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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):
MAY 6, 1999
INSTRON CORPORATION
(Exact Name of Registrant as Specified in its Charter)
MASSACHUSETTS 001-05641 04-2057203
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
100 ROYALL STREET, CANTON, MASSACHUSETTS 02021
(Address of Principal Executive Offices and Zip Code)
Registrant's telephone number, including area code: (781) 828-2500
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ITEM 5. OTHER EVENTS.
On May 6, 1999, Instron Corporation (the "Company") entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Kirtland Capital
Partners III L.P. ("Kirtland") and ISN Acquisition Corporation, a corporation
newly formed by Kirtland ("MergerCo"), pursuant to which Kirtland and certain
affiliates, together with members of the Company's management and certain
members of the Company's Board of Directors who are also stockholders
(collectively, the "Rollover Stockholders"), will acquire the Company.
Under the Merger Agreement, MergerCo will be merged with and into the
Company with the Company continuing as the surviving corporation (the "Merger").
Pursuant to the Merger, each outstanding share of the Company's common stock
(except for shares held by the Company, its subsidiaries, MergerCo, and those
dissenting stockholders who exercise and perfect their appraisal rights) will be
converted into the right to receive a cash payment of $22.00, without interest.
Certain shares of the Company's common stock held by the Rollover Stockholders
will be converted into shares of stock of the surviving corporation.
The Company's Board of Directors has approved the Merger Agreement and
the transactions contemplated thereby, including the Merger. Consummation of the
transactions, including the Merger, is subject to the approval of the Company's
stockholders, certain regulatory approvals and other conditions.
The foregoing summary of the Merger Agreement and the transactions
contemplated thereby is qualified in its entirety by reference to the Merger
Agreement which is attached hereto as Exhibit 2.1 and is incorporated herein by
reference, and the press release issued by the Company and Kirtland in
connection with the execution of the Merger Agreement which is attached hereto
as Exhibit 99.1 and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(c) Exhibits. The following exhibits are provided in accordance
with the provisions of Item 601 of Regulation S-K and are filed herewith unless
otherwise noted.
EXHIBIT INDEX
*2.1 Agreement and Plan of Merger dated as of May 6, 1999 by and among
Instron Corporation, ISN Acquisition Corporation and Kirtland Capital
Partners III L.P.
99.1 Press Release dated May 7, 1999
*The exhibits and schedules thereto have been omitted but copies thereof will be
furnished supplementally to the Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 12, 1999 INSTRON CORPORATION
By: /s/ Linton A. Moulding
---------------------------
Linton A. Moulding
Chief Financial Officer
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================================================================================
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
KIRTLAND CAPITAL PARTNERS III L.P.,
ISN ACQUISITION CORPORATION
AND
INSTRON CORPORATION
Dated as of May 6, 1999
================================================================================
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TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I
THE MERGER....................................................................................2
1.1 The Merger...........................................................................2
1.2 Effective Time.......................................................................2
1.3 Closing..............................................................................2
1.4 Directors and Officers...............................................................3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS.....................3
2.1 Effect on Capital Stock..............................................................3
2.2 Company Stock Options and Related Matters............................................4
ARTICLE III
PAYMENT FOR SHARES; DISSENTING SHARES.........................................................5
3.1 Payment for Shares of Company Common Stock...........................................5
3.2 Appraisal Rights.....................................................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO.........................................8
4.1 Organization.........................................................................8
4.2 Authorization; Validity of Agreement; Necessary Action...............................8
4.3 Consents and Approvals; No Violations................................................9
4.4 Required Financing...................................................................9
4.5 Takeover Laws.......................................................................10
4.6 Formation of MergerCo; No Prior Activities..........................................10
4.7 Beneficial Ownership................................................................10
4.8 Financial Condition of Parent.......................................................10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................10
</TABLE>
(i)
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<TABLE>
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5.1 Existence; Good Standing; Authority; Compliance With Law............................11
5.2 Authorization, Validity and Effect of Agreements....................................12
5.3 Capitalization......................................................................12
5.4 Subsidiaries........................................................................13
5.5 Other Interests.....................................................................14
5.6 No Violation; Consents..............................................................14
5.7 SEC Documents.......................................................................15
5.8 Litigation..........................................................................15
5.9 Absence of Certain Changes..........................................................15
5.10 Taxes...............................................................................16
5.11 Books and Records...................................................................17
5.12 Properties..........................................................................17
5.13 Intellectual Property...............................................................18
5.14 Environmental Matters...............................................................19
5.15 Employee Benefit Plans..............................................................20
5.16 Labor Matters.......................................................................23
5.17 No Brokers..........................................................................23
5.18 Opinion of Financial Advisors.......................................................23
5.19 Year 2000...........................................................................23
5.20 Insurance...........................................................................23
5.21 Contracts...........................................................................24
5.22 Takeover Laws.......................................................................24
5.23 Vote Required.......................................................................24
5.24 Definition of the Company's Knowledge...............................................24
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER.......................................................25
6.1 Conduct of Business by the Company..................................................25
ARTICLE VII
ADDITIONAL AGREEMENTS........................................................................27
7.1 Stockholders Meeting................................................................27
7.2 Other Filings.......................................................................29
7.3 Additional Agreements...............................................................29
7.4 Fees and Expenses...................................................................30
7.5 No Solicitations....................................................................30
</TABLE>
(ii)
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<TABLE>
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7.6 Officers' and Director' Indemnification.............................................32
7.7 Access to Information; Confidentiality..............................................34
7.8 Financial and Other Statements......................................................34
7.9 Public Announcements................................................................35
7.10 Employee Benefit Arrangements.......................................................35
7.11 Required Financing..................................................................35
7.12 Recapitalization Accounting Treatment...............................................36
7.13 Delisting...........................................................................36
7.14 Exchange of Common Stock............................................................36
7.15 Solvency Letters....................................................................36
7.16 Purchase of Company Shares..........................................................37
ARTICLE VIII
CONDITIONS TO THE MERGER.....................................................................37
8.1 Conditions to the Obligations of Each Party to Effect the Merger....................37
8.2 Conditions to Obligations of MergerCo...............................................38
8.3 Conditions to Obligations of the Company............................................40
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER............................................................41
9.1 Termination.........................................................................41
9.2 Effect of Termination...............................................................42
9.3 Amendment...........................................................................44
9.4 Extension; Waiver...................................................................44
ARTICLE X
GENERAL PROVISIONS...........................................................................44
10.1 Notices.............................................................................44
10.2 Interpretation......................................................................45
10.3 Non-Survival of Representations, Warranties, Covenants and Agreements...............45
10.4 Miscellaneous.......................................................................46
10.5 Assignment..........................................................................46
10.6 Severability........................................................................46
10.7 Choice of Law/Consent to Jurisdiction...............................................46
10.8 No Agreement Until Executed.........................................................47
</TABLE>
(iii)
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PARENT AND MERGERCO DISCLOSURE SCHEDULE
SECTION TITLE
4.2 Exceptions to Parent's and MergerCo's Representations
COMPANY DISCLOSURE SCHEDULE
SECTION TITLE
2.2 Rollover of Certain Options
5.1 Organizational and Good Standing
5.1(d) Organizational Documents of the Company Subsidiaries
5.3 Capitalization
5.4 Subsidiaries
5.5 Other Interests
5.6 Consents
5.8 Litigation
5.9 Absence of Changes
5.10 Taxes
5.12 Properties
5.13 Intellectual Property
5.14 Environmental Matters
5.15 Employee Benefit Plans
5.16 Labor Matters
5.20 Insurance
5.24 Definition of Knowledge
6.1(a) Rollover Stockholders
6.1(c) Conduct of Business Pending the Merger
6.1(g) Certain Executive Officers
6.1(h) Rights, Preferences and Designations of the Series B Stock
7.10 Employee Benefit Arrangements
8.2(c) Consents of Third Parties
(iv)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of May 6,
1999, by and among Kirtland Capital Partners III L.P., an Ohio limited
partnership ("PARENT"), ISN Acquisition Corporation, a Massachusetts corporation
and a wholly owned subsidiary of Parent ("MERGERCO"), and Instron Corporation, a
Massachusetts corporation (the "COMPANY").
RECITALS
WHEREAS, the respective Boards of Directors of MergerCo and the Company
and the general partner of Parent (the "General Partner") have approved the
merger of MergerCo with and into the Company (the "MERGER") in accordance with
the Massachusetts Business Corporation Law (the "MBCL") and, upon the terms and
subject to the conditions set forth in this Agreement, holders of shares of
common stock, par value $1.00 per share, of the Company (the "COMMON STOCK")
issued and outstanding immediately prior to the Effective Time (as hereinafter
defined) will be entitled, subject to the terms and conditions hereof, to the
right to receive cash;
WHEREAS, the Board of Directors of the Company (the "COMPANY BOARD")
has, in light of and subject to the terms and conditions set forth herein, (i)
determined that (A) the consideration to be paid for each share of Common Stock
in the Merger is fair to the stockholders of the Company, and (B) the Merger is
otherwise in the best interests of the Company and its stockholders, and (ii)
resolved to approve and adopt this Agreement and the transactions contemplated
or required by this Agreement, including the Merger (collectively, the
"TRANSACTIONS"), and to recommend approval and adoption by the stockholders of
the Company of this Agreement and the Transactions;
WHEREAS, as a condition to the willingness of Parent and MergerCo to
enter into this Agreement, certain stockholders of the Company (the "VOTING
AGREEMENT STOCKHOLDERS") have entered into a Voting Agreement, dated as of the
date hereof, with Parent and MergerCo (the "VOTING AGREEMENT"), pursuant to
which each Voting Agreement Stockholder has agreed, among other things, to vote
his shares of Common Stock in favor of the approval of the Transactions and the
approval of any other matter relating to consummation of the Transactions, upon
the terms and subject to the conditions set forth in the Voting Agreement;
WHEREAS, Parent, MergerCo and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Transactions, and also to prescribe various conditions to the Transactions; and
WHEREAS, it is intended that the Merger be recorded as a
recapitalization for
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financial reporting purposes.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, Parent, MergerCo and the Company hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
\Agreement, at the Effective Time, the Company and MergerCo shall consummate the
Merger pursuant to which (a) MergerCo shall be merged with and into the Company
and the separate corporate existence of MergerCo shall thereupon cease, (b) the
Company shall be the successor or surviving corporation in the Merger (sometimes
hereinafter referred to as the "SURVIVING CORPORATION") and shall continue to be
governed by the laws of the Commonwealth of Massachusetts, and (c) the separate
corporate existence of the Company with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. The Company shall
take such steps as are permitted under the MBCL to (i) amend the Articles of
Organization of the Company (the "ARTICLES OF ORGANIZATION") so that the
Articles of Organization of MergerCo, as in effect immediately prior to the
Effective Time, shall be the Articles of Organization of the Surviving
Corporation until thereafter amended as provided by law and such Articles of
Organization, and (ii) amend the Bylaws of the Company (the "BYLAWS") so that
the Bylaws of MergerCo, as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation until thereafter amended as
provided by law, by the Articles of Organization of the Surviving Corporation
and by such Bylaws. Notwithstanding the foregoing, the name of the Surviving
Corporation shall be "Instron Corporation" and the Articles of Organization and
Bylaws of the Surviving Corporation shall so provide. The Merger shall have the
effects specified in the MBCL. The purpose of the Surviving Corporation shall be
to carry on a manufacturing, contracting, merchandising, and research business,
and in general, to carry on any business or other activity which may be lawfully
carried on by a corporation organized under Chapter 156B of the Massachusetts
General Laws (the "MGL").
1.2 EFFECTIVE TIME. On the Closing Date (as hereinafter defined),
MergerCo and the Company shall duly execute and file articles of merger (the
"ARTICLES OF MERGER") with the Secretary of State of the Commonwealth of
Massachusetts in accordance with the MBCL. The Merger shall become effective at
such time as the Articles of Merger, accompanied by payment of the filing fee
(as provided in Chapter 156B, Section 114 of the MBCL), have been examined by
and received the endorsed approval of the Secretary of State of the Commonwealth
of Massachusetts (the "EFFECTIVE TIME").
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1.3 CLOSING. The closing of the Merger (the "CLOSING") shall occur
as promptly as practicable (but in no event later than the second business day)
after all of the conditions set forth in Article VIII shall have been satisfied
or, if permissible, waived by the party entitled to the benefit of the same,
and, subject to the foregoing, shall take place at such time and on a date to be
specified by the parties (the "CLOSING DATE"); PROVIDED, HOWEVER, that in no
event shall the Closing occur earlier than July 8, 1999. The Closing shall take
place at the offices of Jones, Day, Reavis & Pogue, 901 Lakeside Avenue,
Cleveland, Ohio 44114, unless another place is agreed to by the parties hereto.
1.4 DIRECTORS AND OFFICERS. The directors of MergerCo immediately
prior to the Effective Time shall be the initial directors 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, each to hold
office in accordance with the Articles of Organization and Bylaws of the
Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Common Stock or Series B Stock (as hereinafter defined) or any shares of capital
stock of MergerCo:
(a) Each share of common stock, par value $.01 per share, of
MergerCo (the "MERGERCO COMMON STOCK") issued and outstanding immediately prior
to the Effective Time shall be converted into one fully paid and nonassessable
share of common stock, par value $1.00 per share, of the Surviving Corporation
(the "SURVIVING CORPORATION COMMON STOCK") following the Merger.
(b) Each share of Common Stock that is owned by the Company, or by
any wholly owned Subsidiary (as defined in Section 10.2) of the Company or by
MergerCo shall automatically be canceled and retired and shall cease to exist,
and no cash or other consideration shall be delivered or deliverable in exchange
therefor.
(c) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares owned by the Company, any of its
wholly owned Subsidiaries or MergerCo and Dissenting Shares (as defined in
Section 3.2)) shall be converted into the right to receive $22.00 per share, net
to the seller in cash, payable to the holder thereof, without any interest
thereon (the "MERGER CONSIDERATION"), upon surrender and exchange of the
Certificate (as hereinafter defined) representing such share of Common Stock.
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(d) Each share of Series B Preferred Stock, par value $1.00 per
share, of the Company (the "SERIES B STOCK") issued and outstanding immediately
prior to the Effective Time (other than shares owned by the Company or any of
its wholly owned Subsidiaries) shall be converted into one fully paid and
nonassessable share of Surviving Corporation Common Stock following the Merger.
(e) All shares of Common Stock, when converted as provided in
Section 2.1(c), shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each Certificate (as
hereinafter defined) previously evidencing such shares shall thereafter
represent only the right to receive the Merger Consideration. The holders of
Certificates previously evidencing shares of Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to the Common Stock except as otherwise provided herein or by law and,
upon the surrender of Certificates in accordance with the provisions of Section
3.1, shall only represent the right to receive for their shares of Common Stock,
the Merger Consideration, without any interest thereon.
(f) All shares of Series B Stock, when converted as provided in
Section 2.1(d) shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate previously
evidencing such shares of Series B Stock shall thereafter represent only the
right to receive shares of Surviving Corporation Common Stock. The holders of
certificates previously evidencing shares of Series B Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to the Series B Stock except as otherwise provided herein or by law.
2.2 COMPANY STOCK OPTIONS AND RELATED MATTERS.
(a) Each option (collectively, the "OPTIONS") granted under the
Company's 1992 Stock Incentive Plan (the "1992 PLAN"), the 1984 United Kingdom
Share Option Scheme (the "1984 PLAN"), the 1982 Incentive Stock Option Plan (the
"1982 PLAN") and the 1979 Non-Qualified Plan (the "1979 PLAN" and, together with
the 1992 Plan, the 1984 Plan and the 1982 Plan, the "STOCK OPTION PLANS"), which
is outstanding (whether or not then exercisable) as of immediately prior to the
Effective Time and which has not been exercised or canceled prior thereto (other
than the Options identified in Section 2.2 of the Company Disclosure Schedule
(as hereinafter defined), such Options being hereinafter referred to as the
"Rollover Options"), shall, at the Effective Time, be canceled and upon the
surrender and cancellation of the option agreement representing such Option, the
Company shall (x) pay to the holder thereof cash in an amount equal to the
product of (i) the number of shares of Common Stock provided for in such Option
and (ii) the excess, if any, of the Merger Consideration over the exercise price
per share provided for in such Option, which cash payment shall be treated as
compensation and shall be net of any applicable federal or state withholding tax
(the "OPTION CONSIDERATION"). The Company shall take all actions necessary to
ensure that (i) all Options, to the extent not
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exercised prior to the Effective Time, shall terminate and be canceled as of the
Effective Time and thereafter be of no further force or effect, and (ii) no
Options are granted after the date of this Agreement.
(b) Each Rollover Option which is outstanding (whether or not then
exercisable) as of immediately prior to the Effective Time shall, at the
Effective Time, be automatically converted into an option to acquire 0.2 fully
paid and nonassessable shares of Surviving Corporation Common Stock at an
exercise price per share equal to (i) five (5) multiplied by (ii) the exercise
price per share provided for in the Option for which such Rollover Option is
surrendered; provided, however, that such exercise price shall be rounded up to
the nearest whole cent. From and after the Effective Time, the Rollover Options
shall be governed by the terms of the Stock Option Plans applicable to the
Option for which such Rollover Option is surrendered. The adjustments provided
herein with respect to any Rollover Options that are "incentive stock options"
as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"CODE"), shall be and are intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
(c) Except as set forth in Section 2.2 of the Company Disclosure
Schedule, the Stock Option Plans shall terminate as of the Effective Time and
the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any of the Company Subsidiaries shall be of no further force and
effect and shall be deemed to be deleted as of the Effective Time and no holder
of an Option or any participant in any Stock Option Plan or any other plans,
programs or arrangements (other than holders of Rollover Options) shall have any
right thereunder to acquire any equity securities of the Company, the Surviving
Corporation or any Subsidiary thereof.
(d) Except as set forth in Section 2.2 of the Company Disclosure
Schedule, Parent and MergerCo acknowledge that all restricted stock awards
granted under the Stock Option Plans shall immediately vest and the restrictions
associated therewith shall automatically be deemed waived as provided by the
Stock Option Plans but in no event later than the date on which the Company's
stockholders approve this Agreement and the Transactions.
ARTICLE III
PAYMENT FOR SHARES; DISSENTING SHARES
3.1 PAYMENT FOR SHARES OF COMPANY COMMON STOCK.
(a) From and after the Effective Time, such bank or trust company
as shall be mutually acceptable to MergerCo and the Company shall act as
exchange agent (the "EXCHANGE
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AGENT"). At or prior to the Effective Time, MergerCo shall deposit, or MergerCo
shall otherwise take all steps necessary to cause to be deposited, with the
Exchange Agent in an account (the "EXCHANGE FUND") the aggregate Merger
Consideration (net of any applicable withholding taxes) to which holders of
shares of Common Stock shall be entitled at the Effective Time pursuant to
Section 2.1(c).
(b) Promptly after the Effective Time, MergerCo shall cause the
Exchange Agent to mail to each record holder of Certificates (the
"CERTIFICATES") that immediately prior to the Effective Time represented shares
of Common Stock a form of letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent and
instructions for use in surrendering such Certificates and receiving the Merger
Consideration in respect thereof.
(c) In effecting the payment of the Merger Consideration with
respect to shares of Common Stock represented by Certificates entitled to
payment of the Merger Consideration pursuant to Section 2.1(c) (the "CASHED
SHARES"), upon the surrender of each such Certificate, the Exchange Agent shall
pay the holder of such Certificate the Merger Consideration multiplied by the
number of Cashed Shares (net of any applicable withholding taxes), in
consideration therefor. Upon such payment such Certificate shall forthwith be
canceled.
(d) Until surrendered in accordance with paragraph (c) above, each
such Certificate (other than Certificates representing shares of Common Stock
held by MergerCo or any of its affiliates, in the treasury of the Company or by
any wholly owned Subsidiary of the Company or Dissenting Shares) shall represent
solely the right to receive the Merger Consideration relating thereto. No
interest or dividends shall be paid or accrued on the Merger Consideration. If
the Merger Consideration (or any portion thereof) is to be delivered to any
person other than the person in whose name the Certificate formerly representing
shares of Common Stock surrendered therefor is registered, it shall be a
condition to such right to receive such Merger Consideration that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person surrendering such shares of Common Stock
shall pay to the Exchange Agent any transfer or 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 establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable.
(e) No dividends or other distributions with respect to shares of
Common Stock shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Common Stock represented thereby.
(f) Promptly following the date which is 180 days after the
Effective Time, the Exchange Agent shall deliver to the Surviving Corporation
all cash, Certificates and other
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documents in its possession relating to the Transactions, and the Exchange
Agent's duties shall terminate. Thereafter, each holder of a Certificate
formerly representing a share of Common Stock may surrender such Certificate to
the Surviving Corporation and (subject to applicable abandoned property, escheat
and similar laws) receive in consideration therefor the Merger Consideration
relating thereto without any interest or dividends thereon.
(g) After the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of any shares of Common Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates formerly representing shares of Common Stock are
presented to the Surviving Corporation or the Exchange Agent, they shall be
surrendered and canceled in return for the payment of the Merger Consideration
relating thereto, as provided in this Article III.
(h) None of Parent, MergerCo, the Company or the Exchange Agent
shall be liable to any person in respect of any cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificate shall not have been surrendered prior
to seven years after the Effective Time, any such shares, cash, dividends or
distributions in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
3.2 APPRAISAL RIGHTS.
(a) Notwithstanding anything in this Agreement to the contrary,
any shares of Common Stock ("DISSENTING SHARES") which are issued and
outstanding immediately prior to the Effective Time and which are held by
stockholders of the Company who have filed with the Company, before the taking
of the vote of the stockholders of the Company to approve this Agreement,
written objections to such approval stating their intention to demand payment
for such shares of Common Stock, and who have not voted such shares of Common
Stock in favor of the adoption of this Agreement, will not be converted as
described in Section 2.1 hereof, but will thereafter constitute only the right
to receive payment of the fair value of such shares of Common Stock in
accordance with the applicable provisions of Chapter 156B of the MBCL (the
"APPRAISAL RIGHTS PROVISIONS"); PROVIDED, HOWEVER, that all shares of Common
Stock held by stockholders who shall have failed to perfect or who effectively
shall have withdrawn or lost their rights to appraisal of such shares of Common
Stock under the Appraisal Rights Provisions shall thereupon be deemed to have
been canceled and retired and to have been converted, as of the Effective Time,
into the right to receive the Merger Consideration, without interest, in the
manner provided in Section 2.1. Persons who have perfected statutory rights with
respect to Dissenting Shares as aforesaid will not be paid by the Surviving
Corporation as provided in this Agreement and will have only such rights as are
provided by the Appraisal Rights Provisions with respect to such Dissenting
Shares. Notwithstanding
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anything in this Agreement to the contrary, if Parent, MergerCo or the Company
abandon or are finally enjoined or prevented from carrying out, or the
stockholders rescind their adoption of, this Agreement, the right of each holder
of Dissenting Shares to receive the fair value of such Dissenting Shares in
accordance with the Appraisal Rights Provisions will terminate, effective as of
the time of such abandonment, injunction, prevention or rescission. The Company
shall give MergerCo prompt notice of any demands received by the Company for the
exercise of appraisal rights with respect to shares of Common Stock and Parent
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of Parent (which shall not be unreasonably withheld), make any payment
with respect to, or settle or offer to settle, any such demands.
(b) Each dissenting stockholder who becomes entitled under the
MBCL to payment for Dissenting Shares shall receive payment therefor after the
Effective Time from the Surviving Corporation (but only after the amount thereof
shall have been agreed upon or finally determined pursuant to the MBCL), and
such shares of Common Stock shall be canceled.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGERCO
Parent and MergerCo jointly and severally hereby represent and warrant
to the Company as follows:
4.1 ORGANIZATION. Parent is a limited partnership duly organized
and validly existing under the laws of the State of Ohio and MergerCo is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts, and each has all requisite power and
authority and all necessary governmental approvals to own, lease and operate
their properties and to carry on their businesses as now being conducted, except
where the failure to be so organized, existing and in good standing or to have
such power, authority, and governmental approvals would not have a material
adverse effect on the business, results of operations or condition (financial or
otherwise) of Parent (a "PARENT MATERIAL ADVERSE EFFECT"). Parent is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing would
not, individually or in the aggregate, have a Parent Material Adverse Effect.
4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION. Each
of Parent and
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MergerCo has full power and authority to execute and deliver this Agreement and
to consummate the Transactions. The execution, delivery and performance by
Parent and MergerCo of this Agreement and the consummation of the Transactions
have been duly authorized by all necessary partnership action on behalf of
Parent (the "PARENT BOARD") and the Board of Directors of MergerCo (the
"MERGERCO BOARD") and by the stockholders of MergerCo, and, except as set forth
in Section 4.2 of the schedule attached to this Agreement setting forth
exceptions to Parent's and MergerCo's representations and warranties set forth
herein (the "PARENT AND MERGERCO DISCLOSURE SCHEDULE"), no other action on the
part of Parent and MergerCo is necessary to authorize the execution and delivery
by Parent and MergerCo of this Agreement and the consummation of the
Transactions. This Agreement has been duly executed and delivered by Parent and
MergerCo and, assuming due and valid authorization, execution and delivery
hereof by the Company, is a valid and binding obligation of each of Parent and
MergerCo, as the case may be, enforceable against each of them in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth in
Section 4.2 of the Parent and MergerCo Disclosure Schedule and except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), the Securities Act of 1933, as amended
(the "SECURITIES ACT"), the HSR Act (as hereinafter defined), the antitrust and
competition laws of foreign countries and state securities or state "Blue Sky"
laws, none of the execution, delivery or performance of this Agreement by Parent
or MergerCo, the consummation by Parent or MergerCo of the Transactions or
compliance by Parent or MergerCo with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the limited
partnership agreement of Parent or the articles of organization or bylaws of
MergerCo, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity (as hereinafter defined), (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or MergerCo is a party or by which
either of them or any of their respective properties or assets may be bound, or
(iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent or MergerCo or any of their properties or assets, excluding
from the foregoing clauses (ii), (iii) and (iv) such violations, breaches or
defaults which would not, individually or in the aggregate, have a Parent
Material Adverse Effect.
4.4 REQUIRED FINANCING. Parent and MergerCo have revolving credit
facility and high yield bridge financing commitments in place which, if funded
in accordance with their terms, together with equity capital commitments from
the limited partners of Parent and certain
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additional equity capital commitments from certain of the limited partners of
Parent (the "SIDE-BY-SIDE EQUITY COMMITMENTS"), will provide sufficient funds to
consummate the Transactions (collectively, the "TRANSACTION COSTS"), including,
without limitation, to (i) pay the Merger Consideration pursuant to Section
2.1(c), (ii) refinance the outstanding indebtedness of the Company, (iii) pay
any fees and expenses in connection with the Transactions or the financing
thereof and (iv) provide for the working capital needs of the Company following
the Merger, including, without limitation, if applicable, letters of credit.
Neither Parent nor MergerCo has any reason to believe that any condition to such
financing commitments cannot or will not be waived or satisfied prior to the
Effective Time. Parent has provided to the Company true, complete and correct
copies of all financing commitment letters executed by the revolving credit
facility lender and the high yield bridge lender (collectively, the "LENDERS"),
including any exhibits, schedules or amendments thereto (the "FINANCING
LETTERS"). Parent has provided to the Company true, complete and correct copies
of each Side-by-Side Equity Commitment letter executed by the limited partner of
Parent signatory thereto, including any exhibits, schedules or amendments
thereto. The advisory board of Parent has approved an investment by Parent of
$40,000,000 of Fund Capital (as hereinafter defined) in the Company and, from
and after the date of this Agreement, the advisory board of Parent shall not
withdraw or change such approval unless this Agreement shall have been
terminated in accordance with its terms.
4.5 TAKEOVER LAWS. Neither Parent nor MergerCo was, immediately
prior to the execution of this Agreement, an "interested stockholder" within the
meaning of Chapter 110F of the MGL.
4.6 FORMATION OF MERGERCO; NO PRIOR ACTIVITIES. MergerCo was
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement. As of the date hereof and as of the Effective Time, except for
(i) obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and (ii) this
Agreement and any other agreements or arrangements contemplated by this
Agreement or in furtherance of the transactions contemplated hereby, MergerCo
has not incurred, directly or indirectly, through any subsidiary or affiliate,
any obligations or liabilities or engaged in any business activities of any type
or kind whatsoever or entered into any agreements or arrangements with any
person.
4.7 BENEFICIAL OWNERSHIP. Except to the extent permitted by
Section 7.16 hereof or as a result of the execution by Parent and MergerCo of
the Voting Agreement, neither Parent nor MergerCo "beneficially owns" (as
defined in Rule 13d-3 under the Exchange Act) any shares of Common Stock or any
securities convertible into or exchangeable for Common Stock.
4.8 FINANCIAL CONDITION OF PARENT. Parent has provided to the
Company true, complete and correct copies of the audited financial statements of
Parent for the fiscal year
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ended December 31, 1998 and the unaudited financial statements of Parent for the
interim period ended March 31, 1999. Such financial statements fairly present
the financial position of Parent as of the respective dates thereof, and the
other related statements (including the related notes) included therein fairly
present the results of operations of Parent for the respective fiscal periods
set forth above. Parent has equity commitments from its limited partners in an
aggregate amount in excess of $185,000,000 (the "Fund Capital"). The General
Partner may, in its sole discretion, call such portion of the Fund Capital as is
necessary to satisfy any of Parent's or MergerCo's obligations under or arising
out of this Agreement and the performance by Parent and MergerCo thereof. None
of the Fund Capital has been pledged or is subject to any material lien,
security interest or other encumbrance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered at or prior
to the execution hereof to Parent and MergerCo, which shall refer to the
relevant Sections of this Agreement (the "COMPANY DISCLOSURE SCHEDULE"), the
Company represents and warrants to Parent and MergerCo as follows:
5.1 EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts and has
all requisite corporate or other power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority and
governmental approvals would not reasonably be expected to have a Company
Material Adverse Effect (as hereinafter defined). Except as set forth in Section
5.1 of the Company Disclosure Schedule, the Company is duly qualified or
licensed to do business and is in good standing (with respect to jurisdictions
that recognize such concept) in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing, individually
or in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect. For purposes of this Agreement, a "COMPANY MATERIAL ADVERSE
EFFECT" shall mean a material adverse effect on the business, results of
operations or condition (financial or otherwise) of the Company and the Company
Subsidiaries taken as a whole.
(b) Except as set forth in Section 5.1 of the Company Disclosure
Schedule, each of
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the Company Subsidiaries is a corporation, partnership or limited liability
company (or similar entity or association in the case of those Company
Subsidiaries organized and existing other than under the laws of a State of the
United States) duly incorporated or organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has the corporate or other power and authority to own its properties and to
carry on its business as it is now being conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which the ownership of
its property or the conduct of its business requires such qualification, except
for jurisdictions in which such failure to be so qualified or to be in good
standing could not reasonably be expected to have a Company Material Adverse
Effect.
(c) Neither the Company nor any of the Company Subsidiaries is in
violation of any order of any court, governmental authority or arbitration board
or tribunal, or any law, ordinance, governmental rule or regulation to which the
Company or any Company Subsidiary or any of their respective properties or
assets is subject, where such violation could have a Company Material Adverse
Effect. The Company and the Company Subsidiaries have obtained all licenses,
permits and other authorizations and have taken all actions required by
applicable law or governmental regulations in connection with their businesses
as now conducted, where the failure to obtain any such license, permit or
authorization or to take any such action could have a Company Material Adverse
Effect.
(d) Except as set forth in Section 5.1(d) of the Company
Disclosure Schedule, copies of the Articles of Organization and Bylaws and the
other charter documents, bylaws, organizational documents and partnership,
limited liability company and joint venture agreements (and in each such case,
all amendments thereto) of each of the Company Subsidiaries have been provided
to MergerCo or its representatives and are true and correct in all material
respects.
5.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of the
Company and the Company Subsidiaries has the requisite power and authority to
enter into the Transactions and to execute and deliver this Agreement. The
Company Board has approved this Agreement and the Transactions. In connection
with the foregoing, the Company Board has taken such actions and votes as are
necessary on its part to render the provisions of Chapter 110C and Chapter 110F
of the MGL and all other applicable takeover statutes inapplicable to this
Agreement and the Transactions. Subject only to the approval of this Agreement
by the holders of the Common Stock, the execution by the Company of this
Agreement and consummation of the Transactions have been duly authorized by all
requisite corporate action on the part of the Company. This Agreement, assuming
due and valid authorization, execution and delivery thereof by Parent and
MergerCo, constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable
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bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
5.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 10,000,000 shares of Common Stock and 1,000,000 shares of preferred
stock, par value $1.00 per share, of the Company (the "PREFERRED STOCK"). As of
the date of this Agreement, (i) 6,956,838 shares of Common Stock were issued and
outstanding, (ii) 791,500, 650,000, 190,000 and 900,000 shares of Common Stock
have been authorized and reserved for issuance pursuant to the 1979 Plan, the
1982 Plan, the 1984 Plan and the 1992 Plan, respectively, subject to adjustment
on the terms set forth in the applicable Stock Option Plans, (iii) 200,588,
69,546 and 437,851 Options were outstanding under the 1979 Plan, the 1984 Plan
and the 1992 Plan, respectively, (iv) no Options were outstanding under the 1982
Plan, (v) no shares of Preferred Stock were issued and outstanding, (vi) 108,262
shares of Common Stock and no shares of Preferred Stock were held in the
treasury of the Company and (vii) 100,000 shares of Preferred Stock had been
designated as Series A Junior Participating Cumulative Preferred Stock, par
value $1.00 per share. As of the date of this Agreement, the Company had no
shares of Common Stock reserved for issuance other than as described above.
Section 5.3 of the Company Disclosure Schedule sets forth a description of the
Common Stock, the Preferred Stock and the Series A Junior Participating
Cumulative Preferred Stock. All such issued and outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. The parties acknowledge and agree
that 75,000 shares of Preferred Stock will be designated by the Company as the
Series B Stock prior to the Closing Date and up to such amount will be issued to
the Rollover Stockholders (as hereinafter defined) prior to the Closing Date in
accordance with Section 7.14 hereof. The Series B Stock, when issued, will be
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. The Company has no outstanding bonds, debentures, notes or
other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter. Except as set forth above and for
the Options (all of which have been issued under the Stock Option Plans), there
are not as of the date of this Agreement issued, reserved for issuance or
outstanding, (i) any shares of capital stock or other voting securities of the
Company, (ii) any securities convertible into or exchangeable or exercisable for
shares of capital stock or voting securities of the Company, or (iii) any
warrants, calls, options or other rights to acquire from the Company or any
Company Subsidiary, and no obligation of the Company or any Company Subsidiary
to issue, any capital stock or voting securities of the Company. Section 5.3 of
the Company Disclosure Schedule sets forth a full list of Options, including the
name of the person to whom such Options have been granted, the number of shares
subject to each Option, the per share exercise price for each Option and the
vesting schedule for each Option. Except as set forth in Section 2.2 hereof and
Section 5.3 of the Company Disclosure Schedule and as provided in the Stock
Option Plans, the vesting schedule of all Options shall not be changed or
affected by the execution of this Agreement or
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consummation of the Transactions. Other than the Voting Agreement and other than
awards made pursuant to any of the Stock Option Plans, there are no agreements
or understandings to which the Company or any Company Subsidiary is a party with
respect to the voting of any shares of capital stock of the Company or which
restrict the transfer of any such shares, nor does the Company have knowledge of
any third party agreements or understandings with respect to the voting of any
such shares or which restrict the transfer of any such shares. Other than (i) as
set forth above, (ii) awards made pursuant to any of the Stock Option Plans, and
(iii) as expressly contemplated by this Agreement and the Transactions, there
are no outstanding contractual obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock, partnership interests or any other securities of the Company or any
Company Subsidiary. Except as set forth in Section 5.3 of the Company Disclosure
Schedule and as expressly contemplated by this Agreement and the Transactions,
neither the Company nor any Company Subsidiary is under any obligation,
contingent or otherwise, by reason of any agreement to register the offer and
sale or resale of any of their securities under the Securities Act.
5.4 SUBSIDIARIES. Except as set forth in Section 5.4 of the
Company Disclosure Schedule, the Company owns directly or indirectly each of the
outstanding shares of capital stock or other equity interest of each of the
Company Subsidiaries. Each of the outstanding shares of capital stock of each of
the Company Subsidiaries having corporate form is duly authorized, validly
issued, fully paid and nonassessable. Except as set forth in Section 5.4 of the
Company Disclosure Schedule, each of the outstanding shares of capital stock or
other equity interest of each of the Company Subsidiaries is owned, directly or
indirectly, by the Company free and clear of all liens, pledges, security
interests, claims or other encumbrances. The following information for each
Company Subsidiary as of the date of this Agreement is set forth in Section 5.4
of the Company Disclosure Schedule: (i) its name and jurisdiction of
incorporation or organization; (ii) its authorized capital stock, share capital
or other equity interest, to the extent applicable; and (iii) the name of each
stockholder or equity interest holder and the number of issued and outstanding
shares of capital stock, share capital or other equity interest held by it.
There are no (i) securities convertible into or exchangeable or exercisable for
shares of capital stock or voting securities of any Company Subsidiary, or (ii)
warrants, calls, options or other rights to acquire from any Company Subsidiary,
and no obligation of any Company Subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible into
or exchangeable or exercisable for any capital stock, voting securities or
ownership interests in, any Company Subsidiary. There are no outstanding
contractual obligations of any Company Subsidiary to repurchase, redeem or
otherwise acquire any such securities of Company Subsidiaries or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such securities.
5.5 OTHER INTERESTS. Except as set forth in Section 5.5 of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary owns
directly or indirectly any
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interest or investment (whether equity or debt) in any corporation, partnership,
limited liability company, joint venture, business, trust or other entity (other
than investments in short-term investment securities).
5.6 NO VIOLATION; CONSENTS. Except as set forth in Section 5.6 of
the Company Disclosure Schedule, neither the execution and delivery by the
Company of this Agreement nor consummation by the Company of the Transactions in
accordance with the terms hereof, will conflict with or result in a breach of
any provisions of the Articles of Organization, Bylaws, or the organizational
documents of the Company or any Company Subsidiary. Except as set forth in
Section 5.6 of the Company Disclosure Schedule, the execution and delivery by
the Company of this Agreement and consummation by the Company of the
Transactions in accordance with the terms hereof will not violate, or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination or in a right of termination or cancellation
of, or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties of the
Company or the Company Subsidiaries under, or result in being declared void,
voidable or without further binding effect, any of the terms, conditions or
provisions of (x) any note, bond, mortgage, indenture, deed of trust or (y) any
license, franchise, permit, lease, contract, agreement or other instrument,
commitment or obligation to which the Company or any of the Company Subsidiaries
is a party, or by which the Company or any of the Company Subsidiaries or any of
their properties is bound, except as otherwise would not have a Company Material
Adverse Effect. Other than the filings provided for in Article II of this
Agreement, the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
ACT"), the antitrust and competition laws of foreign countries, the Exchange
Act, the Securities Act, or applicable state securities and "Blue Sky" laws
(collectively, the "REGULATORY FILINGS"), the execution and delivery of this
Agreement by the Company does not, and the performance of this Agreement by the
Company and consummation of the Transactions does not, require any consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority, except where the failure to obtain any
such consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority would not have a
Company Material Adverse Effect.
5.7 SEC DOCUMENTS. The Company has filed all required forms,
reports and documents with the Securities and Exchange Commission (the "SEC")
since December 31, 1995 (collectively, the "COMPANY SEC REPORTS"), all of which
were prepared in accordance with the applicable requirements of the Exchange
Act, the Securities Act and the rules and regulations promulgated thereunder
(the "SECURITIES LAWS"). All required Company SEC Reports have been filed with
the SEC and constitute all forms, reports and documents required to be filed by
the Company under the Securities Laws since December 31, 1995. As of their
respective dates, the Company SEC Reports (i) complied as to form in all
material respects
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with the applicable requirements of the Securities Laws and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Each of the consolidated balance sheets of the Company included in or
incorporated by reference into the Company SEC Reports (including the related
notes and schedules) fairly presents the consolidated financial position of the
Company and the Company Subsidiaries as of its date and each of the consolidated
statements of income, retained earnings and cash flows of the Company included
in or incorporated by reference into the Company SEC Reports (including any
related notes and schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of the Company and the Company
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which would not be
material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein and except, in the case of the unaudited
statements, as permitted by Form 10-Q pursuant to Section 13 or 15(d) of the
Exchange Act.
5.8 LITIGATION. Except as set forth in Section 5.8 of the Company
Disclosure Schedule, no action, proceeding or investigation by any Governmental
Entity and no suit, action or proceeding by any person, in each such case, with
respect to the Company or any Company Subsidiary or any of their respective
properties, is pending, or, to the knowledge of the Company, threatened, other
than, in each case, those the outcome of which, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect or that would not reasonably be expected to prevent or materially delay
consummation of the Transactions.
5.9 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 5.9
of the Company Disclosure Schedule, since December 31, 1998 the Company and the
Company Subsidiaries have conducted their businesses only in the ordinary course
of business and there has not been: (i) any Company Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to the Common Stock; (iii) any material commitment,
contractual obligation (including, without limitation, any management or
franchise agreement, any lease (capital or otherwise) or any letter of intent),
borrowing, liability, guaranty, capital expenditure or transaction (each, a
"COMMITMENT") entered into by the Company or any of the Company Subsidiaries
outside the ordinary course of business except for Commitments for expenses of
attorneys, accountants and investment bankers incurred in connection with the
Transactions; or (iv) any material change in the Company's accounting
principles, practices or methods.
5.10 TAXES.
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(a) Except as set forth in Section 5.10 of the Company
Disclosure Schedule, each of the Company and the Company Subsidiaries (i) has
timely filed all Tax Returns (as hereinafter defined) which the Company was
required to file (after giving effect to any filing extension granted by a
Governmental Entity) and (ii) has paid all Taxes (as hereinafter defined)
required to be paid by it, except, in each case, where the failure to file such
Tax Returns or pay such Taxes would not have a Company Material Adverse Effect.
Except as set forth in Section 5.10 of the Company Disclosure Schedule, the most
recent audited financial statements contained in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998 reflect, to the knowledge
of the Company, an adequate reserve for all material Taxes payable by the
Company and the Company Subsidiaries for all taxable periods and portions
thereof through the date of such financial statements in accordance with United
States generally accepted accounting principles ("GAAP") applied on a consistent
basis. Except as set forth in Section 5.10 of the Company Disclosure Schedule,
(w) no deficiencies for any Taxes have been proposed, asserted or assessed
against the Company or any of the Company Subsidiaries, (x) no federal income
Tax Returns for a taxable period beginning after December 31, 1990 have been or
are being audited, (y) no agreements or consents are in effect for the extension
or waiver of the time in which to file any Tax Return or assess or collect any
Taxes from the Company or any Company Subsidiary, and (z) neither the Company
nor any Company Subsidiary is a party to any Tax sharing agreement, agreement
for an exemption with any Governmental Entity, or agreement, contract,
arrangement or plan that would result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section 280G of
the Code.
(b) For purposes of this Agreement, "TAXES" means all
federal, state, local and foreign net or gross income, alternative or add-on
minimum, environmental, gross receipts, property, sales, use, franchise,
employment, withholding, excise and other taxes, tariffs or governmental charges
of any nature whatsoever, together with any interest, penalties or additions to
Tax with respect thereto.
(c) For purposes of this Agreement, "TAX RETURNS" means
all reports, returns (including information returns), declarations, statements
or other information required to be supplied to a Governmental Entity in
connection with Taxes.
5.11 BOOKS AND RECORDS.
(a) The books of account and other financial records of the
Company and each of the Company Subsidiaries are true, complete and correct in
all material respects, have been maintained in accordance with good business
practices, and are accurately reflected in all material respects in the
financial statements included in the Company SEC Reports.
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(b) The minute books and other records of the Company and each of
the Company Subsidiaries have been made available to MergerCo or its
representatives, contain in all material respects accurate records of all
meetings and accurately reflect in all material respects all other corporate
action of the stockholders and directors and any committees of the Company Board
and the boards of directors of each of the Company Subsidiaries and all actions
of the partners or managers of each of the Company Subsidiaries, as applicable,
except in each such case as would otherwise not have a Company Material Adverse
Effect.
5.12 PROPERTIES.
(a) All of the real estate properties owned or leased by the
Company or any of the Company Subsidiaries and material to the business and
operations of the Company and the Company Subsidiaries taken as a whole are set
forth in Section 5.12 of the Company Disclosure Schedule. Except as set forth in
Section 5.12 of the Company Disclosure Schedule, the Company or a Company
Subsidiary owns fee simple title to each of the owned real properties identified
in Section 5.12 of the Company Disclosure Schedule (the "COMPANY PROPERTIES"),
free and clear of liens which secure the payment of money, mortgages or deeds of
trust, monetary charges which are liens, security interests or other
encumbrances on title which secure the payment of money (collectively,
"ENCUMBRANCES"), and the Company Properties are not subject to any easements,
rights of way, covenants, conditions, restrictions or other written agreements,
laws, ordinances and regulations materially and adversely affecting the current
use or occupancy of any of the Company Properties by the Company or the Company
Subsidiaries, as applicable (collectively, "PROPERTY RESTRICTIONS"), except for
(i) Property Restrictions imposed or promulgated by law or any governmental body
or authority with respect to real property, including zoning regulations, that
do not materially and adversely affect the current use of the property by the
Company, (ii) Property Restrictions disclosed on any title policies or reports
or surveys received by, made available to, or otherwise obtained by, MergerCo,
(iii) Property Restrictions that would be disclosed by current, accurate surveys
or title policies or reports, and (iv) mechanics', carriers', suppliers',
workmen's or repairmen's liens and other Encumbrances, Property Restrictions and
other limitations of any kind, if any, which, individually or in the aggregate,
are not material in amount, do not materially detract from the value of or
materially interfere with the present use of any of the Company Properties
subject thereto or affected thereby, and do not otherwise materially impair
business operations conducted by the Company and the Company Subsidiaries and
which have arisen or been incurred only in the ordinary course of business.
Except as set forth in Section 5.12 of the Company Disclosure Schedule, (A) the
Company has not received any written notice of any material violation of any
federal, state or municipal law, ordinance, order, regulation or requirement
affecting any portion of any of the Company Properties by any Governmental
Entity; (B) to the Company's knowledge, there are no material structural defects
relating to any of the Company Properties; (C) to the Company's knowledge, there
is no Company Property whose building systems are not in working order in any
material respect;
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and (D) to the Company's knowledge, there is no physical damage, other than
ordinary wear and tear, for which the Company is responsible to any Company
Property in excess of $250,000 for which there is no insurance in effect
covering the full cost of the restoration.
(b) The Company and the Company Subsidiaries own good title, free
and clear of all Encumbrances, to all of the personal property and assets shown
on the Company's balance sheet at December 31, 1998 as reflected in the Company
SEC Reports (the "BALANCE SHEET") or acquired after December 31, 1998, except
for (A) assets which have been disposed of to nonaffiliated third parties since
December 31, 1998 in the ordinary course of business, (B) Encumbrances reflected
in the Balance Sheet, (C) Encumbrances or imperfections of title which are not,
individually or in the aggregate, material in character, amount or extent and
which do not materially detract from the value or materially interfere with the
present or presently contemplated use of the assets subject thereto or affected
thereby, and (D) Encumbrances for current Taxes not yet due and payable. All of
the machinery, equipment and other tangible personal property and assets owned
or used by the Company and the Company Subsidiaries are in good condition and
repair to the extent necessary to permit the Company and the Company
Subsidiaries to conduct their businesses as they are currently being conducted.
5.13 INTELLECTUAL PROPERTY. The Company or the Company Subsidiaries
are the owner of, or a licensee under a valid license for, all items of
intangible property which are material to the business of the Company and the
Company Subsidiaries as currently conducted, taken as a whole, including,
without limitation, trade names, unregistered trademarks and service marks,
brand names, software, patents and copyrights, except where the failure to own
or be a licensee for such intangible property would not have a Company Material
Adverse Effect. Except as disclosed in Section 5.13 of the Company Disclosure
Schedule, there are no claims pending or, to the Company's knowledge,
threatened, that the Company or any Company Subsidiary is in violation of any
such intellectual property right of any third party which would have a Company
Material Adverse Effect, and, to the Company's best knowledge, no third party is
in violation of any intellectual property rights of the Company or any Company
Subsidiary which would have a Company Material Adverse Effect.
5.14 ENVIRONMENTAL MATTERS. The Company and the Company
Subsidiaries are in compliance with all Environmental Laws (as hereinafter
defined), except for any noncompliance that, either singly or in the aggregate,
would not reasonably be expected to have a Company Material Adverse Effect. As
used in this Agreement, "ENVIRONMENTAL LAWS" shall mean all federal, state,
local and foreign laws, rules, regulations, ordinances and orders that purport
to regulate the release of hazardous substances or other materials into the
environment, or impose limitations, requirements or obligations relating to
environmental protection. As used in this Agreement, "HAZARDOUS MATERIALS" means
any "hazardous waste" as defined in either the United States Resource
Conservation and Recovery Act or regulations
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adopted pursuant to said act, any "hazardous substance" or "pollutant or
contaminant" as defined in the United States Comprehensive Environmental
Response, Compensation and Liability Act and, to the extent not included in the
foregoing, any medical waste, petroleum or oil or fractions thereof. There is no
administrative or judicial enforcement or cost recovery proceeding pending, or
to the best knowledge of the Company threatened, against the Company or any
Company Subsidiary under any Environmental Law. Neither the Company nor any
Company Subsidiary or, to the best knowledge of the Company, any legal
predecessor of the Company or any Company Subsidiary, has received any written
notice that it is potentially responsible under any Environmental Law for any
costs of response or for damages to natural resources, as those terms are
defined under the Environmental Laws, at any location and neither the Company
nor any Company Subsidiary has transported or disposed of, or allowed or
arranged for any third party to transport or dispose of, any waste containing
Hazardous Materials at any location included on the National Priorities List, as
defined under the Comprehensive Environmental Response, Compensation, and
Liability Act, or any location proposed for inclusion on that list or at any
location on any analogous state list. Except for any release that, either
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect, there has been no release on the real property
owned or leased by the Company or any Company Subsidiary, or, to the Company's
knowledge, on the real property owned or leased by any predecessor entity, which
real property currently is owned or leased by the Company or any Company
Subsidiary, of Hazardous Materials, or, with respect to any real property
located outside of the United States, any hazardous or toxic material or
substance regulated under any foreign Environmental Law, in a manner that could
result in an order to perform a response action or in material liability under
the Environmental Laws and, except as set forth in Section 5.14 of the Company
Disclosure Schedule, there is no hazardous waste treatment, storage or disposal
facility, underground storage tank, landfill, surface impoundment, underground
injection well, or, to the Company's knowledge, friable asbestos or PCB's, as
those terms are defined under the Environmental Laws, located at any of the real
property owned or leased by the Company or any Company Subsidiary or, to the
Company's knowledge, any predecessor entity, or at any facilities utilized by
the Company or the Company Subsidiaries. The Company has disclosed and made
available to MergerCo all studies, analyses and test results in the possession,
custody or control of the Company or any Company Subsidiary relating to the
environmental conditions on or under any of the properties or assets owned,
leased or operated by the Company or any Company Subsidiary. Except as set forth
in Section 5.14 of the Company Disclosure Schedule, the Company and the Company
Subsidiaries hold all permits, licenses or authorizations required under
applicable Environmental Laws ("ENVIRONMENTAL PERMITS") or have submitted on a
timely basis complete applications for the renewal of any Environmental Permit
which has expired but has not yet been renewed.
5.15 EMPLOYEE BENEFIT PLANS.
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(a) Section 5.15 of the Company Disclosure Schedule sets forth a
list of every Company Benefit Plan (as hereinafter defined) that is maintained
by the Company or an Affiliate (as hereinafter defined) on the date hereof.
(b) Each Company Benefit Plan which has been intended to qualify
under Section 401(a) of the Code has received a favorable determination or
approval letter from the Internal Revenue Service (the "IRS") regarding its
qualification under such section and neither the Company nor any Affiliate knows
that any such Company Benefit Plan has been maintained in a manner that would
preclude qualified status.
(c) Except as set forth in Section 5.15 of the Company Disclosure
Schedule, neither the Company nor any Affiliate knows of any failure of any
party to comply with any laws applicable with respect to the Company Benefit
Plans. With respect to any Company Benefit Plan, there has been no (i)
"prohibited transaction," as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Code Section 4975, for
which an exemption is not available or (ii) material failure to comply with any
provision of ERISA, other applicable law, or any agreement, which, in either
case, would subject the Company or any Affiliate to liability (including,
without limitation, through any obligation of indemnification or contribution)
for any damages, penalties, or taxes, or any other material loss or expense. No
litigation or governmental administrative proceeding (or investigation) or other
proceeding (other than those relating to routine claims for benefits) is pending
or, to the Company's knowledge, threatened with respect to any such Company
Benefit Plan.
(d) Neither the Company nor any Affiliate has incurred any
liability under title IV of ERISA which has not been paid in full as of the date
of this Agreement. There has been no "accumulated funding deficiency" (whether
or not waived) with respect to any employee pension benefit plan ever maintained
by the Company or any Affiliate and subject to Code Section 412 or ERISA Section
302. With respect to any Company Benefit Plan maintained by the Company or any
Affiliate and subject to Title IV of ERISA, there has been no (nor will there be
any as a result of the Transactions) (i) "reportable event," within the meaning
of ERISA Section 4043 or the regulations thereunder, for which the notice
requirement is not waived by the regulations thereunder, and (ii) event or
condition which presents a material risk of a plan termination or any other
event that may cause the Company or any Affiliate to incur liability or have a
lien imposed on its assets under Title IV of ERISA. Neither the Company nor any
Affiliate has ever maintained a Multiemployer Plan (as hereinafter defined).
(e) With respect to each Company Benefit Plan, complete and
correct copies of the following documents (if applicable to such Company Benefit
Plan) have previously been delivered to MergerCo or its representatives: (i) all
documents embodying or governing such Company Benefit Plan, and any funding
medium for such Company Benefit Plan (including, without limitation, trust
agreements) as they may have been amended to the date hereof; (ii) the
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most recent IRS determination or approval letter with respect to such Company
Benefit Plan under Code Section 401(a), and any applications for determination
or approval subsequently filed with the IRS; (iii) the three most recently filed
IRS Forms 5500, with all applicable schedules and accountants' opinions attached
thereto; (iv) the current summary plan description for such Company Benefit Plan
(or other descriptions of such Company Benefit Plan provided to employees) and
all modifications thereto; and (v) any insurance policy (including any fiduciary
liability insurance policy or fidelity bond) related to such Company Benefit
Plan.
(f) With respect to each group health plan benefitting any current
or former employee of the Company or any Affiliate that is subject to Section
4980B of the Code, or was subject to Section 162(k) of the Code, the Company and
each Affiliate have complied in all material respects with (i) the continuation
coverage requirements of Section 4980B of the Code and Section 162(k) of the
Code, as applicable, and Part 6 of Subtitle B of Title I of ERISA and (ii) the
Health Insurance Portability and Accountability Act of 1996, as amended.
(g) With respect to any insurance policy providing funding for
benefits under any Company Benefit Plan, (i) there is no liability of the
Company or any Affiliate in the nature of a retroactive rate adjustment, loss
sharing arrangement, or other actual or contingent liability, nor would there be
any such liability if such insurance policy was terminated on the date hereof,
and (ii) to the knowledge of the Company, no insurance company issuing any such
policy is in receivership, conservatorship, liquidation or similar proceeding
and no such proceedings with respect to any insurer are imminent.
(h) Except as set forth in Section 5.15 of the Company Disclosure
Schedule, no Company Benefit Plan provides benefits, including, without
limitation, death or medical benefits, beyond termination of service or
retirement other than (i) coverage mandated by law, (ii) death or retirement
benefits under any qualified Company Benefit Plan, or (iii) deferred
compensation benefits reflected on the books of the Company or an Affiliate.
(i) Except as set forth in Section 5.15 of the Company Disclosure
Schedule, the execution and performance of this Agreement will not (i)
constitute a stated triggering event under any Company Benefit Plan that will
result in any payment (whether of severance pay or otherwise) becoming due from
the Company or any Affiliate to any officer, employee, or former employee (or
dependents of such employee), or (ii) accelerate the time of payment or vesting,
or increase the amount of compensation due to any employee, officer or director
of the Company or any Affiliate.
(j) Except as set forth in Section 5.15 of the Company Disclosure
Schedule, (i) any amount that could be received (whether in cash or property or
the vesting of property) as a result of any of the transactions contemplated by
this Agreement by any employee, officer or director of the Company or any
Affiliate who is a "disqualified individual" (as such term is
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defined in proposed Treasury Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other compensation arrangement or Company
Benefit Plan currently in effect would not be characterized as an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the Code),
and (ii) the disallowance of a deduction under Section 162(m) of the Code for
employee remuneration will not apply to any amount paid or payable by the
Company or any Affiliate under any contract, Company Benefit Plan, program,
arrangement or understanding currently in effect.
(k) For purposes of this Section:
(i) "COMPANY BENEFIT PLAN" means (A) all employee benefit
plans within the meaning of ERISA Section 3(3) maintained by the Company or any
Affiliate, including, but not limited to, multiple employer welfare arrangements
(within the meaning of ERISA Section 3(40)), plans to which more than one
unaffiliated employer contributes and employee benefit plans (such as foreign or
excess benefit plans) which are not subject to ERISA; (B) all stock option
plans, stock purchase plans, bonus or incentive award plans, severance pay
policies or agreements, deferred compensation agreements, supplemental income
arrangements, vacation plans, and all other employee benefit plans, agreements,
and arrangements not described in (A) above maintained by the Company or any
Affiliate, including without limitation, any arrangement intended to comply with
Code Section 120, 125, 127, 129 or 137; and (C) all plans or arrangements
providing compensation to employee and non-employee directors maintained by the
Company or any Affiliate. In the case of a Company Benefit Plan funded through a
trust described in Code Section 401(a), or any other funding vehicle, each
reference to such Company Benefit Plan shall include a reference to such trust,
organization or other vehicle;
(ii) An entity "MAINTAINS" a Company Benefit Plan if such
entity sponsors, contributes to, or provides benefits under or through such
Company Benefit Plan, or has any obligation (by agreement or under applicable
law) to contribute to or provide benefits under or through such Company Benefit
Plan, or if such Company Benefit Plan provides benefits to or otherwise covers
employees of such entity (or their spouses, dependents, or beneficiaries);
(iii) An entity is an "AFFILIATE" of the Company for
purposes of this Section 5.15 if it would have ever been considered a single
employer with the Company under ERISA Section 4001(b) or part of the same
"controlled group" as the Company for purposes of ERISA Section 302(d)(8)(C);
and
(iv) "MULTIEMPLOYER PLAN" means an employee pension or
welfare benefit plan to which more than one unaffiliated employer contributes
and which is maintained pursuant to one or more collective bargaining
agreements.
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5.16 LABOR MATTERS. Except as set forth in Section 5.16 of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary is 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 the Company
Subsidiaries relating to their business, except for any such proceeding which
would not reasonably be expected to have a Company Material Adverse Effect. To
the Company's knowledge there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or threatened
involving employees of the Company or any of the Company Subsidiaries.
5.17 NO BROKERS. Neither the Company nor any of the Company
Subsidiaries has entered into any contract, arrangement or understanding with
any person or firm which may result in the obligation of such entity or MergerCo
to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or
consummation of the Transactions, except that the Company has retained The
Beacon Group Capital Services, L.L.C. ("BEACON GROUP") as its financial advisor
in connection with the Transactions, a true copy of any and all agreements
between the Company and Beacon Group, including the engagement letter entered
into between the Company and Beacon Group, have been delivered to MergerCo.
Other than the foregoing arrangements, the Company is not aware of any claim for
payment of any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or
consummation of the Transactions.
5.18 OPINION OF FINANCIAL ADVISORS. The Company has received the
opinion of Beacon Group to the effect that, as of the date hereof, the Merger
Consideration is fair to the holders of the Common Stock from a financial point
of view.
5.19 YEAR 2000. There is no impediment to the Company being year
2000 compliant by December 31, 1999 (i.e., that products, hardware, software and
other date-sensitive equipment manufactured, sold, owned, licensed or used by
the Company will be capable of correctly processing date data (including, but
not limited to, calculating, comparing and sequencing) accurately prior to,
during and after the calendar year 2000 when used, assuming that all third party
products, hardware, software and other date-sensitive equipment used in
combination therewith are capable of properly exchanging date data), except to
the extent that any such impediment would not have a Company Material Adverse
Effect.
5.20 INSURANCE. The Company and the Company Subsidiaries are
covered by insurance in scope and amount customary and reasonable for the
businesses in which they are engaged. Except as disclosed in Section 5.20 of the
Disclosure Schedule, each insurance policy to which the Company or any of the
Company Subsidiaries is a party is in full force and effect
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and will not require any consent as a result of the consummation of the
Transactions. Neither the Company nor any of the Company Subsidiaries is in
material breach or default (including with respect to the payment of premiums or
the giving of notices) under any insurance policy to which it is a party, and no
event has occurred which, with notice or the lapse of time, would constitute
such a material breach or default by the Company or any of the Company
Subsidiaries or would permit termination, modification or acceleration, under
such policies; and the Company has not received any notice from the insurer
disclaiming coverage or reserving rights with respect to any material claim or
any such policy in general.
5.21 CONTRACTS. Neither the Company nor any of the Company
Subsidiaries is in breach, nor has the Company or any Company Subsidiary
received in writing any claim that it has breached, any of the terms or
conditions of any material agreement, contract or commitment (excluding leases)
to which it is a party or by which any of its assets and properties are bound
(collectively, "MATERIAL CONTRACTS") in such a manner as would permit any other
party to cancel or terminate the same prior to its stated term or would permit
any other party to collect material damages from the Company under any such
Material Contract. Neither the Company nor any of the Company Subsidiaries is in
breach, nor has the Company or any Company Subsidiary received in writing any
claim that it has breached, any of the terms or conditions of any lease to which
it is a party and which is material to the business of the Company and the
Company Subsidiaries taken as a whole (collectively, "MATERIAL LEASES"), in such
a manner as would permit any other party to cancel or terminate the same prior
to its stated term or would permit any other party to collect material damages
from the Company under any such Material Lease. Each Material Contract and
Material Lease is in full force and effect and to the Company's knowledge is not
subject to any material default thereunder by any party obligated to the Company
or any of the Company Subsidiaries thereunder. The Company is not a party to any
"poison pill," shareholder rights plan, rights agreement or similar agreement,
instrument, plan or arrangement.
5.22 TAKEOVER LAWS. No "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation enacted under
state or federal laws in the United States including, without limitation,
Chapter 110F of the MGL, applicable to the Company or any of the Company
Subsidiaries is applicable to the execution, delivery and performance of this
Agreement or the consummation of the Merger or the other Transactions.
5.23 VOTE REQUIRED. The affirmative vote of the holders of two-
thirds of the outstanding shares of Common Stock entitled to vote thereon is the
only vote of any class of capital stock of the Company required by the MBCL, the
Articles of Organization or the Bylaws to adopt this Agreement and approve the
Transactions.
5.24 DEFINITION OF THE COMPANY's KNOWLEDGE. As used in this
Agreement, the phrase "TO THE KNOWLEDGE OF THE COMPANY" or any similar phrase
means the actual (and not the
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constructive or imputed) knowledge (following a reasonable inquiry) of those
individuals identified in Section 5.24 of the Company Disclosure Schedule.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
6.1 CONDUCT OF BUSINESS BY THE COMPANY. During the period from the
date of this Agreement to the Effective Time, except as otherwise contemplated
by this Agreement, the Company shall, and shall cause each of the Company
Subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course, consistent with past practice, and use their best efforts to
preserve intact their present business organizations, keep available the
services of their present advisors, managers, officers and employees and
preserve their relationships with customers, suppliers, licensors and others
having business dealings with them and continue existing contracts as in effect
on the date hereof (for the term provided in such contracts). Without limiting
the generality of the foregoing, neither the Company nor any of the Company
Subsidiaries will (except as expressly permitted by this Agreement or as
contemplated by the Transactions or to the extent that Parent or MergerCo shall
otherwise consent in writing):
(a) (i) declare, set aside or pay any dividend or other
distribution (whether in cash, stock, property or any combination thereof) in
respect of any of its capital stock, (ii) split, combine or reclassify any of
its capital stock or (iii) repurchase, redeem or otherwise acquire any of its
securities, except, in the case of clause (iii), for (X) the acquisition of
shares of Common Stock from holders of Options in full or partial payment of the
exercise price payable by such holders upon exercise of Options outstanding on
the date of this Agreement and (Y) the acquisition of shares of Common Stock
from the stockholders of the Company set forth in Section 6.1(a) of the Company
Disclosure Schedule (collectively, the "ROLLOVER STOCKHOLDERS") upon the
exchange of such shares for shares of Series B Stock in connection with the
Transactions;
(b) authorize for issuance, issue, sell, deliver or agree
or commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities (including indebtedness having
the right to vote) or equity equivalents (including, without limitation, stock
appreciation rights), other than (X) the issuance of shares of Common Stock upon
the exercise of Options outstanding on the date of this Agreement in accordance
with their present terms and (Y) the issuance of the Series B Stock to the
Rollover Stockholders in exchange for shares of Common Stock in connection with
the Transactions;
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(c) acquire, sell, lease, encumber, transfer or dispose
of any assets outside the ordinary course of business (whether by asset
acquisition, stock acquisition or otherwise), except as set forth in Section
6.1(c) of the Company Disclosure Schedule;
(d) make any loans, advances or capital contributions
other than in the ordinary course of business consistent with prior practice;
(e) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than any payment, discharge or satisfaction (i) in the
ordinary course of business consistent with past practice, or (ii) in connection
with the Transactions;
(f) change any of the accounting principles or practices
used by it (except as required by generally accepted accounting principles, in
which case written notice shall be provided to MergerCo prior to any such
change);
(g) except as required by law, (i) enter into, adopt,
amend or terminate any Company Benefit Plan, (ii) enter into, adopt, amend or
terminate any agreement, arrangement, plan or policy between the Company or any
of the Company Subsidiaries (other than terminations of agreements,
arrangements, plans or policies in accordance with the terms thereof existing on
the date of this Agreement) and one or more of their directors or officers, or
(iii) increase in any manner the compensation or fringe benefits of any director
of the Company or the compensation or fringe benefits of any officer of the
Company or any Company Subsidiary set forth in Section 6.1(g) of the Company
Disclosure Schedule, or, except for normal increases in the ordinary course of
business consistent with past practice, any employee of the Company or any
Company Subsidiary, or pay any benefit not required by any Company Benefit Plan
or arrangement as in effect as of the date hereof;
(h) adopt any amendments to the Articles of Organization
or Bylaws, other than (X) to authorize the shares of Series B Stock to be issued
to the Rollover Stockholders and to establish the rights, preferences and
designations thereof (such rights, preferences and designations of such Series B
Stock shall be as set forth in Section 6.1(h) of the Company Disclosure
Schedule) and (Y) as otherwise expressly provided by the terms of this
Agreement;
(i) except as set forth in Section 5.1 of the Company
Disclosure Schedule, adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or reorganization;
(j) settle or compromise any litigation (whether or not
commenced prior to the date of this Agreement);
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(k) waive, release or amend its rights under any
confidentiality, "standstill" or similar agreement that the Company entered into
in connection with its consideration of a potential strategic transaction;
provided, however, that the Company may waive, release or amend its rights under
any such confidentiality, "standstill" or similar agreement if the Company Board
determines based on the advice of independent legal counsel that failure to do
so would be reasonably likely to constitute a breach of its fiduciary duties to
the Company's stockholders under applicable law; or
(l) enter into an agreement to take any of the foregoing
actions.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 STOCKHOLDERS MEETING.
(a) The Company, acting through the Company Board, shall,
in accordance with applicable law:
(i) duly call, give notice of, convene and hold
a special meeting of its stockholders (the "SPECIAL MEETING") as soon as
practicable following the execution of this Agreement for the purpose of
considering and taking action upon this Agreement and the Transactions (it being
understood that the date of the Special Meeting shall be reasonably acceptable
to Parent);
(ii) as promptly as practicable (but in no event
later than twenty-five (25) days following the date of this Agreement) prepare
and file with the SEC a preliminary proxy statement relating to this Agreement
and the Transactions;
(iii) use its reasonable efforts to (A) obtain and
furnish the information required to be included by the SEC in a definitive proxy
statement (the "PROXY STATEMENT") and, after consultation with MergerCo, to
respond promptly to any comments made by the SEC with respect to the preliminary
proxy statement and cause the Proxy Statement to be mailed to its stockholders
not later than five (5) business days following clearance from the SEC, and (B)
obtain the necessary approval of this Agreement and the Transactions by its
stockholders; and
(iv) subject to the fiduciary duties of the
Company Board as provided in Section 7.5, include in the Proxy Statement the
recommendation of the Company Board that stockholders of the Company vote in
favor of the approval of this Agreement and the Transactions.
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(b) Each of the Company, on the one hand, and Parent and
MergerCo, on the other hand, agree promptly to correct any information provided
by either of them for use in the Proxy Statement if and to the extent that such
information shall have become false or misleading, and the Company further
agrees to take all necessary steps to cause the Proxy Statement as so corrected
to be filed with the SEC and to be disseminated to the stockholders of the
Company, in each case, as to the extent required by applicable federal
securities laws.
(c) As soon as practicable following the date of this
Agreement, the Company and MergerCo shall together prepare and file with the SEC
a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "SCHEDULE 13E-3"). The
Company and MergerCo shall use all reasonable best efforts to have the Schedule
13E-3 cleared by the SEC as soon as practicable following such filing. Each of
the Company, Parent and MergerCo shall furnish all information about itself, its
business and operations and its owners and all financial information to Parent
and MergerCo as may be reasonably necessary in connection with the preparation
of the Schedule 13E-3. Each of the Company, Parent and MergerCo agrees promptly
to correct any information provided by it for use in the Schedule 13E-3 if and
to the extent that such information shall have become false or misleading in any
material respect. Each of the Company and MergerCo shall notify the other of the
receipt of any comments of the SEC with respect to the Schedule 13E-3. Each of
the Company and MergerCo shall give the other and its counsel the opportunity to
review Schedule 13E-3 prior to its being filed with the SEC and shall give the
other and its counsel the opportunity to review all amendments and supplements
to the Schedule 13E-3 and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC.
(d) None of the information supplied by the Company
specifically for inclusion or incorporation by reference in (i) the Proxy
Statement, (ii) the Schedule 13E-3 or (iii) the Other Filings (as hereinafter
defined), will, at the respective times filed with the SEC or other Governmental
Entity and, in addition, in the case of the Proxy Statement and the Schedule
13E-3, as of the date it or any amendment or supplement thereto is mailed to
stockholders and at the time of any meeting of stockholders to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement and the Schedule 13E-3,
insofar as they relate to the Company or other information supplied by the
Company for inclusion therein, will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder. The Company makes no representation, warranty or
covenant with respect to information concerning Parent or MergerCo included in
the Proxy Statement or the Schedule 13E-3 or information supplied by Parent or
MergerCo for inclusion in the Proxy Statement or the Schedule 13E-3.
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(e) None of the information supplied by Parent or
MergerCo specifically for inclusion or incorporation by reference in (i) the
Proxy Statement, (ii) the Schedule 13E-3 or (iii) the Other Filings, will, at
the respective times filed with the SEC or other Governmental Entity and, in
addition, in the case of the Proxy Statement and the Schedule 13E-3, as of the
date it or any amendment or supplement thereto is mailed to stockholders and at
the time of any meeting of stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement and the Schedule 13E-3, insofar as they relate
to Parent or MergerCo or other information supplied by Parent or MergerCo for
inclusion therein, will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder.
7.2 OTHER FILINGS. As promptly as practicable (but in no event
later than thirty (30) days following the date of this Agreement in the case of
any filing under the HSR Act), the Company, Parent and MergerCo each shall
properly prepare and file any other filings required under the Exchange Act or
any other federal, state or foreign law relating to the Merger and the
Transactions (including filings, if any, required under the HSR Act)
(collectively, the "OTHER FILINGS"). Each of the Company, MergerCo and Parent
shall promptly notify the other of the receipt of any comments on, or any
request for amendments or supplements to, any of the Other Filings by the SEC or
any other Governmental Entity or official, and each of the Company, Parent and
MergerCo shall supply the other with copies of all correspondence between it and
each of its Subsidiaries and representatives, on the one hand, and the SEC or
the members of its staff or any other appropriate governmental official, on the
other hand, with respect to any of the Other Filings. The Company, Parent and
MergerCo each shall use its respective reasonable best efforts to obtain and
furnish the information required to be included in any of the Other Filings.
Parent and MergerCo hereby covenant and agree to use their respective reasonable
best efforts to secure termination of any waiting periods under the HSR Act and
obtain the approval of the Federal Trade Commission (the "FTC") or any other
Governmental Entity for the Transactions, including without limitation, promptly
entering into a consent decree or other arrangement with the FTC or other
Governmental Entity as may be necessary to secure termination of such waiting
periods or obtain such other approval. Parent and MergerCo shall make any
undertakings (including undertakings to make divestitures) required in order to
comply with the antitrust requirements or laws of any Governmental Entity,
including the HSR Act, in connection with the Transactions.
7.3 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the Transactions and to cooperate with each other in
connection with the foregoing, including the taking of such actions as are
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necessary to obtain any necessary consents, approvals, orders, exemptions and
authorizations by or from any public or private third party, including without
limitation any that are required to be obtained under any federal, state or
local law or regulation or any contract, agreement or instrument to which the
Company or any Company Subsidiary is a party or by which any of their respective
properties or assets are bound, to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the Transactions,
to cause to be lifted or rescinded any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
Transactions, and to effect all necessary registrations and Other Filings,
including, but not limited to, filings under the HSR Act, if any, and
submissions of information requested by governmental authorities. For purposes
of the foregoing sentence, the obligation of the Company, Parent and MergerCo to
use their "reasonable best efforts" to obtain waivers, consents and approvals to
loan agreements, leases and other contracts shall not include any obligation to
agree to an adverse modification of the terms of such documents or to prepay or
incur additional obligations to such other parties.
7.4 FEES AND EXPENSES. Except as set forth in Section 9.2 hereof,
whether or not the Merger is consummated, all fees, costs and expenses incurred
in connection with this Agreement and the Transactions shall be paid by the
party incurring such costs or expenses.
7.5 NO SOLICITATIONS.
(a) The Company represents and warrants that it has
terminated any discussions or negotiations relating to, or that may be
reasonably be expected to lead to, any Acquisition Proposal (as hereinafter
defined) and will promptly request the return of all confidential information
regarding the Company provided to any third party prior to the date of this
Agreement pursuant to the terms of any confidentiality agreements. Except as
permitted by this Agreement, the Company shall not, and shall not authorize or
permit any of its officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
to, directly or indirectly, (i) solicit, initiate or encourage (including by way
of furnishing non-public information), or take any other action to facilitate,
any inquiries or the making of any proposal that constitutes an Acquisition
Proposal, or (ii) participate in any discussions or negotiations regarding an
Acquisition Proposal; PROVIDED, HOWEVER, that, at any time prior to the approval
of this Agreement by the stockholders of the Company, if the Company receives an
Acquisition Proposal that was unsolicited or that did not otherwise result from
a breach of this Section 7.5(a), the Company may furnish non-public information
with respect to the Company and the Company Subsidiaries to the person who made
such Acquisition Proposal (a "THIRD PARTY") and may participate in negotiations
regarding such Acquisition Proposal if (A) the Company Board determines based on
the advice of independent legal counsel that failure to do so would be
reasonably likely to constitute a breach of its fiduciary duties to the
Company's stockholders under applicable law, and (B) the Company Board
determines that such Acquisition Proposal is reasonably likely to lead to a
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Superior Proposal (as hereinafter defined). Notwithstanding the foregoing, the
Company shall, prior to furnishing non-public information with respect to the
Company and the Company Subsidiaries to such Third Party, enter into a
confidentiality agreement with such Third Party with terms no less favorable to
the Company than those contained in the Confidentiality Agreement, provided that
such confidentiality agreement need not include the same standstill provisions
as those contained in the Confidentiality Agreement, it being understood that if
there are no standstill provisions in such confidentiality agreement or if such
provisions are more favorable to such Third Party than those in the
Confidentiality Agreement, the Confidentiality Agreement shall be deemed amended
to exclude the existing standstill provision or include such more favorable
provisions, as the case may be. The Company shall promptly notify (but in any
event within two (2) calendar days) MergerCo of the Company's first receipt of a
written Acquisition Proposal by such Third Party and of the material terms and
conditions thereof. Notwithstanding anything to the contrary in this Agreement,
the Company shall not be required to disclose to Parent or MergerCo the identity
of the Third Party making any such Acquisition Proposal and, except as provided
in Section 9.1(c)(i), shall have no duty to notify or update Parent or MergerCo
on the status of discussions or negotiations (including the status of such
Acquisition Proposal or any amendments or proposed amendments thereto) between
the Company and such Third Party.
(b) Subject to Section 9.1(d)(ii) hereof, at any time
prior to the approval of this Agreement by the stockholders of the Company, the
Company Board may (i) withdraw or modify in a manner material and adverse to
Parent or MergerCo its approval or recommendation of this Agreement or the
Merger, (ii) approve or recommend an Acquisition Proposal to its stockholders or
(iii) cause the Company to enter into any definitive acquisition agreement with
respect to an Acquisition Proposal, in each such case if (A) the Company Board
determines based on the advice of independent legal counsel that failure to take
such action would be reasonably likely to constitute a breach of its fiduciary
duties to the Company's stockholders under applicable law, and (B) the Company
Board determines based on the advice of its financial advisors that such
Acquisition Proposal constitutes a Superior Proposal. Any such withdrawal,
modification or change of the recommendation of the Company Board of this
Agreement shall not change the approval of the Company Board of this Agreement
for purposes of causing any state takeover statute or other state law to be
inapplicable to the Transactions, including the Merger.
(c) Nothing contained in this Section 7.5 shall prohibit
the Company from at any time taking and disclosing to its stockholders a
position contemplated by Rule 14d-9 or Rule 14e-2 promulgated under the Exchange
Act or making any disclosure required by Rule 14a-9 promulgated under the
Exchange Act.
(d) As used in this Agreement, the term "ACQUISITION
PROPOSAL" shall mean any proposed or actual (i) merger, consolidation or similar
transaction involving the Company,
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(ii) sale, lease or other disposition, directly or indirectly, by merger,
consolidation, share exchange or otherwise, of any assets of the Company or the
Company Subsidiaries representing 15% or more of the consolidated assets of the
Company and the Company Subsidiaries, (iii) issue, sale or other disposition by
the Company of (including by way of merger, consolidation, share exchange or any
similar transaction) securities (or options, rights or warrants to purchase, or
securities convertible into, such securities) representing 15% or more of the
votes associated with the outstanding securities of the Company, (iv) tender
offer or exchange offer in which any person shall acquire beneficial ownership
(as such term is defined in Rule 13d-3 under the Exchange Act), or the right to
acquire beneficial ownership, or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 15% or more of the outstanding shares of Common
Stock, (v) recapitalization, restructuring, liquidation, dissolution, or other
similar type of transaction with respect to the Company or (vi) transaction
which is similar in form, substance or purpose to any of the foregoing
transactions; PROVIDED, HOWEVER, that the term "Acquisition Proposal" shall not
include the Merger and the Transactions.
(e) As used in this Agreement, the term "SUPERIOR
PROPOSAL" means an Acquisition Proposal that the Company Board determines based
on the advice of its financial advisors is more favorable to the stockholders of
the Company from a financial point of view than the Transactions (taking into
account all of the terms and conditions of such Acquisition Proposal, including
any conditions to consummation and the likelihood of such Acquisition Proposal
being consummated).
7.6 OFFICERS' AND DIRECTORS' INDEMNIFICATION.
(a) In the event of any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
proceeding or investigation in which any person who is now, or has been at any
time prior to the date hereof, or who becomes prior to the Effective Time, a
director, officer, employee, fiduciary or agent of the Company or any of the
Company Subsidiaries (the "INDEMNIFIED PARTIES") is, or is threatened to be,
made a party based in whole or in part on, or arising in whole or in part out
of, or pertaining to (i) the fact that he is or was a director, officer,
employee, fiduciary or agent of the Company or any of the Company Subsidiaries,
or is or was serving at the request of the Company or any of the Company
Subsidiaries as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust or other enterprise, or (ii) the
negotiation, execution or performance of this Agreement or any of the
Transactions, whether in any case asserted or arising before or after the
Effective Time, the parties hereto agree to cooperate and use their reasonable
best efforts to defend against and respond thereto. It is understood and agreed
that the Company shall indemnify and hold harmless, and after the Effective Time
the Surviving Corporation shall
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indemnify and hold harmless, as and to the full extent permitted by applicable
law, each Indemnified Party against any losses, claims, damages, liabilities,
costs, expenses (including reasonable attorneys' fees and expenses), judgments,
fines and amounts paid in settlement in connection with any such threatened or
actual claim, action, suit, proceeding or investigation, and in the event of any
such threatened or actual claim, action, suit, proceeding or investigation
(whether asserted or arising before or after the Effective Time), (A) the
Company, and the Surviving Corporation after the Effective Time, shall promptly
pay expenses in advance of the final disposition of any claim, suit, proceeding
or investigation to each Indemnified Party to the full extent permitted by law,
(B) the Indemnified Parties may retain counsel satisfactory to them, and the
Company and the Surviving Corporation, shall pay all fees and expenses of such
counsel for the Indemnified Parties within thirty days after statements therefor
are received, and (C) the Company and the Surviving Corporation will use their
respective reasonable best efforts to assist in the vigorous defense of any such
matter; PROVIDED, HOWEVER, that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld); and PROVIDED
FURTHER, HOWEVER, that the Surviving Corporation shall have no obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final and
non-appealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim indemnification under this Section 7.6, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify the Company
and, after the Effective Time, the Surviving Corporation, thereof, provided that
the failure to so notify shall not affect the obligations of the Company and the
Surviving Corporation except to the extent such failure to notify materially
prejudices such party.
(b) Parent and MergerCo agree that all rights to
indemnification existing in favor of, and all limitations on the personal
liability of, the directors, officers, employees and agents of the Company and
the Company Subsidiaries provided for in the Articles of Organization or Bylaws
as in effect as of the date hereof with respect to matters occurring prior to
the Effective Time, and including the Merger and the Transactions, shall
continue in full force and effect for a period of six (6) years from the
Effective Time; PROVIDED, HOWEVER, that all rights to indemnification in respect
of any claims (each a "CLAIM") asserted or made within such period shall
continue until the disposition of such Claim. Prior to the Effective Time, the
Company shall purchase an extended reporting period endorsement ("REPORTING TAIL
COVERAGE") under the Company's existing directors' and officers' liability
insurance coverage for the Company's directors and officers in a form acceptable
to the Company which shall provide such directors and officers with coverage for
six (6) years following the Effective Time of not less than the existing
coverage under, and have other terms not materially less favorable to, the
insured persons than the directors' and officers' liability insurance coverage
presently maintained by the Company; PROVIDED, HOWEVER, than in any event the
total
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aggregate cost of such Reporting Tail Coverage shall not exceed $175,000 (the
"MAXIMUM AMOUNT"); and PROVIDED, FURTHER, that if such coverage cannot be
obtained for such cost, the Company will maintain, for such six-year period, the
maximum amount of comparable coverage as shall be available for the Maximum
Amount on such terms.
(c) This Section 7.6 is intended for the irrevocable
benefit of, and to grant third party rights to, the Indemnified Parties and
shall be binding on all successors and assigns of Parent, MergerCo, the Company
and the Surviving Corporation. Each of the Indemnified Parties shall be entitled
to enforce the covenants contained in this Section 7.6.
(d) In the event that the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other person
or entity 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 or entity, then, and in each such
case, proper provision shall be made so that the successors and assigns of the
Surviving Corporation assume the obligations set forth in this Section 7.6.
7.7 ACCESS TO INFORMATION; CONFIDENTIALITY. From the date hereof
until the Effective Time, the Company shall, and shall cause each of the Company
Subsidiaries and each of the Company's and Company Subsidiaries' officers,
employees, customers, suppliers, lenders and agents to, afford to MergerCo and
to the officers, employees and agents of MergerCo complete access at all
reasonable times to such officers, employees, agents, properties, books, records
and contracts, and shall furnish MergerCo such financial, operating and other
data and information as MergerCo may reasonably request. Prior to the Effective
Time, Parent and MergerCo shall hold in confidence all such information on the
terms and subject to the conditions contained in that certain confidentiality
agreement between Parent and the Company dated October 30, 1998 (the
"CONFIDENTIALITY AGREEMENT"). The Company hereby waives the provisions of the
Confidentiality Agreement as and to the extent necessary to permit the making
and consummation of the Transactions. At the Effective Time, such
Confidentiality Agreement shall terminate. Each party shall give prompt written
notice to the other of any fact, event or circumstance known to it that would be
reasonably likely to cause or constitute a material breach of any of its
representations or warranties contained herein or a Company Material Adverse
Effect or Parent Material Adverse Effect, as applicable.
7.8 FINANCIAL AND OTHER STATEMENTS. Notwithstanding anything
contained in Section 7.7, during the term of this Agreement, the Company shall
also provide to MergerCo or its representatives the following documents and
information:
(a) As soon as reasonably available after filing with the
SEC, the Company will deliver to MergerCo or its representatives the Company's
Quarterly Report on Form 10-Q as filed under the Exchange Act for each fiscal
quarter ending after the date of this Agreement.
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As soon as reasonably available after filing with the SEC, the Company will
deliver to MergerCo or its representatives the Company's Annual Report on Form
10-K, as filed under the Exchange Act for each fiscal year ending after the date
of this Agreement. The Company will also deliver to MergerCo or its
representatives, contemporaneously with its being filed with the SEC, a copy of
each Current Report on Form 8-K. As soon as reasonably available, the Company
will deliver to MergerCo or its representatives copies of financial reports for
each calendar month ending after the date of this Agreement prepared by the
Company's management in the ordinary course of business.
(b) Promptly upon receipt thereof, the Company will
furnish to MergerCo or its representatives copies of all internal control
reports submitted to the Company or any Company Subsidiary by independent
accountants in connection with each annual, interim or special audit of the
books of the Company or any such Company Subsidiary made by such accountants.
(c) As soon as practicable, the Company will furnish to
MergerCo or its representatives copies of all such financial statements and
reports as the Company or any Company Subsidiary shall send to its stockholders,
the SEC or any other regulatory authority, to the extent any such reports
furnished to any such regulatory authority are not confidential and except as
legally prohibited thereby.
7.9 PUBLIC ANNOUNCEMENTS. The Company and MergerCo shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or any of the Transactions and shall
not issue any such press release or make any such public statement without the
prior consent of the other party, which consent shall not be unreasonably
withheld; PROVIDED, HOWEVER, that a party may, without the prior consent of the
other party, issue such press release or make such public statement as may be
required by law or the applicable rules of any stock exchange if it has used its
best efforts to consult with the other party and to obtain such party's consent
but has been unable to do so in a timely manner. In this regard, the parties
shall make a joint public announcement of the Transactions contemplated thereby
no later than (i) the close of trading on the American Stock Exchange on the day
this Agreement is signed, if such signing occurs during a business day or (ii)
the opening of trading on the American Stock Exchange on the business day
following the date on which this Agreement is signed, if such signing does not
occur during a business day.
7.10 EMPLOYEE BENEFIT ARRANGEMENTS. Section 7.10 of the Company
Disclosure Schedule sets forth each employment or severance agreement to which
the Company or any Company Subsidiary is presently a party. MergerCo agrees that
the Company will honor, and from and after the Effective Time, the Surviving
Corporation will honor, all obligations under such employment and severance
agreements.
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7.11 REQUIRED FINANCING. Each of Parent and MergerCo hereby agrees
to use its reasonable best efforts to arrange the financing in respect of the
Transactions and to satisfy the conditions set forth in the Financing Letters.
Parent and MergerCo shall keep the Company informed of the status of their
financing arrangements for the Transactions, including providing written
notification to the Company as promptly as possible (but in any event within
forty-eight (48) hours) with respect to (i) any indication that either of the
Lenders may be unable to provide the financing as contemplated by the Financing
Letters, including without limitation, any indication from either of the Lenders
that there has occurred a material disruption or material adverse change in the
banking, financial or capital markets generally or in the market for senior
credit facilities or for new issuances of high yield securities which has caused
or could cause such Lender to withdraw its commitment to provide financing as
contemplated by the Financing Letters, (ii) the ability of Parent or MergerCo to
satisfy any of the conditions set forth in the Financing Letters, and (iii) any
adverse developments relating to the financing contemplated by the Financing
Letters. Parent shall provide written notice to the Company within twenty-four
(24) hours if either of the Lenders has indicated to Parent or MergerCo that
such Lender will be unable to provide the financing contemplated by the
applicable Financing Letter (a "PARENT FINANCING NOTICE"). In the event Parent
and MergerCo are unable to arrange any portion of such financing in the manner
or from the sources contemplated by the Financing Letters, Parent and MergerCo
shall arrange (or, in the event that such inability to arrange financing arises
under the circumstances contemplated by Section 8.2(f) hereof, use its
reasonable best efforts to arrange) any such portion from alternative sources on
substantially the same terms and with substantially the same conditions as the
portion of the financing that Parent and MergerCo were unable to arrange. The
Company shall use its reasonable best efforts to assist Parent and MergerCo in
obtaining their financing; provided, however, that the obligation of the Company
to use its reasonable best efforts in connection with the foregoing shall only
apply to reasonable and customary activities in this regard and shall not
include any obligation to obtain any extraordinary waivers, consents or
approvals to loan agreements, leases or other contracts or to agree to an
adverse modification of the terms of any of such documents, to prepay or incur
additional obligations to any other parties or to incur or become liable for any
other costs or expenses.
7.12 RECAPITALIZATION ACCOUNTING TREATMENT. Each of the Company,
Parent and MergerCo shall use its reasonable best efforts to cause the
Transactions, including the Merger, to be accounted for as a recapitalization
and such accounting treatment to be accepted by their respective accountants and
by the SEC, and each of the Company, Parent and MergerCo agrees that it shall
not take or omit to take any action that would cause such accounting treatment
not to be obtained.
7.13 DELISTING. Each of the parties hereto agrees to cooperate with
each other in taking, or causing to be taken, all actions necessary to delist
the Common Stock from the
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American Stock Exchange, provided that such delisting shall not be effective
until after the Effective Time of the Merger.
7.14 EXCHANGE OF COMMON STOCK. Not later than the Effective Time,
the Company shall (i) designate 75,000 shares of Preferred Stock of the Company
as the Series B Stock and (ii) take all such actions as may be necessary to
exchange each share of Common Stock held by the Rollover Stockholders that is
set forth opposite their respective names in Section 6.1(a) of the Company
Disclosure Schedule for 0.2 shares of Series B Stock and complete such exchange,
in each case, pursuant to documentation reasonably acceptable in form and
substance to MergerCo. In effecting such exchange, all fractional shares of
Series B Stock otherwise issuable in connection therewith shall not be issued
but shall be rounded to the nearest number of whole shares of Series B Stock.
7.15 SOLVENCY LETTERS. Parent or MergerCo shall engage an appraisal
firm, reasonably satisfactory to the Company, to deliver a letter (the "SOLVENCY
LETTER") addressed to the Company, the Company Board, MergerCo and the MergerCo
Board (and on which the Company Board and the MergerCo Board shall be entitled
to rely), which Solvency Letter shall be reasonably satisfactory to the Company
and the Company Board, indicating that immediately after the Effective Time, and
after giving effect to the Merger, the financings contemplated by this Agreement
and any other of the Transactions, the Surviving Corporation will not (i) be
insolvent or (ii) have unreasonably small capital with which to engage in its
business. Notwithstanding anything to the contrary in this Agreement, Parent
and/or MergerCo shall pay all fees, costs and expenses of such appraisal firm in
connection with the preparation and delivery of the Solvency Letter.
7.16 PURCHASE OF COMPANY SHARES. The Company acknowledges that
MergerCo may acquire up to 9.9% of the outstanding shares of Common Stock prior
to the Effective Time in one or more privately negotiated transactions. In
connection with the foregoing, Parent and MergerCo hereby represent and warrant
that they are (a) aware that the United States securities laws prohibit any
person who has material, non-public information concerning a company from
purchasing or selling securities of such company or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities, and
(b) familiar with the Exchange Act and that they will not purchase or sell any
shares of Common Stock in contravention of the Exchange Act, including, without
limitation, Rule 10b-5 thereunder. Each of Parent and MergerCo agrees that it
shall indemnify and hold harmless the Company and each of its directors,
officers, employees and agents against any losses, claims, damages, liabilities,
costs, expenses (including reasonable attorneys' fees and expenses), judgments,
fines and amounts paid in settlement in connection with any threatened or actual
claim, action, suit, proceeding or investigation, whether civil, criminal or
administrative, arising out of or relating to any transactions in the Common
Stock contemplated by the first sentence of this Section 7.16.
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ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment or waiver, where permissible, at or prior to the
Closing Date, of each of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the
Transactions, including the Merger, shall have been approved and adopted by the
affirmative vote of the stockholders of the Company as required by the MBCL and
the Articles of Organization.
(b) HART-SCOTT-RODINO ACT. Any waiting period (and any
extension thereof) applicable to the consummation of the Merger under the HSR
Act shall have expired or been terminated.
(c) OTHER REGULATORY APPROVALS. All necessary approvals,
authorizations and consents of any governmental or regulatory entity required to
consummate the Merger shall have been obtained and remain in full force and
effect, and all waiting periods relating to such approvals, authorizations and
consents shall have expired or been terminated.
(d) NO INJUNCTIONS, ORDERS OR RESTRAINTS; ILLEGALITY. No
preliminary or permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission (an "INJUNCTION") nor any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority shall be in effect which would (i) make the consummation of the Merger
illegal, or (ii) otherwise restrict, prevent or prohibit the consummation of any
of the Transactions, including the Merger.
(e) SOLVENCY LETTER. Each of the Company Board and the
MergerCo Board shall have received the Solvency Letter.
8.2 CONDITIONS TO OBLIGATIONS OF MERGERCO. The obligations of
MergerCo to effect the Merger are further subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Those representations
and warranties of the Company set forth in this Agreement which are qualified by
materiality or a Company Material Adverse Effect or words of similar effect
shall be true and correct as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (except to the extent such
representations and warranties expressly relate to a specific date, in
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which case such representations and warranties shall be true and correct as of
such date), and those representations and warranties of the Company set forth in
this Agreement which are not so qualified shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the extent such
representations and warranties expressly relate to a specific date, in which
case such representations and warranties shall be true and correct in all
material respects as of such date). Notwithstanding the foregoing, the
representations and warranties of the Company set forth in Section 5.3 shall be
true and correct on the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the extent such
representations and warranties expressly relate to a specific date, in which
case such representations and warranties shall be true and correct as of such
date).
(b) PERFORMANCE AND OBLIGATIONS OF THE COMPANY. The
Company shall have performed in all material respects all obligations required
to be performed by it under this Agreement, including, without limitation, the
covenants contained in Articles 6 and 7 hereof.
(c) CONSENTS, ETC. Any consent, authorization, order or
approval of (or filing or registration with) any third party (i) identified on
Section 8.2(c) of the Company Disclosure Schedule, or (ii) otherwise identified
by MergerCo after the date of this Agreement shall have been obtained or made,
except, in the case of clause (ii) hereof, where the failure to have obtained or
made any such consent, authorization, order, approval, filing or registration,
would not reasonably be expected to have a Company Material Adverse Effect.
(d) NO INJUNCTION. There shall not have been entered any
order in any action or proceeding by any state or federal government or
governmental authority or by any United States or state court of competent
jurisdiction (a "GOVERNMENTAL ENTITY") which prohibits or limits the ownership
or operation by the Company (or any of the Company Subsidiaries) of any portion
of the Company's or the Company Subsidiaries' business, properties or assets
which is material to the Company and the Company Subsidiaries as a whole, or
compels the Company (or any Company Subsidiary) to dispose of or hold separate
any portion of the Company's or the Company Subsidiaries' business, properties
or assets which is material to the Company and the Company Subsidiaries as a
whole.
(e) NO COMPANY MATERIAL ADVERSE CHANGE. There shall not
have occurred any material adverse change in the business, assets, condition
(financial or otherwise) or results of operations of the Company and the Company
Subsidiaries taken as a whole nor any event or other circumstance which would,
individually or in the aggregate, reasonably be expected to result in any such
material adverse change.
(f) NO FINANCING MATERIAL ADVERSE CHANGE. There shall not
have occurred any material disruption or material adverse change in the banking,
financial or capital markets
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generally or in the market for senior credit facilities or for new issuances of
high yield securities which has caused either of the Lenders to withdraw its
commitment to provide financing as contemplated by the Financing Letters.
(g) DISSENTING SHARES. As of immediately prior to the
Effective Time, no more than 5% of the outstanding shares of Common Stock shall
have taken actions to assert dissenter's rights under Chapter 156B of the MBCL.
(h) ACCOUNTING TREATMENT. The Proxy Statement shall
contain a statement to the effect that the Merger shall be treated as a
recapitalization for accounting purposes and the SEC shall not have disapproved
such statement in the Proxy Statement.
(i) GOVERNMENTAL LITIGATION. There shall not be pending
any action, claim, proceeding or investigation instituted by any Governmental
Entity challenging or prohibiting the consummation of the Merger and the
Transactions.
(j) EXCHANGE COMPLETE. The exchange contemplated by
Section 7.14 hereof shall have been completed to the reasonable satisfaction of
MergerCo.
(k) INDEBTEDNESS. On the Closing Date the Company shall
have no more than $13,000,000 of Net Indebtedness as reflected in a certificate
signed by the Chief Financial Officer of the Company in form and substance
reasonably satisfactory to MergerCo. For purposes of this Section 8.2(k), "Net
Indebtedness" shall mean all obligations of the Company and the Company
Subsidiaries for borrowed money (including the current portion thereof) or
evidenced by a bond, note, debenture or similar instrument, including without
limitation, all obligations arising under the credit facility identified in
Section 5.6 of the Company Disclosure Schedule, minus all cash and cash
equivalents of the Company and the Company Subsidiaries. Furthermore, for
purposes of determining the Company's Net Indebtedness under this Section
8.2(k), (i) all checks deposited by the Company on or prior to the Closing Date,
even if such checks have not "cleared" the bank or financial institution into
which such checks were deposited, shall be deemed to be an increase in "cash",
and (ii) all checks issued by the Company on or prior to the Closing Date, even
if such checks have not been "cashed" by the recipients thereof on or prior to
the Closing Date, shall be deemed to be a decrease in "cash." Notwithstanding
the foregoing, the term "Net Indebtedness" shall not include any obligations of
the Company or any Company Subsidiary under any letters of credit.
(l) OFFICER's CERTIFICATE. The Company shall have
furnished MergerCo with a certificate dated as of the Closing Date signed on its
behalf by an executive officer to the effect that the conditions set forth in
Sections 8.1 and 8.2 have been satisfied.
8.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of
the Company to
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effect the Merger is further subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Those representations
and warranties of Parent and MergerCo set forth in this Agreement which are
qualified by materiality or a Parent Material Adverse Effect or words of similar
effect shall be true and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except to the extent
such representations and warranties expressly relate to a specific date, in
which case such representations shall be true and correct as of such date), and
those representations and warranties of Parent and MergerCo set forth in this
Agreement which are not so qualified shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on the Closing Date (except to the extent such representations and
warranties expressly relate to a specific date, in which case such
representations and warranties shall be true and correct in all material
respects as of such date).
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND MERGERCO.
Each of Parent and MergerCo shall have performed all obligations required to be
performed by it under this Agreement, including, without limitation, the
covenants contained in Articles 6 and 7 hereof, except where any failure to
perform would, individually or in the aggregate, not materially impair or
significantly delay the ability of the Company to consummate the Merger.
(c) MERGERCO OFFICER's CERTIFICATE. MergerCo shall have
furnished the Company with a certificate dated as of the Closing Date signed on
its behalf by an executive officer to the effect that the conditions to be
satisfied by MergerCo set forth in Sections 8.1 and 8.3 have been satisfied.
(d) PARENT OFFICER's CERTIFICATE. Parent shall have
furnished the Company with a certificate dated as of the Closing Date signed on
its behalf by an executive officer to the effect that the conditions to be
satisfied by Parent set forth in Sections 8.1 and 8.3 have been satisfied.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after stockholder approval
thereof:
(a) by the mutual written consent of MergerCo and the
Company.
(b) by either of the Company or MergerCo:
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<PAGE> 48
(i) if the stockholders of the Company shall
have failed to give the required approval at the Special Meeting (including any
adjournment or postponement thereof); or
(ii) if any Governmental Entity shall have issued
an Injunction or taken any other action (which Injunction or other action the
parties hereto shall use their reasonable best efforts to lift), which
permanently restrains, enjoins or otherwise prohibits the Merger, and such
Injunction shall have become final and non-appealable; or
(iii) if, without any material breach by the
terminating party of its obligations under this Agreement, the Merger shall not
have occurred on or before November 30, 1999.
(c) by the Company:
(i) in connection with entering into a
definitive agreement to effect a Superior Proposal in accordance with Section
7.5; PROVIDED, HOWEVER, that prior to terminating this Agreement pursuant to
this Section 9.1(c)(i), (A) the Company shall have paid the Liquidated Amount,
as set forth in Section 9.2(b), and (B) the Company shall have provided MergerCo
with forty-eight (48) hours' prior written notice of the Company's decision to
so terminate. Such notice shall indicate in reasonable detail the terms and
conditions of such Superior Proposal, including, without limitation, the amount
and form of the proposed consideration and whether such Superior Proposal is
subject to any material conditions. Notwithstanding the foregoing, the Company
is not required to disclose to Parent or MergerCo the identity of the person
making such Superior Proposal; or
(ii) if Parent or MergerCo shall have breached in
any material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which breach cannot
be or has not been cured within fifteen (15) days after the giving of written
notice to Parent or MergerCo except, in any case, for such breaches which are
not reasonably likely to affect adversely Parent's or MergerCo's ability to
consummate the Merger; or
(iii) after sixty (60) days following receipt by the
Company of a Parent Financing Notice.
(d) by MergerCo:
(i) if the Company shall have breached in any
respect any of its representations, warranties or covenants contained in this
Agreement, which breach cannot be
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<PAGE> 49
or has not been cured within fifteen (15) days after the giving of written
notice to the Company except, in any case, for breaches of such representations
and warranties which are not reasonably likely to result in a Company Material
Adverse Effect;
(ii) if the Company Board shall (A) fail to\
include a recommendation in the Proxy Statement of this Agreement and the
Transactions, including the Merger, (B) withdraw or modify or change, or propose
or announce any intention to withdraw or modify or change, in a manner material
and adverse to MergerCo, the approval or recommendation by the Company Board of
this Agreement or the Transactions, including the Merger, (C) approve or
recommend or propose to announce any intention to approve or recommend any
Acquisition Proposal, or (D) propose or announce any intention to enter into any
agreement (other than a confidentiality agreement contemplated by Section 7.5
hereof) with respect to an Acquisition Proposal; or
(iii) after sixty (60) days following delivery by
Parent or MergerCo to the Company of a Parent Financing Notice.
9.2 EFFECT OF TERMINATION.
(a) Subject to Sections 9.2(b) and (d) hereof, in the
event of the termination of this Agreement pursuant to Section 9.1 hereof, this
Agreement shall forthwith become null and void and have no effect, without any
liability on the part of any party hereto or its affiliates, trustees,
directors, officers or stockholders and all rights and obligations of any party
hereto shall cease except for the agreements contained in Section 7.4, the third
sentence of Section 7.16 and Articles 9 and 10; PROVIDED, HOWEVER, that nothing
contained in this Section 9.2(a) shall relieve any party from liability for any
fraud or willful breach of this Agreement.
(b) The Company shall pay to MergerCo an amount in cash
equal to (A) $5,000,000 (the "LIQUIDATED AMOUNT"), plus (B) the Parent/MergerCo
Expenses (as hereinafter defined) if (W) MergerCo terminates this Agreement
under Section 9.1(d)(i) as a result of the Company having wilfully breached its
obligations under Section 7.1(a)(i) or Section 7.1(a)(iii), or (X) the Company
terminates this Agreement pursuant to Section 9.1(c)(i) or (Y) MergerCo
terminates this Agreement pursuant to Section 9.1(d)(ii) or (Z) either the
Company or MergerCo terminates this Agreement pursuant to Section 9.1(b)(i), if,
prior to the Special Meeting, (i) an Acquisition Proposal shall have been made
directly to the Company's stockholders generally or any person shall have
publicly announced an Acquisition Proposal or solicited proxies or consents in
opposition to the Merger and (ii) within nine (9) months immediately following
the date of such termination the Company and the party who shall have made such
Acquisition Proposal or any affiliate thereof enter into a definitive agreement
with respect thereto. Notwithstanding the foregoing, in no event shall the
Company be obligated to pay the Liquidated Amount or the Parent/MergerCo
Expenses more than once. For purposes
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<PAGE> 50
of this Section 9.2, "Parent/MergerCo Expenses" shall be an amount equal to the
reasonable out-of-pocket costs and expenses incurred by Parent and MergerCo in
connection with this Agreement and the Transactions, including without
limitation, fees and disbursements of its outside legal counsel, investment
bankers, accountants and other consultants retained by or on behalf of Parent
and MergerCo together with the other out-of-pocket costs and expenses incurred
by Parent and MergerCo in connection with analyzing and structuring the
Transactions, negotiating the terms and conditions of this Agreement and any
other agreements or other documents relating to the Transactions, arranging
financing, conducting due diligence and other activities related to this
Agreement and the Transactions (collectively, the "PARENT/MERGERCO EXPENSES");
provided, however, that the aggregate amount of all Parent/MergerCo Expenses to
be reimbursed by the Company shall not exceed $1,000,000.
(c) Any payment of the Liquidated Amount required by
Section 9.2(b) hereof shall be payable by the Company to MergerCo by wire
transfer of immediately available funds (i) in the case of clause (W) or (Y)
thereof, within three (3) business days after the date of termination, (ii) in
the case of clause (Z) thereof, within three (3) business days after the date of
entering into such definitive agreement, and (iii) in the case of clause (X)
thereof, prior to terminating this Agreement pursuant to Section 9.1(c)(i)
hereof, in any such case to an account designated by MergerCo. Any payment of
the Parent/MergerCo Expenses required by Section 9.2(b) hereof shall be payable
by the Company to MergerCo by wire transfer of immediately available funds
promptly following receipt by the Company of reasonable documentation of all
Parent/MergerCo Expenses.
(d) Notwithstanding anything to the contrary in this
Agreement, Parent and MergerCo hereto expressly acknowledge and agree that, with
respect to any termination of this Agreement pursuant to Section 9.1(c)(i) or
Section 9.1(d)(ii) hereof, or Section 9.1(b)(i) or Section 9.1(d)(i) hereof in
circumstances where the Liquidated Amount and the Parent/MergerCo Expenses are
payable in accordance with Section 9.2(b) hereof, the payment of the Liquidated
Amount and the Parent/MergerCo Expenses shall constitute liquidated damages with
respect to any claim for damages or any other claim which Parent or MergerCo
would otherwise be entitled to assert against the Company or any of the Company
Subsidiaries or any of their respective assets, or against any of their
respective directors, officers, employees, partners, managers, members or
shareholders, with respect to this Agreement and the Transactions and shall
constitute the sole and exclusive remedy available to Parent and MergerCo. The
parties hereto expressly acknowledge and agree that, in light of the difficulty
of accurately determining actual damages with respect to the foregoing upon any
termination of this Agreement pursuant to Section 9.1(c)(i) or Section
9.1(d)(ii) hereof, or Section 9.1(b)(i) or Section 9.1(d)(i) hereof in
circumstances where the Liquidated Amount and the Parent/MergerCo Expenses are
payable in accordance with Section 9.2(b) hereof, the rights to payment under
Section 9.2(b): (i) constitute a reasonable estimate of the damages that will be
suffered by reason of any such proposed or actual termination of this Agreement
pursuant to Section 9.1(c)(i) or Section 9.1(d)(ii) hereof, or Section 9.1(b)(i)
or Section 9.1(d)(i) hereof in circumstances where the Liquidated Amount and the
Parent/MergerCo Expenses are payable in accordance with Section 9.2(b) hereof,
and (ii) shall be in full and complete satisfaction of any and all damages
arising as a result of the foregoing. Except for nonpayment of the amounts set
forth in Section 9.2(b), Parent and MergerCo hereby agree that, upon any
termination of this Agreement pursuant to
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<PAGE> 51
Section 9.1(c)(i) or Section 9.1(d)(ii) hereof, or Section 9.1(b)(i) or Section
9.1(d)(i) hereof in circumstances where the Liquidated Amount and the
Parent/MergerCo Expenses are payable in accordance with Section 9.2(b) hereof,
in no event shall Parent or MergerCo (A) seek to obtain any recovery or judgment
against the Company or any of the Company Subsidiaries or any of their
respective assets, or against any of their respective directors, officers,
employees, partners, managers, members or shareholders, and (B) be entitled to
seek or obtain any other damages of any kind, including, without limitation,
consequential, indirect or punitive damages.
9.3 AMENDMENT. This Agreement may be amended by the parties hereto
by an instrument in writing signed on behalf of each of the parties hereto at
any time before or after any approval hereof by the stockholders of the Company
and MergerCo, but in any event following authorization by the MergerCo Board and
the Company Board; PROVIDED, HOWEVER, that after any such stockholder approval,
no amendment shall be made which by law requires further approval by
stockholders without obtaining such approval.
9.4 EXTENSION; WAIVER. At any time prior to the Closing, the
parties hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
10.1 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered or sent if delivered personally or sent by
facsimile or sent by prepaid overnight carrier to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):
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<PAGE> 52
(a) if to Parent or MergerCo:
Kirtland Capital Partners
2550 SOM Center Road
Suite 105
Willoughby Hills, OH 44904
Attn: Raymond A. Lancaster
Facsimile: (440) 585-9699
with a copy to:
Jones, Day, Reavis & Pogue
901 Lakeside Avenue
Cleveland, OH 44114
Attn: Charles W. Hardin, Esq.
Facsimile: (216) 579-0212
(b) if to the Company:
Instron Corporation
100 Royall Street
Canton, MA 02021
Attn: James M. McConnell
Facsimile: (781) 575-5765
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attn: Stuart M. Cable, P.C.
Joseph L. Johnson III, P.C.
Facsimile: (617) 570-8150
10.2 INTERPRETATION. When a reference is made in this Agreement to
a subsidiary or subsidiaries of Parent, MergerCo or the Company, the word
"SUBSIDIARY" means any corporation more than 50% of whose outstanding voting
securities, or any partnership, joint venture or other entity more than 50% of
whose total equity interest, is directly or indirectly owned by Parent, MergerCo
or the Company, as the case may be. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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<PAGE> 53
10.3 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Except for Sections 7.6, 7.16 and 10.7 none of the representations,
warranties, covenants and agreements contained in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, and thereafter there shall be no liability on the part of either Parent,
MergerCo or the Company or any of their respective officers, directors or
stockholders in respect thereof. Except as expressly set forth in this
Agreement, there are no representations or warranties of any party hereto,
express or implied.
10.4 MISCELLANEOUS. This Agreement (i) constitutes, together with
the Confidentiality Agreement, the Company Disclosure Letter and the Parent and
MergerCo Disclosure Schedule, the entire agreement and supersedes all of the
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof, (ii) shall be binding
upon and inure to the benefits of the parties hereto and their respective
successors and assigns and is not intended to confer upon any other person
(except as set forth below) any rights or remedies hereunder and (iii) may be
executed in two or more counterparts which together shall constitute a single
agreement. Section 7.6 is intended to be for the benefit of those persons
described therein and the covenants contained therein may be enforced by such
persons. The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in the Massachusetts Courts (as hereinafter
defined), this being in addition to any other remedy to which they are entitled
at law or in equity.
10.5 ASSIGNMENT. Except as expressly permitted by the terms hereof,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior written consent
of the other parties.
10.6 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
10.7 CHOICE OF LAW/CONSENT TO JURISDICTION. All disputes, claims or
controversies arising out of or relating to this Agreement, or the negotiation,
validity or performance of this Agreement, or the Transactions shall be governed
by and construed in accordance with the laws of the Commonwealth of
Massachusetts without regard to its rules of conflict of laws. Each of the
Company, Parent and MergerCo hereby irrevocably and unconditionally consents to
submit to the sole and exclusive jurisdiction of the courts of the Commonwealth
of Massachusetts and of the United States District Court for the District of
Massachusetts (the
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<PAGE> 54
"MASSACHUSETTS COURTS") for any litigation arising out of or relating to this
Agreement, or the negotiation, validity or performance of this Agreement, or the
Transactions (and agrees not to commence any litigation relating thereto except
in such courts), waives any objection to the laying of venue of any such
litigation in the Massachusetts Courts and agrees not to plead or claim in any
Massachusetts Court that such litigation brought therein has been brought in any
inconvenient forum. Each of the parties hereto agrees, (a) to the extent such
party is not otherwise subject to service of process in the Commonwealth of
Massachusetts, to appoint and maintain an agent in the Commonwealth of
Massachusetts as such party's agent for acceptance of legal process, and (b)
that service of process may also be made on such party by prepaid certified mail
with a proof of mailing receipt validated by the United States Postal Service
constituting evidence of valid service. Service made pursuant to (a) or (b)
above shall have the same legal force and effect as if served upon such party
personally within the Commonwealth of Massachusetts. For purposes of
implementing the parties' agreement to appoint and maintain an agent for service
of process in the Commonwealth of Massachusetts, each of Parent and MergerCo
does hereby appoint CT Corporation, 2 Oliver Street, Boston, Massachusetts
02109, as such agent.
10.8 NO AGREEMENT UNTIL EXECUTED. Irrespective of negotiations
among the parties or the exchanging of drafts of this Agreement, this Agreement
shall not constitute or be deemed to evidence a contract, agreement, arrangement
or understanding among the parties hereto unless and until (i) the Board of
Directors of the Company has approved, for purposes of Chapter 110F of the MGL
and any applicable provision of the Articles of Organization, the terms of this
Agreement, and (ii) this Agreement is executed by the parties hereto.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Parent, MergerCo and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
KIRTLAND CAPITAL PARTNERS III L.P.
By: Kirtland Partners Ltd.,
its General Partner
By: /S/ RAYMOND A. LANCASTER
--------------------------------------------------
Name: Raymond A. Lancaster
Title:
ISN ACQUISITION CORPORATION
By: /S/ RAYMOND A. LANCASTER
--------------------------------------------------
Name: Raymond A. Lancaster
Title: President
By: /S/ THOMAS N. LITTMAN
--------------------------------------------------
Name: Thomas N. Littman
Title: Treasurer
INSTRON CORPORATION
By: /S/ JAMES M. MCCONNELL
--------------------------------------------------
Name: James M. McConnell
Title: President
By: /S/ JOHN R. BARRETT
--------------------------------------------------
Name : John R. Barrett
Title: Treasurer
<PAGE> 1
EXHIBIT 99.1
[INSTRON CORPORATION LETTERHEAD]
INSTRON CORPORATION TO BE ACQUIRED
BY
KIRTLAND CAPITAL PARTNERS
CANTON, MA - MAY 7, 1999 -- Instron Corporation (ASE:ISN) and Kirtland Capital
Partners (KCP) today jointly announced that they have entered into a definitive
merger agreement providing for the acquisition of Instron by KCP. Under the
proposed transaction, which is structured as a merger of a Kirtland affiliate
with and into Instron, each share of Instron's common stock outstanding at the
effective time of the merger will be converted into the right to receive $22 per
share payable in cash. The announcement was made by James M. McConnell,
President and Chief Executive Officer of Instron, and Raymond A. Lancaster, a
KCP managing partner.
"This transaction is an exciting step forward for Instron. Our
shareholders should be pleased as this proposed transaction will provide them
with a 35% premium over the last trading price for their shares," said
McConnell. "We also believe that our customers and employees will benefit
greatly from our partnership with KCP. We anticipate that KCP will provide us
with the resources to continue our strategic direction of growth through
acquisitions. This will enable us to better serve our customers, offer expanded
opportunities for our employees, and capitalize on our leading market position."
Under the terms of the Merger Agreement, Instron has agreed not to pay
any dividends on its common stock prior to the closing of the transaction. In
addition, certain members of management of Instron, as well as Instron's two
founding shareholders, will maintain an equity interest in Instron following the
closing. In connection with the execution of the merger agreement, the Board of
Directors of Instron received an opinion from its financial advisor, The Beacon
Group Capital Services, LLC, that the consideration to be received by its
stockholders in the merger is fair from a financial point of view to
stockholders.
The closing of the proposed transaction is subject to the satisfaction
of various conditions, including approval by Instron's shareholders and the
receipt of certain regulatory approvals. Instron's management and its two
founding stockholders, who in the aggregate currently own nearly 22% of
Instron's common stock, have agreed to vote their shares in favor of approval of
the merger. The transaction is expected to close during the third quarter of
1999.
<PAGE> 2
"We are delighted to have signed a merger agreement for the acquisition
of Instron and look forward to the completion of the transaction," Lancaster
said. "Instron is the world's leading materials and structural testing equipment
manufacturer and is managed by a very talented team. KCP, together with
Instron's current management, expects to continue to grow the company."
Instron Corporation is based in Canton, MA with proforma revenues in
1998 of $219 million. Instron manufactures, markets and services materials and
structural testing systems, software and accessories used to evaluate the
mechanical properties and performance of various materials, components and
structures. Instron's application technology is used by research scientists,
design engineers and quality control managers in industry, academia and
government. Due to the scope of its international operations, range of products
and recent growth through acquisitions, Instron is considered to be the world's
leading full service materials testing company.
Based in Cleveland, Ohio, KCP is a privately funded investment group
with over $300 million in committed equity capital. KCP and its predecessor
companies have been making investments in operating companies since 1978. It has
historically generated superior returns for its investors. In addition to
Lancaster, the five other KCP principals are: John F. Turben, John G. Nestor,
William R. Robertson, Michael T. Degrandis and Thomas N. Littman.
CONTACT: Linton A. Moulding
INSTRON CORPORATION
Telephone: (781) 575-5374
E-mail: [email protected]
Website: www.instron.com
AMEX symbol ASE:ISN
Rob Falls
ROBERT FALLS & CO. PUBLIC RELATIONS
Kirkland Capital Partners
Telephone: (216) 696-0229
