<PAGE> 1
As filed with the Securities and Exchange Commission on: February 13, 1998
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
------------------------
Date of Report (Date of earliest event reported): February 12, 1998
THE GNI GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-10735 76-0232338
(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification No.)
2525 BATTLEGROUND ROAD, DEER PARK, TEXAS 77536 (281) 930-0350
(Address of Principal Executive Offices) (Zip Code) (Registrant's
telephone number
including area code)
================================================================================
Page 1 of 3 Pages
<PAGE> 2
FORM 8-K
CURRENT REPORT
ITEM 1(b). CHANGES IN CONTROL OF REGISTRANT.
The GNI Group, Inc. (GNUC) today announced that it has entered into a
definitive merger agreement pursuant to which 399 Venture Partners, Inc. will,
in conjunction with certain members of management (Investor Group), acquire the
Company.
Under the terms of the agreement, which is subject to approval by a
majority of the Company's shareholders, regulatory review, and other
conditions, shareholders will receive $7.00 per share in cash. The management
members of the Investor Group have agreed to retain an equity ownership
interest in the Company following the merger. Certain shareholders, including
members of management, representing approximately 29% of the fully diluted
common shares, have executed agreements to vote their shares in favor of the
merger at the shareholders' meeting, which the Company expects to call in the
spring.
Donaldson, Lufkin & Jenrette Securities Corporation will act as
exclusive financial advisor to 399 Venture Partners in connection with the
transaction. The Board of Directors of the Company has recommended that
shareholders vote in favor of the merger and has received a fairness opinion
from Sanders Morris Mundy Inc. that the transaction is fair, from a financial
point of view, to the public shareholders.
Mr. Rush, the President and CEO of GNI, said, "I'm pleased that
through the efforts of 399 Venture Partners and GNI's management, we are able
to provide the Company's shareholders with liquidity through this transaction.
It is an exciting opportunity for the Company, its employees and customers, and
brings excellent value to all of the Company's shareholders."
The GNI Group, Inc. headquartered in Deer Park, Texas, is engaged in
the manufacture of specialty chemicals and in hazardous and non-hazardous waste
management.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Not Applicable.
(b) Pro forma financial information.
Not Applicable.
(c) Exhibits.
99. Agreement and Plan of Merger between Green I
Acquisition Corp. and The GNI Group, Inc. dated as of
February 12, 1998.
Page 2 of 3 pages
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE GNI GROUP, INC.
DATE: February 13, 1998 /s/ Carl V Rush, Jr.
----------------- --------------------
Carl V Rush, Jr.
President and CEO
Page 3 of 3 Pages
<PAGE> 4
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
between
GREEN I ACQUISITION CORP.
and
THE GNI GROUP, INC.
Dated as of February 12, 1998
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.03. Effective Time; Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.04. Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.05. Articles of Incorporation; By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.06. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.07. Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.08. Employee Stock Options; Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.09. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.10. Surrender of Shares; Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.01. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.02. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.03. Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.04. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.05. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.06. SEC Reports; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.07. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.08. Compliance with Law; Environmental Matters . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.09. Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.10. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.11. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.12. Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.14. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.15. Other Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.16. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.17. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.18. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.19. Real Property and Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.20. Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.21. Certain Business Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.22. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.23. Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.24. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.25. Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
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<TABLE>
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SECTION 2.26. Stock Retention and Voting Agreements . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.01. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.02. Authorization and Validity of Agreement . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.03. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.04. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.05. Disclosure Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.06. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IV
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.02. Access; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.03. Preparation of Company Statement;
Shareholders' Meeting; Further Actions . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.04. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.05. Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.06. Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.07. D&O Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.08. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.09. Debt Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.10. Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.11. Schedule 13-E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.12. Certain Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.01. Conditions to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.04. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.05. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.01. Non-Survival of Representations,
Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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SECTION 7.03. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.04. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.05. Entire Agreement; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.06. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.07. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.09. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
EXHIBIT A Amended and Restated Certificate of Incorporation of
(omitted) The GNI Group, Inc.
EXHIBIT B Amended and Restated By-Laws of The GNI Group, Inc.
(omitted)
EXHIBIT C-1 Voting Agreement
(omitted)
EXHIBIT C-2 Management Voting Agreement
(omitted)
EXHIBIT 4.01(k)(iv) Capital Budget
(omitted)
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<PAGE> 8
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Location of Definition
------------ ----------------------
<S> <C>
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . Section 4.06
affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(a)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
beneficial owner . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(b)
Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.02
business day . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(c)
Capital Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03
Capital Lease Obligations . . . . . . . . . . . . . . . . . . . . . . Section 7.03
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . Section 1.03
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.09(b)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.12(a)
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . Section 2.01
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . Section 2.06
Company Statement . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.07
control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(f)
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.07(a)
Debt Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.09
defined benefit plan . . . . . . . . . . . . . . . . . . . . . . . . Section 2.12(b)
Delaware Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.09(a)
D&O Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.07(b)
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.03
Equity Financing . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3.06
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(m)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(n)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.04
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.08(a)
Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6.03(d)
First Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.17
Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(o)
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.03(d)
Governmental Order . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.08
Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(p)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.04
</TABLE>
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GLOSSARY OF DEFINED TERMS
<TABLE>
<S> <C>
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.07(a)
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . Section 2.14(d)
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(r)
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.08
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.19(d)
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.19(b)
Management Voting Agreement . . . . . . . . . . . . . . . . . . . . . Section 1.07(c)
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(s)
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.20(a)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . Section 1.07(a)
Mirror Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . Section 4.10
Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(t)
Ordinary Course of Business . . . . . . . . . . . . . . . . . . . . . Section 7.03(u)
Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.08
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.08
Owned Intellectual Property . . . . . . . . . . . . . . . . . . . . . Section 2.14(a)
Owned Real Property . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.19(b)
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.10(a)
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.05
Permitted Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.19(b)
Per Share Amount . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.07(a)
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(v)
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(w)
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.02(a)
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Purchaser Disclosure Schedule . . . . . . . . . . . . . . . . . . . . Section 3.03
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . Section 4.12
Revolver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 4.9 (b)
Rollover Shareholder . . . . . . . . . . . . . . . . . . . . . . . . Section 1.07(c)
Sanders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.02(a)
Schedule 13E-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.07
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.10(a)
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.04
Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals
Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . Section 4.03(c)
Stockholders Agreement . . . . . . . . . . . . . . . . . . . . . . . Section 5.01(c)(viii)
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(aa)
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . Section 1.01
</TABLE>
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GLOSSARY OF DEFINED TERMS
<TABLE>
<S> <C>
Swap Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7.03(bb)
Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.13(a)
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.13(a)
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.02(a)
Voting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2.26
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1.08(b)
</TABLE>
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AGREEMENT AND PLAN OF MERGER, dated as of February 12, 1998
(this "Agreement"), between GREEN I ACQUISITION CORP., a Delaware corporation
("Purchaser"), and The GNI Group, Inc., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Purchaser and the Company
have each determined that it is in the best interests of its shareholders for
Purchaser to acquire the Company upon the terms and subject to the conditions
set forth herein; and
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of Purchaser and the Company has each approved the merger (the
"Merger") of Purchaser with and into the Company in accordance with the General
Corporation Law of the State of Delaware ("Delaware Law") upon the terms and
subject to the conditions set forth herein; and
WHEREAS, Purchaser is unwilling to enter into this Agreement
unless, contemporaneously with the execution and delivery of this Agreement,
certain beneficial and record stockholders of the Company have entered into
certain voting agreements, substantially in the form as set forth in Exhibits
C-1 and C-2 hereto, providing for certain actions relating to certain of the
shares of common stock, par value $.01 per share, of the Company (shares of
common stock of the Company being collectively referred to as "Shares" and
individually as a "Share") owned or controlled by them;
WHEREAS, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe certain conditions to the Merger;
WHEREAS, it is intended that the Merger be recorded as a
recapitalization for financial reporting purposes;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Purchaser and the Company hereby agree as follows:
ARTICLE
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the
conditions set forth in Article V, and in accordance with Delaware 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").
<PAGE> 12
SECTION 1.02 Company Action. (a) The Company hereby
represents that (i) the Board of Directors of the Company (the "Board"), at a
meeting duly called and held on February 10, 1998, has (A) determined that this
Agreement, the Merger and the other transactions contemplated by this Agreement
(collectively, the "Transactions") and the Transactions are fair to and in the
best interests of the holders of Shares, (B) approved and adopted this
Agreement and the Merger and (C) recommended that the shareholders of the
Company approve and adopt this Agreement and the Merger and (ii) Sanders Morris
Mundy Inc. ("Sanders") has delivered to the Board an opinion to the effect
that, as of the date of this Agreement, the cash consideration to be received
in the Merger by the holders of Shares (other than Purchaser and its affiliates
and any other holders of Shares who will retain Shares following consummation
of the Merger) is fair from a financial point of view to such holders. The
Company agrees to include in the Company Statement (as defined in Section 2.07)
the recommendation of the Board described in the immediately preceding
sentence.
(b) The Company shall take all action as may be necessary
to effect the Transactions as contemplated by this Agreement, including,
without limitation, promptly mailing the Company Statement to the record
holders and beneficial owners of the Shares.
SECTION 1.03 Effective Time; Closing. As promptly as
practicable after the satisfaction or, if permissible, waiver of the conditions
set forth in Article V, the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger (the "Certificate of Merger")
with the Secretary of State of the State of Delaware, in such form or forms as
is required by, and executed in accordance with the relevant provisions of,
Delaware Law (the date and time of such filing being the "Effective Time").
Prior to such filing, a closing shall be held at the offices of Morgan, Lewis &
Bockius LLP, 101 Park Avenue, New York, New York, 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 V.
SECTION 1.04 Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers 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 1.05 Articles of Incorporation; By-laws. (a) At the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be amended to read in its entirety as set forth in Exhibit A attached
hereto until thereafter amended as provided by law and such Certificate of
Incorporation.
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(b) At the Effective Time, the By-laws of the Surviving
Corporation shall be amended to read as set forth in Exhibit B attached hereto
until thereafter amended as provided by law and such By-laws.
SECTION 1.06 Directors and Officers. The directors of the
Company 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 1.07. Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of 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 1.07(b), any Shares to remain outstanding pursuant to
Section 1.07(c) and any Dissenting Shares as defined in Section 1.09)
shall be canceled and shall be converted automatically into the right
to receive an amount equal to $7.00 (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 1.10,
of the certificate that formerly evidenced such Share;
(b)(i) Each Share held in the treasury of the Company and
each Share owned by any direct or indirect wholly owned subsidiary of
the Company and each Share owned by Purchaser immediately prior to the
Effective Time shall be canceled without any conversion thereof and no
payment or distribution shall be made with respect thereto; (ii) Each
share of common stock of Purchaser outstanding immediately prior to
the Effective Time shall be converted and exchanged for one validly
issued, fully paid and nonassessable share of Class A or Class B
Common Stock (as appropriate), par value $.01 per share, of the
Surviving Corporation equal to and with the same rights, powers and
privileges as the shares so converted; and (iii) Each share of
preferred stock of Purchaser outstanding immediately prior to the
Effective Time shall be converted and exchanged for one validly
issued, fully paid and non-assessable share of Series A Preferred
Stock of the Surviving Corporation with the same rights, powers and
privileges as the preferred stock so converted;
(c) certain of the Shares held by and registered in the
names of certain members of management and the Board (the "Rollover
Shareholders"), pursuant to the terms of the voting agreement among
the Rollover Shareholders, certain members of management and
Purchaser, substantially as set forth in Exhibit C-2 attached hereto
(the
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<PAGE> 14
"Management Voting Agreement"), shall not be canceled as provided
above, but shall remain outstanding.
SECTION 1.08 Employee Stock Options; Warrants. (a) Unless
otherwise provided in the Management Voting Agreement, each option to purchase
Shares ("Options") that is outstanding immediately prior to the Effective Time
(whether or not vested or exercisable) shall, at the Effective Time, be
canceled, and in exchange therefor, each Option holder shall receive a cash
payment which, prior to deduction for applicable withholding taxes, is in an
amount equal to the product of (A) the excess, if any, of the Per Share Amount
over the per share exercise price of the Option and (B) the number of shares
subject to the Option (whether or not vested). The Company shall make such
payment on or prior to the Effective Date immediately upon receipt of a written
agreement from the Option holder to accept such payment in full settlement of
such Option holder's rights with respect to the Option. If the per share
exercise price of any Option equals or exceeds the Per Share Amount, such
Option shall be canceled without any payment required thereunder. No such Plan
will survive the Effective Time.
(b) the warrants issued pursuant to the Note and Warrant
Purchase Agreement between the Company and the other parties thereto (the
"Warrants") will have been canceled and the holders thereof shall have received
payment in full in accordance with the terms of the Warrants.
SECTION 1.09 Dissenting Shares. (a) Notwithstanding any
provision of this Agreement to the contrary, Shares that are outstanding
immediately prior to the Effective Time and that are held by shareholders who
shall not have voted in favor of the Merger and who shall have complied with
all of the relevant provisions of Section 262 of Delaware Law (collectively,
the "Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration but instead shall be converted into the right
to receive payment from the Surviving Corporation with respect to such
Dissenting Shares in accordance with Delaware Law, unless and until such
holders shall have failed to perfect or shall have effectively withdrawn or
lost their rights to appraisal under Delaware Law. If any such holder shall
have failed to perfect or shall have effectively withdrawn or lost such right,
such holder's Shares shall be entitled to receive the Merger Consideration in
accordance with Section 1.07.
(b) The Company shall give Purchaser (i) prompt notice of
any demands for appraisal received by the Company, withdrawals of such demands,
and any other instruments served pursuant to Delaware Law and received by the
Company and (ii) the opportunity to participate in all negotiations and
proceedings with respect to demands for appraisal under Delaware Law. The
Company shall not, except with the prior written consent of Purchaser (which
consent shall not be unreasonably withheld), make any payment with respect to
Dissenting Shares or offer to settle or settle any claims or demands with
respect to Dissenting Shares.
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SECTION 1.10 Surrender of Shares; Stock Transfer Books. (a)
Prior to the Effective Time, Purchaser shall designate a bank or trust company
(which bank or trust company shall be reasonably acceptable to the Company) to
act as agent (the "Paying Agent") for the holders of Shares in connection with
the Merger to receive the funds to which holders of Shares shall become
entitled pursuant to Section 1.07(a). Such funds shall be invested by the
Paying Agent as directed by the Surviving Corporation, provided that such
investments shall be in obligations of or guaranteed by the United States of
America or of any agency thereof and backed by the full faith and credit of the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Moody's Investors Services, Inc. or Standard & Poor's Corporation,
respectively, or in deposit accounts, certificates of deposit or banker's
acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar
time deposits purchased from, commercial banks with capital, surplus and
undivided profits aggregating in excess of $1.0 billion (based on the most
recent financial statements of such bank which are then publicly available at
the Securities and Exchange Commission (the "SEC") or otherwise).
(b) Promptly after the Effective Time, the Surviving
Corporation 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 1.07(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 Shares (the "Certificates") shall pass, only upon
proper delivery of the Certificates to the Paying Agent) 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 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 payment of the Merger Consideration is to be made to a
Person other than the Person in whose name the surrendered Certificate 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.
(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
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<PAGE> 16
as general creditors thereof with respect to any Merger Consideration that may
be payable upon due surrender of the Certificates held by them to the fullest
extent permitted by law. Notwithstanding the foregoing, to the fullest extent
permitted by law, 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 Effective Time, the stock transfer books of
the Company shall be closed to the extent permitted by applicable law 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.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser as
follows:
SECTION 2.01 Organization and Qualification. The Company and
each of its subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (b) has the
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted and (c) is
in good standing and duly qualified to do business in each jurisdiction in
which the transaction of its business makes such qualification necessary;
except where the failure to be so organized, existing, qualified and in good
standing or to have such power or authority would not constitute a Material
Adverse Effect. True and complete copies of the Certificates of Incorporation
and the by-laws (or other comparable governing documents) of the Company and
each of its subsidiaries have been made available to Purchaser. A true and
complete list of all of the Company's subsidiaries, together with the
jurisdiction of incorporation of each such subsidiary and the percentage of the
outstanding capital stock of each such subsidiary owned by the Company and its
subsidiaries, is set forth in Section 2.01 of the Company's disclosure schedule
delivered to Purchaser in connection with this Agreement (the "Company
Disclosure Schedule").
SECTION 2.02 Capitalization. (a) The authorized capital
stock of the Company consists of 20,000,000 Shares and 1,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"), of which
500,000 shares have been designated "Series A Preferred Stock." As of the date
of this Agreement, (i) 6,674,709 Shares were issued and outstanding and 40,184
Shares were held in treasury, (ii) 808,950 Shares were reserved for issuance
pursuant to outstanding Options and 208,517 Shares were reserved for issuance
in respect of future grants of Options, (iii) 428,400 Shares were reserved for
issuance pursuant to outstanding warrants, and (iv) no shares of Preferred
Stock were issued and outstanding. All outstanding Shares are validly
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<PAGE> 17
issued, fully paid and nonassessable and are not subject to preemptive rights.
Except as set forth in this Section 2.02(a) or as disclosed in Section 2.02(a)
of the Company Disclosure Schedule, there are no outstanding subscriptions,
options, warrants, calls, rights, commitments or any other agreements to which
the Company is a party or by which the Company is bound which obligate the
Company to (i) issue, deliver or sell or cause to be issued, delivered or sold
any additional Shares or any other capital stock of the Company or any other
securities convertible into, or exercisable or exchangeable for, or evidencing
the right to subscribe for, any such Shares or (ii) purchase, redeem or
otherwise acquire any Shares and any other capital stock of the Company. All
Shares subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There
are no outstanding contractual obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any Shares or any
capital stock of any such subsidiary or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
subsidiary (other than a wholly owned subsidiary of the Company) or any other
Person. Each outstanding share of capital stock of each of the Company's
subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and, except as disclosed on Section 2.02 (a) of the Company Disclosure
Schedule, each such share is owned by the Company and its subsidiaries is free
and clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on the Company's or such other
subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever, except for liens arising by operation of law that would not
constitute a Material Adverse Effect.
(b) Except as provided in Section 2.02(b) of the Company
Disclosure Schedule, there are no voting trusts or shareholder agreements to
which the Company is a party with respect to the voting of the capital stock of
the Company.
SECTION 2.03 Authorization and Validity of Agreement. The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the Transactions in accordance with the terms
hereof (subject to the approval and adoption of this Agreement and the Merger
by the holders of a majority of the outstanding Shares and the filing and
recordation of appropriate merger documents as required by Delaware Law). The
Board has duly authorized the execution, delivery and performance of this
Agreement by the Company, and no other corporate action or other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or the Transactions (other than the approval and adoption of this
Agreement and the Merger by the holders of a majority of the outstanding
Shares). This Agreement has been duly and validly executed and delivered by the
Company and, assuming this Agreement constitutes the legal, valid and binding
obligation of Purchaser, constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by any bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law). The
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Board has taken all necessary actions such that the provisions of Section
203 of Delaware Law do not apply to the Transactions.
SECTION 2.04 Consents and Approvals. Neither the execution
and delivery of this Agreement by the Company nor the performance of this
Agreement by the Company and the consummation by the Company of the
Transactions will require on the part of the Company or any of its subsidiaries
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except (i) in connection with the
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (ii) pursuant to the applicable requirements
of the Securities Act of 1933, as amended (the "Securities Act") and the SEC's
rules and regulations thereunder, the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the SEC's rules and regulations promulgated
thereunder and state takeover laws (iii) the filing and recordation of the
Certificate of Merger pursuant to Delaware Law and appropriate documents with
the relevant authorities of other states in which the Company is authorized to
do business, (iv) as set forth in Section 2.04 of the Company Disclosure
Schedule or (v) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification would not
constitute a Material Adverse Effect or restrict or prevent the consummation of
the Transactions.
SECTION 2.05 No Violation. Except as set forth in Section
2.05 of the Company Disclosure Schedule, assuming the Merger has been duly
approved by the holders of a majority of the outstanding Shares, neither the
execution and delivery of this Agreement by the Company nor the performance of
this Agreement by the Company and the consummation by the Company of the
Transactions will (a) conflict with or violate the Certificate of Incorporation
of the Company or the By-laws (or other comparable governing documents) of the
Company or any of its subsidiaries; (b) result in a violation or breach of,
constitute a default (with or without notice or lapse of time, or both) under,
give rise to any right of termination, cancellation or acceleration of, or
result in the imposition of any lien, charge or other encumbrance on any assets
or property of the Company or any of its subsidiaries pursuant to, any note,
bond, mortgage, indenture, contract, agreement, Lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective assets or properties are bound, except for any such
violations, breaches and defaults (or rights of termination, cancellation or
acceleration or lien or other charge or encumbrance) described in this clause
(b) as to which requisite waivers or consents have been obtained or which would
not constitute a Material Adverse Effect or restrict or prevent the
consummation of the Transactions; or (c) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in Section
2.04 and this Section 2.05 are duly and timely obtained or made and the
approval of the Merger by the holders of a majority of the outstanding Shares
has been obtained, conflict with or violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any of its
subsidiaries or any of their respective assets and properties, except for such
violations which would not constitute a Material Adverse Effect or restrict or
prevent the consummation of the Transactions. Except as would not constitute
a Material Adverse Effect, the Company and each of its
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subsidiaries hold all permits, variances, licenses, exemptions, orders and
approvals of governmental, administrative, and regulatory authorities,
(collectively, "Permits") regarding the conduct of their respective businesses
and the use of their respective property, including, without limitation, all
Permits issued by any governmental, administrative and regulatory authorities
that are concerned with the safety, efficacy, reliability or manufacturing of
chemicals, as now being conducted and the same are in full force and effect.
SECTION 2.06 SEC Reports; Financial Statements. (a) Except
as set forth on Section 2.06 of the Company Disclosure Schedule, since January
1, 1995 the Company has filed with the SEC all forms, reports, schedules,
statements and other documents required to be filed by it with the SEC pursuant
to the Securities Act and the SEC's rules and regulations promulgated
thereunder and the Exchange Act and the SEC's rules and regulations promulgated
thereunder (any such documents filed prior to the date hereof being
collectively, the "Company SEC Documents"). The Company SEC Documents
including, without limitation, any financial statements or schedules included
therein, at the time filed, or in the case of registration statements on their
respective effective dates, (i) complied as to form in all material respects
with the applicable requirements of the Securities Act and the SEC's rules and
regulations promulgated thereunder and the Exchange Act and the SEC's rules and
regulations promulgated thereunder and (ii) did not at the time filed (or, in
the case of registration statements, at the time of effectiveness), 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 light of the circumstances under which they were made, not misleading. No
subsidiary of the Company is required to file any form, report or other
document with the SEC.
(b) Each of the consolidated financial statements of the
Company (including any related notes thereto) included in the Company SEC
Documents (excluding the Company SEC Documents described in Section 2.07)
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the period involved
(except as may be indicated in such financial statements or in the notes
thereto or, in the case of unaudited financial statements, as permitted by the
requirements of Form 10-Q) and present fairly, in all material respects
(subject, in the case of the unaudited statements, to normal year-end
adjustments which such adjustments in the aggregate would constitute a Material
Adverse Effect and the absence of footnotes), the financial position of the
Company as of the dates thereof and the results of the Company's operations and
cash flows for the periods presented therein.
(c) The Company has heretofore furnished or made
available to Purchaser complete and correct copies of all amendments and
modifications that have not been filed by the Company with the SEC to all
agreements, documents and other instruments that previously had been filed by
the Company with the SEC and are currently in effect.
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SECTION 2.07 Disclosure Documents. The Proxy Statement to be
sent to the shareholders of the Company in connection with the Shareholders'
Meeting (such Proxy Statement, as amended or supplemented, being referred to
herein as the "Company Statement"), as of the date first mailed to the
shareholders of the Company and at the time of the Shareholders' Meeting, and
the Rule 13e-3 Transaction Statement on Schedule 13E-3 (together with all
amendments and supplements thereto, the "Schedule 13E-3") at the time filed
with the SEC, or at any time thereafter when the information therein is
required to be updated pursuant to applicable law, will not 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
light of the circumstances under which they were made, not misleading. The
Company Statement will, when filed by the Company with the SEC, comply as to
form in all material respects with the applicable provisions of the Exchange
Act and the SEC rules and regulations promulgated thereunder. Notwithstanding
the foregoing, the Company makes no representation or warranty with respect to
the statements made in any of the foregoing documents based on written
information supplied by or on behalf of Purchaser or any of its respective
affiliates specifically for inclusion therein.
SECTION 2.08 Compliance with Law; Environmental Matters.
Except as set forth in Section 2.08 of the Company Disclosure Schedule, neither
the Company nor any of its subsidiaries is in violation of any applicable
federal, state, local or foreign statute, rule, regulation, decree, ordinance,
code requirement or order of any governmental or regulatory authority or rule
of common law, including, without limitation, all federal and state antitrust
law (whether statutory or otherwise) (collectively, "Law") applicable to the
Company or any of its subsidiaries, or any of the products produced,
distributed marketed or sold by the Company or any of its subsidiaries, except
for violations which would not constitute a Material Adverse Effect. Section
2.08 of the Company Disclosure Schedule sets forth a brief description of each
order, writ, judgment, injunction, decree, stipulation, determination or award
entered by or with any governmental or regulatory authority (each, a
"Governmental Order") applicable to the Company and any of its subsidiaries.
No such Governmental Order constitutes a Material Adverse Effect. Without
limiting the foregoing, except as set forth in Section 2.08 of the Company
Disclosure Schedule, (a) the Company and its subsidiaries have obtained and
hold all Environmental Permits (other than those Environmental Permits the
absence of which to obtain would not constitute a Material Adverse Effect),
which are listed on Section 2.08 of the Company Disclosure Schedule, and to the
Knowledge of the Company, there are no facts, conditions or circumstances that
could reasonably form the basis for the revocation, denial of renewal, or
material amendment or modification of any such Environmental Permit; (b) the
Company and its subsidiaries are in compliance with all terms, conditions and
provisions of all applicable Environmental Permits and Environmental Laws
except for any non-compliance which would not constitute a Material Adverse
Effect; (c) there are no pending or threatened Environmental Claims, which
would constitute a Material Adverse Effect, against the Company or any of its
subsidiaries, and the Company is not aware of any facts or circumstances which
could reasonably be expected to form the basis for any Environmental Claim,
which would constitute a Material Adverse Effect, against the Company or any of
its subsidiaries; (d) no
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Releases of Hazardous Materials have occurred at, from, in, to, on or under any
Site and no Hazardous Materials are present in, on, about or migrating to or
from any Site that are reasonably likely to rise to an Environmental Claim
against the Company or any of its subsidiaries; (e) neither the Company, any
subsidiary of the Company, any predecessor of the Company or any such
subsidiary, nor any entity previously owned by the Company or any such
subsidiary, has transported or arranged for the treatment, storage, handling,
disposal, or transportation of any Hazardous Material to any off-Site location
which is reasonably likely to result in an Environmental Claim against the
Company or any of its subsidiaries; (f) no Site is a current or proposed
Environmental Clean-up Site; (g) there are no Liens (other than Permitted Liens)
arising under or pursuant to any Environmental Law on any Site and there are no
facts, circumstances, or conditions that could reasonably be expected to
restrict, encumber, or result in the imposition of special conditions under any
Environmental Law with respect to the ownership, occupancy, development, use or
transferability of any Site; (h) there are no current or former underground
storage tanks (active or abandoned), polychlorinated biphenyl containing
equipment or asbestos containing material at any Site; and (i) there have been
no environmental investigations, studies, audits, tests, reviews or other
analyses conducted by, on behalf of, or which are in the possession of the
Company or any of its subsidiaries with respect to any Site which have not been
delivered to or made available to Purchaser prior to the execution of this
Agreement. To the Knowledge of the Company, except as disclosed in Schedule
2.08 of the Company Disclosure Schedule, there are no capital expenditures that
the Company or its subsidiaries will be required to incur to comply with current
or reasonably foreseeable Environmental Laws that could constitute a Material
Adverse Effect.
SECTION 2.09 Absence of Certain Changes. Except as and to
the extent disclosed in Section 2.09 of the Company Disclosure Schedule, since
June 30, 1997, the Company and each of its subsidiaries have conducted its
businesses only in the ordinary course of business and consistent with past
practice and (a) there has not been any Material Adverse Effect and (b) the
Company has not taken any of the actions set forth in paragraphs (a) through
(m) of Section 4.01.
SECTION 2.10 No Undisclosed Liabilities. Except (a) for
liabilities incurred in the ordinary course of business and consistent with
past practice, (b) liabilities incurred in connection with the Transactions,
(c) liabilities which would not constitute a Material Adverse Effect and (d) as
and to the extent disclosed in the Company SEC Documents or as set forth in
Section 2.10 of the Company Disclosure Schedule, from June 30, 1997, neither
the Company nor any of its subsidiaries has incurred any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which would be required to be reflected in or reserved against on a
consolidated balance sheet, or in the notes thereto, of the Company prepared in
accordance with generally accepted accounting principles consistent with past
practice.
SECTION 2.11 Litigation. Except as and to the extent
disclosed in Section 2.11 of the Company Disclosure Schedule, there are no
claims, actions, proceedings or governmental, administrative or regulatory
investigations pending, nor has the Company or any of its
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subsidiaries received notice of any threatened claims, actions, proceedings or
governmental, administrative or regulatory investigations, against the Company
or any of its subsidiaries by or before any court, arbitrator or administrative
or governmental or regulatory body, domestic or foreign, which, if adversely
determined would constitute a Material Adverse Effect or seek to delay or
prevent the consummation of the Transactions. None of the Company, its
subsidiaries, nor any of their respective assets is subject to any outstanding
and unsatisfied order, writ, judgment, injunction, determination, award or
decree which would constitute a Material Adverse Effect.
SECTION 2.12 Employee Benefit Matters. All Benefit Plans are
listed in Section 2.12 of the Company Disclosure Schedule, and copies of all
documentation relating to such Benefit Plans have been delivered or made
available to Purchaser (including copies of written Benefit Plans, written
descriptions of oral Benefit Plans, summary plan descriptions, trust
agreements, the three most recent annual returns, employee communications, and
IRS determination letters). Except as disclosed in Section 2.12 of the
Company Disclosure Schedule:
(a) each Benefit Plan has at all times been maintained
and administered in all material respects in accordance with its terms and with
the requirements of all applicable law, including ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"), and each Benefit Plan intended
to qualify under section 401(a) of the Code has at all times since its adoption
been so qualified, and each trust which forms a part of any such plan has at
all times since its adoption been tax-exempt under section 501(a) of the Code;
(b) no Benefit Plan is a "defined benefit plan" within
the meaning of section 414(j) of the Code;
(c) no Benefit Plan is a Multiemployer Plan;
(d) no direct, contingent or secondary liability has been
incurred or is expected to be incurred by the Company or any of its
subsidiaries under Title IV of ERISA to any party with respect to any Benefit
Plan, or with respect to any other Plan presently or heretofore maintained or
contributed to by any ERISA Affiliate;
(e) neither the Company, any of its subsidiaries nor any
ERISA Affiliate has incurred any liability for any tax imposed under section
4971 through 4980B of the Code or civil liability under section 502(i) or (l)
of ERISA;
(f) no benefit under any Benefit Plan, including, without
limitation, any severance or parachute payment plan or agreement, will be
established or become accelerated, vested or payable by reason of any
transaction contemplated under this Agreement;
(g) no tax has been incurred under section 511 of the
Code with respect to any Benefit Plan (or trust or other funding vehicle
pursuant thereto);
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(h) no Benefit Plan provides health or death benefit
coverage beyond the termination of an employee's employment, except as required
by Part 6 of Subtitle B of Title I of ERISA or section 4980B of the Code or any
state laws requiring continuation of benefits coverage following termination of
employment;
(i) no suit, actions or other litigation (excluding
claims for benefits incurred in the ordinary course of plan activities) have
been brought or, to the Knowledge of the Company or any of its subsidiaries,
threatened against or with respect to any Benefit Plan and there are no facts
or circumstances known to the Company or any of its subsidiaries that could
reasonably be expected to give rise to any such suit, action or other
litigation; and
(j) all contributions to Benefit Plans that were required
to be made under such Benefit Plans have been made, and all benefits accrued
under any unfunded Benefit Plan have been paid, accrued or otherwise adequately
reserved in accordance with GAAP, all of which accruals under unfunded Benefit
Plans are as disclosed in Section 2.12 of the Company Disclosure Schedule, and
each of the Company and its subsidiaries have performed all material
obligations required to be performed under all Benefit Plans.
SECTION 2.13 Taxes. (a) For purposes of this Agreement, (i)
"Tax" or "Taxes" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any governmental or taxing authority including, without
limitation, taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added, or gains taxes; license,
registration and documentation fees; and customs' duties, tariffs, and similar
charges and (ii) "Tax Returns" means all reports and returns (including
elections, claims, declarations, disclosures, schedules, estimates,
computations and information returns) required to be supplied to a Tax
authority in any jurisdiction relating to Taxes.
(b) Except as and to the extent disclosed in the Company
SEC Documents or in Section 2.13(b) of the Company Disclosure Schedule, (i) the
Company and each of its subsidiaries have duly and timely filed (taking into
account any extension of time within which to file) all material Tax Returns
required to be filed by any of them and all such filed Tax Returns are complete
and accurate in all material respects; (ii) the Company and each of its
subsidiaries have paid all Taxes required to be paid by it including Taxes that
the Company and its subsidiaries are obligated to withhold from amounts owing
to any employee, creditor or third party, except with respect to matters
contested in good faith or for such amounts that would not constitute a
Material Adverse Effect; (iii) as of the date of this Agreement, there are no
pending or, to the Knowledge of the Company, threatened in writing audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters relating to the Company or any of its
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subsidiaries which, if determined adversely to the Company or its subsidiaries,
would constitute a Material Adverse Effect; (iv) there are no deficiencies or
claims for any Taxes that have been proposed, asserted or assessed against the
Company or any of its subsidiaries which, if such deficiencies or claims were
finally resolved against the Company or any of its subsidiaries, would
constitute a Material Adverse Effect; (v) there are no material Liens for Taxes
upon the assets of the Company or any of its subsidiaries, other than Liens for
current Taxes not yet due and payable and Liens for Taxes that are being
contested in good faith by appropriate proceedings; (vi) none of the Company or
any of its subsidiaries has made an election under Section 341(f) of the Code
(vii) no extension of the statute of limitations on the assessment of any Taxes
has been granted by the Company or any of its subsidiaries and is currently in
effect; (viii) none the Company or its subsidiaries is a party to any agreement
or arrangement that could reasonably be expected to result, separately or in
the aggregate, in the actual or deemed payment by the Company or a subsidiary
of any "excess parachute payments" within the meaning of Section 280G or 162(m)
of the Code; (ix) none of the Company or its subsidiaries have been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; (x) all Taxes required to be withheld, collected
or deposited by or with respect to the Company and its subsidiaries have been
timely withheld, collected or deposited, as the case may be, and, to the extent
required have been paid to the relevant taxing authority, except, in each case,
to the extent that failing to so withhold, collect, deposit or pay would not
constitute a Material Adverse Effect; (xi) none of the Company or its
subsidiaries has issued or assumed (A) any obligations described in Section
279(b) of the Code, (B) any applicable high yield discount obligations, as
defined in Section 163(i) of the Code, or (C) any registration-required
obligations, within the meaning of Section 163(f)(2) of the Code, that is not,
registered form; (xii) there are no requests for information currently
outstanding that could affect the Taxes of the Company and its subsidiaries;
and (xiii) there are no proposed reassessments of any property owned by the
Company or its subsidiaries or other proposals that could increase the amount
of any Tax to which the Company, its subsidiaries or any such Person would be
subject.
SECTION 2.14 Intellectual Property. (a) Section 2.14(a) of
the Company Disclosure Schedule sets forth a true and complete list of all
Intellectual Property owned by the Company and its subsidiaries, including all
patents, trademarks, copyrights, mask works and other forms of Intellectual
Property and all applications and registrations therefor (the "Owned
Intellectual Property"). Except as would not constitute a Material Adverse
Effect and except as set forth in Section 2.14(a) of the Company Disclosure
Schedule, the Company is the sole and exclusive owner of the Owned Intellectual
Property, free and clear of any encumbrance. Except as would not constitute a
Material Adverse Effect and except as set forth in Section 2.14(a) of the
Company Disclosure Schedule, the patents and registrations made for the Owned
Intellectual Property are current, outstanding and valid, and the Company has
complied with all requirements to maintain such Intellectual Property in full
force and effect.
(b) The Owned Intellectual Property constitutes all of
the Intellectual Property requisite and necessary for the conduct of the
businesses of the Company and its subsidiaries.
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Except as set forth in Section 2.14(b) of the Company Disclosure Schedule, the
Company and its subsidiaries does not have, nor do they require, any license
(other than licenses generally available to the public at reasonable cost) from
any Person in or to any Intellectual Property that is material to the
businesses of the Company and its subsidiaries. As a result of the
Transactions, as of the Effective Date, the Surviving Corporation shall own all
right, title and interest in and to all Intellectual Property requisite and
necessary for the conduct of the businesses of the Surviving Corporation and
its subsidiaries. Except as provided on Section 2.14(b) of the Company
Disclosure Schedule, the Company and its subsidiaries has not granted a license
to any Person in or to any of the Owned Intellectual Property.
(c) Except as provided on Section 2.14(c) of the Company
Disclosure Schedule, to the Knowledge of the Company, no actions or proceedings
involving the Company or its subsidiaries are pending or threatened, (i) which
challenge the ownership, validity or enforceability of any of the Owned
Intellectual Property, (ii) which seek to restrict the use by the Company or
its subsidiaries of any of the Owned Intellectual Property, or (iii) which
allege that the Company or its subsidiaries infringes or violates the
Intellectual Property of any Person. No pending or threatened action or
proceeding, including but not limited to those on Section 2.14(c) of the
Company Disclosure Schedule, would constitute a Material Adverse Effect if
decided adversely to the Company or its subsidiaries. To the Knowledge of the
Company, the Company is aware of no infringement or violation of the Owned
Intellectual Property by any Person.
(d) For the purpose of this Section 2.14, the
Intellectual Property means (i) inventions, whether or not patentable, whether
or not reduced to practice, and whether or not yet made the subject of a
pending patent application or applications, (ii) ideas and conceptions of
potentially patentable subject matter, including, without limitation, any
patent disclosures, whether or not reduced to practice and whether or not yet
made the subject of a pending patent application or applications, (iii)
national (including the United States) and multinational statutory invention
registrations, patents and patent applications (including all reissues,
divisions, continuations, continuations-in-part, extensions and reexaminations
thereof) and all rights therein provided by international treaties or
conventions and all improvements to the inventions disclosed in each such
patent or application, (iv) trademarks, service marks, trade dress, logos,
trade names and corporate names, including all goodwill associated therewith
and appurtenant thereto, whether or not registered, including all common law
rights, and registrations and applications for registration thereof, including,
but not limited to, all marks registered in the United States Patent and
Trademark Office, the Trademark Offices of the States and Territories of the
United States of America, and the Trademark Offices of other nations throughout
the world, and all rights therein provided by international treaties or
conventions, (v) copyrights (registered or otherwise) and registrations and
applications for registration thereof, and all rights therein provided by
international treaties or conventions, (vi) computer software, including,
without limitation, source code, operating systems and specifications, data,
data bases, files, documentation and other materials related thereto, data and
documentation, (vii) trade secrets and confidential, technical and business
information (including ideas, formulas, compositions, inventions, and
conceptions of inventions whether patentable or unpatentable and whether or not
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reduced to practice), (viii) whether or not confidential, technology (including
know-how and show-how), manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial, marketing and
business data, pricing and cost information, business and marketing plans and
customer and supplier lists and information, (ix) copies and tangible
embodiments of all the foregoing, in whatever form or medium, (x) all rights to
obtain and rights to apply for patents, and to register trademarks and
copyrights, and (xi) all rights to sue or recover and retain damages and costs
and attorneys' fees for present and past infringement of any of the foregoing.
SECTION 2.15 Other Interests. Except as set forth in Section
2.15 of the Company Disclosure Schedule, the Company does not own, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or entity (other than
investments in short-term investment securities).
SECTION 2.16 Labor Matters. Except as set forth in Section
2.16 of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is presently, nor has in the past been, a party to, or bound by,
any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor union organization. There is no
unfair labor practice or labor arbitration proceeding pending or, to the
Knowledge of the Company, threatened against the Company or any of its
subsidiaries relating to their respective businesses except for any such
proceeding which would not constitute a Material Adverse Effect.
SECTION 2.17 Brokers and Finders. No broker, finder or
investment bank has acted directly or indirectly for the Company, nor has the
Company incurred any obligation to pay any brokerage, finder's or other fee or
commission in connection with the transactions contemplated hereby, other than
First Analysis Securities Corporation ("First Analysis") the fees and expenses
of which shall be borne by the Company. The Company has furnished to Purchaser
a complete and correct copy of all agreements between the Company and First
Analysis pursuant to which such firm would be entitled to any payment relating
to the transactions contemplated by this Agreement.
SECTION 2.18 Opinion of Financial Advisor. Sanders has
delivered its opinion, dated the date of this Agreement, to the Board to the
effect that, as of such date, the cash consideration to be received in the
Merger by the holders of Shares (other than holders of Shares who will retain
Shares following consummation of the Merger) is fair from a financial point of
view to such holders and such opinion has not been withdrawn or modified.
SECTION 2.19 Real Property and Leases. (a) The Company and
each of its subsidiaries has sufficient title to all of its real properties and
assets to conduct its businesses as currently conducted or as contemplated to
be conducted.
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(b) Each parcel of real property owned ("Owned Real
Property") or leased by the Company or any of its subsidiaries (i) is specified
in Section 2.19(b)(i) of the Company Disclosure Schedule, (ii) 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 (collectively, "Liens"), other than (A)
Liens for current real estate taxes and assessments not yet past due, (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) all Liens and other imperfections of title and encumbrances
which would not constitute a Material Adverse Effect (collectively, "Permitted
Liens"), and (E) Liens set forth on Section 2.19(b)(ii) of the Company
Disclosure Schedule and (iii) 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, has any
notice been received by the Company stating that any such condemnation,
expropriation or taking is proposed.
(c) All leases of real property leased for the use or
benefit of the Company or any of its subsidiaries to which the Company or any
of its subsidiaries is a party requiring rental payments in excess of $10,000
on an annualized basis during the period of the lease, and all amendments and
modifications thereto are in full force and effect and have not been modified
or amended (except as specified in Section 2.19(c) of the Company Disclosure
Schedule) and there exists no default under any such lease by the Company or
any of its subsidiaries, nor any event which with notice or lapse of time or
both would constitute a default thereunder by the Company or any of its
subsidiaries, except as would not constitute a Material Adverse Effect.
(d) Section 2.19(d) of the Company Disclosure Schedule
sets forth a list of all leases and subleases (i) requiring rental payments in
excess of $50,000 on an annualized basis and that have a term in excess of one
year or (ii) which are material to the operations or business of the Company
under which the Company or any of its subsidiaries is tenant, subtenant or
sublandlord (the "Leases"), including the date of the Lease and the premises
demised thereunder. True copies of the Leases have been delivered to Purchaser
by the Company. No lessor or lessee under any Lease has exercised any option
or right to (i) cancel or terminate such Lease, (ii) lease additional premises,
(iii) reduce or relocate the premises demised by such Lease or (iv) purchase
any property.
(e) There are no pending or, to the Knowledge of the
Company, contemplated zoning changes, "floor area ratio" changes, variances,
special zoning exceptions, conditions or agreements affecting or which might
affect any Owned Real Property. The Company has not transferred any
development rights applicable to any Owned Real Property.
SECTION 2.20 Material Contracts. (a) Section 2.20(a) of
the Company Disclosure Schedule lists each of the following contracts and
agreements (including, without limitation, oral arrangements to the extent
legally binding) of the Company and each of its
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subsidiaries (such contracts and agreements, together with all contracts and
agreements disclosed in Section 2.14 of the Company Disclosure Schedule, being
"Material Contracts"):
(i) each contract, agreement and other arrangement for
the purchase of inventory, spare parts, other materials or
personal property with any supplier or for the furnishing of
services to the Company and each of its subsidiaries or
otherwise related to the businesses of the Company and each of
its subsidiaries under the terms of which the Company or any
of its subsidiaries: (A) are likely to pay or otherwise give
consideration (other than those contracts that may be canceled
by the Company upon 30 days notice) of more than $250,000 in
the aggregate during the fiscal year ended June 30, 1998 or
(B) are likely to pay or otherwise give consideration of more
than $1,000,000 in the aggregate over the remaining term of
such contract;
(ii) each contract, agreement and other arrangement for
the sale of inventory or other personal property or for the
furnishing of services by the Company or any of its
subsidiaries which: (A) is likely to involve consideration of
more than $250,000 in the aggregate during the fiscal year
ended June 30, 1998 or (B) is likely to involve consideration
of more than $1,000,000 in the aggregate over the remaining
term of the contract;
(iii) all material broker, distributor, dealer,
manufacturer's representative, franchise, agency, sales
promotion, market research, marketing, consulting and
advertising contracts and agreements to which the Company or
any of its subsidiaries is a party;
(iv) all management contracts and contracts with
independent contractors or consultants (or similar
arrangements) to which the Company or any of its subsidiaries
is a party and which are not cancelable without penalty or
further payment in excess of $50,000 and without more than 90
days' notice;
(v) all contracts and agreements relating to
indebtedness of the Company or any of its subsidiaries or to
any direct or indirect guaranty by the Company or any of its
subsidiaries of indebtedness of any other Person;
(vi) all contracts, agreements, commitments, written
understandings or other arrangements with any Governmental
Entity, to which the Company or any of its subsidiaries is a
party;
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(vii) all contracts and(agreements that limit or
purport to limit the ability of the Company or any of its
subsidiaries to compete in any line of business or with any
Person or in any geographic area or during any period of time;
and
(viii) all other contracts and agreements, whether or not
made in the ordinary course of business, which are material to
the Company and its subsidiaries, taken as a whole, or the
conduct of the business of the Company and its subsidiaries,
taken as a whole, or the absence of which would constitute a
Material Adverse Effect.
(b) Except as disclosed in Section 2.20(b) of the Company
Disclosure Schedule, each Material Contract: (i) is legal, valid and binding on
the Company or its respective subsidiary party thereto and, to the Knowledge of
the Company, the other parties thereto, and is in full force and effect and
(ii) upon consummation of the transactions contemplated by this Agreement,
except to the extent that any consents set forth in Section 2.04 of the Company
Disclosure Schedule are not obtained, shall continue in full force and effect
without penalty or other adverse consequence. Neither the Company nor any of
its subsidiaries is in breach of, or default under, any Material Contract.
(c) No other party to any Material Contract is, to the
Knowledge of the Company, in material breach thereof or default thereunder.
(d) Except as disclosed in Section 2.20(d) of the Company
Disclosure Schedule, there is no contract, agreement or other arrangement
granting any Person any preferential right to purchase any of the properties or
assets of the Company or any of its subsidiaries.
SECTION 2.21 Certain Business Practices. Neither the Company
nor any of its subsidiaries nor any of their respective directors, officers,
agents, representatives or employees (in their capacity as directors, officers,
agents, representatives or employees) has: (a) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (b) directly or indirectly, paid or delivered any fee,
commission or other sum of money or item of property, however characterized, to
any finder, agent, or other party acting on behalf of or under the auspices of
a governmental official or Governmental Entity, in the United States or any
other country, which is in any manner related to the business or operations of
the Company or any of its subsidiaries, that was illegal under any federal,
state or local laws of the United States or any other country having
jurisdiction; or (c) made any payment to any customer or supplier of the
Company or any of its subsidiaries or any officer, director, partner, employee
or agent of any such customer or supplier for the unlawful sharing of fees or
to any such customer or supplier or any such officer, director, partner,
employee or agent for the unlawful rebating of charges, or engaged in any other
unlawful reciprocal practice, or made any other unlawful payment or given any
other unlawful consideration to any such customer or supplier or
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any such officer, director, partner, employee or agent, in respect of the
business of the Company and its subsidiaries.
SECTION 2.22 [Reserved]
SECTION 2.23 Customers and Suppliers. Neither the Company
nor any of its subsidiaries has received written notice that any customer or
supplier intends to cancel, terminate or otherwise modify any relationship with
the Company, or any of its subsidiaries, which constitutes a Material Adverse
Effect.
SECTION 2.24 Insurance. The Company and its subsidiaries
have obtained and maintained in full force and effect insurance with
responsible and reputable insurance companies or associations in such amounts,
on such terms, with such deductibles and covering such risks, including fire
and other risks insured against by extended coverage, as is customarily carried
by reasonably prudent Persons conducting businesses or owning assets similar to
those of the Company and its subsidiaries, and each has maintained in full
force and effect liability insurance against claims for personal injury or
death or property damage occurring in connection with the activities of the
Company and its subsidiaries or any properties owned, occupied or controlled by
the Company or any of its subsidiaries in such amount as is customarily carried
by reasonably prudent Persons conducting businesses or owning assets similar to
those of the Company and its subsidiaries. There is no material default with
respect to any provision contained in any such policy or binder, nor has the
Company or any of its subsidiaries failed to give any material notice or to
present any material claim under any such policy or binders in due and timely
fashion. There are no billed but unpaid premiums past due under any such policy
or binder, the failure of which to be paid would result in the cancellation of
such policy or binder. Except as otherwise set forth in the Company SEC
Documents or in Section 2.24 of the Company Disclosure Schedule, (a) there are
no outstanding claims in excess of normal retentions that are not covered under
any such policies or binders and, to the Knowledge of the Company, there has
not occurred any event that might reasonably form the basis of any claim in
excess of normal retentions that is not covered against or relating to the
Company or any of its subsidiaries that is not covered by any of such policies
and binders; (b) no notice of cancellation or non-renewal of any such policies
or binders has been received; and (c), except as set forth in Section 2.24 of
the Company Disclosure Schedule, there are no performance bonds outstanding
with respect to the Company or any of its subsidiaries.
SECTION 2.25 Vote Required. The only vote of the holders of
any class or series of capital stock of the Company necessary to approve this
Agreement and the Transactions is the affirmative vote of the holders of a
majority of the outstanding Shares.
SECTION 2.26 Stock Retention and Voting Agreements. The
individuals set forth on Schedule 2.26(a) to the Company Disclosure Schedule
have, on the date hereof, entered into the Management Voting Agreement,
pursuant to which such shareholders will retain stock or options in the
Surviving Corporation as set forth in Section 1.07(c). The Company shall use
all
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reasonable efforts to cause certain employees listed in Section 2.26(b) of the
Company Disclosure Schedule to execute the Management Voting Agreement,
pursuant to which such employees will agree to vote the Shares beneficially
owned by such employees in favor of the Merger and the Transactions. Certain
shareholders of the Company have, on or prior to the date hereof, entered into
voting agreements with the Purchaser, substantially in the form as set forth as
Exhibit C-1 attached hereto (the "Voting Agreements"). The Company shall not
enter into any stockholders or voting agreement without the prior consent of
Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as
follows:
SECTION 3.01 Organization and Qualification. Purchaser is
(a) duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the requisite power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted and (c) is in good standing and duly qualified to do business
in each jurisdiction in which the transaction of its business makes such
qualification necessary, except where the failure to be so organized, existing,
qualified and in good standing or to have such power or authority would not
materially restrict or prevent the consummation of the Transaction.
SECTION 3.02 Authorization and Validity of Agreement.
Purchaser has the requisite power and authority to execute and deliver this
Agreement and to consummate the transactions in accordance with the terms
hereof. The Board of Directors and Shareholders of Purchaser have duly
authorized the execution, delivery and performance of this Agreement by
Purchaser, and no other action or other proceedings on the part of Purchaser is
necessary to authorize this Agreement or the Transactions. This Agreement has
been duly and validly executed and delivered by Purchaser and, assuming this
Agreement constitutes the legal, valid and binding obligation of the Company,
constitutes the legal, valid and binding obligation of Purchaser, enforceable
against such Purchaser in accordance with its terms, except as enforcement
thereof may be limited by any bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
SECTION 3.03 Consents and Approvals. Neither the execution
and delivery of this Agreement by Purchaser nor the performance of this
Agreement by Purchaser or the consummation by Purchaser of the Transactions
will require on the part of Purchaser or any of its affiliates any consent,
approval, authorization or permit of, or filing with, or notification to, any
governmental or regulatory authority, except (a) in connection with the
applicable requirements of the HSR Act, (b) pursuant to the applicable
requirements of the Securities Act and the SEC's rules and regulations
promulgated thereunder, the Exchange Act and the SEC's
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rules and regulations promulgated thereunder and state takeover laws, (c) the
filing and recordation of the Certificate of Merger pursuant to Delaware Law,
(d) as set forth in Section 3.03 of Purchaser's disclosure schedule delivered
to the Company in connection with this Agreement (the "Purchaser Disclosure
Schedule") or (e) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not
restrict or prevent the consummation of the Transactions.
SECTION 3.04 No Violation. Except as set forth in Section
3.04 of the Purchaser Disclosure Schedule, neither the execution and delivery
of this Agreement by Purchaser nor the performance of this Agreement by
Purchaser or the consummation by Purchaser of the Transactions will (a)
conflict with or violate the Certificate of Incorporation or the By-Laws of
Purchaser, (b) result in a violation or breach of, constitute a default (with
or without notice or lapse of time, or both) under, give rise to any right of
termination, cancellation or acceleration of, or result in the imposition of
any lien, charge or other encumbrance on any assets or property of Purchaser
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Purchaser
is a party or by which Purchaser or any of its assets or properties are bound,
except for such violations, breaches and defaults (or rights of termination,
cancellation or acceleration or lien or other charge or encumbrance) as to
which consents have been obtained or which would not, individually or in the
aggregate, materially restrict or prevent the consummation of the transactions
contemplated hereby or (c) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in Section 3.03 and this
Section 3.04 are duly and timely obtained or made, conflict with or violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Purchaser, except for such violations which would not, individually or in the
aggregate, materially restrict or prevent the consummation of the Transactions.
SECTION 3.05 Disclosure Documents. No information supplied
by or on behalf of Purchaser specifically for inclusion in the Company
Statement or the Schedule 13E-3 will, at the respective times filed with the
SEC, or at any time thereafter when the information included therein is
required to be updated pursuant to applicable law, or, in the case of the
Company Statement, at the date mailed to the Company's shareholders and at the
time of the Shareholders' Meeting, contain any untrue statement of a material
act or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Schedule 13E-3
will, when filed by Purchaser with the SEC, comply as to form in all material
respects with the provisions of the Exchange Act and the SEC's rules and
regulations promulgated thereunder.
SECTION 3.06 Financing. (a) At the Closing, Purchaser will
have available $22,500,000 for purposes of consummating the Closing (the
"Equity Financing"), reduced by an amount equal to the sum of (i) the number of
Shares retained by management pursuant to the Management Voting Agreement
multiplied by the Per Share Amount and (ii) the number of
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Options retained by management pursuant to the Management Voting Agreement
multiplied by the excess of the Per Share Amount over the exercise price of
such Options.
(b) Purchaser has provided the Company with complete and
correct copies of a letter from Donaldson, Lufkin & Jenrette Securities
Corporation pursuant to which it has indicated that it is highly confident of
its ability to underwrite in the public markets, senior notes of the Company in
an aggregate amount of at least $75,000,000 to finance the Transactions. The
financing to be provided pursuant to the foregoing arrangements is hereinafter
referred to as the "Debt Financing". As of the date hereof, the highly
confident letter relating to the Debt Financing has not been withdrawn.
ARTICLE IV
COVENANTS
SECTION 4.01 Conduct of the Business of the Company Pending
the Merger. From the date hereof until the Effective Time, the Company shall
conduct the business of the Company and each of its subsidiaries in all
material respects only in the ordinary course consistent with past practice,
shall use all reasonable efforts to preserve intact the business organization
of the Company and its subsidiaries and keep available the services of their
respective present key officers and employees (provided, however, that to
satisfy the foregoing obligation, the Company shall not be required to make any
payments or enter into or amend any contractual arrangements or understandings,
except in the ordinary course of business consistent with past practice) and
shall use all reasonable efforts to preserve the current relationships of the
Company and each of its subsidiaries with customers and suppliers with which
the Company or such subsidiary has significant business relations and, except
as otherwise required by applicable law or as set forth in Section 4.01 of the
Company Disclosure Schedule, the Company shall not, without the prior consent
of Purchaser:
(a) amend its Certificate of Incorporation or By-Laws;
(b) declare, set aside or pay any dividend or other
distribution or payment in cash, stock or property in respect of its capital
stock, and not reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock (other than
pursuant to the Transactions);
(c) issue, grant, sell, dispose of, encumber or pledge or
agree to or authorize the issuance, grant, sale, disposition, encumbrance of or
pledge of any shares of, or rights of any kind to acquire any shares of, the
capital stock of any class of or any other ownership interest in the Company or
any of its subsidiaries (other than pursuant to the Transactions);
(d) acquire, sell, transfer, lease or encumber any
material assets (including, without limitation any Lease) except in the
ordinary course of business and consistent with past practice nor shall it
permit its subsidiaries to do any of the foregoing under this clause (d);
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(e) adopt a plan of complete or partial liquidation or
adopt resolutions providing for the complete or partial liquidation,
dissolution, consolidation, merger, restructuring or recapitalization of the
Company or any of its subsidiaries;
(f) grant any severance or termination pay to, or enter
into any employment agreement with, any executive officer or director of the
Company or any of its subsidiaries, other than in the ordinary course of
business and consistent with past practice;
(g) except in the ordinary course of business and
consistent with past practice, increase the compensation payable or to become
payable to its or its subsidiaries' officers or employees, enter into any
contract or other binding commitment in respect of any such increase (other
than pursuant to a Benefit Plan or policy or agreement existing as of the date
hereof) to, or enter into any severance agreement with any director, executive
officer or other employee of the Company or any of its subsidiaries or
establish, adopt, enter into, make any new grants or awards under or amend, any
Benefit Plan, except as required by applicable law, to maintain tax-qualified
status or as may be required by any Benefit Plan as of the date hereof;
(h) settle or compromise any material claims or
litigation or, except in the ordinary course of business and consistent with
past practice, modify, amend or terminate any Material Contracts or waive,
release or assign any material rights or claims, or make any payment, direct or
indirect, of any material liability of the Company or any of its subsidiaries
before the same becomes due and payable in accordance with its terms;
(i) take any action, other than in the ordinary course of
business and consistent with past practice, with respect to accounting policies
or procedures (including tax accounting policies and procedures); except as may
be required by law or generally accepted accounting principles;
(j) make any Tax election or permit any material
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated without prior notice to Purchaser, except in the
ordinary course of business and consistent with past practice;
(k) with respect to the Company or any of its
subsidiaries, (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership,
other business organization or any division thereof or any material amount of
assets; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any loans or
advances, except in the ordinary course of business and consistent with past
practice; (iii) enter into any contract or agreement other than in the ordinary
course of business and consistent with past practice (provided, that nothing
contained in the Section 4.01 shall limit the Company's ability to negotiate or
enter into an agreement with a certain potential customer of the Company on
terms substantially similar to
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those previously outlined by the Company to Purchaser during the due diligence
process); or (iv) except in accordance with the Company's approved capital
budget, attached hereto as Exhibit 4.01(k)(iv), authorize any single capital
expenditure which is in excess of $50,000 or capital expenditures which are, in
the aggregate, in excess of $250,000 for the Company and its subsidiaries,
taken as a whole;
(l) waive, modify, amend, terminate or surrender any
Lease or exercise any option under any Lease or extend or renew any Lease, or
(m) authorize or enter into an agreement to do any of the
foregoing.
SECTION 4.02 Access; Confidentiality. (a) From the date of
this Agreement until the Effective Time, upon reasonable prior notice to the
Company, the Company shall give Purchaser and its authorized representatives,
and Persons providing or committing to provide financing for the Transactions
and their representatives, reasonable access to its and its subsidiaries'
officers, properties, books and records including, but not limited to, the
right to conduct environmental sampling, testing or analysis, and shall furnish
Purchaser and each of its authorized representatives with such financial and
operating data and other information concerning the business and properties of
the Company and its subsidiaries as Purchaser from time to time may reasonably
request.
(b) Purchaser will hold and will cause its affiliates,
agents and other representatives to keep all documents and information
concerning the Company furnished to Purchaser or its representatives in
connection with the Transactions confidential in accordance with a
confidentiality agreement dated June 26, 1997, between the Company and a
representative of Purchaser, which confidentiality agreement shall remain in
full force and effect in accordance with its terms.
SECTION 4.03 Preparation of Company Statement; Shareholders'
Meeting; Further Actions. (a) The Company shall file the Company Statement
with the SEC. Purchaser shall cooperate with the Company in connection with
the preparation of the Company Statement including, but not limited to,
furnishing to the Company any and all information regarding Purchaser and any
of its affiliates as may be required to be disclosed therein. The Company
shall use its commercially reasonable efforts to cause the Company Statement to
be mailed to the Company's shareholders as promptly as practicable after the
date hereof.
(b) The Company shall as promptly as practicable notify
Purchaser of the receipt of any comments from the SEC regarding the
Transactions. All filings by the Company with the SEC and all mailings to the
Company's shareholders in connection with the Transactions, including the
Company Statement, shall be subject to the prior review, comment and approval
of Purchaser (such approval not to be unreasonably withheld or delayed).
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(c) 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 for the purpose of considering and taking action on this
Agreement and the Merger (the "Shareholders' Meeting") and (ii) subject to its
fiduciary duties under applicable law as advised in writing by outside counsel,
(A) include in the Company Statement the recommendation of the Board that the
shareholders of the Company approve and adopt this Agreement and the Merger and
(B) use its best efforts to obtain such approval and adoption. At the
Shareholders' Meeting, Purchaser shall cause all Shares then owned by it to be
voted in favor of the approval and adoption of this Agreement and the Merger.
(d) Subject to the terms and conditions of this Agreement
and applicable law, each of the parties shall act in good faith and use
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the Transactions as soon as practicable,
including such actions or things as any other party may reasonably request in
order to cause any of the conditions to such other party's obligation to
consummate the Transactions to be fully satisfied. Without limiting the
foregoing, the parties shall (and shall cause their respective subsidiaries,
and use commercially reasonable efforts to cause their respective affiliates,
directors, officers, employees, agents, attorneys, accountants and
representatives, to) consult and fully cooperate with and provide assistance to
each other in (i) obtaining all necessary consents, approvals, waivers,
licenses, permits, authorizations, registrations, qualifications, or other
permission or action by, and giving all necessary notices to and making all
necessary filings with and applications and submissions to any court,
administrative agency or commission or other governmental authority, or
instrumentality, domestic or foreign (collectively, "Governmental Entity") or
other Person or entity as soon as reasonably practicable after filing; (ii)
making promptly its respective filings, and thereafter making any other
required submissions, under, seeking early termination of any waiting period
under, the HSR Act; (iii) providing all such information concerning such party,
its subsidiaries and its officers, directors and affiliates and making all
applications and filings as may be necessary or reasonably requested in
connection with any of the foregoing; (iv) consummating and making effective
the transactions contemplated hereby; and (v) in the event and to the extent
required, amending this Agreement so that this Agreement and the Merger comply
with Delaware Law. Prior to making any application to or filing with any
Governmental Entity or other Person or entity in connection with this Agreement
(other than filing under the HSR Act), each party shall provide the other party
with drafts thereof and afford the other party a reasonable opportunity to
comment on such drafts. If at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use
their commercially reasonable efforts to take all such action.
SECTION 4.04 Public Announcements. The Company and Purchaser
will obtain the written consent of one another prior to issuing any press
release or otherwise making any public statements with respect to the
Transactions and shall not issue any such press release
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or make any public statement prior to obtaining such consent, except as may be
required by applicable law or pursuant to the rules and regulations of the
NASDAQ National Market (in which case the party making such release or
announcement will provide prior notice thereof to the other party).
SECTION 4.05 Recapitalization. The Company shall cooperate
with any reasonable requests of Purchaser or the SEC related to the reporting
of the Transactions as a recapitalization for financial reporting purposes
including, without limitation, to assist Purchaser and its affiliates with any
presentation to the SEC with regard to such reporting and to include
appropriate disclosure with regard to such reporting in all filings with the
SEC and mailings to the shareholders of the Company made in connection with the
Merger. In furtherance of the foregoing, the Company shall provide to Purchaser
for the prior review of Purchaser's advisors any description of the
Transactions which is meant to be disseminated.
SECTION 4.06 Acquisition Proposals. Neither the Company nor
any of its subsidiaries shall, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the making of any
proposal or offer from any Person relating to any acquisition or purchase of
all or (other than in the ordinary course of business and not likely to
interfere with the consummation of the Transactions) any portion of the assets
of, or any equity interest in, the Company or any of its subsidiaries or any
recapitalization, business combination, consolidation, merger, liquidation,
dissolution or similar transaction with the Company or any of its subsidiaries
or any other transaction the consummation of which would or could reasonably be
expected to impede, interfere with, prevent or materially delay the Merger or
which would or could reasonably be expected to materially dilute the benefits
to Purchaser of the Transactions (any communication with respect to the
foregoing being an "Acquisition Proposal") or participate in any negotiations
regarding, or furnish to any other Person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to do or seek any of the
foregoing; provided, however, that the Company may furnish information to
(subject, in each case, to receipt by the Company of a confidentiality
agreement on terms substantially similar to the agreement referred to in
Section 4.02(b)), and negotiate or otherwise engage in discussions with, any
party who delivers a written Acquisition Proposal which was not solicited or
encouraged after the date of this Agreement if the Board reasonably determines
in good faith by a majority vote (i) after consultation with and receipt of
advice from its outside legal counsel, that failing to take such action is
reasonably determined to constitute a breach of the fiduciary duties of the
Board under applicable Law, (ii) after consultation with and receipt of advice
from a recognized investment banking firm, that such proposal is more favorable
to the Company's shareholders from a financial point of view than the
Transactions (including any adjustment to the terms and conditions proposed by
Purchaser in response to such Acquisition Proposal), (iii) that sufficient
commitments have been obtained with respect to such Acquisition Proposal that
the Board reasonably expects a transaction pursuant to such Acquisition
Proposal could be consummated and (iv) that such Acquisition Proposal is not
subject to any regulatory approvals or other legal, financial or other
restrictions that could reasonably be expected to prevent consummation. The
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Company will immediately cease all existing activities, discussions and
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. From and after the execution of this Agreement, the
Company shall immediately advise Purchaser orally and in writing of the
receipt, directly or indirectly, of any inquiries, discussions, negotiations,
or proposals relating to any Acquisition Proposal (including the specific terms
thereof and the identity of the other party or parties involved) and furnish to
Purchaser within 24 hours of such receipt an accurate description of all
material terms (including any changes or adjustments to such terms as a result
of negotiations or otherwise) of any such proposal in addition to any
information provided to any third party relating thereto. In addition, the
Company shall immediately advise Purchaser, in writing, if the Board shall make
any determination as to any Acquisition Proposal as contemplated by the proviso
to the first sentence of this Section 4.06. Notwithstanding the foregoing, the
Company shall be permitted to take such actions as may be required to comply
with Rule 14e-2 of the Exchange Act.
SECTION 4.07 D&O Indemnification. (a) From the Effective
Time through the sixth anniversary of the date on which the Effective Time
occurs, Purchaser shall cause the Surviving Corporation to indemnify and hold
harmless each present and former officer and director of the Company (the
"Indemnified Parties"), against all claims, losses, liabilities, damages,
judgments, fines, fees, costs or expenses, including, without limitation,
attorneys' fees and disbursements (collectively, "Costs"), incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time (including,
without limitation, this Agreement and the transactions and actions
contemplated hereby and giving effect to the consummation of such transactions
and actions), whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent permitted under the Certificate of Incorporation or
By-Laws of the Company as in effect on the date hereof, including provisions
relating to advancement of expenses incurred in the defense of any claim,
action, suit, proceeding or investigation. Without limiting the foregoing, in
the event that any claim, action, suit, proceeding or investigation is brought
against an Indemnified Party (whether arising before or after the Effective
Time), the Indemnified Party may retain counsel satisfactory to such
Indemnified Party and reasonably satisfactory to Purchaser and Purchaser shall,
or shall cause the Surviving Corporation to, advance the fees and expenses of
such counsel for the Indemnified Party in accordance with the Certificate of
Incorporation or By-Laws of the Company in effect on the date of this
Agreement.
(b) [Reserved]
(c) Notwithstanding anything herein to the contrary, if
any claim, action, suit, proceeding or investigation (whether arising before,
at or after the Effective Time) is made against any Indemnified Party, on or
prior to the sixth anniversary of the Effective Time, the provisions of this
Section 4.07 shall continue in effect until the final disposition of such
claim, action, suit, proceeding or investigation.
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(d) In the event that the Surviving Corporation or any of
its 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 or conveys all or substantially all
of its properties and assets to any Person, then, and in each such case, to the
extent necessary to effectuate the purposes of this Section 4.07, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation shall succeed to the obligations set forth in this Section 4.07.
SECTION 4.08 Fees and Expenses. (a) In the event the Merger
is consummated, all costs and expenses incurred by each party hereto in
connection with this Agreement and the Transactions (including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants) which, in the case of the Company, shall not exceed $1,750,000,
and in the case of Purchaser shall not exceed $1,750,000, shall be paid by the
Surviving Corporation or the Surviving Corporation shall promptly reimburse
such party, as the case may be.
(b) Notwithstanding anything contained herein to the
contrary, in the event the Fee is required to be paid by the Company to
Purchaser pursuant to Section 6.03, the Company shall simultaneously reimburse
Purchaser for all costs and expenses incurred by Purchaser in connection with
this Agreement and the Transactions (including, without limitation, fees and
disbursements of counsel, financial advisors and accountants) in an amount not
to exceed $1,750,000.
(c) In all events other than those expressly described in
Section 4.08(a) and (b), all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby (including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants) shall be borne by the party which incurs such cost or expense,
provided that all costs and expenses related to the preparation, printing,
filing and mailing (as applicable) of the Schedule 13E-3, the Company Statement
and all SEC and other regulatory filing fees incurred in connection with the
Company Statement shall be borne equally by the Company, on the one hand, and
Purchaser, on the other hand (subject, in the case of Purchaser, to
reimbursement to the extent provided in Section 4.08(b)).
SECTION 4.09 Debt Financing. (a) Purchaser shall use its
reasonable best efforts to assist the Company in obtaining the Debt Financing
or other alternative financing on substantially comparable or more favorable
terms. The Company shall use its reasonable best efforts to cooperate with
Purchaser in the obtaining of the Debt Financing, including, without
limitation, by participating in road shows and meeting with, and providing
information to, potential sources of financing identified by Purchaser.
(b) The Company shall use its reasonable best efforts to
obtain a revolving credit commitment (the "Revolver") from NationsBank, the
terms of which shall be substantially similar to those in the term sheet
previously forwarded to Purchaser.
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SECTION 4.10 Preferred Stock. Provided that Purchaser shall
have provided to the Company reasonably in advance of the first mailing to
stockholders of the Company Statement the terms of the Mirror Preferred Stock,
then, prior to the Effective Time, the Board of Directors of the Company shall
take all necessary action to establish the terms of the Mirror Preferred Stock
and file the certificate of designation with respect thereto with the Delaware
Secretary of State, all in accordance with the applicable provisions of
Delaware Law. The "Mirror Preferred Stock" shall be Preferred Stock of the
Company, the terms of and certificate of designations of which shall be
identical in all respects (except the name of the Company) to the terms of the
Preferred Stock of the Purchaser and the certificate of designations therefor
in effect immediately prior to the Effective Time.
SECTION 4.11 Schedule 13-E. As soon as practicable after the
date of announcement of the execution of the Agreement, Purchaser shall file
(separately, or as part of the Company Proxy Statement) with the SEC, the
Schedule 13E-3. Purchaser and the Company each agree to correct any
information provided by it for use in the Schedule 13-E if and to the extent
that it shall have become false or misleading in any material respect.
Purchaser and the Company further agree to take all steps necessary to cause
the Schedule 13-E as so corrected to be filed with the SEC and 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 an opportunity to review and comment on the Schedule 13-E prior to its
being filed with the SEC.
SECTION 4.12 Certain Filings. The Company and Purchaser
shall use their respective reasonable best efforts to take or cause to be
taken, (i) actions necessary, proper or advisable by such party with respect to
the prompt preparation and filing with the SEC of a Form S-4 registration
statement (the "Registration Statement") if necessary, the Company Statement
and the Schedule 13-E, (ii) such actions as may be required to have the
Registration Statement declared effective if necessary under the Securities
Act and to have the Company Statement cleared by the SEC, in each case as
promptly as practicable, and (iii) such actions as may be required to have to
be taken under state securities or applicable Blue Sky laws in connection with
the issuance of the securities contemplated hereby.
ARTICLE V
CONDITIONS
SECTION 5.01 Conditions to the Merger. (a) 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:
(i) Shareholder Approval. This Agreement and the
Transactions shall have been approved and adopted by the
affirmative vote of the
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shareholders of the Company to the extent required by Delaware
Law and the Certificate of Incorporation of the Company;
(ii) No Order. No United States or state governmental
authority or other agency or commission or United States or
state court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any law, rule,
regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which has the
effect of making the acquisition of Shares or the Mirror
Preferred by Purchaser or any affiliate illegal or otherwise
restricting, preventing or prohibiting consummation of the
Transactions;
(iii) HSR Act. Any applicable waiting period under the
HSR Act relating to the Transactions shall have expired; and
(iv) Consents. All consents, approvals and licenses of
any governmental or other regulatory body required in
connection with the execution, delivery and performance of
this Agreement and for the Surviving Corporation to conduct
the business of the Company in substantially the manner now
conducted, shall have been obtained, unless the failure to
obtain such consents, authorizations, orders or approvals
would not constitute a Material Adverse Effect after giving
effect to the Transactions (including the Debt Financing); and
(v) Registration Statement. If necessary, the
Registration Statement shall have been declared effective and
no stop order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such
purpose shall be pending before or threatened by the SEC.
(vi) Debt Financing. The Debt Financing shall have been
obtained.
(b) The obligation of the Company to effect the Merger is
also subject to the satisfaction at or prior to the Effective Time of each of
the following additional conditions, unless waived by the Company:
(i) Accuracy of Representations and Warranties. All
representations and warranties made by Purchaser herein shall
be true and correct in all material respects (except for
representations qualified by materiality or Material Adverse
Effect which shall be correct in all respects) at the Effective
Time, with the same force and effect as though such
representations and warranties had been made on and as of the
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Effective Time, except for changes permitted or contemplated by
this Agreement and except for representations and warranties
that are made as of a specified date or time, which shall be
true and correct in all material respects (except for
representations qualified by materiality or Material Adverse
Effect which shall be correct in all respects) only as of such
specific date or time.
(ii) Compliance with Covenants. Purchaser shall have
performed in all material respects all obligations and
agreements, and complied in all material respects with
covenants, contained in this Agreement to be performed or
complied with by it prior to or as of the Effective Time.
(iii) Officer's Certificates. The Company shall have
received such certificates of Purchaser, dated as of the
Effective Time, signed by an executive officer of Purchaser to
evidence satisfaction of the conditions set forth in this
Article V (insofar as it relates to Purchaser) as may be
reasonably requested by the Company.
(c) The obligation of Purchaser to effect the Merger is
also subject to the satisfaction at or prior to the Effective Time of each of
the following additional conditions, unless waived by Purchaser:
(i) Accuracy of Representations and Warranties. All
representations and warranties made by the Company herein, and
made by each party (other than the Purchaser or its
affiliates) in the Voting Agreements and the Management Voting
Agreement, shall be true and correct in all material respects
(except for representations qualified by materiality or
Material Adverse Effect which shall be correct in all
respects) as of the Effective Time, with the same force and
effect as though such representations and warranties had been
made on and as of the Effective Time, except for changes
permitted or contemplated by this Agreement and except for
representations and warranties that are made as of a specified
date or time, which shall be true and correct in all material
respects (except for representations qualified by materiality
or Material Adverse Effect which shall be correct in all
respects) only as of such specific date or time.
(ii) Compliance with Covenants. The Company shall have
performed in all material respects all obligations and
agreements, and complied in all material respects with
covenants, contained in this Agreement to be performed or
complied with by it prior to or as of the Effective Time.
Each party (other than the Purchaser or its affiliates) shall
have performed in all material respects all obligations and
agreements, and
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complied in all material respects with covenants, contained in
the Voting Agreements and the Management Voting Agreement to
be performed or complied with by each such party to or as of
the Effective Time.
(iii) Officer's Certificates. Purchaser shall have
received such certificates of the Company, dated as of the
Effective Time, signed by an executive officer of the Company
to evidence satisfaction of the conditions set forth in this
Article V (insofar as it relates to the Company) as may be
reasonably requested by the Company.
(iv) Directors Resignations. All Directors of the
Company other than Carl V. Rush, Jr. shall have tendered
their resignations effective as of the Effective Time and
shall have been replaced by nominees acceptable to Purchaser.
(v) The Funded Debt of the Company and its
Subsidiaries determined on a consolidated basis in accordance
with GAAP shall not exceed $35.6 million.
(vi) The Revolver shall be in full force and effect
with adequate availability thereunder.
(vii) There shall not be instituted or pending (x) any
action or proceeding by any Governmental Entity or (y) any
action or proceeding by any other Person, in any case referred
to in clauses (x) and (y), before any court or Governmental
Entity that has reasonable likelihood of success
notwithstanding the reasonable efforts of the Company and
Purchaser to dismiss or otherwise terminate such action or
proceeding (i) challenging or seeking to make illegal, to
delay materially or otherwise directly or indirectly to
restrain or prohibit the consummation of the Merger or seeking
to obtain material damages or otherwise directly or indirectly
relating to the Transactions, (ii) seeking to restrain or
prohibit Purchaser's (including its Subsidiaries and
affiliates) ownership or operation of all or any material
portion of the business or assets of the Company and its
Subsidiaries, taken as a whole, or to compel Purchaser or any
of its Subsidiaries or affiliates to dispose of or hold
separate all or any material portion of the business or assets
of the Company and its Subsidiaries, taken as a whole, (iii)
seeking to impose or confirm material limitations on the
ability of Purchaser or any of its Subsidiaries or affiliates
to effectively control the business or operations of the
Company and its Subsidiaries, taken as a whole, or effectively
to exercise full rights of ownership of the Shares or Mirror
Preferred Stock, including, without limitation, the right to
vote any Shares or Mirror Preferred Stock acquired or owned by
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Purchaser or any of its Subsidiaries or affiliates on all
matters properly presented to the Company's stockholders, or
(iv) seeking to require divestiture by Purchaser or any of its
Subsidiaries or affiliates of any Shares or Mirror Preferred
Stock, and no court, arbitrator or governmental body, agency
or official shall have issued any judgment, order, decree or
injunction, and there shall not be any statute, rule or
regulation, that, in the sole judgment of Purchaser is likely,
directly or indirectly, to result in any of the consequences
referred to in the preceding clauses (i) through (iv);
(viii) The Rollover Shareholders shall have executed a
stockholders agreement (the "Stockholders Agreement") in form
and substance acceptable to Purchaser.
(ix) The holders of not more than 10% of the
outstanding Shares shall have demanded appraisal of their
Shares in accordance with Delaware Law;
(x) Purchaser shall be reasonably satisfied that the
Merger will be recorded as a "recapitalization" for financial
reporting purposes;
(xi) The certificate of designation for the Mirror
Preferred Stock shall have been accepted for filing by the
Delaware Secretary of State;
(xii) There will be no more than 7,871,875 shares
outstanding, on a fully diluted basis (including, without
limitation all Options, Warrants or any other ownership
interest in the Company); and
(xiii) The Warrant obligations shall have been fully
satisfied and the Warrants shall have been canceled in
accordance with the terms of said Warrants.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
SECTION 6.01 Termination. This Agreement may be terminated
and the Transactions may be abandoned at any time prior to the Effective Time,
as the case may be, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions by the shareholders of the Company:
(a) by mutual written consent duly authorized by the
Board of Directors of each of Purchaser and the Company; or
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<PAGE> 45
(b) by Purchaser or the Company if (i) the Effective Time
shall not have occurred on or before July 31, 1998; provided, however, that the
right to terminate this Agreement under this Section 6.01(b) 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 the Effective
Time to occur on or before such date or (ii) any United States or state
governmental authority or other agency or commission or United States or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) which
has the effect of making the acquisition of Shares or Mirror Preferred by
Purchaser or any affiliate illegal or otherwise restricting, preventing or
prohibiting consummation of the Transactions; or
(c) by either the Company or Purchaser, if Purchaser (in
the case of termination by the Company), or the Company (in the case of
termination by Purchaser) shall have breached in any material respect any of
its obligations under this Agreement or any representation and warranty of
Purchaser (in the case of termination by the Company) or the Company (in the
case of termination by Purchaser) shall have been incorrect in any material
respect when made or at any time prior to the Effective Time;
(d) by Purchaser if the Board of Directors of the Company
shall have withdrawn or modified or amended, in a manner adverse to Purchaser,
its approval or recommendation of this Agreement, the Merger or the
Transactions or its recommendation that stockholders of the Company adopt and
approve this Agreement and the Merger, or approved, recommended or endorsed any
proposal for another transaction pursuant to any Acquisition Proposal, or shall
have resolved to do any of the foregoing, or if the Company has failed to call
the Company Stockholders Meeting or taken any action indicating it will not
hold such meeting or failed as promptly as practicable after the Registration
Statement is declared effective if necessary to mail the Company Statement to
its stockholders or failed to include in such statement the recommendation
referred to above;
(e) by the Company, upon approval of the Board, if prior
to the Effective Time the Board of Directors of the Company shall have
withdrawn or modified or amended, in a manner adverse to Purchaser, its
approval or recommendation of this Agreement and the Merger or its
recommendation that stockholders of the Company adopt and approve this
Agreement, the Merger or the Transactions in order to permit the Company to
execute a definitive agreement concerning a transaction pursuant to an
Acquisition Proposal so long as the Board of Directors of the Company, after
consultation with and receipt of advice from its outside legal counsel,
determines in good faith that the failure to take such action will constitute a
breach of the fiduciary duties of the Board of Directors of the Company under
applicable laws, and provided that the Company shall be in compliance with
Section 4.06;
(f) by either the Company or Purchaser if, at a duly held
stockholders meeting of the Company or any adjournment thereof at which this
Agreement and the Merger is voted upon, the requisite stockholder adoption and
approval shall not have been obtained.
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The party desiring to terminate this Agreement pursuant to Sections
6.01(b)-(f) shall give written notice of such termination to the other party in
accordance with Section 7.02.
SECTION 6.02 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 6.01, this Agreement shall
forthwith become void, and there shall be no liability on the part of any party
hereto, except (i) as set forth in Sections 4.02(b), 6.03 and 7.01 and this
Section 6.02 and (ii) nothing herein shall relieve any party from liability for
any breach hereof.
SECTION 6.03 Fees. Notwithstanding the provisions of Section
4.08, in the event that:
(a) this Agreement shall have been terminated pursuant to
Section 6.01(f) and within 12 months of any such termination the Company shall
have entered into definitive documentation or consummated an agreement with
respect to any Acquisition Proposal (whether received prior to or following
such termination);
(b) this Agreement is terminated pursuant to Section 6.01
(d) or 6.01(e), or
(c) this Agreement (i) is terminated pursuant to Section
6.01(b)(i), or Section 6.01(c) (in the case of a termination by Purchaser) and
(ii) within 12 months of any such termination the Company shall have entered
into definitive documentation or consummated an agreement with respect to any
Acquisition Proposal (whether received prior to or following such termination);
then, in any such event, the Company shall pay Purchaser (i) prior to such
consummation or entering into of definitive documentation in the case of
paragraph (a), (ii) prior to such withdrawal or modification in the case of
termination pursuant to the Sections referred to in paragraph (b) or (iii)
prior to the consummation of any such Acquisition Proposal in the case of
paragraph (c), a fee of $4,000,000 (the "Fee").
(d) Upon the termination of this Agreement for any reason
other than (i) a termination by either the Company or Purchaser pursuant to
Section 6.01(a), (ii) a termination by the Company pursuant to Section 6.01(c)
or (iii) a termination that follows a failure of the conditions set forth in
Sections 5.01(a)(ii), 5.01(a)(iii), 5.01(b), 5.01(c)(vii), 5.01(c)(viii),
5.01(c)(ix) or 5.01(c)(x) to be satisfied (provided, however, that the failure
to satisfy any such condition shall not have resulted from the breach by the
Company of any obligation under this Agreement or from any representation or
warranty of the Company having been incorrect when made or at any time prior to
the Effective Time), the Company shall reimburse Purchaser and its affiliates
not later than two business days after submission of a demand thereof for 100%
of their costs and expenses incurred in connection with this Agreement and the
Transactions (including, without limitation, fees and disbursements of counsel,
financial advisors and accountants)
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provided that the aggregate amount payable pursuant to this Section 6.03(e)
shall not exceed $1,750,000.
SECTION 6.04 Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after the approval and adoption of this Agreement and the Transactions by the
shareholders of the Company, no amendment may be made which would require
further approval of the stockholders of the Company under applicable law
without such further stockholder approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 6.05 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 the other party contained herein or in
any document delivered pursuant hereto and (iii) waive compliance with any
agreement or condition 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 VII
GENERAL PROVISIONS
SECTION 7.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 6.01, as the case may be, except that the agreements set
forth in Article I and Sections 4.07 and 4.08 shall survive the Effective Time
indefinitely and those set forth in Sections 4.02(b), 6.02 and 6.03 and this
Section 7.01 shall survive termination indefinitely.
SECTION 7.02 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
cable, telecopy, telegram or telex 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 7.02):
if to Purchaser: Green I Acquisition Corp.
c/o 399 Venture Partners, Inc.
399 Park Avenue
New York, New York 10043
Facsimile No.: 212-888-2940
Attention: Joseph M. Silvestri, Vice President
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with a copy to: Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: 212-309-6273
Attention: Philip Werner, Esq.
if to the Company:
The GNI Group, Inc.
2525 Battleground Road
Deer Park, TX 77536
Facsimile No.: 281-930-0355
Attention: President
with a copy to: Bracewell & Patterson, LLP
2900 South Tower Pennzoil Place
700 Louisiana, 7th Floor
Houston, Texas 77002
Facsimile No.: 713-221-1212
Attention: Rick Wittenbraker, Esq.
SECTION 7.03 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;
(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 of 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 consideration rights,
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) "Benefit Plan" means any Plan, existing at the
Effective Time or prior thereto, established or to which contributions have at
any time been made by the Company, any
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of its subsidiaries, any ERISA Affiliate, or any predecessor of any of the
foregoing, or under which any employee, former employee or director of the
Company, any of its subsidiaries or any ERISA Affiliate or any beneficiary
thereof is covered, is eligible for coverage or has benefit rights.
(d) "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;
(e) "Capital Lease" means a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an asset
and the incurrence of a liability in accordance with GAAP.
(f) "Capital Lease Obligation" means, with respect to any
Person and a Capital Lease, the amount of the obligation of such Person as the
lessee under such Capital Lease which would, in accordance with GAAP, appear as
a liability on a balance sheet of such Person.
(g) "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;
(h) "Environment" means all air, surface water,
groundwater, or land, including land surface or subsurface, including all fish,
wildlife, biota and all other natural resources;
(i) "Environmental Claim" means any and all
administrative or judicial actions, suits, orders, claims, liens, notices,
notices of violations, investigations, complaints, requests for information,
proceedings, or other communication (written or oral), whether criminal or
civil, (collectively, "Claims") pursuant to or relating to any applicable
Environmental Law by any person (including but not limited to any Governmental
Entity, private person and citizens' group) based upon, alleging, asserting, or
claiming any actual or potential (i) violation of or liability under any
Environmental Law, (ii) violation of any Environmental Permit, or (iii)
liability for investigatory costs, cleanup costs, removal costs, remedial
costs, response costs, natural resource damages, property damage, personal
injury, fines, or penalties arising out of, based on, resulting from, or
related to the presence, Release, or threatened Release into the Environment,
of any Hazardous Materials at any location, including but not limited to any
off-Site location to which Hazardous Materials or materials containing
Hazardous Materials were sent for handling, storage, treatment, or disposal;
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(j) "Environmental Clean-up Site" means any location
which is listed or proposed for listing on the National Priorities List, the
Comprehensive Environmental Response, Compensation and Liability Information
System, or on any similar state list of sites requiring investigation or
cleanup, or which is the subject of any pending or threatened action, suit,
proceeding, or investigation related to or arising from any alleged violation
of any Environmental Law;
(k) "Environmental Law" means any and all federal, state,
local, provincial and foreign, civil and criminal laws, statutes, ordinances,
orders, codes, rules, regulations, common law, Environmental Permits, policies,
guidance documents, judgments, decrees, injunctions, or agreements with any
Governmental Entity, relating to the protection of health and the Environment,
worker health and safety, and/or governing the handling, use, generation,
treatment, storage, transportation, disposal, manufacture, distribution,
formulation, packaging, labeling, or Release of Hazardous Materials, whether
now existing or subsequently amended or enacted, including but not limited to:
the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601 et seq.; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq.; the Hazardous Material Transportation Act 49 U.S.C.
Section 1801 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act 7
U.S.C. Section 136 et seq.; the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901 et seq.; the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq.; the Occupational Safety & Health Act of 1970,
29 U.S.C. Section 651 et seq.; the Atomic Energy Act of 1954, 42 U.S.C.
Section 2011 et seq; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et
seq.; Safe Drinking Water Act, 42 U.S.C. Section 300f et. seq. and the state
analogies thereto, all as amended or superseded from time to time; and any
common law doctrine, including but not limited to, negligence, nuisance,
trespass, personal injury, or property damage related to or arising out of the
presence, Release, or exposure to a Hazardous Material;
(l) "Environmental Permit" means any federal, state,
local, provincial, or foreign permits, licenses, approvals, consents,
variances, exemptions or authorizations required by any Governmental Entity
under or in connection with any Environmental Law and includes any and all
orders, consent orders or binding agreements issued or entered into by a
Governmental Entity under any applicable Environmental Law;
(m) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations promulgated thereunder;
(n) "ERISA Affiliate" means any Person who is, or at any
time was, a member of a controlled group (within the meaning of Section
412(n)(6) of the Code) that includes, or at any time included, the Company or
any of its subsidiaries, or any predecessor of any of the foregoing;
(o) "Funded Debt" with respect to any Person means, at
any time, without duplication, (a) its liabilities for borrowed money and its
redemption obligations in respect of
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mandatorily redeemable preferred stock; (b) its liabilities for the deferred
purchase price of property acquired by such Person (excluding accounts payable
arising in the Ordinary Course of Business but including all liabilities
created or arising under any conditional sale or other title retention
agreement with respect to any such property); (c) all Capital Lease Obligations
of such Person; (d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not such Person has
assumed or otherwise become liable for such liabilities); (e) all its
liabilities in respect of letters of credit or instruments serving a similar
function issued or accepted for its account by banks and other financial
institutions (whether or not representing obligations for borrowed money); (f)
Swap Obligations of such Person; and (g) any Guaranty of such Person with
respect to liabilities of a type described in any of clauses (a) through (f)
hereof.
(p) "Guaranties" by any Person means all obligations
(other than endorsements in the Ordinary Course of Business of negotiable
instruments for deposit or collection) of such Person guaranteeing, or in
effect guaranteeing, any Funded Debt, cash dividend or other monetary
obligation of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, all obligations incurred
through an agreement, contingent or otherwise, by such Person: (i) to purchase
such Funded Debt or obligation or any property or assets constituting security
therefor; (ii) to advance or supply funds for the purchase or payment of such
Funded Debt or obligation; (iii) to lease property or to purchase securities or
other property or services primarily for the purpose of assuring the owner of
such Funded Debt or obligation of the ability of the primary obligor to make
payment of the Funded Debt or obligation; or (iv) otherwise to assure the owner
of the Debt or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Funded Debt for borrowed money shall be deemed to be
Funded Debt equal to the principal amount of such Funded Debt for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Funded Debt equal
to the maximum aggregate amount of such obligation, liability or dividend
unless such Guaranty is limited.
(q) "Hazardous Material" means petroleum, petroleum
hydrocarbons or petroleum products, petroleum by-products, radioactive
materials, asbestos or asbestos-containing materials, gasoline, diesel fuel,
pesticides, radon, urea formaldehyde, lead or lead-containing materials,
polychlorinated biphenyls; and any other chemicals, materials, substances or
wastes in any amount or concentration which are now or hereafter become defined
as or included in the definition of "hazardous substances," "hazardous
materials," "hazardous wastes," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "pollutants,"
"regulated substances," "solid wastes," or "contaminants" or words of similar
import, under any Environmental Law;
(r) "Knowledge" means the actual knowledge, after due
investigation, of the officers of the Company or any of its subsidiaries
together with the persons listed in Section 7.03(r) of the Company Disclosure
Schedule;
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(s) "Material Adverse Effect" means any change or effect
or any event or circumstance which, individually or when taken together with
all other changes, effects, events or circumstances, is, or could reasonably be
expected to be, materially adverse to the assets, liabilities, business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole;
(t) "Multiemployer Plan" means a multiemployer plan
within the meaning of Section 4001(a)(3) of ERISA with respect to which the
Company or any ERISA Affiliate has an obligation to contribute or has or could
have withdrawal liability under Section 4201 of ERISA.
(u) "Ordinary Course of Business" means the ordinary
course of business consistent with past custom and practice (including with
respect to quantity and frequency).
(v) "Person" means an individual, corporation,
partnership, limited partnership, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association or entity or government, political subdivision, agency or
instrumentality of a government;
(w) "Plan" means any bonus, incentive compensation,
deferred compensation, pension, profit sharing, retirement, stock purchase,
stock option, stock ownership, stock appreciation rights, phantom stock, leave
of absence, layoff, vacation, day or dependent care, legal services, cafeteria,
life, health, accident, disability, workmen's compensation or other insurance,
severance, separation or other employee benefit plan, practice, policy or
arrangement of any kind, whether written or oral, or whether for the benefit of
a single individual or more than one individual including, but not limited to,
any "employee benefit plan" within the meaning of Section 3(3) of ERISA.
(x) "Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing of a Hazardous Material into the Environment;
(y) "generally accepted accounting principles" means
United States generally accepted accounting principles as in effect from time
to time consistently applied.
(z) "Site" means any of the real properties currently or
previously owned, leased or operated by the Company, any subsidiary of the
Company, any predecessors of the Company or any such Subsidiary or any entities
previously owned by the Company or any such Subsidiary, including all soil,
subsoil, surface waters and groundwater thereat; and
(aa) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Purchaser or any other Person means an affiliate
controlled by such person, directly or indirectly, through one or more
intermediaries.
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(bb) "Swap Obligations" means, with respect to any Person,
payment obligations with respect to interest rate swaps, currency swaps and
similar obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For the purposes of this
Agreement, the amount of any Swap Obligation shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap Obligation had terminated
at the end of such fiscal quarter, and in making such determination, if any
agreement relating to such Swap Obligation provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then, in each such
case, the amount of such obligation shall be the net amount so determined.
SECTION 7.04 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, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions 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 7.05 Entire Agreement; Assignment. This Agreement,
the Voting Agreements and the Management Voting Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise, except that
Purchaser may assign all or any of its rights and obligations hereunder to any
affiliate or affiliates of Purchaser provided that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations.
SECTION 7.06 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 Section 4.07 (which is intended to be for
the benefit of the Persons covered thereby and may be enforced by such
Persons).
SECTION 7.07 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
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SECTION 7.08 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any Delaware state or federal court. THE COMPANY AND
PURCHASER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENT (VERBAL OR WRITTEN) OR ACTION OF THE COMPANY OR
PURCHASER.
SECTION 7.09 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 7.10 Counterparts. This Agreement may be executed 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.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, 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.
GREEN I ACQUISITION CORP.
By
---------------------------
Name:
Title:
The GNI Group, Inc.
By
---------------------------
Name:
Title:
[SIGNATURE PAGE TO MERGER AGREEMENT]
