<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO
SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
----------------
MHI GROUP, INC.
(NAME OF SUBJECT COMPANY)
LOEWEN GROUP INTERNATIONAL, INC.
AND
SPRT CORP.
(BIDDERS)
COMMON STOCK, PAR VALUE $0.40 PER SHARE
(TITLE OF CLASS OF SECURITIES)
----------------
552925505
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
ROBERT O. WIENKE, ESQ.
EXECUTIVE VICE PRESIDENT
LOEWEN GROUP INTERNATIONAL, INC.
50 EAST RIVERCENTER BOULEVARD, SUITE 800
COVINGTON, KENTUCKY 41011
(606) 431-6663
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF THE BIDDERS)
----------------
COPY TO:
CHRISTOPHER M. KELLY, ESQ.
JONES, DAY, REAVIS & POGUE
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 326-3939
AUGUST 9, 1995
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT ON SCHEDULE 13D)
CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
TRANSACTION AMOUNT OF
VALUATION: FILING FEE:
<S> <C>
$75,276,656* $15,155.33**
</TABLE>
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* Estimated for purposes of calculating the amount of filing fee only. The
amount assumes the purchase of 7,344,064 shares of Common Stock, par value
$0.40 per share (the "Shares"), at a price per Share of $10.25 in cash.
Such number of Shares represents all of the Shares outstanding as of August
9, 1995, and assumes the exercise or conversion of all existing options,
rights and securities which were then exercisable or convertible into
Shares.
** Includes a Schedule 13D filing fee of $100.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and
identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: None.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
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<PAGE>
CUSIP NO. 552925505
1.
Names of Reporting Persons: Loewen Group International, Inc.
S.S. or I.R.S. Identification Nos. of Above Person: 52-1522627
--------------------------------------------------------------------------------
2.
Check the Appropriate Box if a Member of a Group (See
Instructions).
[_] (a)
[_] (b)
--------------------------------------------------------------------------------
3.
SEC Use Only.
--------------------------------------------------------------------------------
4.
Sources of Funds (See Instructions). BK
--------------------------------------------------------------------------------
5.
[_] Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f).
--------------------------------------------------------------------------------
6.
Citizenship or Place of Organization: Delaware
--------------------------------------------------------------------------------
7.
Aggregate Amount Beneficially Owned by Each Reporting Person: 1,740,175*
--------------------------------------------------------------------------------
8.
[_] Check if the Aggregate Amount in Row 7 Excludes
Certain Shares.
--------------------------------------------------------------------------------
9.
Percent of Class Represented by Amount in Row 7.
21.7% as of August 9, 1995
--------------------------------------------------------------------------------
10.
Type of Reporting Person (See Instructions). CO
2
<PAGE>
CUSIP NO.: 552925505
1.
Names of Reporting Persons: The Loewen Group Inc.
S.S.or I.R.S. Identification Nos. of Above Person: 98-0121376
--------------------------------------------------------------------------------
2.
Check the Appropriate Box if a Member of a Group (See
Instructions).
[_] (a)
[_] (b)
--------------------------------------------------------------------------------
3.
SEC Use Only.
--------------------------------------------------------------------------------
4.
Sources of Funds (See Instructions). AF, BK
--------------------------------------------------------------------------------
5.
[_] Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f).
--------------------------------------------------------------------------------
6.
Citizenship or Place of Organization: Province of
British Columbia
--------------------------------------------------------------------------------
7.
Aggregate Amount Beneficially Owned by Each Reporting Person: 1,740,175*
--------------------------------------------------------------------------------
8.
[_] Check if the Aggregate Amount in Row 7 Excludes
Certain Shares.
--------------------------------------------------------------------------------
9.
Percent of Class Represented by Amount in Row 7. 21.7% as of August 9, 1994
--------------------------------------------------------------------------------
10.
Type of Reporting Person (See Instructions). CO
3
<PAGE>
CUSIP NO.: 552925505
1.
Names of Reporting Persons: SPRT Corp.
S.S. or I.R.S. Identification Nos. of Above Person:
--------------------------------------------------------------------------------
2.
Check the Appropriate Box if a Member of a Group (See
Instructions).
[_] (a)
[_] (b)
--------------------------------------------------------------------------------
3.
SEC Use Only.
--------------------------------------------------------------------------------
4.
Sources of Funds (See Instructions). AF
--------------------------------------------------------------------------------
5.
[_] Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(e) or 2(f).
--------------------------------------------------------------------------------
6.
Citizenship or Place of Organization: Florida
--------------------------------------------------------------------------------
7.
Aggregate Amount Beneficially Owned by Each Reporting Person: 1,740,175*
--------------------------------------------------------------------------------
8.
[_] Check if the Aggregate Amount in Row 7 Excludes
Certain Shares.
--------------------------------------------------------------------------------
9.
Percent of Class Represented by Amount in Row 7. 21.7% as of August 9, 1995
--------------------------------------------------------------------------------
10.
Type of Reporting Person (See Instructions). CO
4
<PAGE>
*On August 9, 1995, Loewen Group International, Inc., a Delaware corporation
(the "Parent"), an indirect wholly owned subsidiary of The Loewen Group Inc.,
a corporation organized under the laws of the Province of British Columbia
("TLGI"), entered into a Stock Option Agreement, dated as of August 9, 1995
(the "Company Option Agreement") with MHI Group, Inc. (the "Company"),
pursuant to which the Company granted to the Parent an irrevocable option,
subject to certain conditions (the "Company Option"), to purchase for a price
of $10.25 per share (subject to adjustments specified therein) up to 1,253,823
shares (the "Option Shares") of Common Stock, par value $0.40 per share (the
"Shares"), of the Company (which would represent approximately 16.7% of the
Shares outstanding as of August 9, 1995 if the Company Option were then
exercised in full and the Company delivered newly issued Shares upon such
exercise). The Company Option to purchase the Option Shares is reflected in
Rows 7 and 9 of each of the tables above. The Company Option is exercisable by
the Parent, in whole or in part, at any time or from time to time after the
occurrence of a "Triggering Event", as such term is defined in the Company
Option Agreement. In addition, on August 9, 1995, the Parent entered into a
Warrant Option Agreement, dated as of August 9, 1995 (the "Warrant Option
Agreement") with MH Associates, a New York general partnership ("MH
Associates"), pursuant to which MH Associates has granted to the Parent the
option (the "Warrant Option") to purchase MH Associates' option (the "MH
Option") to purchase 486,352 Shares (the "MH Option Shares") at a purchase
price of $2.25 per MH Option Share at any time or from time to time prior to
April 22, 1996, granted pursuant to the Stock Option Agreement dated April 22,
1986 between the Company and KD Equities, as amended by the Option Amendment
Agreement dated October 26, 1990 between the Company and MH Associates (as
successor to KD Equities). The Shares subject to the MH Option, and therefore
the Warrant Option Agreement, would constitute approximately 7.2% of the
Shares outstanding as of August 9, 1995 if the MH Option were then exercised
in full and the Company delivered newly issued Shares upon such exercise. If
the Warrant Option (as defined below) were exercised, and each of the Company
Option and the MH Option were then exercised by the Parent in full and the
Company delivered newly issued Shares upon such exercise, the Parent would own
approximately 21.7% of the Shares outstanding as of August 9, 1995. The
Company Option Agreement and the Warrant Option Agreement are described more
fully in Section 13, "Merger Agreement; Timing; Appraisal Rights; Company
Option Agreement; Warrant Option Agreement; Confidentiality Agreement;
Exclusivity Agreement", of the Offer to Purchase dated August 14, 1995 (the
"Offer to Purchase").
5
<PAGE>
This tender offer statement on Schedule 14D-l also constitutes a statement
on Schedule 13D with respect to the acquisition by the Purchaser and the
Parent of beneficial ownership of the Option Shares and the MH Option Shares.
The item numbers and responses thereto below are in accordance with
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is MHI Group, Inc. The address of its
principal executive offices is 3100 Capital Circle, NE, Tallahassee, Florida
32308.
(b) This Statement on Schedule 14D-1 relates to the offer by the Purchaser
to purchase all outstanding shares of Common Stock, par value $0.40 per share
(the "Shares"), of the Company at $10.25 per Share, net to the seller in cash
without interest, upon the terms and subject to the conditions set forth in
the Offer to Purchase (the "Offer to Purchase") and in the related Letter of
Transmittal, copies of which are attached hereto as Exhibits (a) (1) and (a)
(2) (which together constitute the "Offer"). The information set forth in the
Introduction to the Offer to Purchase (the "Introduction") is incorporated
herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market is set forth in Section 6, "Price Range of Shares; Dividends", of the
Offer to Purchase and is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement on Schedule 14D-1 is filed by SPRT Corp., a
Florida corporation and a wholly owned subsidiary of the Loewen Group
International, Inc., a Delaware corporation, which is in turn an indirect
wholly owned subsidiary of The Loewen Group Inc., a corporation organized
under the laws of the Province of British Columbia. The information concerning
the principal business and the addresses of the principal offices of the
Purchaser and the Parent is set forth in Section 9, "Certain Information
Concerning the Purchaser and the Parent", of the Offer to Purchase, and is
incorporated herein by reference. The names, business addresses, principal
occupations or employment, material occupations, positions, offices or
employment during the last five years and citizenship of the directors and
executive officers of the Purchaser, the Parent and TLGI are set forth in
Schedule I to the Offer to Purchase and are incorporated herein by reference.
(e) and (f) None of the Purchaser, the Parent and TLGI or, to the best
knowledge of such corporations, any of the persons listed on Schedule I to the
Offer to Purchase, has during the last five years (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in (i) the Introduction, Section 11
"Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company", Section 12, "Purpose of the Offer; Plans for the Company", Section
13, "Merger Agreement; Timing; Appraisal Rights; Company Option Agreement;
Warrant Option Agreement; Confidentiality Agreement; Exclusivity Agreement",
of the Offer to Purchase, (ii) the Agreement and Plan of Merger, dated August
9, 1995 (the "Merger Agreement"), among the Company, the Purchaser and the
Parent, a copy of which is attached as Exhibit (c)(l) hereto, (iii) the Stock
Option Agreement (the "Company Option Agreement"), dated August 9, 1995
between the Company and the Parent, a copy of which is attached as Exhibit
(c)(2) hereto, (iv) the Warrant Option Agreement (the "Warrant Option
Agreement"), dated August 9, 1995 between the Parent and MH Associates, a copy
of which is attached as Exhibit (c)(3) hereto, (v) the Confidentiality
Agreement, (the "Confidentiality Agreement"), dated March 9, 1995 between the
Company and the Parent, a copy of which is attached at (c)(4) hereto, and (vi)
the letter agreements, dated July 24, 1995 and July 25, 1995 (collectively,
the "Exclusivity Agreement"), between the Company and TLGI, copies of which
are attached as Exhibit (c)(5) hereto, respectively, are incorporated herein
by reference.
6
<PAGE>
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) (i) The information set forth in Section 10, "Source and Amount of
Funds", of the Offer to Purchase is incorporated herein by reference and (ii)
the Amended and Restated Multicurrency Credit Agreement dated as of May 11,
1995 among the Parent, as the Borrower, TLGI, as a Guarantor, the Banks named
therein, as the Lenders, and the First National Bank of Chicago, as the Agent,
a copy of which is attached hereto as Exhibit (b) is incorporated hereto by
reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction and Section 12
"Purpose of the Offer; Plans for the Company", and Section 13, "Merger
Agreement; Timing; Appraisal Rights; Company Option Agreement; Warrant Option
Agreement; Confidentiality Agreement; Exclusivity Agreement", of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7, "Effect of the Offer on
the Market for the Shares; Stock Exchange Listing; Margin Securities;
Registration under the Exchange Act", of the Offer to Purchase is incorporated
herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in (i) the Introduction, Section 9,
"Certain Information Concerning the Purchaser and the Parent", Section 11,
"Background of the Offer; Past Contacts; Transactions or Negotiations with the
Company", Section 13, "Merger Agreement; Timing; Appraisal Rights; Company
Option Agreement; Warrant Option Agreement; Confidentiality Agreement;
Exclusivity Agreement", and Schedule I of the Offer to Purchase, (ii) the
Merger Agreement, (iii) the Company Option Agreement, and (iv) the Warrant
Option Agreement, respectively, are incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in (i) the Introduction, Section 9, "Certain
Information Concerning the Purchaser and the Parent", Section 11, "Background
of the Offer; Past Contacts, Transactions or Negotiations with the Company",
Section 12, "Purpose of the Offer; Plans for the Company" and Section 13,
"Merger Agreement; Timing; Appraisal Rights; Company Option Agreement; Warrant
Option Agreement; Confidentiality Agreement; Exclusivity Agreement", of the
Offer to Purchase, (ii) the Merger Agreement, (iii) the Company Option
Agreement and (iv) the Warrant Option Agreement, respectively, are
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 18, "Fees and Expenses", of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9, "Certain Information Concerning the
Purchaser and the Parent", of the Offer to Purchase, and the consolidated
financial information of the Parent contained in TLGI's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and Quarterly Report on Form
10-Q for the twelve weeks ended June 30, 1995, are incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Introduction and Section 12, "Purpose
of the Offer; Plans for the Company", Section 13, "Merger Agreement; Timing;
Appraisal Rights; Company Option Agreement; Warrant Option Agreement;
Confidentiality Agreement; Exclusivity Agreement", and Section 17, "Certain
Legal Matters; Florida Law; State Takeover Statutes; Antitrust; Florida
Funeral Home and Cemetery License Transfer", of the Offer to Purchase are
incorporated herein by reference.
7
<PAGE>
(b) and (c) The information set forth in Section 17, "Certain Legal Matters;
Florida Law; State Takeover Statutes; Antitrust; Florida Funeral Home and
Cemetery License Transfer", of the Offer to Purchase is incorporated herein by
reference.
(d) Not Applicable.
(e) None.
(f) The Offer to Purchase, the related Letter of Transmittal, the Merger
Agreement and the Company Option Agreement are incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
(a) (1) -- Offer to Purchase, dated August 14, 1995.
(a) (2) -- Letter of Transmittal.
(a) (3) -- Notice of Guaranteed Delivery.
(a) (4) -- Form of Letter from Smith Barney Inc. to Brokers, Dealers,
Commercial Banks, Trust Companies and other Nominees.
(a) (5) -- Form of Letter to be sent by Brokers, Dealers, Commercial Banks,
Trust Companies and other Nominees.
(a) (6) -- Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a) (7) -- Press release, dated August 9, 1995.
(a) (8) -- Newspaper advertisement, dated August 14, 1995.
(b) -- Amended and Restated Multicurrency Credit Agreement dated as of May
11, 1995 among the Parent, as the Borrower, The Loewen Group Inc.,
as a Guarantor, the Banks named therein, as the Lenders, and The
First National Bank of Chicago, as the Agent.
(c) (1) -- Agreement and Plan of Merger, dated August 9, 1995, among the
Company, the Purchaser and the Parent.
(c) (2) -- Stock Option Agreement, dated August 9, 1995, between the Company
and the Parent.
(c) (3) -- Warrant Option Agreement, dated August 9, 1995, between MH
Associates and the Parent.
(c) (4) -- Confidentiality Agreement, dated March 9, 1995, between the Company
and the Parent.
(c) (5) -- Letter Agreements, dated July 24, 1995 and July 25, 1995, between
the Company and TLGI.
(d) -- None.
(e) -- Not Applicable.
(f) -- None.
</TABLE>
8
<PAGE>
SIGNATURES
AFTER DUE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I CERTIFY THAT
THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND CORRECT.
Dated: August 14, 1995
Sprt Corp.
/s/ A.M. Bruce Watson
By: _________________________________
Name: A.M. Bruce Watson
Title: Treasurer and Secretary
9
<PAGE>
SIGNATURES
AFTER DUE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I CERTIFY THAT
THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND CORRECT.
Dated: August 14, 1995
Loewen Group International, Inc.
/s/ A.M. Bruce Watson
By: _________________________________
Name: A.M. Bruce Watson
Title: Executive Vice President
10
<PAGE>
SIGNATURES
AFTER DUE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I CERTIFY THAT
THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND CORRECT.
Dated: August 14, 1995
The Loewen Group Inc.
/s/ A.M. Bruce Watson
By: _________________________________
Name: A.M. Bruce Watson
Title: Executive Vice President
11
<PAGE>
Exhibit 99.(a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MHI GROUP, INC.
AT
$10.25 PER SHARE
BY
SPRT CORP.
A WHOLLY OWNED SUBSIDIARY OF
LOEWEN GROUP INTERNATIONAL, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORKCITY
TIME, ON MONDAY, SEPTEMBER 11, 1995, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN A NUMBER OF SHARES OF
COMMON STOCK, PAR VALUE $0.40 PER SHARE (THE "SHARES"), OF MHI GROUP,
INC. (THE "COMPANY") WHICH, TOGETHER WITH THE SHARES THEN OWNED BY SPRT
CORP. (THE "PURCHASER") AND LOEWEN GROUP INTERNATIONAL, INC. (THE
"PARENT"), WOULD REPRESENT AT LEAST A MAJORITY OF THE TOTAL NUMBER OF
OUTSTANDING SHARES ON A FULLY DILUTED BASIS. THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE
SECTION 16.
THE BOARD OF DIRECTORS OF THE COMPANY, BY THE UNANIMOUS VOTE OF ALL
DIRECTORS PRESENT, DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
ARE FAIR TO AND IN THE BEST INTERESTS OF THE HOLDERS OF SHARES, APPROVED
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE HOLDERS OF SHARES
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
IMPORTANT
Any holder of Shares desiring to tender Shares should either (i) complete and
sign the Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver it with the
certificate(s) representing such Shares and all other required documents to the
Depositary or tender such Shares pursuant to the procedure for book-entry
transfer set forth in Section 3 or (ii) request such holder's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
such holder. A holder of Shares having Shares registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such person if such holder desires to tender such Shares.
Any holder of Shares who desires to tender Shares and cannot deliver
certificates representing such Shares and all other required documents to the
Depositary by the expiration of the Offer may tender such Shares pursuant to
the guaranteed delivery procedure set forth in Section 3.
Questions and requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers specified on the back cover of this Offer to
Purchase. Holders of Shares may also contact brokers, dealers, commercial banks
and trust companies for assistance concerning the Offer.
---------------
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
August 14, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.............................................................. 1
THE TENDER OFFER.......................................................... 3
1. Terms of the Offer; Expiration Date................................... 3
2. Acceptance for Payment and Payment.................................... 3
3. Procedures for Tendering Shares....................................... 4
4. Withdrawal Rights..................................................... 7
5. Certain Tax Consequences.............................................. 7
6. Price Range of Shares; Dividends...................................... 8
7. Effect of the Offer on the Market for the Shares; Stock Exchange
Listing; Margin Securities; Registration under the Exchange Act....... 9
8. Certain Information Concerning the Company............................ 10
9. Certain Information Concerning the Purchaser and the Parent........... 12
10. Source and Amounts of Funds........................................... 14
11. Background of the Offer; Past Contacts, Transactions or Negotiations
with the Company...................................................... 15
12. Purpose of the Offer; Plans for the Company........................... 16
13. Merger Agreement; Timing; Appraisal Rights; Company Option Agreement;
Warrant Option Agreement; Confidentiality Agreement; Exclusivity
Agreement............................................................. 17
14. Dividends and Distributions........................................... 29
15. Extension of Tender Period; Termination; Amendment.................... 29
16. Certain Conditions of the Offer....................................... 30
17. Certain Legal Matters; Florida Law; State Takeover Statutes;
Antitrust; Florida Funeral Home and Cemetery License Transfer......... 32
18. Fees and Expenses..................................................... 36
19. Miscellaneous......................................................... 36
Schedule I--Information Concerning the Directors and Executive Officers of
the Purchaser, the Parent and TLGI............................... I-1
</TABLE>
i
<PAGE>
To the Holders of Common Stock
of MHI Group, Inc.:
INTRODUCTION
SPRT Corp., a Florida corporation (the "Purchaser") and a wholly owned
subsidiary of Loewen Group International, Inc., a Delaware corporation (the
"Parent"), hereby offers to purchase all outstanding shares of Common Stock,
$0.40 par value (collectively, the "Shares"), of MHI Group, Inc., a Florida
corporation (the "Company"), at $10.25 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"). The Parent is an indirect wholly owned subsidiary of
The Loewen Group Inc., a corporation organized under the laws of the Province
of British Columbia ("TLGI"). Tendering holders of Shares will not be obligated
to pay brokerage fees or commissions or, except as set forth in the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
The Parent will pay all charges and expenses of Smith Barney Inc., as Dealer
Manager (in such capacity, the "Dealer Manager"), The Bank of New York, as
Depositary (the "Depositary"), and Georgeson & Company Inc., as Information
Agent (the "Information Agent"), in connection with the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY, BY THE UNANIMOUS VOTE OF ALL DIRECTORS
PRESENT, DETERMINED THAT THE MERGER AGREEMENT (AS DEFINED BELOW) AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS
DEFINED BELOW), ARE FAIR TO AND IN THE BEST INTERESTS OF THE HOLDERS OF SHARES,
APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT HOLDERS OF SHARES
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Company has advised the Purchaser that Commonwealth Associates has
delivered to the Company's Board of Directors its written opinion that the
consideration to be paid in the Offer and the Merger is fair to the holders of
the Shares from a financial point of view. Such opinion of Commonwealth
Associates is set forth in full in the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to
holders of Shares contemporaneously herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED BY THE DATE THE OFFER EXPIRES AND NOT WITHDRAWN A NUMBER OF SHARES
WHICH, TOGETHER WITH THE SHARES THEN OWNED BY THE PARENT AND THE PURCHASER,
WOULD REPRESENT A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY
DILUTED BASIS (SUCH TOTAL NUMBER OF OUTSTANDING SHARES BEING HEREINAFTER
REFERRED TO AS THE "FULLY DILUTED SHARES") (THE "MINIMUM CONDITION"). THE OFFER
ALSO IS SUBJECT TO VARIOUS OTHER CONDITIONS. SEE SECTION 16.
The Company has represented to the Parent and the Purchaser that, as of
August 9, 1995, there were 6,272,251 Shares issued and outstanding (exclusive
of treasury Shares), 407,961 Shares reserved for issuance upon the exercise of
stock options outstanding under the Company's 1989 Stock Option Plan (the "1989
Stock Option Plan") and 663,852 shares reserved for issuance upon the exercise
of certain outstanding warrants (the "Warrants"), which Warrants include the MH
Option (as defined below). Based upon the foregoing, as of August 9, 1995,
there were approximately 7,344,064 Fully Diluted Shares. As a result of
entering into the Warrant Option Agreement (as defined below), the Parent may
be deemed to beneficially own 486,352 Shares (the "MH Option Shares"),
representing approximately 6.6% of the Fully Diluted Shares (based upon the
foregoing). Accordingly, the Parent believes that the Minimum Condition would
be satisfied (based on the foregoing) if approximately 3,185,681 Shares (not
including the MH Option Shares) are validly tendered pursuant to the Offer and
not withdrawn. The Offer is not being made for the Warrants, nor will any
tenders of Warrants be accepted.
<PAGE>
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of August 9, 1995 (the "Merger Agreement"), among the Parent, the Purchaser and
the Company, which has been unanimously approved by the Company's Board of
Directors. The Merger Agreement provides, among other things, that as soon as
practicable after the consummation of the Offer and the satisfaction or waiver
of certain conditions, the Purchaser will be merged with and into the Company
(the "Merger"), with the Company continuing as the surviving corporation (the
"Surviving Corporation") and a subsidiary of the Parent. Pursuant to the Merger
Agreement, at the effective time of the Merger (the "Effective Time"), each
outstanding Share (other than Shares held in the treasury of the Company and
Shares owned by the Parent or any direct or indirect subsidiary of the Parent
or the Company (which shall be cancelled)) will be converted into a right to
receive $10.25 in cash, without interest.
In connection with the execution and delivery of the Merger Agreement, the
Company and the Parent have entered into a Stock Option Agreement dated as of
August 9, 1995 (the "Company Option Agreement"), pursuant to which the Company
has granted the Parent the right to acquire up to 1,253,823 Shares under
certain circumstances at a price per Share of $10.25. See Section 13.
MH Associates is the holder of the MH Option, which is a warrant to purchase
from the Company 486,352 Shares at a purchase price of $2.25 per Share at any
time or from time to time prior to April 22, 1996. The MH Option was granted
pursuant to the Stock Option Agreement dated April 22, 1986 between the Company
and KD Equities, as amended by the Option Amendment Agreement dated October 26,
1990 between the Company and MH Associates (as successor to KD Equities).
Pursuant to the Warrant Option Agreement dated as of August 9, 1995 (the
"Warrant Option Agreement") between MH Associates and the Parent, MH Associates
has granted to the Parent an option to acquire the MH Option on the terms and
subject to the conditions set forth in that agreement. See Section 13.
Pursuant to the Merger Agreement, subject to the effectiveness of the Merger,
each outstanding option to purchase Shares granted prior to the date of the
Merger Agreement under the 1989 Stock Option Plan (an "Option"), whether or not
such Option is then exercisable, shall be cancelled in consideration of the
payment by the Company or the Surviving Corporation to each holder thereof of
an amount in cash equal to the extent (if any) by which $10.25 exceeds the
exercise price per share payable under such Option, multiplied by the number of
Shares subject to such Option.
Pursuant to the Merger Agreement, upon the purchase by the Purchaser of
Shares pursuant to the Offer, so long as the Purchaser has not waived the
Minimum Condition, the Parent shall be entitled to designate the number of
directors, rounded up to the next whole number, on the Company's Board of
Directors that equals the product of (i) the total number of directors on the
Company's Board of Directors and (ii) the percentage that the number of Shares
owned by the Purchaser or any affiliate of the Purchaser (including Shares
accepted for payment) bears to the total number of Shares outstanding
(excluding Shares held by the Company or its subsidiaries), and the Company
shall take all necessary action to cause the Purchaser's designees to be
elected or appointed to the Company's Board of Directors. In addition, under
the Merger Agreement, until successors are duly elected or appointed and
qualified in accordance with applicable law, the directors of the Purchaser
immediately prior to consummation of the Merger will be the directors of the
Surviving Corporation following the Merger, and the officers of the Company
immediately prior to the consummation of the Merger will be the officers of the
Surviving Corporation following the Merger.
In addition to the Shares, the Options and the Warrants, the Company has
represented to the Parent and the Purchaser that, as of August 9, 1995, there
were 24,757 shares of Series B Preferred Stock and 13,938 shares of Series C
Preferred Stock outstanding (collectively, the "Preferred Shares"). THE PARENT
AND THE PURCHASER HAVE NOT MADE, AND DO NOT PRESENTLY INTEND TO MAKE, ANY OFFER
TO PURCHASE PREFERRED SHARES. THE PREFERRED SHARES WILL REMAIN OUTSTANDING
FOLLOWING, AND WILL BE UNAFFECTED BY, THE MERGER.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions set forth in the Offer, the
Purchaser will accept for payment and purchase, at the time and in the manner
set forth in Section 2, all Shares that are validly tendered by the Expiration
Date and not withdrawn as provided in Section 4. The term "Expiration Date"
shall mean 12:00 Midnight, New York City time, on Monday, September 11, 1995,
unless the Purchaser shall have extended the period of time for which the Offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date at which the Offer, as so extended by the Purchaser, shall expire.
The Offer is subject to certain conditions set forth in Section 16, including
satisfaction of the Minimum Condition and expiration or termination of the
waiting period applicable to the Purchaser's acquisition of Shares pursuant to
the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR Act"). If any such condition is not satisfied, the Purchaser may (i)
terminate the Offer and return all tendered Shares to tendering holders of
Shares, (ii) extend the Offer and, subject to withdrawal rights as set forth in
Section 4, retain all such Shares until the expiration of the Offer as so
extended, (iii) waive such condition and, subject to any requirement to extend
the period of time during which the Offer is open, purchase all Shares validly
tendered by the Expiration Date and not withdrawn or (iv) delay acceptance for
payment or payment for Shares, subject to applicable law, until satisfaction or
waiver of the conditions to the Offer. For a description of the Purchaser's
right to extend the period of time during which the Offer is open and to amend,
delay or terminate the Offer, see Section 15.
Any extension, delay in payment, amendment or termination of the Offer will
be followed as promptly as practicable by public announcement thereof. Without
limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser shall have no obligation (except as otherwise
required by applicable law) to publicly advertise or otherwise communicate any
such public announcement other than by issuing a press release.
Subject to the terms of the Merger Agreement, if the Purchaser makes any
material change in the terms of the Offer or the information concerning the
Offer, or waives any condition to the Offer that results in a material change
to the circumstances of the Offer, the Purchaser will disseminate additional
tender offer materials and extend the Offer to the extent required to comply
with Rules 14d-4(c) and 14d-6(d) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Securities and Exchange Commission (the
"Commission") has interpreted such rules to prescribe that the minimum period
during which an offer must remain open following material changes in the terms
of the Offer or information concerning the Offer, other than a change in price
or a change in percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the terms or information
changed. With respect to a change in price or a change in the percentage of
securities sought, a minimum period of ten business days may be required to
allow for adequate dissemination to holders of Shares and investor response. As
used in this Offer to Purchase, "business day" means any day other than a
Saturday, Sunday or a federal holiday and shall consist of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
The Company has provided the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of Shares whose names appear on the Company's
shareholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose
nominees, appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment and
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<PAGE>
pay for all Shares validly tendered by the Expiration Date and not withdrawn as
soon as practicable after the later of the Expiration Date or the date of
satisfaction or waiver of all of the conditions to the Offer. Assuming the
prior satisfaction or waiver of the conditions to the Offer, the Parent shall
cause the Purchaser to accept for payment, in accordance with the terms of the
Offer, all Shares validly tendered pursuant to the Offer as soon as legally
permitted after the commencement thereof and to pay for all such Shares as
promptly as practicable after acceptance. For a description of the Purchaser's
right to terminate the Offer and not accept for payment or pay for Shares or to
delay acceptance for payment or payment for Shares, see Section 15.
For purposes of the Offer, the Purchaser shall be deemed to have accepted for
payment validly tendered Shares when, as and if the Purchaser gives oral or
written notice to the Depositary of its acceptance of the tenders of such
Shares. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price with the Depositary, which will act as agent for the
tendering holders of Shares for the purpose of receiving payments from the
Purchaser and transmitting such payments to tendering holders of Shares. In all
cases, payment for Shares accepted for payment pursuant to the Offer will be
made only after timely receipt by the Depositary of certificates evidencing
such Shares (or of a confirmation of a book-entry transfer of such Shares into
the Depositary's account at one of the Book-Entry Transfer Facilities (as
defined in Section 3)), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other required documents. For a
description of the procedure for tendering Shares pursuant to the Offer, see
Section 3. Accordingly, payment may be made to tendering holders of Shares at
different times if delivery of the Shares and other required documents occur at
different times. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE PURCHASER
ON THE CONSIDERATION PAID FOR SHARES PURSUANT TO THE OFFER, REGARDLESS OF ANY
DELAY IN MAKING SUCH PAYMENT.
If the Purchaser increases the consideration to be paid for Shares pursuant
to the Offer, the Purchaser will pay such increased consideration for all
Shares purchased pursuant to the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve the Purchaser of its obligations under the Offer or prejudice the
rights of tendering holders of Shares to receive payment for Shares validly
tendered and accepted for payment.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted for more Shares than are tendered,
certificates for such unpurchased or untendered Shares will be returned (or, in
the case of Shares tendered by book-entry transfer, such Shares will be
credited to an account maintained at one of the Book-Entry Transfer
Facilities), without expense to the tendering holder of Shares, as promptly as
practicable following the expiration or termination of the Offer.
3. PROCEDURES FOR TENDERING SHARES.
To tender Shares pursuant to the Offer, either (i) a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), and any other
documents required by the Letter of Transmittal must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase and either (a) certificates for the Shares to be tendered must be
received by the Depositary at one of such addresses or (b) such Shares must be
delivered pursuant to the procedures for book-entry transfer described below
(and a confirmation of such delivery received by the Depositary including an
Agent's Message if the tendering shareholder has not delivered a Letter of
Transmittal), in each case, by the Expiration Date, or (ii) the guaranteed
delivery procedure described below must be complied with. The term "Agent's
Message" means a message, transmitted by a Book-Entry Transfer Facility (as
hereinafter defined) to and received by the Depositary and forming a part of a
book-entry confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such book-entry
confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.
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<PAGE>
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND SOLE RISK OF THE TENDERING HOLDER OF SUCH SHARES. IF CERTIFICATES
FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company, Midwest Securities Trust Company and Philadelphia
Depository Trust Company (collectively referred to as the "Book-Entry Transfer
Facilities") for purposes of the Offer within two business days after the date
of this Offer to Purchase, and any financial institution that is a participant
in the system of any Book-Entry Transfer Facility may make delivery of Shares
by causing such Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the procedures of such Book-Entry
Transfer Facility. However, although delivery of Shares may be effected through
book-entry transfer, the Letter of Transmittal (or facsimile thereof) properly
completed and duly executed together with any required signature guarantees or
an Agent's Message and any other required documents must, in any case, be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase by the Expiration Date, or the guaranteed delivery
procedure described below must be complied with.
DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees
Except as otherwise provided below, all signatures on a Letter of Transmittal
must be guaranteed by a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the
United States (an "Eligible Institution"). Signatures on a Letter of
Transmittal need not be guaranteed (i) if the Letter of Transmittal is signed
by the registered holder of the Shares tendered therewith and such holder has
not completed the boxes entitled "Special Payment Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) if such Shares are
tendered for the account of an Eligible Institution. If a share certificate is
registered in the name of a person other than the signer of the Letter of
Transmittal, or payment is to be made, or a share certificate not accepted for
payment or not tendered is to be returned, to a person other than the
registered holder(s), then the share certificate must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear on the share certificate, with the
signatures on such share certificates or stock powers guaranteed by an Eligible
Institution. See Instructions l and 5 of the Letter of Transmittal.
Guaranteed Delivery
If a holder of Shares desires to tender Shares pursuant to the Offer and
cannot deliver such Shares and all other required documents to the Depositary
by the Expiration Date, such Shares may nevertheless be tendered if all of the
following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary (as provided below) by the Expiration Date; and
(iii) the certificates for all physically delivered Shares (or a
confirmation of a book-entry transfer into the Depositary's account at one
of the Book-Entry Transfer Facilities), as well as a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any
required signature guarantees or an Agent's Message and any other documents
required by the Letter of Transmittal, are received by the Depositary
within three trading days on the New York Stock Exchange ("NYSE") after the
date of execution of the Notice of Guaranteed Delivery.
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<PAGE>
The Notice of Guaranteed Delivery may be delivered by hand or facsimile
transmission or mailed to the Depositary and must include a guarantee by an
Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
Previous Reverse Stock Split
In November 1993, the Company effected a one-for-four reverse stock split, in
which every four shares of the Company's Common Stock, $0.10 par value ("Pre-
Split Shares"), were converted into one Share. A certificate evidencing Pre-
Split Shares now represents only the right to receive, upon presentation of
such certificate for exchange, a certificate evidencing a number of Shares
equal to one-fourth of the number of Pre-Split Shares evidenced by such
certificate and a cash payment in lieu of fractional shares. Holders of
certificates evidencing Pre-Split Shares may tender the Shares such holders are
entitled to receive upon exchange of the certificates evidencing Pre-Split
Shares by following the instructions set forth in this Section 3 with respect
to the tender of Shares physically and Instruction 12 of the Letter of
Transmittal; provided, however, that such holders must physically deliver the
certificates representing Pre-Split Shares, and may not use the procedures for
book-entry transfer.
Determination of Validity
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Purchaser, in its sole discretion, which
determination shall be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders of Shares determined by it not to be in
proper form or the acceptance for payment of or payment for which may, in the
opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any defect or irregularity in any tender of Shares.
None of the Purchaser, the Parent, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defect or irregularity in tenders or incur any liability
for failure to give any such notification. The Purchaser's interpretation of
the terms and conditions of the Offer (including the Letter of Transmittal and
the instructions thereto) will be final and binding.
Back-up Federal Income Tax Withholding
Unless an exemption applies under the applicable law and regulations
concerning "backup withholding" of federal income tax, the Depositary will be
required to withhold, and will withhold, 31% of the gross proceeds otherwise
payable to a holder of Shares or other payee with respect to Shares purchased
pursuant to the Offer if the holder of Shares does not provide such holder's
taxpayer identification number (social security number or employer
identification number) and certify that such number is correct. Each tendering
holder of Shares should complete and sign the main signature form and the
Substitute Form W-9 included as part of the Letter of Transmittal, so as to
provide the information and certification necessary to avoid backup
withholding, unless an applicable exemption exists and is proved in a manner
satisfactory to the Purchaser and the Depositary. See Instruction 9 of the
Letter of Transmittal.
Appointment as Proxy
By executing a Letter of Transmittal, a tendering holder of Shares
irrevocably appoints designees of the Purchaser as such holder's proxy in the
manner set forth in the Letter of Transmittal to the full extent of such
holder's rights with respect to the Shares tendered by such holder and accepted
for payment by the Purchaser (and any and all other Shares or other securities
issued or issuable in respect of such Shares on or after August 9, 1995). All
such proxies shall be irrevocable and considered coupled with an interest in
the tendered Shares. Such appointment is effective only upon the acceptance for
payment of such Shares by the Purchaser. Upon such acceptance for payment, all
prior proxies and consents granted by such holder of Shares with respect to
such Shares and other securities will, without further action, be revoked, and
no subsequent proxies may be given nor subsequent written consents executed by
such holder (and, if given or executed, will not be deemed to be effective).
Such designees of the Purchaser will be empowered to exercise all voting and
other rights of such holder of Shares as they, in their sole discretion, may
deem proper at any
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<PAGE>
annual, special or adjourned meeting of the holders of Shares, by written
consent or otherwise. The Purchaser reserves the right to require that, in
order for Shares to be validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares, the Purchaser is able to exercise full
voting rights with respect to such Shares and other securities (including
voting at any meeting of holders of Shares then scheduled or acting by written
consent without a meeting).
The tender of Shares pursuant to any one of the procedures described above
will constitute an agreement between the tendering holder of Shares and the
Purchaser upon the terms and subject to the conditions of the Offer, including
such holder's agreement that such tender has been made in compliance with Rule
14e-4 promulgated under the Exchange Act which requires in substance that a
tendering holder of Shares own all Shares tendered pursuant to the Offer.
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after Thursday, October 12, 1995 unless theretofore
accepted for payment as provided in this Offer to Purchase. If the Purchaser
extends the period of time during which the Offer is open, is delayed in
accepting for payment or paying for Shares or is unable to accept for payment
or pay for Shares pursuant to the Offer for any reason, then, without prejudice
to the Purchaser's rights under the Offer, the Depositary may, on behalf of the
Purchaser, retain all Shares tendered, and such Shares may not be withdrawn
except as otherwise provided in this Section 4. Any such delay will be an
extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase and must specify the name
of the person who tendered the Shares to be withdrawn, the number of Shares to
be withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered the Shares. If the Shares to be withdrawn
have been delivered to the Depositary, a signed notice of withdrawal with
(except in the case of Shares tendered by an Eligible Institution) signatures
guaranteed by an Eligible Institution must be submitted prior to the release of
such Shares. In addition, such notice must specify, in the case of Shares
tendered by delivery of certificates, the name of the registered holder (if
different from that of the tendering holder of Shares) and the serial numbers
shown on the particular certificates evidencing the Shares to be withdrawn or,
in the case of Shares tendered by book-entry transfer, the name and number of
the account at one of the Book-Entry Transfer Facilities to be credited with
the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding. None of the Parent,
the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for the purpose of the Offer. However, withdrawn Shares may be
retendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
5. CERTAIN TAX CONSEQUENCES.
This summary sets forth material anticipated federal income tax consequences
to holders of Shares of their disposition of Shares pursuant to the Offer and
the Merger. The summary is based on the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), the Treasury regulations promulgated
thereunder, and administrative and judicial interpretations thereof, all as in
effect as of the date hereof. Such laws or interpretations may differ on the
date of the consummation of the Offer or at the Effective Time, and relevant
facts may also differ. The summary does not address any foreign, state or local
tax consequences, nor does it address estate or gift tax considerations.
Neither the consummation of the Offer nor the
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effectiveness of the Merger is conditioned upon the receipt of any ruling from
the Internal Revenue Service or any opinion of counsel as to tax matters.
This summary is for general information only. The tax treatment of each
holder of Shares will depend in part upon his particular situation. Special
tax consequences not described below may be applicable to particular classes
of taxpayers, including financial institutions, pension funds, mutual funds,
broker-dealers, persons who are not citizens or residents of the United States
or who are foreign corporations, foreign partnerships or foreign estates or
trusts, holders of Shares who own actually or constructively (under certain
attribution rules contained in the Code) 5% or more of the Shares, holders of
Shares who acquired their Shares through the exercise of an employee stock
option or otherwise as compensation, and persons who receive payments in
respect of options to acquire Shares. ALL HOLDERS OF SHARES SHOULD CONSULT
WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER
AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE,
LOCAL AND FOREIGN TAX LAWS.
Sales of Shares by holders of Shares pursuant to the Offer (or the Merger)
will be taxable transactions for federal income tax purposes and may also be
taxable transactions under applicable state, local, foreign and other tax
laws.
In general, a holder of Shares will recognize gain or loss equal to the
difference between the tax basis of such holder's Shares and the amount of
cash received in exchange for the Shares. Such gain or loss will be capital
gain or loss if the Shares are capital assets in the hands of the holder of
Shares and will be long-term gain or loss if the holding period for the Shares
is more than 12 months as of the date of the sale of such Shares.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed on the NYSE and the Pacific Stock Exchange (the
"PSE"). The following table sets forth for the quarters indicated the high and
low prices per Share as reported on the NYSE Composite Tape and the Dow Jones
News Service, as restated for the Company's one-for-four reverse stock split
effected in November 1993:
<TABLE>
<CAPTION>
PRICE
--------------
HIGH LOW
------- ------
<S> <C> <C>
FISCAL YEAR ENDED APRIL 30, 1994:
First Quarter........................................... $ 8 $6 1/2
Second Quarter.......................................... 11 1/2 7
Third Quarter........................................... 11 1/2 7 5/8
Fourth Quarter.......................................... 8 5/8 7 1/8
FISCAL YEAR ENDED APRIL 30, 1995:
First Quarter........................................... $10 3/8 $7 1/2
Second Quarter.......................................... 9 3/4 7 1/8
Third Quarter........................................... 7 7/8 6 3/8
Fourth Quarter.......................................... 8 6 5/8
FISCAL YEAR ENDED APRIL 30, 1996:
First Quarter........................................... $ 8 1/2 $6 3/4
Second Quarter (through August 11, 1995)................ 10 1/8 7
</TABLE>
On August 8, 1995, the last full day of trading prior to the issuance by the
Company and the Parent of press releases announcing the execution of the
Merger Agreement and the Purchaser's intention to commence the Offer, the
reported closing sales price per Share on the NYSE was $8 7/8. On August 11,
1995, the last full day of trading prior to the commencement of the Offer, the
reported closing sales price per Share on the NYSE was $10.00.
HOLDERS OF SHARES ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
According to published financial sources, the Company has not paid any
dividends on its Common Stock for the periods presented above. As of June 26,
1995, there were approximately 3,386 holders of record of outstanding Shares
according to the Company.
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7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE LISTING;
MARGIN SECURITIES; REGISTRATION UNDER THE EXCHANGE ACT.
The purchase of Shares pursuant to the Offer will reduce the number of Shares
that might otherwise trade publicly and may reduce the number of holders of
Shares, which could adversely affect the liquidity and market value of the
remaining Shares held by holders of Shares other than the Parent or the
Purchaser. The Purchaser cannot predict whether the reduction in the number of
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for or marketability of the Shares or whether it
would cause future market prices to be greater or less than the price to be
paid in the Offer.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE or the PSE for continued
listing and may, therefore, be delisted from such exchanges. According to the
NYSE's published guidelines, the NYSE would consider delisting the Shares if,
among other things, the number of record holders of at least 100 Shares should
fall below 1,200, the number of publicly held Shares (exclusive of holdings of
officers, directors and their families and other concentrated holdings of 10%
or more ("NYSE Excluded Holdings")) should fall below 600,000 or the aggregate
market value of publicly held Shares (exclusive of NYSE Excluded Holdings)
should fall below $5,000,000. The PSE has similar guidelines based on the
number of holders and the number and market value of publicly held shares. If,
as a result of the purchase of Shares pursuant to the Offer, the Shares no
longer meet the requirements of the NYSE or the PSE for continued listing and
the listing of the Shares is discontinued, the market for the Shares could be
adversely affected.
If the NYSE and the PSE were to delist the Shares, it is possible that the
Shares would continue to trade on another securities exchange or in the over-
the-counter market and that price or other quotations would be reported by such
exchange or through the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or other sources. The extent of the public market
therefor and the availability of such quotations would depend, however, upon
such factors as the number of holders of Shares and/or the aggregate market
value of such securities remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act as described below, and other factors.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares. Depending upon factors similar to those
described above regarding listing and market quotations, the Shares might no
longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as
collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such registration
may be terminated upon application of the Company to the Commission if the
Shares are not listed on a national securities exchange and there are fewer
than 300 holders of record. Termination of the registration of the Shares under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of Shares and to the Commission and would
make certain of the provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b), the requirement of furnishing a
proxy or information statement in connection with shareholder action and the
related requirement of an annual report to holders of Shares and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Shares. Furthermore,
"affiliates" of the Company and persons holding "restricted securities" of the
Company may be deprived of the ability to dispose of such securities pursuant
to Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). If registration of the Shares under the Exchange Act were
terminated, the Shares would no longer be "margin securities" or eligible for
listing or NASDAQ reporting. In the event that the consummation of the Offer
results in the listing of the Shares on both the NYSE and the PSE being
discontinued and there being fewer than 300 holders of record, the Purchaser
intends to seek to cause the Company to terminate the registration of the
Shares under the Exchange Act.
9
<PAGE>
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
General
The information concerning the Company contained herein, including financial
information, has been furnished by the Company or has been taken from or is
based upon reports and other documents on file with the Commission or otherwise
publicly available. Neither the Parent nor the Purchaser assumes any
responsibility for the accuracy or completeness of the information concerning
the Company contained in such reports and other documents or for any failure by
the Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information but that are unknown to the
Parent and the Purchaser.
The Company is a Florida corporation with its principal executive offices
located at 3100 Capital Circle N.E., Tallahassee, Florida 32308.
According to the Company's Annual Report on Form 10-K for its fiscal year
ended April 30, 1995 (the "Company 10-K"), the Company is a provider of
comprehensive deathcare products and services and derives revenues primarily
from the at-need delivery of funeral services and cemetery products and
services, and the pre-need sale of cemetery products and services.
The following selected consolidated financial data relating to the Company
and its subsidiaries has been taken or derived from the audited financial
statements contained in the Company 10-K. More comprehensive financial
information is included in the Company 10-K and the other documents filed by
the Company with the Commission, and the financial data set forth below is
qualified in its entirety by reference to such reports and other documents
including the financial statements (and any related notes) contained therein.
Such reports and other documents may be examined and copies may be obtained
from the offices of the Commission or the NYSE in the manner set forth below.
MHI GROUP, INC. AND SUBSIDIARIES
SELECTED SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL
30,
------------------------
1993 1994 1995
------- ------- --------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue............................................. $17,384 $20,189 $23,793
Income before income taxes and cumulative effect of
change in accounting principles.................... 2,894 3,214 4,354
Net income.......................................... 5,376 5,945 3,047
PER SHARE INFORMATION (1):
Per share primary and fully diluted income before
cumulative effect of change in accounting principle
and extraordinary item............................. $ 0.83 $ 1.13 $ 0.44
Net income per share................................ $ 1.27 $ 1.13 $ 0.44
BALANCE SHEET DATA (AT END OF PERIOD):
Total current assets(2)............................. $10,257 $19,341 $ 17,621
Total assets........................................ 81,975 98,913 108,556
Long-term debt(3)................................... 22,875 13,750 12,625
Shareholders' equity................................ 16,955 38,911 42,788
</TABLE>
--------
(1) All per Share information has been restated for the one-for-four reverse
stock split effected in November 1993.
(2) Current assets were reclassified in fiscal years 1994 and 1995.
Consequently, the amount shown for fiscal year 1993 is not comparable to
the amounts shown for fiscal years 1994 and 1995. The reclassification is
not considered material.
(3) Includes current maturities of long-term debt and notes payable to related
party(ies).
10
<PAGE>
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files periodic reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company. Such reports, proxy
statements and other information may be inspected at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and should also be available for inspection and
copying at the regional offices of the Commission in New York (Seven World
Trade Center, New York, New York 10048) and Chicago (Northwestern Atrium
Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661). Copies
of such material can also be obtained from the Public Reference Section of the
Commission in Washington, D.C. 20549, at prescribed rates. Reports, proxy
statements and other information concerning the Company should also be
available for inspection at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
Financial Projections
In the course of the discussions between the Parent and the Company that led
to the execution of the Merger Agreement, the Company and Commonwealth
Associates provided the Parent with certain information which the Parent
believes is not publicly available. Such information included certain of the
Company's operating budgets for the fiscal year ending April 30, 1996, and
projections of the Company's operating performance for fiscal years 1997,
1998, 1999 and 2000. The Company does not as a matter of course make public
either its annual budgets or financial projections, and such budgeted and
projected information set forth below are included in this Offer to Purchase
only because the information was provided to the Parent.
MHI GROUP, INC. AND SUBSIDIARIES
SELECTED BUDGETED AND PROJECTED SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30,
-------------------------------------------------
BUDGETED PROJECTED
----------------- -------------------------------
1996A/1/ 1996B/2/ 1997 1998 1999 2000
-------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Revenue...................... $27,302 $27,522 $31,724 $37,434 $44,173 $52,124
Income before interest and
income taxes................. 5,751 6,988 8,276 9,883 11,735 13,915
Net income................... 2,903 3,818 4,834 5,815 6,858 8,117
Net income per share......... $ 0.39 $ 0.52 $ 0.66 $ 0.79 $ 0.93 $ 1.10
</TABLE>
--------
/1/ The 1996A budgeted consolidated financial data (the "1996A Budget")
represents the Company's base case budget for its fiscal year ended April 30,
1996.
/2/ The 1996B budgeted consolidated financial data (the "1996B Budget")
represents the Company's 1996A Budget, adjusted to reflect the anticipated
effects of a new plan of operations proposed by the Company's senior
management.
The 1996A Budget, the 1996B Budget and the Company's projections referred to
in the table above (the "Projections") were developed by the Company's
management (and, in the case of the 1996B Budget and the Projections, with the
assistance of Commonwealth Associates) and were predicated on management's
assumptions with respect to certain macroeconomic conditions and developments
in the deathcare industry for such fiscal years, without giving effect to the
Offer, the Merger or to any action to be taken by the Parent or the Company,
as the Surviving Corporation, after the Effective Time. The 1996A Budget was
prepared by the Company's management in the ordinary course of the Company's
annual budgeting process and makes
11
<PAGE>
certain assumptions with respect to revenue growth, sales, general and
administrative expenses, net interest expense and certain other future
conditions. For purposes of calculating net income per share with respect to
each period shown in the table above, the Company assumed that there were
7,352,814 Shares outstanding.
The Parent has been informed by the Company that in preparing the 1996A
Budget and 1996B Budget, the primary assumptions were as follows: (i) revenue
growth was budgeted to be approximately 16% in fiscal year 1996; (ii) operating
margins were budgeted to increase approximately 1% over estimated fiscal year
1995, based on improvements in operating efficiency and selected price
increases; and (iii) the effective tax rate was budgeted to be 34%.
The Parent has been informed by the Company that in addition to the above
assumptions, the following were the additional primary assumptions used by the
Company in preparing the 1996B Budget: (i) trust income was budgeted to
increase by $220,000 as a result of improved trust asset allocation;
(ii) operational costs were budgeted to decline by approximately $1 million as
a result of reductions in sales, general and administrative expenses; and
(iii) interest expense was budgeted to decrease by $150,000 as a result of
partial prepayment of the outstanding balance of the Company's term loan.
The Parent has been informed by the Company that in preparing the Projections
the primary assumptions were as follows: (i) revenue growth was projected to be
15% in fiscal year 1997 and 18% in fiscal years 1998 through 2000, assuming
moderate growth through acquisitions beginning in the latter half of fiscal
year 1997; (ii) operating margins were projected to remain constant at the
level assumed in the 1996B Budget before adjustments to depreciation and
amortization, which adjustments reflect the moderate post fiscal year 1997
projected increase in acquisition activity; (iii) interest expense was
projected to decrease in fiscal year 1997 based on the Company's partial
prepayment of the outstanding balance of its term loan during fiscal year 1996
and, thereafter, interest expense was projected to approach historical levels
due to increased acquisition activity; and (iv) the effective tax rate was
projected to be 36% for fiscal years 1997 through 2000.
The foregoing information was not prepared with a view toward complying with
published guidelines of the Commission regarding projections or forecasts or
with the American Institute of Certified Public Accountants Guide for
Prospective Financial Statements. While presented with numerical specificity,
the 1996A Budget, the 1996B Budget and the Projections necessarily reflect
numerous assumptions (not all of which were stated therein and not all of which
were provided to the Parent), including assumptions with respect to industry
performance, general business and economic conditions and the availability and
cost of capital, many of which are inherently uncertain and/or beyond the
Company's control. Accordingly, the 1996A Budget, the 1996B Budget and the
Projections are not necessarily indicative of future performance of the
Company, which may be significantly more favorable or less favorable than as
set forth above. Although the information contained in the 1996A Budget and the
1996B Budget was one of many factors considered, such information was not
material to the decision of the Parent and the Purchaser to proceed with the
Offer. The Projections were not given significant consideration by the Parent
or the Purchaser and were not material to the decision by the Parent and the
Purchaser to proceed with the Offer. The inclusion of this information should
not be regarded as an indication that the Parent, the Purchaser, the financial
advisors to the Parent, the Dealer Manager, or anyone who received the
information considered it a reliable predictor of future events, and this
information should not be relied on as such. Because the 1996A Budget, the
1996B Budget and the Projections are inherently subject to uncertainty, none of
the Parent, the Purchaser, TLGI, the financial advisors to the Parent, the
Dealer Manager, Commonwealth Associates, the Company or anyone to whom the
information was provided assumes any responsibility for the validity,
reasonableness, accuracy or reliability of such information, and the Company
has made no representations to the Parent, the Purchaser or TLGI regarding any
such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT.
The Purchaser, a Florida corporation and wholly owned subsidiary of the
Parent, was organized to acquire the Company and has not conducted any
unrelated activities since its organization on August 8, 1995. Accordingly, no
meaningful financial information with respect to the Purchaser is available.
The Purchaser
12
<PAGE>
is a wholly owned subsidiary of the Parent, a Delaware corporation, which, in
turn, is an indirect wholly owned subsidiary of TLGI.
The Parent serves as the holding company for all United States assets and
operations of TLGI. According to TLGI's Annual Report on Form 10-K for its
fiscal year ended December 31, 1994, TLGI is the largest funeral service
corporation in Canada and the second largest in North America. TLGI operated
733 funeral homes and 158 cemeteries located throughout the United States and
Canada as of August 9, 1995, with approximately 90% of its 1994 consolidated
revenues derived from locations in the United States. TLGI is not a party to
the Merger Agreement and has no obligations thereunder.
The principal executive offices of the Parent and the Purchaser are located
at 50 East RiverCenter Blvd., Suite 800, Covington, Kentucky 41011. The
principal executive offices of TLGI are located at 4126 Norland Avenue,
Burnaby, British Columbia, Canada, V5G 3S8. The name, business address,
principal occupation or employment and citizenship of each director and
executive officer of TLGI, the Parent and the Purchaser are set forth in
Schedule I hereto.
The following selected summary consolidated financial data relating to the
Parent has been updated through June 30, 1995 and has been taken or derived
from the audited financial statements of TLGI contained in TLGI's Annual Report
on Form 10-K for the year ended December 31, 1994 and the unaudited financial
statements of TLGI contained in TLGI's Quarterly Reports on Form 10-Q for the
six months ended June 30, 1995 (collectively, the "TLGI Reports"). Such
selected summary consolidated financial data relating to the Parent was
prepared in accordance with Canadian generally accepted accounting principles
("Canadian GAAP"), and are presented in United States dollars. Canadian GAAP
differs in certain material respects from United States generally accepted
accounting principles. The financial data set forth below are qualified in
their entirety by reference to the TLGI Reports, including the financial
statements (and any related notes) contained therein. The TLGI Reports, which
are incorporated herein by reference, may be examined and copies may be
obtained from the offices of the Commission in the same manner as set forth
with respect to the Company in Section 8.
LOEWEN GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
SELECTED SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER SIX MONTHS
31, ENDED
-------------------------- JUNE 30,
1992 1993(1) 1994 1995
-------- -------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenue......................... $190,047 $263,493 $365,458 $ 238,793
Gross profit.......................... 69,675 97,328 136,639 93,270
Earnings from operations ............. 43,906 60,578 83,702 60,535
Net earnings.......................... 9,766 10,671 7,491 11,546
BALANCE SHEET DATA (AT END OF PERIOD):
Current assets........................ $ 57,145 $ 81,028 $ 96,943 $ 124,026
Non-current assets.................... 406,546 562,154 868,766 1,098,871
-------- -------- -------- ----------
Total assets.......................... 463,691 643,182 965,709 1,222,897
Current liabilities................... 27,242 36,722 81,472 85,889
Non-current liabilities............... 326,808 444,148 714,434 955,659
-------- -------- -------- ----------
Total liabilities..................... 354,050 480,870 795,906 1,041,548
Shareholders' equity.................. 109,641 162,312 169,803 181,349
</TABLE>
--------
(1) During the year ended December 31, 1994, TLGI made a retroactive change to
its revenue recognition policy (applicable to the Parent) with regard to
pre-need sales of cemetery interment rights and other related products.
Previously revenue was recognized in accordance with principles prescribed
for sales of real estate.
13
<PAGE>
Except as described in this Offer to Purchase, and except that Timothy A.
Birch, Vice President, Corporate Development and Law, of the Parent and TLGI,
owns 700 Shares jointly with his spouse, neither TLGI, the Parent, the
Purchaser nor, to their knowledge, any of the persons listed in Schedule I
hereto or any associate or majority owned subsidiary of any of the foregoing,
beneficially owns or has the right to acquire any equity securities of the
Company, nor have TLGI, the Parent, the Purchaser nor, to their knowledge, any
of the persons or entities referred to above or any of the respective executive
officers, directors or subsidiaries of any of the foregoing, effected any
transaction in the equity securities of the Company during the past 60 days.
Except as described in this Offer to Purchase, neither TLGI, the Parent, the
Purchaser nor, to their knowledge, any of the persons listed in Schedule I
hereto, has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to (whether or not legally enforceable), any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any
securities of the Company, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss,
guarantees of profits, division of profits or the giving or withholding of
proxies.
Except as described in this Offer to Purchase, there have been no contacts,
negotiations or transactions between TLGI, the Parent, the Purchaser or any
other subsidiary of the Parent or, to their knowledge, any of the persons
listed in Schedule I hereto, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets.
Except as described in this Offer to Purchase, none of TLGI, the Parent, the
Purchaser, any other subsidiary of the Parent, or, to their knowledge, any of
the persons listed in Schedule I hereto, has had any business relationship or
transaction with the Company or any of its executive officers, directors or
affiliates that would require disclosure pursuant to the rules and regulations
of the Commission applicable to the Offer.
10. SOURCE AND AMOUNTS OF FUNDS.
The Purchaser estimates that the total amount of funds required by the
Purchaser to purchase Shares pursuant to the Offer and to pay related fees and
expenses will be approximately $78 million.
The Parent intends to obtain such funds from an existing revolving credit
facility established under the Amended and Restated Multicurrency Credit
Agreement dated as of May 11, 1995 (the "Credit Agreement"), among the Parent,
certain financial institutions listed therein (the "Lenders"), TLGI, as
Guarantor, and the First National Bank of Chicago, as Agent ("Agent").
The following is a summary of the Credit Agreement, a copy of which is filed
as an exhibit to the Schedule 14D-1 and incorporated herein by reference. Such
summary is qualified in its entirety by reference to the Credit Agreement. The
Credit Agreement provides for a revolving credit facility of $400,000,000,
which terminates on May 12, 2000. Loans made thereunder are unsecured and bear
interest based, at the Parent's option, upon the relevant Eurocurrency Rate,
the Fixed CD Rate, or the Alternate Base Rate, each as defined in the Credit
Agreement, plus, in each case, an applicable margin (currently 50 bp, 62.5 bp
and 0 bp, respectively, each as determined by reference to the then current
rating on TLGI's long-term debt pursuant to the terms of the Credit Agreement)
or a rate determined through a competitive bid as provided in the Credit
Agreement.
At August 9, 1995, there was approximately $50 million of borrowings
outstanding, and approximately $350 million was available, under the Credit
Agreement.
The Lenders are the First National Bank of Chicago, ABN AMRO Bank N.V., Bank
of America National Trust and Savings Association, Nationsbank of Texas, N.A.,
Wachovia Bank of Georgia, N.A., Bank of Montreal, Chicago, First Union National
Bank of North Carolina, Cooperatieve Centrale Raiffeisen-Boerenbeenbank B.A.,
Royal Bank of Canada, The Bank of Nova Scotia, Dresdner Bank AG, PNC Bank,
Ohio, National Association and Seattle-First National Bank.
14
<PAGE>
The Credit Agreement requires, among other things, that TLGI maintain certain
financial ratios and a certain net worth. The Credit Agreement also limits,
among other things, TLGI's ability to incur debt and to incur liens on any of
its existing assets or those of its subsidiaries.
The Parent has not conditioned the Offer on obtaining financing. It is
anticipated that any borrowings incurred by the Parent in connection with the
Offer will be repaid from internally generated funds of the Parent and its
subsidiaries, and from borrowings and other external sources. Currently, the
Parent does not have specific plans for the refinancing of any borrowings
incurred by the Parent in connection with the Offer.
11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH
THE COMPANY.
In the summer of 1994, representatives of the Parent first contacted the
Company to discuss generally the Parent's interest in exploring a potential
acquisition of the Company and the potential synergies arising from such an
acquisition. These discussions led to a meeting at the Company's headquarters
in July 1994 between W. Fred Lindsey, M.D., Chairman of the Board of Directors
of the Company, other representatives of the Company and representatives of the
Parent. Following these discussions, the Company determined not to pursue a
transaction with the Parent at that time but advised the Parent that the
Company might be willing to pursue discussions at a future time.
In February 1995, the Parent contacted the Company to again explore the
Parent's interest in acquiring the Company. On February 16, 1995,
representatives of the Parent met with Clifford Hinkle, then a Director of the
Company, and certain members of the Company's senior management to discuss a
possible acquisition or other business combination with respect to the Company.
At that meeting, the Parent requested additional business and financial
information about the Company. Further discussions between the Company and the
Parent took place following this meeting, and on March 9, 1995 the Company and
the Parent executed a confidentiality agreement pursuant to which the Parent
agreed to maintain the confidentiality of non-public information received from
the Company. In this Agreement, the Parent agreed for a period of two years not
to acquire securities of the Company except pursuant to a transaction approved
by the Company's Board of Directors unless, without the approval of the Board
of Directors of the Company, a third party acquires or makes a tender offer for
more than 10% of the Shares. Discussions continued thereafter from time to time
between representatives of the Company, including its financial advisor, and
representatives of the Parent, and the Parent was provided with limited
information about the Company. At the end of March 1995, the Parent indicated
to the Company that its valuation range was $7.25 to $7.75 per Share. The
Company informed the Parent that it would not consider a transaction at such a
price.
In June 1995, the Parent retained Smith Barney Inc. ("Smith Barney") to serve
as its financial advisor in connection with the possible acquisition of the
Company.
On June 11 and 12, 1995, Mr. Hinkle and Raymond Loewen, Chairman and Chief
Executive Officer of the Parent, along with other representatives of the Parent
and the Company, met to discuss the Parent's continuing interest in the Company
and the principal terms of various possible forms of business combinations. The
Parent was also provided with additional information about the Company.
Discussions continued to proceed between the parties from June 12, 1995 through
the middle of July. On July 19, 1994, certain representatives of the Parent and
its financial advisors met with the Company's financial advisor to discuss
valuation of the Company. At such meeting, the 1996B Budget and the Projections
were delivered to representatives of the Parent and discussed. In addition, the
parties discussed potential arrangements by which the Company would negotiate
exclusively with the Parent toward a business combination transaction between
the parties. Based on these discussions, the Parent and the Company agreed to a
valuation range of $9.75 to $11.00, subject to the Parent's due diligence
review of the Company and an exclusivity agreement. On July 24, 1995, the
parties entered into an agreement pursuant to which the Company agreed to work
exclusively with the Parent through August 15, 1995 with respect to a possible
acquisition of the Company.
15
<PAGE>
On July 26, 1995, counsel for the Company delivered to the Parent and its
representatives a draft of a merger agreement, and on August 4, 1995 counsel
for the Parent delivered to the Company and its representatives a draft of an
option agreement.
Between July 24, 1995 and August 8, 1995, representatives of the Parent
conducted a due diligence investigation of the Company and representatives of
the Parent and the Company, including their financial advisors and legal
counsel, discussed the principal issues relating to the drafts of the merger
agreement and the option agreement.
On August 7, 1995, representatives of the Parent met with representatives of
the Company and proposed an acquisition of the Company by the Parent on the
basis of a cash price of $9.75 per Share, which proposal was rejected by the
representatives of the Company. Later that day, representatives of the Company
informed the Parent that the Company would consider a price of $9.75 per Share,
but only if the Parent would proceed with a transaction that did not include
either a stock option from the Company or a termination fee. This proposal was
rejected by the representatives of the Parent. The parties continued to
negotiate the terms of the transaction and on August 8, 1995 agreed to a price
of $10.25 per Share in a transaction with a stock option from the Company and a
termination fee. Representatives of the Parent and the Company thereupon
finalized the agreements, subject to the approval of their respective Boards of
Directors. On August 8, 1995 representatives of the Parent and representatives
of MH Associates negotiated the terms of the Warrant Option Agreement. On
August 8, 1995, the Board of Directors of the Parent approved the Merger
Agreement, the Company Option Agreement and the Warrant Option Agreement. On
August 9, 1995, the Board of Directors of the Company approved the Merger
Agreement and the Company Option Agreement. On August 9, 1995, the Warrant
Option Agreement was executed, and, thereafter, the Merger Agreement and the
Company Option Agreement were executed and the parties each issued press
releases with respect thereto.
12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
Purpose of the Offer
The purpose of the Offer and the Merger is for the Parent to acquire control
of, and the entire common equity interest in, the Company. Following the Offer,
the Parent and the Purchaser intend to acquire any remaining common equity
interest in the Company not acquired in the Offer by consummating the Merger.
If for any reason the Merger is not consummated, the Parent and the Purchaser
will evaluate their other alternatives. Such alternatives could include
purchasing additional Shares in the open market, in privately negotiated
transactions, in another tender or exchange offer or otherwise, or taking no
further action to acquire additional Shares. Any additional purchases of Shares
could be at a price greater or less than the price to be paid for Shares in the
Offer and could be for cash or other consideration. Alternatively, the
Purchaser may sell or otherwise dispose of any or all Shares acquired pursuant
to the Offer or otherwise. Such transactions may be effected on terms and at
prices then determined by the Parent or the Purchaser, which may vary from the
price to be paid for Shares in the Offer.
Plans for the Company
The Parent intends to conduct a detailed review of the Company and its
assets, corporate structure, dividend policy, capitalization, operations,
properties, policies, management and personnel and to consider, subject to the
terms of the Merger Agreement, what, if any, changes would be desirable by the
Parent in light of the circumstances then existing and reserves the right to
take such actions or effect such changes as it deems desirable. Such changes
could include changes in the Company's business, corporate structure,
capitalization, Board of Directors, management or dividend policy. Based upon
its initial review of the Company's corporate structure, the Parent is
considering the possibility of consolidating the Company's existing corporate
functions with the Parent's existing corporate structure. Parent expects that
following the Offer it will cause its designees to constitute a majority of the
members of the Board of Directors of the Company.
Except as otherwise described in this Offer to Purchase, the Parent and the
Purchaser have no current plans or proposals that would relate to, or result
in, any extraordinary corporate transaction involving the Company, such as a
merger, reorganization or liquidation involving the Company or any of its
subsidiaries, a
16
<PAGE>
sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, any material change in the Company's capitalization or dividend
policy or any other material change in the Company's business, corporate
structure, Board of Directors or management.
13. MERGER AGREEMENT; TIMING; APPRAISAL RIGHTS; COMPANY OPTION AGREEMENT;
WARRANT OPTION AGREEMENT; CONFIDENTIALITY AGREEMENT; EXCLUSIVITY AGREEMENT.
The Merger Agreement
The following description of the Merger Agreement is qualified in its
entirety by reference to the text of such agreement, a copy of which is filed
as an exhibit to the Schedule 14D-1 and incorporated herein by reference.
THE OFFER. The Merger Agreement provides for the making of the Offer. The
obligation of the Purchaser to accept for payment or pay for Shares is subject
to the satisfaction of the Minimum Condition and certain other conditions that
are described in Section 16 hereof. Pursuant to the terms of the Merger
Agreement, the Parent and the Purchaser expressly reserve the right to waive
any of the conditions to the Offer (including the Minimum Condition) and to
make any change in the terms or conditions of the Offer, subject to having
obtained the prior written consent of the Company in the event of: (i) a
decrease in the price per Share payable in the Offer; (ii) a reduction in the
maximum number of Shares to be purchased in the Offer; or (iii) changes in the
terms and conditions of the Offer that impose additional conditions to the
Offer.
THE RECOMMENDATION. Pursuant to the Merger Agreement, the Company has
approved of and consented to the Offer and the Merger and has represented and
warranted that its Board of Directors, at a meeting duly called and held on
August 9, 1995, by the unanimous vote of all directors present, (i) duly
approved and adopted the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger and the Company Option Agreement,
(ii) recommended that the shareholders of the Company accept the Offer, tender
their Shares pursuant to the Offer and adopt the Merger Agreement and the
transactions contemplated hereby, including the Merger, (iii) determined that
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, are fair to and in the best interests of the holders of
Shares, and (iv) took all other action necessary to render Section 607.0901 and
Section 607.0902 of the Florida Business Corporation Act ("Florida Law")
inapplicable to the Offer and the Merger and the Company Option Agreement and
the transactions contemplated hereby and thereby ((i), (ii), (iii) and (iv),
collectively, the "Recommendation"). The Company further represented that
Commonwealth Associates has rendered to the Board of Directors of the Company a
written opinion dated as of August 9, 1995, to the effect that the
consideration to be received by the holders of Shares pursuant to the Offer and
the Merger is fair to such shareholders (other than the Parent and its
affiliates) from a financial point of view. Pursuant to the Merger Agreement,
the Company has agreed that the Recommendation will not be withdrawn, modified
or amended, except to the extent that the Board of Directors of the Company,
after consultation with and based upon the advice of independent legal counsel
(who may be the Company's regularly engaged independent legal counsel),
determines in good faith that the failure to take such action would constitute
a breach of the Board of Directors' fiduciary duties under applicable law.
BOARD REPRESENTATION. The Merger Agreement provides that, subsequent to the
consummation of the Offer, so long as the Purchaser shall not have waived the
Minimum Condition, the Purchaser will be entitled to at least that percentage
of the number of seats on the Board (rounded up to the nearest whole seat) as
reflects the percentage of the outstanding Shares then owned by the Purchaser;
provided, however, that until the Effective Time (as defined below) at least
one person who was a director of the Company on August 9, 1995, and who is
neither an officer of the Company nor a designee, shareholder, affiliate or
associate (within the meaning of the Federal securities laws) of the Purchaser
(one or more of such directors, the "Independent Directors"), shall be entitled
to remain a director of the Company. In order to provide the Purchaser with
such representation on the Board, the Merger Agreement provides that, upon
request of the Purchaser, the
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Company shall promptly increase the size of the Board of Directors or exercise
its best efforts to secure the resignation of such number of directors as is
necessary to enable the Purchaser's designees to be elected to the Board of
Directors and shall cause the Purchaser's designees to be so elected. The
Merger Agreement provides that, notwithstanding anything therein to the
contrary, prior to the Effective Time, the affirmative vote of a majority of
the Independent Directors shall be required to (i) amend or terminate the
Merger Agreement by the Company, (ii) exercise or waive any of the Company's
rights or remedies thereunder, or (iii) extend the time for performance of the
Purchaser's obligations thereunder.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company with respect to corporate
existence and power, corporate authorization, consents and approvals, non-
contravention, capitalization, subsidiaries, Commission filings, financial
statements, absence of certain changes or events, litigation, taxes, employee
benefits, compliance with laws, brokers' fees, environmental matters and other
matters.
The Parent and the Purchaser have also made certain representations and
warranties with respect to corporate existence and power, corporate
authorization, governmental authorization, non-contravention, financing and
other matters.
THE MERGER. The Merger Agreement provides that, following the purchase of
Shares pursuant to the Offer and upon the terms (but subject to the conditions)
set forth in the Merger Agreement, the Purchaser will be merged with and into
the Company. The Merger Agreement provides that the Merger will be consummated
as promptly as practicable after the satisfaction or waiver of the conditions
to the Merger and shall become effective at the time at which Articles of
Merger have been filed with the Secretary of State of the State of Florida.
The Merger Agreement provides that, following the consummation of the Offer,
the Company shall promptly take all action necessary in accordance with Florida
Law and its Articles of Incorporation and By-Laws to convene a meeting of the
Company's shareholders to consider the Merger, if such meeting is required, and
that the Company shall use its best efforts to solicit from shareholders of the
Company proxies in favor of the Merger and shall take all other action
necessary or, in the reasonable opinion of the Parent, advisable to secure any
vote or consent of shareholders required by Florida Law to effect the Merger.
Pursuant to the Merger Agreement, the Parent has agreed that it shall vote, or
cause to be voted, in favor of the Merger all Shares directly or indirectly
beneficially owned by it. Accordingly, if the Purchaser acquires a majority of
the outstanding Shares pursuant to the Offer or otherwise, the Parent may be
able, without the vote of any other holder of Shares, to adopt the Merger
Agreement and approve the Merger.
In the Merger, each outstanding Share (other than Shares held in the treasury
of the Company), not held, directly or indirectly, by the Parent or the
Purchaser will be converted into the right to receive $10.25 in cash, without
interest. Each share of common stock of the Purchaser issued and outstanding
immediately prior to the Effective Time will be converted into and become one
share of common stock of the Surviving Corporation, which will thereupon become
a subsidiary of the Parent and the Parent will own the entire common equity
interest in the Company. The directors of the Purchaser immediately prior to
the Effective Time will become the initial directors of the Surviving
Corporation and the officers of the Company immediately before the Effective
Time will be the initial officers of the Surviving Corporation, in each case
until their successors are duly elected or appointed and qualified.
CONDITIONS TO THE MERGER. Consummation of the Merger is subject to certain
conditions, including (i) consummation of the Offer, (ii) adoption of the
Merger and the Merger Agreement by the requisite vote of the Company's
shareholders, (iii) the waiting period (and any extension thereof), if any,
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated, (iv) no statute, rule, regulation, judgment, writ,
decree, order or injunction shall have been promulgated, enacted, entered or
enforced, and no other action shall have been taken, by any domestic or foreign
government or governmental,
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administrative or regulatory authority or agency of competent jurisdiction or
by any court or tribunal of competent jurisdiction, domestic or foreign, that
in any of the foregoing cases has the effect of making illegal or directly or
indirectly restraining, prohibiting or restricting the consummation of the
Merger, and (v) all actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit the
consummation of the Merger shall have been taken or made. In addition, the
obligations of the Parent and the Purchaser to consummate the Merger are
further subject to the satisfaction at or prior to the Effective Time of the
additional condition that the Company will have satisfied and complied with in
all material respects each of the covenants of the Company contained in the
Merger Agreement from the time the Purchaser accepts Shares for payment
pursuant to the Offer up to and including such time as designees of the Parent
or the Purchaser have been elected to, and constitute a majority of, the Board
of Directors of the Company.
CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the Merger Agreement, the
Company has agreed that, between the date of the Merger Agreement and the
Effective Time, unless the Parent shall otherwise consent in writing, the
businesses of the Company and its subsidiaries shall be conducted only in the
ordinary course of business and in a manner consistent with past practice; and
that the Company will use its best efforts to preserve substantially intact the
business organization of the Company and its subsidiaries, to keep available
the services of the present officers, employees and consultants of the Company
and its subsidiaries and to preserve the present relationships of the Company
and its subsidiaries with customers, suppliers and other persons with which the
Company or any of its subsidiaries has significant business relations. The
Merger Agreement provides that neither the Company nor any of its subsidiaries
shall, between the date of the Merger Agreement and the Effective Time, without
the prior written consent of the Parent:
(i) (a) issue, sell, pledge, dispose of, encumber, authorize, agree to
or publicly propose the issuance, sale, pledge, disposition, encumbrance or
authorization of any shares of capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of capital stock, or any other ownership interest, of the Company or
any of its subsidiaries; (b) amend or publicly propose to amend the
Articles of Incorporation or By-Laws or equivalent organizational documents
of the Company or any of its subsidiaries or of any term of any outstanding
security of the Company or any subsidiary thereof; (c) split, combine or
reclassify any outstanding shares of capital stock of the Company or its
subsidiaries or declare, set aside or pay any dividend or distribution
payable in cash, stock, property or otherwise with respect to the Shares;
(d) redeem, purchase or otherwise acquire or offer to redeem, purchase or
otherwise acquire any shares of, or any options, warrants, convertible
securities or rights of any kind to acquire, shares of, its capital stock
or any other ownership interest of the Company, except in the performance
of its obligations under existing employee benefit plans or as specifically
contemplated by the Merger Agreement; or (e) authorize or propose or enter
into any contract, agreement, commitment or arrangement with respect to any
of the matters set forth in this paragraph (i);
(ii) (a) acquire (by merger, consolidation, or acquisition of stock or
assets) any material corporation, partnership or other business
organization, business line or division thereof; (b) except in the ordinary
course of business and in a manner consistent with past practices, sell,
lease, transfer, assign, license, pledge, dispose of, or encumber or
authorize or propose the sale, lease, transfer, assignment, license,
pledge, disposition, mortgage, security interest in or encumbrance of any
assets of the Company or any of its subsidiaries; (c) incur, assume or
prepay any indebtedness for borrowed money, or enter into any transaction,
contract or agreement, except in the ordinary course of business, provided
that borrowings will not in any event exceed $200,000 in the aggregate; (d)
guaranty any indebtedness for borrowed money, (e) authorize any capital
expenditures outside the Company's previously approved capital budget and
other planned expenditures theretofore disclosed to the Purchaser which are
in the aggregate in excess of $50,000; (f) enter into or amend any
contract, agreement, commitment or arrangement or relinquish any right with
respect to any of the matters set forth in this paragraph (ii); (g) amend
or modify any of the terms of any stock option or grant any stock option,
stock appreciation right or stock
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bonus; or (h) make any loans, advances or capital contributions to, or
investments in, any other person or entity, other than to any wholly owned
subsidiary;
(iii) take any action with respect to the modification or grant of any
severance or termination pay or agreement, deferred compensation
arrangement or employment agreement or grant any increase in benefits
payable under its severance or termination pay or deferred compensation
agreements and policies or any employment agreements in effect on the date
of the Merger Agreement;
(iv) (a) make any payments (except in the ordinary course of business and
in amounts and in a manner consistent with past practice) under any
employee benefit plan to any employee of, or independent contractor or
consultant to, the Company or any of its subsidiaries; (b) adopt any new,
or amend any existing, incentive, retirement or welfare benefit
arrangements, plans or programs for the benefit of current, former or
retired employees of the Company and its subsidiaries; or (c) grant any
increases in employee compensation or make any bonus or other special
payments to employees, or award any stock options (except for automatic
grants to directors as required by the terms of any employee benefit plan
as in effect on the date of the Merger Agreement);
(v) take any action except in the ordinary course of business and in a
manner consistent with past practice (none of which actions shall be
unreasonable or unusual) with respect to accounting policies or procedures
(including without limitation its procedures with respect to the payment of
accounts payable);
(vi) before the purchase of Shares pursuant to the Offer and other than
pursuant to the Merger Agreement, take any action to cause the Shares to
cease to be listed on the NYSE;
(vii) (a) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), except for payment, discharge or satisfaction of its
liabilities or its obligations in the ordinary course of business or in
accordance with their terms as in effect on the date of the Merger
Agreement; (b) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a
dissolution, restructuring, recapitalization or reorganization; or (c)
settle or compromise any litigation brought against it other than
settlements or compromises of any litigation where the amount paid in
settlement or compromise does not exceed $15,000, exclusive of amounts
covered by insurance; or
(viii) authorize or enter into any agreement to do any of the foregoing.
ACQUISITION PROPOSALS; NO SHOPPING. Pursuant to the Merger Agreement, the
Company will notify the Parent immediately if any inquiries or proposals are
received by, any information is requested from, or any negotiations or
discussions are sought to be initiated or continued with the Company, its
subsidiaries, or any of their respective officers, directors, employees, agents
or advisors, in each case in connection with any acquisition, business
combination or purchase of all or any significant portion of the assets of, or
any equity interest in, the Company or any subsidiary which would require the
acquiring entity or group to file a Schedule 13D with respect thereto under the
Exchange Act, and will keep the Parent reasonably informed of the status and
substance of any such inquiries, proposals, requests, negotiations or
discussions. The Merger Agreement provides that the Company and its
subsidiaries will not, directly or indirectly, through any officer, director,
agent, financial adviser or otherwise, solicit, initiate or encourage the
submission of proposals or offers from any person relating to any acquisition
or purchase of all or a portion of the assets of (other than immaterial or
insubstantial assets or inventory in the ordinary course of business), or any
equity interest in, the Company or any of its subsidiaries or any business
combination with the Company or any of its subsidiaries, or participate in any
negotiations regarding, or furnish to any other person any information (except
for information which has been previously publicly disseminated by the Company
in the ordinary course of business) except in respect of proposals received
other than as a result of a failure to comply with the foregoing for which the
failure so to act would, in the good faith judgment of the Board of Directors,
after consultation with and based upon the advice of independent legal counsel
(who may be the Company's regularly engaged independent counsel), constitute a
breach of the Board of Directors' fiduciary duties under
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applicable law. Pursuant to the Merger Agreement, the Company has agreed to
notify the Parent if any such proposal or offer, or any inquiry or contact with
any person with respect thereto, is made or received and, in detail, the terms
thereof no less than two business days prior to responding to any such proposal
or offer and, if any such proposal or offer is in writing, the Company will
promptly deliver to the Purchaser and the Parent a copy of such proposal.
ADDITIONAL AGREEMENTS. Pursuant to the Merger Agreement, upon the terms and
subject to the conditions thereof, each of the parties thereto has agreed to
use its 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 the
transactions contemplated by the Merger Agreement and shall use its best
efforts to obtain all necessary waivers, consents and approvals, and to effect
all necessary filings under the Exchange Act and the HSR Act; provided,
however, that in no event shall the Parent or the Purchaser be required to
divest any of its assets in connection therewith.
AMENDMENT. The Merger Agreement may be amended by action taken by the
Purchaser and the Parent and by action taken by or on behalf of the Board of
Directors of the Company at any time prior to the Effective Time; provided,
however, that, after approval of the Merger by the shareholders of the Company,
no amendment may be made which would reduce the amount or change the type of
consideration into which each Share will be converted upon consummation of the
Merger.
TERMINATION. The Merger Agreement provides that it may be terminated at any
time before the Effective Time in the following circumstances: (i) by mutual
consent of the Parent and the Company; or (ii) by the Parent (a) if the Parent
or the Purchaser shall have failed to commence the Offer due to the occurrence
of any of the events specified in any of the conditions to the Offer, or (b) if
the Offer shall have expired or been terminated without any Shares being
purchased thereunder by the Purchaser as a result of the occurrence of any of
the events specified in the conditions to the Offer; or (iii) by either the
Parent or the Company if the Merger shall not have been consummated by December
31, 1995; provided, however, that such right to terminate the Merger Agreement
will not be available to any party who is in breach of the Merger Agreement; or
(iv) by either the Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any other action (which order,
decree or ruling the parties hereto shall use their best efforts to lift), in
each case permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement; or (v) by the Parent if the
Board of Directors of the Company (a) withdraws, modifies or changes its
Recommendation in a manner adverse to the Purchaser, (b) recommends to the
holders of Shares any proposal with respect to a tender offer, merger,
consolidation, share exchange or similar transaction involving the Company or
any of its subsidiaries, other than the transactions contemplated by the Merger
Agreement, or (c) resolves to do any of the foregoing; or (vi) by the Company
or the Parent if prior to the Effective Time, a corporation, partnership,
person or other entity or group shall have made a bona fide offer with respect
to which the Board of Directors of the Company, after consultation with and
based upon the advice of independent legal counsel (who may be the Company's
regularly engaged independent legal counsel), determines in good faith that the
failure of the Board of Directors to recommend such offer to the holders of
Shares would constitute a breach of the Board of Directors' fiduciary duties
under applicable law, provided that any such termination by the Company shall
not be effective until payment to the Parent of termination fees as set forth
in the Merger Agreement; or (vii) by either the Parent or the Company if the
other party shall have breached the Merger Agreement in any material respect
and such breach continues for a period of ten days after the receipt of notice
of the breach from the non-breaching party.
INDEMNIFICATION. Pursuant to the Merger Agreement, to the extent provided in
Florida Law and in the Company's Articles of Incorporation and By-Laws in
effect on the date the Merger Agreement was entered into, the Company shall
indemnify and hold harmless, and after the Effective Time, the Parent and the
Surviving Corporation shall indemnify and hold harmless, each director and
officer of the Company or any
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of its subsidiaries against any costs or expenses (including attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to any of the transactions
contemplated by the Merger Agreement, including without limitation liabilities
arising under the Securities Act or the Exchange Act in connection with the
Offer, the Merger or any financing. The Merger Agreement provides that the
Surviving Corporation shall, for a period of four years following the Effective
Time, use its reasonable efforts either (i) to maintain the Company's existing
officers' and directors' liability insurance ("D&O Insurance") covering those
persons who are currently covered thereby on the date of the Merger Agreement
in full force and effect without reduction of coverage; provided, however, that
the Surviving Corporation will not be required to pay an annual premium
therefor in excess of 200% of the last annual premium paid prior to the date of
the Merger Agreement (the "Current Premium"); provided further that if the
annual premium of the D&O Insurance exceeds 200% of the Current Premium, the
Surviving Corporation will use its reasonable efforts to obtain a policy with
the greatest coverage available for a cost not exceeding such amount; provided
further that if the existing D&O Insurance expires or is terminated or
cancelled during such four-year period, the Surviving Corporation will use its
reasonable efforts to obtain as much coverage as can be obtained for the
remainder of such period for a premium on an annualized basis not in excess of
200% of the Current Premium; and, provided further that the Surviving
Corporation may substitute for the D&O Insurance policies with the same
coverage containing terms and conditions which are no less advantageous and
provided that such substitution does not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time or (ii)
to cause the Parent's officers' and directors' liability insurance policy then
in effect to cover those persons who are covered on the date of the Merger
Agreement by the D&O Insurance. Pursuant to the Merger Agreement, the Parent
shall cause the Surviving Corporation to continue in effect the indemnification
provisions currently provided by the Articles of Incorporation and By-Laws of
the Company for a period of not less than four years following the Effective
Time. The Merger Agreement provides that neither the Company nor the Surviving
Corporation shall have any obligation to indemnify any person against any cost,
expense, judgment, fine, loss, claim, damage, liability or settlement amount
found to have resulted solely from such person's own gross negligence or
willful misconduct.
FEES AND EXPENSES. After the Merger Agreement is terminated by the Company as
set forth in clause (vi) of the paragraph entitled "Termination" above, or by
the Parent as set forth in clauses (v), (vi) or (vii) of the paragraph entitled
"Termination" above, the Company shall pay to the Parent, within one business
day after receipt of a request therefor, an amount equal to the sum of (i)
$2,250,000 and (ii) the lesser of (a) $2,000,000 and (b) all actual out-of-
pocket costs and expenses of the Parent and the Purchaser incurred in
connection with the Merger Agreement and the transactions contemplated thereby,
including, without limitation, legal, professional and service fees and
expenses. Except as set forth in the immediately preceding sentence, all costs
and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby will be paid by the party incurring such
costs and expenses.
WARRANTS AND STOCK OPTIONS. Pursuant to the Merger Agreement, prior to the
Effective Time, the Company shall (i) offer to each holder of an outstanding
Warrant an amount in cash in cancellation of such Warrant equal to the excess,
if any, of $10.25 net per Share over the per Share exercise price of such
Warrant, multiplied by the number of Shares subject to such Warrant, less
applicable Federal, state and local tax withholdings and (ii) use its best
efforts to secure the agreement, if required, of each such holder to accept
such cash payment in cancellation of such Warrants.
In addition, the Merger Agreement provides that, prior to the Effective Time,
the Board of Directors of the Company (or, if appropriate, a Committee thereof)
will adopt such resolutions and approve such amendments, if any, as are
necessary to provide for the cancellation of all Options to purchase Shares
granted pursuant to the 1989 Stock Option Plan, effective as of immediately
prior to the Effective Time. Pursuant to the 1989 Stock Option Plan and in
accordance with such resolutions and amendments, immediately prior to the
Effective Time, each Option which is not then exercisable or vested will become
fully exercisable and vested, and each such Option and all other Options will
be cancelled, effective as of
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immediately prior to the Effective Time, in exchange for a payment by the
Company or the Surviving Corporation of an amount, payable within ten business
days after the Effective Time, equal to the product of (i) the total number of
Shares subject to such Option and (ii) the excess, if any, of the price per
Share to be paid in the Merger over the exercise price per Share subject to
such Option, subject to any required withholding of taxes. Pursuant to the
Merger Agreement, as of the Effective Time, the Company shall terminate the
1989 Stock Option Plan.
Timing
The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors. Although the Parent has agreed to
cause the Merger to be consummated on the terms set forth above, there can be
no assurance as to the timing of the Merger or that the Merger will in fact
occur.
The Parent and the Purchaser reserve the right to acquire additional Shares
following the expiration or termination of the Offer through open market
transactions, private purchases, other tender offers or otherwise, on terms and
at prices that may be the same as, or more or less favorable than, those of the
Offer.
Appraisal Rights
Holders of Shares do not have dissenters' rights as a result of the Offer. If
on the record date of the shareholder meeting held to approve the Merger, the
Shares are listed on the NYSE, the PSE or another national securities exchange
or there are no fewer than 2,000 shareholders, holders of Shares will not have
dissenters' rights as a result of the Merger.
If these conditions were not met, holders of Shares might have certain rights
under Section 607.1302 of Florida Law to dissent and to demand appraisal of,
and payment of the "fair value" of, their Shares by complying with the
provisions of Section 607.1302 of Florida Law. Such rights, if the statutory
procedures were complied with, could lead to a judicial determination of the
fair value (excluding any element of value arising from the Merger) of their
Shares. The fair value so determined could be more or less than the purchase
price per Share paid pursuant to the Offer and the Merger. Under Florida Law,
Section 607.1302, a shareholder entitled to appraisal rights with respect to a
corporation's shares may not challenge the corporate action creating the
entitlement unless the corporate action is unlawful or fraudulent.
Company Option Agreement
The following is a summary of the Company Option Agreement, a copy of which
is filed as an exhibit to the Schedule 14D-1. Such summary is qualified in its
entirety by reference to the text of the Company Option Agreement, which is
incorporated herein by reference.
THE COMPANY OPTION. Pursuant to the Company Option Agreement, the Company
granted to the Parent an irrevocable option (the "Company Option") to purchase,
upon the terms and subject to the conditions provided for therein, up to
1,253,823 Shares (the "Option Shares") at a purchase price of $10.25 per share
(the "Option Purchase Price").
The Company Option shall, subject to certain exceptions described in the
Company Option Agreement, terminate upon the earliest to occur of (i) the date
which is 12 months after any Triggering Event (as described below) shall have
occurred, (ii) the Effective Time, and (iii) termination of the Merger
Agreement by (a) mutual consents of the Boards of Directors of each of the
Parent and the Company, (b) the Parent as set forth in clause (ii) of the
paragraph entitled "Termination" above (other than a termination resulting from
a willful breach by the Company of any representation or warranty of a covenant
contained in the Merger Agreement), (c) either the Parent or the Company as set
forth in clause (iii) of the paragraph entitled "Termination" above, or (d)
either the Parent or the Company as set forth in clause (iv) of the paragraph
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entitled "Termination" above, unless prior to that time a Triggering Event
shall have occurred. If the Company Option cannot be exercised by reason of any
applicable judgment, decree or order, the expiration date of the Company Option
shall be extended until five business days after such impediment to exercise
shall have been removed.
EXERCISE OF THE COMPANY OPTION. The Parent may exercise the Company Option
subject to certain conditions as set forth in the Company Option Agreement, in
whole or in part, at any time and from time to time following the occurrence of
any of the following events (each a "Triggering Event"):
(i) the Company or any of its subsidiaries shall have entered into any
agreement with any person (other than Parent or any of its affiliates), or
shall have authorized, recommended, proposed or publicly announced its or
their intention to authorize, recommend, or propose to enter into any
agreement with any such person, with respect to (a) a merger, consolidation
or any similar transaction with such person or involving the Company or any
subsidiary, (b) the sale, lease or other disposition of 15% or more of the
consolidated assets of the Company and its consolidated subsidiaries, or
(c) the issuance, sale or other disposition of securities (or an option or
right to acquire such securities) representing 10% or more of the voting
power of the Company or any of its subsidiaries; or
(ii) (a) the making by any person (other than the Parent or any of its
affiliates), by public announcement or communication to the Company or
otherwise, of a proposal to acquire the Company or any of its subsidiaries
by merger, consolidation, purchase of all or a substantial portion of the
Company's assets or other similar transaction, or (b) any person (other
than the Parent or its affiliates), shall have commenced, or shall have
filed a registration statement under the Securities Act, with respect to a
tender or exchange offer for 10% or more of the outstanding Shares; or
(iii) the acquisition, by any person or group, other than the Parent or
any of its affiliates, of beneficial ownership of, or the right to acquire
beneficial ownership of, securities representing 10% or more of the voting
power of the Company or any of its subsidiaries; or
(iv) the shareholders of the Company shall have failed to approve the
Merger at the meeting called for that purpose or at any adjournment or
postponement thereof, such meeting shall not have been held or shall have
been cancelled prior to the termination of the Merger Agreement or the
Board of Directors of the Company shall have withdrawn or modified in a
manner adverse to the Parent its favorable recommendation of the Merger.
To the knowledge of the Parent, no Triggering Event has occurred as of the
date of this Offer to Purchase.
The Company Option Agreement provides that, in the event that the Parent
acquires any Option Shares and disposes of such Shares (other than to an
affiliate of the Parent) through a sale, exchange, transfer, merger or
otherwise, for an amount per share which exceeds the Option Purchase Price by
more than $1.00 (the "Option Cap"), the Parent will promptly return to the
Company the amount of such excess. Pursuant to the Company Option Agreement, to
the extent that the aggregate amount of such excess in respect of all such
transfers exceeds $1,253,823 (the "Aggregate Option Cap"), the Parent shall
return such excess and any remaining Option Shares to the Company and the
Option shall be cancelled. The Parent will not sell or otherwise dispose of
Option Shares except in compliance with the Securities Act and any applicable
state securities law.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The Company Option
Agreement provides that, in the event of any change in the Shares by reason of
a stock dividend, split-up, recapitalization, combination, exchange of shares
or similar transaction, the type and number of shares or securities subject to
the Company Option, the Option Cap (but not the Aggregate Option Cap) and the
Option Purchase Price therefor, shall be adjusted so that the Parent shall
receive upon exercise of the Company Option the number and class of shares or
other securities or property that the Parent would have received in respect of
the Shares if the Company Option had been exercised immediately prior to such
event, or the record date therefor, as
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applicable. Pursuant to the Company Option Agreement, if any additional Shares
are issued after the date of the Company Option Agreement (other than pursuant
to an event described immediately above), the number of Shares subject to the
Company Option shall be adjusted so that, after such issuance, it equals 19.9%
of the number of Shares then issued and outstanding, without giving effect to
any Shares subject to or issued pursuant to the Company Option; provided, that
the Company shall not enter into any transaction described above if,
immediately following such transaction, it does not have available and capable
of being reserved for purposes of the Company Option Agreement authorized but
unissued and unreserved Shares in the quantity required by the Company Option
Agreement to be subject to the Company Option.
The Company Option Agreement provides that, in the event that the Company
shall enter into an agreement (i) to consolidate with or merge into any person,
other than the Parent or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation or merger, (ii) to
permit any person, other than the Parent or one of its subsidiaries, to merge
into the Company and the Company shall be the continuing or surviving
corporation, but, in connection with such merger, the then outstanding Shares
shall be changed into or exchanged for stock or other securities of the Company
or any other person or cash or any property or then outstanding Shares shall
after such merger represent less than 50% of the outstanding shares and share
equivalents of the merged company, or (iii) to sell or otherwise transfer all
or substantially all of its assets to any person, other than the Parent or one
of its subsidiaries, then, and in each such case, the Company Option shall,
upon the consummation of any such transaction and upon the terms and conditions
set forth in the Company Option Agreement, be converted into, or exchanged for,
an option, at the election of the Parent, of either (a) the Acquiring
Corporation (as defined below), (ii) any person that controls the Acquiring
Corporation, or (iii) in the case of merger described in clause (ii), the
Company.
"Acquiring Corporation" means (i) the continuing or surviving corporation of
a consolidation or merger with the Company (if other than the Company), (ii)
the Company in a merger in which the Company is the continuing or surviving
corporation and (iii) the transferee of all or substantially all of the
Company's assets.
PUT RIGHT OF THE PARENT. The Company Option Agreement provides that, at any
time or from time to time during the period commencing with the occurrence of a
Triggering Event and ending 12 months thereafter, subject to certain
exceptions, whether or not any portion of the Company Option has been
exercised, in the event the Merger Agreement has been terminated and, within
twelve months of the date of the Company Option Agreement, (i) any person shall
have acquired a majority of the Shares outstanding, (ii) the Company shall have
consummated a merger, consolidation or similar transaction with any person or
(iii) the Company shall have sold, leased or otherwise disposed of all or
substantially all of the consolidated assets of the Company and its
subsidiaries to any person, the Parent may surrender to the Company all or a
part of the Company Option as well as all or a part of the Option Shares
purchased pursuant to exercise of the Company Option, in which event the
Company or any successor entity shall pay to the Parent, on the day of each
such surrender, against tender by the Parent of an instrument evidencing such
surrender, an amount in cash equal to the sum of:
(a) the aggregate Option Purchase Price (determined without giving effect
to any adjustment described above) for all Option Shares acquired pursuant
to exercise of the Company Option which the Parent has elected to cause the
Company to repurchase;
(b) the product of (i) the difference (but in no event more than the
Option Cap) between the Market Price (as defined below) for Shares and the
Option Purchase Price (as each may be adjusted), multiplied by (ii) the
number of Option Shares purchasable on exercise of that portion of the
Company Option which has not previously been exercised by the Parent and
which portion the Parent has elected to cause the Company to repurchase,
but only if the Market Price is greater than the Option Purchase Price;
(c) the product of (i) the difference (but in no event more than the
Option Cap) between the Market Price and the Option Purchase Price (as may
be adjusted) for the Option Shares acquired by the Parent pursuant to the
exercise of the Company Option (or in the case of Option Shares with
respect to which the Company Option has been exercised but the closing date
has not occurred, to be acquired) and which
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the Parent has elected to cause the Company to repurchase, multiplied by
(ii) the number of Shares so repurchased, but only if the Market Price is
greater than the Option Purchase Price; and
(d) the aggregate amount of out-of-pocket expenses incurred by the Parent
in connection with such transactions.
"Market Price" means the higher of (x) the highest price per Share paid for any
Shares on the principal trading market on which such shares are traded during
the period from the date of the Company Option Agreement to the date the Parent
elects to surrender such Shares to the Company and (y) the highest price paid
or offered to be paid or the consideration per share to be received by holders
of Shares by any person which has caused a Triggering Event upon the occurrence
of a Triggering Event (in each case, as adjusted for any stock split, stock
dividend or similar event).
RIGHT OF FIRST REFUSAL. Pursuant to the Company Option Agreement, if at any
time or from time to time during the period commencing with the occurrence of a
Triggering Event and ending on the first to occur of 24 months following the
first purchase of Option Shares and the termination of the Company Option,
whether or not any portion of the Company Option has been exercised, the Parent
shall desire to sell, transfer, assign or otherwise dispose of all or a part of
the Option Shares or other securities purchased pursuant to exercise of the
Company Option to a person (the "Proposed Transferee") other than an affiliate
of the Parent or the Company, the Parent shall, subject to certain exceptions,
give the Company written notice of the proposed transaction (an "Offeror's
Notice"), identifying the Proposed Transferee and setting forth the terms of
the proposed transaction. The Company Option Agreement provides that the
Company may purchase for cash within 10 days of the receipt of such Offeror's
Notice, such Option Shares or the Company Option on the same terms and
conditions and at the same per share or per option sale price (not to exceed
the sum of the then applicable per share Option Purchase Price and the Option
Cap) at which the Parent is proposing to transfer the Option Shares to the
Proposed Transferee.
The Company Option Agreement provides that if the Company fails or refuses to
purchase all of the Option Shares covered by the Offeror's Notice, the Parent
may sell such Option Shares for not less than the price specified in the
Offeror's Notice.
REGISTRATION RIGHTS. Pursuant to the Company Option Agreement, the Company
has (i) agreed, subject to certain terms and conditions, that upon request by
the Parent, the Company will use its best efforts to register the Option Shares
for sale under the Securities Act and (ii) granted the Parent certain "piggy-
back" registration rights in respect of the Option Shares.
Warrant Option Agreement
The following is a summary of the Warrant Option Agreement, a copy of which
Agreement is filed as an Exhibit to the Schedule 14D-1. Such summary is
qualified in its entirety by reference to the text of the Warrant Option
Agreement, which is incorporated herein by reference.
THE WARRANT OPTION. MH Associates, a general partnership of which George A.
Kellner, a member of the Company's Board of Directors, is a partner, is the
holder of the MH Option, which is a warrant to purchase from the Company
486,352 Shares (the "MH Option Shares") at a purchase price of $2.25 per MH
Option Share at any time or from time to time prior to April 22, 1996. The MH
Option was granted pursuant to the Stock Option Agreement dated April 22, 1986
between the Company and KD Equities, as amended by the Option Amendment
Agreement dated October 26, 1990 between the Company and MH Associates (as
successor to KD Equities). Pursuant to the Warrant Option Agreement, MH
Associates has granted to the Parent the option (the "Warrant Option") to
purchase the MH Option on the terms and subject to the conditions set forth in
that agreement. The MH Option Shares would constitute approximately 7.2% of the
then outstanding Shares if the MH Option were exercised in full and the Company
delivered newly issued Shares upon such exercise. If the Warrant Option or the
Extended Warrant Option (as defined below) were
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exercised, and each of the Company Option and the MH Option were exercised by
the Parent in full, the Parent would own approximately 21.7% of the then
outstanding Shares, assuming the Company fulfilled its obligations under the
Company Option and the MH Option by delivering newly issued Shares upon the
exercise thereof.
EXERCISE OF THE WARRANT OPTION. Pursuant to the Warrant Option Agreement, the
Parent may exercise the Warrant Option at any time after the expiration or
termination of the Offer or the acceptance for purchase by the Purchaser (or
any other person who is authorized by the Parent) of any Shares pursuant to the
Offer, until October 31, 1995 (the "Initial Option Period"). Pursuant to the
Warrant Option Agreement, if any Share is accepted for purchase by the Parent
or the Purchaser (or any other person who is authorized by the Parent) pursuant
to the Offer, the Parent shall be deemed to have exercised the Warrant Option
or the Extended Warrant Option on the business day immediately following such
date.
EXPIRATION OF THE WARRANT OPTION; EXTENDED WARRANT OPTION. The Warrant Option
will expire on October 31, 1995; provided however, that, pursuant to the
Warrant Option Agreement, if, prior to the last day of the Initial Option
Period, the Parent notifies MH Associates of its intent to extend the exercise
period beyond the Initial Option Period and pays MH Associates $607,940 in cash
(the "Extended Warrant Option Payment"), MH Associates shall grant to the
Parent an irrevocable option (the "Extended Warrant Option"), exercisable at
any time during the 60-day period commencing on the first day following the
Initial Option Period, to purchase the MH Option for the Warrant Option
Purchase Price (as defined below).
WARRANT OPTION PURCHASE PRICE. Pursuant to the Warrant Option Agreement, the
price at which the Parent may purchase the MH Option upon exercise of the
Warrant Option or the Extended Warrant Option, as the case may be, (the
"Warrant Option Purchase Price") shall be an amount in cash equal to (i)
486,352 times the greater of the per share price offered or to be offered for
Shares by the Parent or the Purchaser in the Offer (as such amount may be
increased in the Offer) and the highest price per Share paid at any time by the
Parent or the Purchaser (or any of its affiliates) in certain transactions
other than the Offer, in each case as of the date of exercise, minus (ii) the
sum of the aggregate exercise price of the MH Option and the amount of the
Extended Warrant Option Payment paid by the Parent; provided, however, that if,
within one year following the exercise of the Warrant Option or the Extended
Warrant Option, as the case may be, the per share prices described in clause
(i) are increased, the Parent shall thereafter pay to MH Associates an amount
equal to the difference between the amount previously paid to MH Associates and
the Warrant Option Purchase Price as recomputed based upon such increased price
or prices. In the event that noncash consideration is included in the Warrant
Option Purchase Price, the Warrant Option Purchase Price shall be payable in
both such noncash consideration and cash in the respective percentages thereof
paid by the Parent or the Purchaser for Shares.
SALE OF MH OPTION BY THE PARENT. Pursuant to the Warrant Option Agreement,
if, prior to the first anniversary of the date of the exercise of the Warrant
Option or the Extended Warrant Option, as the case may be, the Parent or any of
its affiliates sells or otherwise transfers or assigns either the MH Option, in
whole or in part, or any Shares acquired upon exercise thereof, it will
promptly pay over to MH Associates 50% of the Profits (as defined below)
realized therefrom. "Profits" shall mean, (i) in the case of Shares (a) the
excess of (1) the price per Share received by the Parent over (2) the sum of
the Warrant Option Purchase Price, the aggregate exercise price of the MH
Option and the amount of any Extended Warrant Option Payment paid by the
Parent, divided by 486,352, multiplied by (b) the number of Shares in question,
and (ii) in the case of the MH Option, the excess of (a) the consideration
received by the Parent over (b) the sum of the Warrant Option Purchase Price
and the amount of any Extended Warrant Option Payment paid by the Parent (or
the appropriate pro rata portion thereof, in the case of partial sales). The
Warrant Option Agreement provides that, in the event that noncash consideration
is included in consideration received by the Parent, the Profits shall be
payable in such noncash consideration in the same percentage as such noncash
consideration bears to the total consideration received by the Parent.
COVENANTS OF MH ASSOCIATES. Pursuant to the Warrant Option Agreement, MH
Associates has agreed that, until the Warrant Option or the Extended Warrant
Option, as the case may be, has expired, it will not
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exercise the MH Option, in whole or in part, or sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement with respect to the sale, transfer, pledge, assignment or other
disposition of, the MH Option to any person other than pursuant to the Warrant
Option Agreement.
Confidentiality Agreement
On March 9, 1995, the Company entered into a Confidentiality Agreement with
the Parent (the "Confidentiality Agreement"), a copy of which is filed as an
exhibit to the Schedule 14D-1 and is hereby incorporated herein by reference,
pursuant to which the Parent agreed to maintain the confidentiality of all
confidential information obtained from the Company relating to the Company
(except if such information is a matter of public record or if it is lawfully
obtained from third parties) including, but not limited to, confidential
information obtained through conversations with Company personnel or agents of
the Company or the review of documents, files, operations or statements of the
Company provided by the Company, and, except as provided in the Confidentiality
Agreement, the Parent further agreed to not disclose or disseminate to or
discuss with any other person or entity such confidential information and to
use such information only for its own benefit in reaching a decision regarding
the purchase of the Shares or the Company's assets or both. Pursuant to the
Exclusivity Agreement (as defined below), TLGI agreed to become a party to, and
to cause each of its subsidiaries to become a party to, the Confidentiality
Agreement, and agreed to be fully bound by the terms and provisions thereof.
The Company also agreed, as set forth in the Exclusivity Agreement, that to the
extent that the Company is furnished with confidential information with respect
to TLGI, the Company shall afford such confidential information the same
treatment as is afforded confidential information of the Company by TLGI
pursuant to the Confidentiality Agreement. In addition, the Company and TLGI
agreed that without the prior written consent of the other party, neither the
Company nor TLGI will, and each will direct its officers, directors, agents,
financial advisors and any other representatives not to, disclose to any person
(other than its own representatives) either the fact that the Company is
considering a business combination transaction with the Parent or that any
investigations, discussions or negotiations are taking place concerning a
possible transaction between the Company and TLGI, or that TLGI has requested
or received confidential information relating to the Company, or any of the
terms, conditions, or other facts with respect to any such possible
transaction, including the status thereof, other than as required under
applicable law or at anytime seven months after the date thereof if deemed
appropriate by either party.
The Confidentiality Agreement also provides that for a period of two years
following the date of the Confidentiality Agreement, neither the Parent nor any
person controlled by the Parent nor any of the Parent's officers or directors
having access to the confidential information will purchase any securities of
the Company, except (i) pursuant to a transaction approved by the Company's
Board of Directors, or (ii) if a third party or group acquires or makes a
tender offer to acquire more than 10% or more of the Shares which was not
approved in advance by the Board of Directors of the Company.
Exclusivity Agreement
Pursuant to letter agreements, dated July 24, 1995 and July 25, 1995
(collectively, the "Exclusivity Agreement"), between the Company and TLGI, the
Company agreed to work exclusively with TLGI, from the date of such letter
through the close of business on Tuesday, August 15, 1995 (the "Exclusivity
Period") with respect to a business combination transaction between the
parties, subject to the terms and conditions set forth therein. During the
Exclusivity Period, the Company and its subsidiaries agreed not to, directly or
indirectly, through any officer, director, agent, financial advisor or
otherwise, solicit, initiate or encourage submission of proposals or offers
from any person relating to any acquisition or purchase of all or a portion of
the assets (other than immaterial or insubstantial assets or inventory in the
ordinary course of business), or any equity interest in, the Company or any of
its subsidiaries or any business combination with the Company or any of its
subsidiaries, or participate in any negotiations regarding, or furnish to any
other person any information (except for information which has been previously
publicly disseminated by the Company in the ordinary course of business),
subject to the fiduciary obligations of the Company's Board of Directors as
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advised by counsel in respect of proposals received other than as a result of a
failure to comply with this paragraph. The Company agreed to promptly notify
TLGI if any such proposal or offer is made.
In addition, the Company and TLGI agreed that, for two years following the
date of such letter, neither TLGI nor any person controlled by TLGI nor any
officers or directors of TLGI having access to confidential information will
purchase any securities of the Company, except (i) pursuant to a transaction
approved by the Company's Board of Directors, or (ii) if, without the prior
consent of the Company's Board of Directors, a third party or group acquires,
in a transaction required to be reported on Schedule 13D, or makes a tender
offer to acquire, 10% or more of the Shares. This description is qualified in
its entirety by reference to the Exclusivity Agreement, a copy of which is
filed an exhibit to the Schedule 14D-1 and is hereby incorporated by reference.
14. DIVIDENDS AND DISTRIBUTIONS.
Except as contemplated by the Merger Agreement (including, without
limitation, the making of the Offer) and the Company Option Agreement, the
Company has agreed that neither it nor any of its subsidiaries will, between
the date of the Merger Agreement and the Effective Time, directly do any of the
following without the prior written consent of the Purchaser: (i) issue, sell,
pledge, dispose of, encumber, authorize, agree to or publicly propose the
issuance, sale, pledge, disposition, encumbrance or authorization of any shares
of capital stock of any class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of capital stock, or any
other ownership interest, of the Company or any of its subsidiaries; (ii) amend
or publicly propose to amend the Articles of Incorporation or By-Laws of the
Company or any of its subsidiaries or of any term of any outstanding security
of the Company or any subsidiary; (iii) split, combine or reclassify any
outstanding shares of capital stock of the Company or its subsidiaries or
declare, set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise with respect to the Shares; (iv) redeem, purchase or
otherwise acquire or offer to redeem, purchase or otherwise acquire any shares
of or any options, warrants, convertible securities or rights of any kind to
acquire shares of, its capital stock or any other ownership interest of the
Company, except in the performance of its obligations under existing employee
benefit plans or as specifically contemplated by the Merger Agreement; or (v)
authorize or propose or enter into any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in clauses (i) through
(iv) above.
15. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
The Purchaser reserves the right, at any time or from time to time, in its
sole discretion and regardless of whether or not any of the conditions
specified in Section 16 shall have been satisfied (except to the extent
otherwise provided in the Merger Agreement), (i) to extend the period of time
during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement of such
extension or (ii) to amend the Offer in any respect by making a public
announcement of such amendment. Notwithstanding the foregoing, without the
prior written consent of the Company, the Purchaser cannot (i) decrease the
price per Share payable in the Offer, (ii) reduce the maximum number of Shares
to be purchased in the Offer, or (iii) make any other change in the terms and
conditions to the Offer that imposes additional conditions to the Offer. There
can be no assurance that the Purchaser will exercise its right to extend or
amend the Offer.
If the Purchaser shall decide, in its sole discretion, to increase the
consideration to be paid for Shares pursuant to the Offer and the Offer is
scheduled to expire at any time before the expiration of a period of 10
business days from, and including, the date that notice of such increase is
first published, sent or given in the manner specified below, the Offer will be
extended until the expiration of such period of 10 business days. If the
Purchaser makes a material change in the terms of the Offer (other than a
change in price or percentage of securities sought) or in the information
concerning the Offer, or waives a material condition of the Offer, the
Purchaser will extend the Offer, if required by applicable law, for a period
sufficient to allow holders of Shares to consider the amended terms of the
Offer. In a published release, the Commission has stated that in
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its view an offer must remain open for a minimum period of time following a
material change in the terms of such offer and that the waiver of a condition
such as the Minimum Condition is a material change in the terms of an offer.
The release states that an offer should remain open for a minimum of five
business days from the date the material change is first published, sent or
given to security holders, and that if material changes are made with respect
to information that approaches the significance of price and share levels, a
minimum of 10 business days may be required to allow adequate dissemination and
investor response. The term "business day" means any day other than Saturday,
Sunday or a federal holiday and shall consist of the time period from 12:01
a.m. through 12:00 Midnight, New York City time.
The Purchaser also reserves the right, in its sole discretion, in the event
any of the conditions specified in Section 16 shall not have been satisfied and
so long as Shares have not theretofore been accepted for payment, to delay
(except as otherwise required by applicable law) acceptance for payment of or
payment for Shares or to terminate the Offer and not accept for payment or pay
for Shares.
If the Purchaser extends the period of time during which the Offer is open,
is delayed in accepting for payment or paying for Shares or is unable to accept
for payment or pay for Shares pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary
may, on behalf of the Purchaser, retain all Shares tendered, and such Shares
may not be withdrawn except as otherwise provided in Section 4. The reservation
by the Purchaser of the right to delay acceptance for payment of or payment for
Shares is subject to applicable law, which requires that the Purchaser pay the
consideration offered or return the Shares deposited by or on behalf of holders
of Shares promptly after the termination or withdrawal of the Offer.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. In the case of an
extension of the Offer, the Purchaser will make a public announcement of such
extension no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date. Without limiting the manner in
which the Purchaser may choose to make any public announcement, the Purchaser
will have no obligation (except as otherwise required by applicable law) to
publish, advertise or otherwise communicate any such public announcement other
than by making a press release. In the case of an extension of the Offer, the
Purchaser will make a public announcement of such extension no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
16. CERTAIN CONDITIONS OF THE OFFER.
The Merger Agreement provides that, notwithstanding any other provision of
the Offer, and in addition to, and not in limitation of, the Purchaser's rights
to amend the Offer in any respect at any time (subject to the terms of the
Merger Agreement), the Purchaser shall not be required to accept for payment or
pay for, or may delay the acceptance for payment of or payment for, tendered
Shares (subject to Rule 14e-1(c) under the Exchange Act), or may terminate or
amend the Offer as to any Shares not then paid for if (i) at or before the
expiration date of the Offer the Minimum Condition is not satisfied, (ii) the
waiting period (and any extension thereof), if any, applicable to the
consummation of the Offer and the Merger under the HSR Act, shall not have
expired or been terminated or (iii) on or after August 9, 1995, and at or
before the time of acceptance for payment for any of such Shares, any of the
following events shall occur:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of
competent jurisdiction or a statute, rule, regulation, executive order or
other action shall have been promulgated, enacted, taken or threatened by a
governmental authority or governmental, regulatory or administrative agency
or commission of competent jurisdiction which in any such case (1)
restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger or the acquisition by the Purchaser of any
Shares, or seeks to obtain any material damages with respect to the
transactions contemplated by the Merger Agreement, (2) seeks to prohibit or
materially limit the ownership or
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operation by the Parent or the Purchaser (or any of their respective
affiliates or subsidiaries) of any portion of its or the Company's business
or assets which is material to the business of all such entities taken as a
whole, or to compel the Parent or the Purchaser (or any of their respective
affiliates or subsidiaries) to dispose of or hold separate any portion of
its or the Company's and the Company's subsidiaries' business or assets
which is material to the business of all such entities taken as a whole,
(3) seeks to impose material limitations on the ability of the Parent or
the Purchaser (or any of their affiliates) effectively to acquire or to
hold or to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares purchased by them on all
matters properly presented to the holders of Shares, (4) seeks to impose
any material limitations on the ability of the Parent or the Purchaser or
any of their respective affiliates or subsidiaries effectively to control
in any material respect the business and operations of the Company and its
subsidiaries, (5) seeks to prevent the Parent, the Purchaser or any of
their affiliates from acquiring, or require divestiture by the Parent, the
Purchaser or any of their affiliates of, any Shares or (6) which otherwise
would materially affect the Company and its subsidiaries taken as a whole;
(b) there shall have been instituted or be pending any action or
proceeding by a governmental authority or governmental, regulatory or
administrative agency or commission of competent jurisdiction, which (1)
challenges or seeks to make illegal, materially delay or otherwise directly
or indirectly restrain or prohibit the making or consummation of the Offer
or the consummation of the Merger or the acquisition by the Purchaser of
any Shares, or seeks to obtain any material damages with respect to the
transactions contemplated by the Merger Agreement, (2) seeks to prohibit or
materially limit the ownership or operation by the Parent or the Purchaser
(or any of their respective affiliates or subsidiaries) of any portion of
its or the Company's business or assets which is material to the business
of all such entities taken as a whole, or to compel the Parent or the
Purchaser (or any of their respective affiliates or subsidiaries) to
dispose of or hold separate any portion of its or the Company's and the
Company's subsidiaries' business or assets which is material to the
business of all such entities taken as a whole, (3) seeks to impose
material limitations on the ability of the Parent or the Purchaser (or any
of their affiliates) effectively to acquire or to hold or to exercise full
rights of ownership of the Shares, including, without limitation, the right
to vote any Shares purchased by them on all matters properly presented to
the holders of Shares, (4) seeks to impose any material limitations on the
ability of the Parent or the Purchaser or any of their respective
affiliates or subsidiaries effectively to control in any material respect
the business and operations of the Company and its subsidiaries, (5) seeks
to prevent the Parent, the Purchaser or any of their affiliates from
acquiring, or require divestiture by the Parent, the Purchaser or any of
their affiliates of, any Shares or (6) which otherwise would materially
affect the Company and its subsidiaries taken as a whole;
(c) there shall have been any action taken, or any statute, rule,
regulation, judgment, administrative interpretation, order or injunction,
including a temporary restraining order, deemed applicable to the Company
or any affiliate of the Company, or to the Offer or the Merger, which
results in any of the consequences referred to in clauses (1) through (6)
of paragraph (b) above;
(d) the Merger Agreement shall have been terminated by the Company, the
Parent or the Purchaser in accordance with its terms;
(e) there shall have occurred (1) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States or in Canada, (2) a
declaration of a banking moratorium or any limitation or suspension of
payments in respect of banks by United States Federal or state or Canadian
authorities, (3) from the date of the Merger Agreement through the date of
termination or expiration of the Offer, a decline of at least 30% in the
Standard & Poor's 500 Index, (4) a commencement or escalation of war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States or Canada having a significant
adverse effect on the functioning of the financial markets in the United
States or Canada, or (5) in the case of any of the foregoing existing at
the time of the commencement of the Offer, a material acceleration or
worsening thereof;
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(f) (1) any of the representations and warranties made by the Company in
the Merger Agreement shall not have been true and correct in all material
respects when made, or shall have ceased to be true and correct in all
material respects (whether because of circumstances or events occurring in
whole or in part prior to, on or after the date of the Merger Agreement),
or (2) as of the expiration date of the Offer the Company shall not have
performed its obligations and agreements and complied with its covenants to
be performed and complied with by it under the Merger Agreement, except
where any failures to perform any covenant or agreement (A) would, in the
aggregate, not materially impair or delay the ability of the Purchaser to
consummate the Offer or the ability of the Parent, the Purchaser and the
Company to effect the Merger, (B) has been caused by or results from a
breach by the Parent or the Purchaser of any covenant in the Merger
Agreement, or (C) is not reasonably likely to have a material adverse
effect on the business of the Company and its subsidiaries taken as a
whole;
(g) the Company's Board of Directors shall have withdrawn, modified or
amended in any manner adverse to the Parent or the Purchaser its
recommendation, consent to or approval of the Offer, the Merger or the
Merger Agreement or shall have entered into an agreement with a third party
with respect to any acquisition or purchase of all or (except in the
ordinary course of business) a portion of the assets of, or in any equity
interest in, the Company or any of its subsidiaries or any business
combination with the Company or any of its subsidiaries by such third party
or shall have furnished to any third party any information with respect to,
or otherwise shall have cooperated in any way with, or shall have assisted
or participated in, facilitated or encouraged, any effort or attempt by
such third party to do or seek any of the foregoing, or shall have resolved
to do any of the foregoing; or
(h) the Parent, the Purchaser and the Company shall have agreed that the
Parent or the Purchaser shall amend the Offer to terminate the Offer or
postpone the payment for Shares pursuant thereto;
which, in the reasonable judgment of the Parent and the Purchaser with respect
to each and every matter referred to above and regardless of the circumstances
(including any action or inaction by the Parent or the Purchaser) giving rise
to any such condition, makes it inadvisable to proceed with the Offer or with
such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Parent and the
Purchaser and may be asserted by the Parent or the Purchaser or may be waived
by the Parent or the Purchaser in whole or in part at any time and from time to
time, in each case, in the sole judgment of the Parent and the Purchaser and
subject to the terms of the Merger Agreement. The conditions may be considered
to be material to the Offer. If the Purchaser waives any material condition of
the Offer, it will, if required by applicable law, extend the period of time
during which the Offer is open in accordance with applicable law for a period
sufficient to allow the holders of Shares to consider the Offer by giving oral
or written notice of such extension to the Depositary and by making a public
announcement thereof. The failure by the Purchaser at any time to exercise any
of the foregoing rights will not be deemed a waiver of any other rights and
each such right will be deemed an ongoing right which may be asserted at any
time and from time to time. Any determination by the Purchaser concerning the
events described above will be final and binding upon all parties.
17. CERTAIN LEGAL MATTERS; FLORIDA LAW; STATE TAKEOVER STATUTES; ANTITRUST;
FLORIDA FUNERAL HOME AND CEMETERY LICENSE TRANSFER.
General
Except as set forth in this Section 17, based on its examination of publicly
available information with respect to the Company and review of certain
information furnished by the Company to the Purchaser, the Purchaser is not
aware of any license or regulatory permit that appears to be material to the
Company's business, taken as a whole, which might be adversely affected by the
Purchaser's acquisition of Shares or, of any approval or other action by any
government or governmental authority or agency, domestic or foreign, that would
be required for the acquisition or ownership of Shares by the Purchaser or the
Parent as contemplated herein. Should any such approval or other action be
required, it is currently contemplated that,
32
<PAGE>
except as described below under "State Takeover Statutes", such approval or
other action will be sought. Except as described under "Antitrust", and under
"Florida Funeral Home and Cemetery License Transfer" however, there is no
current intent to delay the purchase of Shares tendered pursuant to the Offer
pending the outcome of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that if such approvals were not obtained or
such other actions were not taken adverse consequences might not result to the
Company's business or certain parts of the Company's business might not have to
be disposed of, any of which could cause the Purchaser to elect to terminate
the Offer without the purchase of Shares thereunder. The Purchaser's obligation
under the Offer to accept for payment and pay for Shares is subject to certain
conditions. See Section 16.
Florida Law
Section 607.0901 of the Florida Law (the "Affiliated Transactions Statute")
prohibits certain "affiliated transactions" (defined to include mergers and
consolidations) involving a Florida corporation and an "interested shareholder"
(defined generally as person who is the beneficial owner of more than 10% of
the outstanding voting shares of the subject corporation) unless the
transaction has been approved by (i) a majority of "disinterested directors" of
the board or directors of the subject corporation (defined generally as
directors who were elected to the board prior to the time the shareholder
became an interested shareholder), (ii) holders of two-thirds of the
outstanding voting shares of the subject corporation, exclusive of those shares
beneficially owned by the shareholder who, but for such approval, would be an
"interested shareholder" or (iii) certain other statutory conditions have been
met. At a special meeting held on August 9, 1995, the Board of Directors of the
Company approved the Merger Agreement, the Company Stock Option Agreement, the
Merger and the other transactions contemplated thereby (collectively, the
"Merger Transaction") and determined that each of the Offer and Merger are fair
to, and in the best interest of, the Company's holders of Shares. Accordingly,
the Affiliated Transaction Statute has been satisfied with respect to the
Parent and the Purchaser in connection with the Merger Transaction.
Section 607.0902 of the Florida Law, (the "Control-Share Acquisitions
Statute"), limits, in certain circumstances, the voting rights of "control-
shares" (defined generally as those shares of an issuing public corporation
which, when added to the number of shares of the corporation already owned or
controlled by a person, entitle that person, immediately after the acquisition
of the shares, to exercise, directly or indirectly, alone or as part of a
group, at least one-fifth of the voting power of the corporation in the
election of directors) acquired in a "control share acquisition" (defined
generally to mean the acquisition directly or indirectly by any person of
ownership of, where the Parent is to direct the exercise of, voting power with
respect to issued and outstanding control-shares) unless the acquisition of the
control-shares of an issuing public corporation has been approved by the board
of directors of such issuing public corporation or certain other statutory
conditions have been met. At a special meeting held on August 9, 1995, the
Board of Directors of the Company approved the acquisition of the Shares.
Accordingly, the Control Share Acquisition Statute is inapplicable to the
Parent and the Purchaser in connection with the Merger Transaction.
Any merger or other similar business combination proposed by the Parent would
also have to comply with any applicable Federal law. In particular, the
Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to
certain "going private" transactions. The Parent believes that Rule 13e-3 will
not be applicable to the Merger unless the Merger is consummated more than one
year after termination of the Offer or if an alternative merger transaction
were to provide for holders of Shares to receive consideration for their Shares
in an amount less than the price per Share paid pursuant to the Offer, unless
the Shares were to be deregistered under the Exchange Act prior to such
transaction. If applicable, Rule 13e-3 would require, among other things, that
certain financial information concerning the Company and certain information
relating to the fairness of the proposed transaction and the consideration
offered to minority holders of Shares in such a transaction be filed with the
Commission and distributed to such holders of Shares prior to consummation of
the transaction.
33
<PAGE>
State Takeover Statutes
In addition to the Florida statutes described in this Section 17, a number of
states have adopted laws that purport, to varying degrees, to apply to attempts
to acquire corporations that are incorporated in, or which have substantial
assets, holders of Shares, principal executive offices or principal places of
business or whose business operations otherwise have substantial economic
effects in, such states. The Company, directly or through subsidiaries,
conducts business in Colorado, which has not enacted such laws. The Purchaser
does not know whether any other state's laws will, by their terms, apply to the
Offer or the Merger and the Company has not complied with any such laws. To the
extent that certain provisions of these laws purport to apply to the Offer or
the Merger, the Purchaser believes there are reasonable bases for contesting
such laws.
In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Statute
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987 in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana
could, as a matter of corporate law, constitutionally disqualify a potential
acquirer from voting shares of a target corporation without the prior approval
of the remaining holders of Shares where, among other things, the corporation
is incorporated in, and has a substantial number of holders of Shares in, the
state.
If any government official or third party should seek to apply any state
takeover law to the Offer or the Merger, the Parent will take such action as
then appears desirable, which action may include challenging the applicability
or validity of such statute in appropriate court proceedings. In the event it
is asserted that one or more state takeover statutes is applicable to the Offer
or the Merger and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, the Parent or
the Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities or holders of Shares, and the
Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer or
the Merger. In such case, the Purchaser may not be obligated to accept for
payment or pay for any tendered Shares. See Section 16.
Antitrust
Under the HSR Act and the rules that have been promulgated thereunder by the
Federal Trade Commission (the "FTC"), certain acquisition transactions may not
be consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the FTC
and certain waiting period requirements have been satisfied. The purchase of
Shares pursuant to the Offer is subject to such requirements.
On August 10, 1995, TLGI, as the ultimate parent entity of the Purchaser,
filed a Notification and Report Form under the HSR Act with respect to the
acquisition, by means of a cash tender offer, of voting securities in
connection with the purchase of the Shares pursuant to the Offer. Also on
August 10, 1995, the Parent notified the Company in writing of its intent to
acquire the Shares. The waiting period with respect to the purchase of the
Shares pursuant to the Offer expires at 11:59 p.m., New York City time, on
August 24, 1995. However, prior to such time, the Antitrust Division or the FTC
may extend the waiting period by requesting additional information or
documentary material relevant to the Offer from any person. If such a request
is made, the waiting period will be extended until 11:59 p.m., New York City
time, on the tenth day after substantial compliance by any such person with
such request. Thereafter, such waiting period can be extended only by court
order.
A request has been made for early termination of the waiting period
applicable to the Offer. There can be no assurance, however, that the 15-day
HSR waiting period will be terminated early. Shares will not be accepted for
payment or paid for pursuant to the Offer until the expiration or earlier
termination of the applicable waiting period under the HSR Act. See Section 16.
Any extension of the waiting period will not give rise to any withdrawal rights
not otherwise provided for by applicable law. See Section 4. If the
34
<PAGE>
Purchaser's acquisition of Shares is delayed pursuant to a request by the
Antitrust Division or the FTC for additional information or documentary
material pursuant to the HSR Act, the Offer may, but need not be extended.
The provisions of the HSR Act would similarly apply to any purchase of Shares
pursuant to the Company Option Agreement and the Warrant Option Agreement,
except that the initial waiting period would expire 30 days following the
filing of HSR Act Notification Forms by the Parent and the Company; and a
request for additional information of material from any person during the
initial 30-day waiting period would extend the waiting period until 11:59 p.m.,
New York City time, on the 20th day after the date of substantial compliance by
any such person and the Company with such request.
The Merger would not require an additional filing under the HSR Act if the
Parent owns 50% or more of the outstanding Shares at the time of the Merger or
if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer. At any time before or after the consummation
of any such transactions the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant to
the Offer or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of the Parent or the Company. Private parties (including
individual States) may also bring legal actions under the antitrust laws. The
Parent does not believe that the consummation of the Offer will result in a
violation of any applicable antitrust laws. However, there can be no assurance
that a challenge to the Offer on antitrust grounds will not be made, or if such
a challenge is made, what the result will be. See Section 16 for certain
conditions to the Offer, including conditions with respect to litigation and
certain governmental actions.
Florida Funeral Home and Cemetery License Transfer
Section 497.205 of the Florida Statutes provides that a license issued to
operate a cemetery is not transferable or assignable, and a licensee may not
operate or develop any cemetery authorized at any location other than that
contained in the application for license. The Parent has been advised by legal
counsel that transfer of the voting control of a licensee, including a transfer
of the voting control of an entity which controls, directly or indirectly, a
licensee, may constitute a transfer of a license under Florida law. Because the
Parent has been advised that a change in control of the Company may constitute
a transfer of such licenses presently held by the Company's wholly owned
subsidiary, Funeral Services Acquisition Group, Inc. ("FSAG"), the licensee of
all cemeteries operated by the Company, the Purchaser and the Company presently
intend to cause FSAG to apply to the Florida Department of Banking and Finance,
Board of Funeral and Cemetery Services (the "Board") for new licenses for each
cemetery currently operated by FSAG.
The Company, through FSAG, currently offers for sale pre-arranged funeral
contracts. The Parent has been advised by legal counsel that, pursuant to
Section 497.405 of the Florida Statutes, no person may sell such a pre-arranged
contract without first having a valid certificate of authority. Such
certificates are not transferable, and a transfer of voting control of a
certificate holder may similarly constitute a transfer of a certificate of
authority under Florida Statutes. Based upon such advice, the Purchaser and the
Company presently intend to cause FSAG to apply to the Board for a new
certificate of authority.
The cemetery and certificate of authority applications referred to in the
preceding paragraphs are currently expected to be approved by the Board at a
meeting scheduled for September 18, 1995. The Parent and the Purchaser are
evaluating the requirement of such approvals and are also exploring alternative
procedures for obtaining such approvals. The Offer is conditioned upon the
receipt of such approvals. In the event that the Parent and the Purchaser seek
such approvals, the Parent and the Purchaser presently intend to extend the
Offer until such approvals are obtained.
35
<PAGE>
18. FEES AND EXPENSES.
Except as set forth below, the Purchaser will not pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer.
Smith Barney is acting as the Dealer Manager in connection with the Offer and
as financial advisor to the Purchaser in connection with its effort to acquire
the Company. The Purchaser has agreed to pay, or to cause to be paid, to
Smith Barney for its services the following fees: (i) a dealer manager fee of
$300,000, payable upon the commencement of the Offer and (ii) a fee of (a)
$1,000,000, payable upon the consummation of the acquisition of the Company, or
(b) a fee of $700,000 payable if the Company receives a higher offer which
results in the termination of the Merger Agreement. The fee payable pursuant to
clause (i) above will be credited against the fee, if any, payable pursuant to
clause (ii) above. The Purchaser has also agreed to reimburse Smith Barney for
its reasonable out-of-pocket expenses (including the reasonable fees and
expenses of its legal counsel) incurred in connection with its engagement, and
to indemnify Smith Barney and certain related persons against certain
liabilities and expenses in connection with its engagement, including certain
liabilities under the federal securities laws.
The Purchaser has retained Mr. Peter Grunebaum to provide financial advisory
services to the Purchaser in connection with the Offer. The Purchaser has
agreed to pay Mr. Grunebaum $180,000 in the event that the Purchaser and its
affiliates acquire a majority of the Shares pursuant to the Offer, or $40,000
in the event that the Offer is terminated without the Purchaser and its
affiliates acquiring a majority of the Shares, in either case in addition to
Mr. Grunebaum's reasonable out-of-pocket expenses incurred in connection with
the provision of his services.
The Purchaser has retained Georgeson & Company Inc., to act as the
Information Agent, and The Bank of New York to act as the Depositary, in
connection with Offer. The Information Agent may contact holders of Shares by
mail, telephone, telex, telegraph and personal interviews and may request
brokers, dealers and other nominee holders of Shares to forward materials
relating to the Offer to beneficial owners. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
respective services, will be reimbursed for certain reasonable out-of-pocket
expenses and will be indemnified against certain liabilities in connection
therewith, including certain liabilities under the federal securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer or
any other person (other than the Dealer Manager, the Information Agent and the
Depositary) for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by the Purchaser for reasonable and necessary costs and expenses incurred by
them in forwarding materials to their customers.
19. MISCELLANEOUS.
The Purchaser is not aware of any jurisdiction where the making of the Offer
is prohibited by any administrative or judicial action pursuant to any valid
state statute. If the Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, the Purchaser will make a good faith effort to comply with any such
state statute. If, after such good faith effort, the Purchaser cannot comply
with any such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Purchaser by the Dealer Manager or by one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
THE PURCHASER HAS FILED WITH THE COMMISSION A TENDER OFFER STATEMENT ON
SCHEDULE 14D-1, TOGETHER WITH EXHIBITS, PURSUANT TO RULE 14D-3 OF THE GENERAL
RULES AND REGULATIONS UNDER THE EXCHANGE ACT, FURNISHING CERTAIN ADDITIONAL
INFORMATION WITH RESPECT TO THE OFFER. THE SCHEDULE 14D-1 AND ANY AMENDMENTS
36
<PAGE>
THERETO, INCLUDING EXHIBITS, MAY BE EXAMINED AND COPIES MAY BE OBTAINED FROM
THE OFFICES OF THE COMMISSION IN THE MANNER SET FORTH IN SECTION 8 OF THIS
OFFER TO PURCHASE (EXCEPT THAT SUCH INFORMATION WILL NOT BE AVAILABLE AT THE
REGIONAL OFFICES OF THE COMMISSION).
SPRT CORP.
August 14, 1995
37
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF THE PURCHASER, THE PARENT AND TLGI
1. EXECUTIVE OFFICERS OF THE PURCHASER. The names, positions and election
dates of the executive officers of the Purchaser are set forth below together
with a current business address for each. Except as otherwise noted, each such
person is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
------------------------- ----------------------------------------------------
<C> <S>
Lawrence Miller 8/8/95-Present: President and Director of Purchaser;
4614 Street Road 3/95-Present: President of Cemetery and Combination
Trevose, PA 19053 Division and Director of the Parent; 3/88-3/95:
President & Chief Executive Officer of Osiris
Holding Corporation
A.M. Bruce Watson 8/8/95-Present: Secretary and Treasurer and Director
50 East RiverCenter Blvd. of Purchaser; 1993-Present: Executive Vice President
Suite 800 and Director of the Parent and TLGI; 1981-1993:
Covington, Kentucky 41011 Partner at Peat Marwick Thorne
(Canadian Citizen)
</TABLE>
2. DIRECTORS OF PURCHASER. The names, positions and election dates of the
directors of the Purchaser (other than directors who are also executive
officers of the Purchaser) are set forth below together with a current business
address for each. Except as otherwise noted, each such person is a citizen of
the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND ELECTION
NAME FIVE-YEAR EMPLOYMENT HISTORY DATE
--------------------- -------------------------------------------- --------
<C> <S> <C>
1985-9/93: Chairman of the Board, President 8/95
Raymond L. Loewen and Director of the Parent and TLGI; 1985-
4126 Norland Avenue Present: Chairman of the Board and Chief
Burnaby, B.C. V5G 3S8 Executive Officer and Director of the Parent
(Canadian Citizen) and TLGI
</TABLE>
3. EXECUTIVE OFFICERS OF PARENT. The names, positions and election dates of
the executive officers of the Parent are set forth below. Unless otherwise
indicated, the current business address for each individual listed below is 50
East RiverCenter Boulevard, Suite 800, Covington, Kentucky 41011. Except as
otherwise noted, each such person is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
--------------------- --------------------------------------------------------
<C> <S>
Raymond L. Loewen 1985-9/93: Chairman of the Board, President and Director
4126 Norland Avenue of the Parent and TLGI; 1985-Present: Chairman of the
Burnaby, B.C. V5G 3S8 Board and Chief Executive Officer and Director of the
(Canadian Citizen) Parent and TLGI
Timothy R. Hogenkamp 8/93-Present: President & Chief Operating Officer of the
Parent and TLGI; 3/93-8/93: Senior Vice President of the
Parent and TLGI; 10/90-3/93: Vice President, Operations
of the Parent and TLGI; Director of the Parent since
11/88 and Director of TLGI since 3/89
A.M. Bruce Watson 8/8/95-Present: Secretary and Treasurer of the
(Canadian Citizen) Purchaser; 1993-Present: Executive Vice President of the
Parent and TLGI; 1981-1993: Partner at Peat Marwick
Thorne; Director of the Parent since 3/94 and Director
of TLGI since 9/93
Paul Wagler 4/95-Present: Sr. Vice President, Finance of the Parent
4126 Norland Ave. and TLGI; 3/90-3/95: Sr. Vice President of ABN Bank,
Burnaby, B.C. V5G 3S8 Canada; Director of the Parent and TLGI since 3/95
(Canadian Citizen)
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
--------------------- --------------------------------------------------------
<C> <S>
Robert O. Wienke 1/95-Present: Sr. Vice President, Law and General
Counsel of the Parent and TLGI; 1991-1994: Senior
Partner at Ross & Hardies; 1987-1990: Senior Partner at
Burke, Wilson & McIlvane; Director of the Parent since
1/95
Lawrence Miller 8/8/95-Present: President and Director of the Purchaser;
4614 Street Road 3/95-Present: President, Cemetery and Combination
Trevose, PA 19053 Division of the Parent and TLGI; 3/88-3/95: President &
Chief Executive Officer of Osiris Holding Corporation
William R. Shane 3/95-Present: Sr. Vice President & Chief Financial
383 Street Road East Officer of the Parent and TLGI; 3/95-Present: President
Trevose, PA 19053 of Cemetery and Combination Division of the Parent and
TLGI and Director of the Parent; 3/88-3/95: Vice
President, Secretary, Treasurer & Chief Financial
Officer of Osiris Holding Corporation
Dwight K. Hawes 5/91-Present: Vice President, Finance of the Parent and
4126 Norland Ave. TLGI; 1/88-5/91: Senior Manager of the Parent and TLGI
Burnaby, B.C. V5G 3S8
(Canadian Citizen)
Peter W. Roberts 1/91-Present: Vice President, Financial Information
4126 Norland Ave. Systems and Corporate Controller of the Parent and TLGI;
Burnaby, B.C. V5G 3S8 9/87-12/90: Executive Vice President of Jim Pattison
(Canadian Citizen) Industries
Myles S. Cairns 10/94-Present: Vice President, Operations Controller of
(Canadian citizen) the Parent and TLGI; 1/94-10/94: Director of Risk
Management of the Parent and TLGI; 6/89-10/94: Director
of Operations Planing and Control of the Parent and TLGI
Peter S. Hyndman 2/90-Present: Corporate Secretary and Vice President Law
4126 Norland Avenue of the Parent and TLGI; Director of the Parent since
Burnaby, B.C. V5G 3S8 3/90 and Director of TLGI since 6/86
(Canadian Citizen)
Timothy A. Birch 11/90-Present: Vice President, Corporate Development and
Law of the Parent and TLGI; 2/88-9/91: Vice President of
the Sentinel Group
</TABLE>
4. DIRECTORS OF PARENT. The names, positions and election dates of the
directors of the Parent (other than directors who are also executive officers
of Parent) are set forth below together with a current business address for
each. Except as otherwise noted, each such person is a citizen of the United
States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND ELECTION
NAME FIVE-YEAR EMPLOYMENT HISTORY DATE
------------------------- ---------------------------------------- --------
<C> <S> <C>
George M. Amato 5/91-Present: Vice President of 3/93
4145 58th Street Operations for the Northeast Division of
Woodside Queens, NY 11377 the Parent and TLGI; 5/91-Present: Vice
President of Operations, Northeast
Division of the Parent and TLGI; 6/87-
10/90: Executive Vice President of
Arlington Group
Dr. Gordon S. Bigelow 1985-Present: Executive Director of 11/89
#13 Gurnett American Board of Funeral Service
Suite 316 Education
Brunswick, ME 04011
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
---------------------------- -----------------------------------------
<C> <S> <C>
J.C. (Buddy) Carothers, Jr. 1993-Present: Vice President for Mid 6/90
Carothers Funeral Home Southern Operations of the Parent and
312 W. Second Ave. TLGI; 1990-1993: Regional Manager of the
Gastonia, North Carolina Parent and TLGI; 1990-Present: Vice
28052 President of Carothers-Williams Funeral
Services and Memorial Gardens, Inc.;
1985-Present: President of Carothers-
Williams Funeral Services
H. Steven Childress 1989-Present: Vice President, Cemetery 5/93
383 Street Road East and Combination Operations of the Parent
Trevose, PA 19053 and TLGI
Bruce Edward Earthman 1990-Present: President of Earthman's, 7/94
8303 Katy Freeway Inc.; 1988-1990: Executive Vice President
Houston, TX 77024 of Earthman's, Inc.
Edward J. Fitzgerald 1965-1991: President of Fitzgerald & Son 11/89
3113 Carlisle N.E. Funeral Directors, Inc.; 1991-Present:
Albuquerque, NM 87110-1654 Retired
Honorine T. Flanagan 1973-Present: President of Custer 11/91
69855 East Ramon Rd. Christianson Covina Mortuary, Inc.
Cathedral City, CA 92234
Thomas F. Glodek 1990-Present: Regional Manager of the 3/90
5600 Excelsor Blvd. Parent and TLGI
St. Louis Park, MN 55416
Enrique Gonzalez 3/94-Present: Vice President of Groupo 3/94
Groupo Loewen Leowen de Mexico; 1/90-2/94: President of
de Mexico S.A. de C.V. Funeraria Gonzalez
Ave "D"
#958 Z.C.
Tijuana, B.C. Mexico
C.P. 22000
(Mexican Citizen)
Dr. Earl A. Grollman 1982-Present: President of E.A.G. Inc. 11/89
79 Country Club Lane
Belmont, Mass. 02178
Timothy R. Hogenkamp 8/93-Present: President & Chief Operating 11/88
50 East RiverCenter Blvd. Officer of the Parent and TLGI; 3/93-
Covington, KY 41011 8/93: Senior Vice President of the Parent
and TLGI; 10/90-3/93: Vice President,
Operations of the Parent and TLGI
Mary M. Howard 1980-Present: President & Director of 1/95
1765 Pancho Rd. Conejo Mtn. Memorial Park
Camarillo, CA 93012
Albert S. Lineberry, Jr. 1989-Present: Vice President, Operations, 12/90
Hanes-Lineberry Funeral Home Eastern Division of the Parent and TLGI
515 North Elm Street
Greensboro, NC 27401
Michael L. Loudon 1959-Present: President of Whitehurst 12/92
Whitehurst Chapels Chapels
102-2560 West Shaw Avenue
Fresno, CA 93711
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND ELECTION
NAME FIVE-YEAR EMPLOYMENT HISTORY DATE
----------------------------- ------------------------------------- --------
<C> <S> <C>
John E. Malletta, Sr. 1993-Present: Vice President, 10/93
7400 Gainey Club Drive #11 Operations, Mountain Division of the
Scottsdale, AZ 85258 Parent and TLGI; 1975-1993: President
of Funeral Service Management
1990-Present: Chairman of the Board 11/89
Hoyt (Pat) Mayes of First American Bank & Trust Co.;
324 West Main St. 1989-Present: President of
Purcell, Oklahoma 73080 Consolidated Equity Corporation
John T. Mullins 1994-Present: Consultant to the 7/94
Mullins & Thompson Parent and TLGI; 1985-1994: President
Funeral Service of Mullins Funeral Home
1621 Jefferson Davis Hwy.
Fredericksburg, VA 22401
1994-Present: Vice President and 3/90
David F. Riemann Director of First Capital Life of
30 Old Oak Lane Louisiana; 1990-1994 President of
Gulfport, Mississippi 39503 Riemann Holdings, Inc.
Robert D. Russell 1986-Present: President of Kraeer 11/91
Kraeer Funeral Homes Funeral Homes
200 North Federal Hwy.
Pompano Beach, FL 33062
Michael L. Schweer 1986-Present: Vice President of 11/89
50 East RiverCenter Blvd Loewen Group Inc.
Suite 800
Covington, Kentucky 41011
Billy Joe (Bill) Seale 1963-Present: President of Bell-Seale 7/94
3101 College Avenue Funeral Home Inc.
Snyders, TX 79549
Sandra C. Strong-Fitzgerald 1984-Present: President of Strong- 11/89
1100 Coal Avenue S.E. Thorne Mortuary
Albuquerque, NM 87106
Robert L. Studley 1982-Present: President of Doane Beal 1/92
160 West Main Street & Ames Funeral Home
Hyannis, MA 02601
Paul Wagler 4/95-Present: Sr. Vice President, 3/95
4126 Norland Ave. Finance of the Parent and TLGI; 3/90-
Burnaby, B.C. V5G 3S8 3/95: Sr. Vice President of ABN Bank,
(Canadian Citizen) Canada
John R. Wright, Sr. 1936-Present: President of Wright & 12/90
350 High at North West Street Ferguson Funeral Home
Jackson, Mississippi 39205
</TABLE>
5. EXECUTIVE OFFICERS OF TLGI. The names, positions and election dates of the
executive officers of TLGI are set forth below. Unless otherwise indicated, the
current business address for each individual listed below is 4126 Norland
Avenue, Burnaby, British Columbia, Canada V5G 3S8. Except as otherwise noted,
each such person is a citizen of the United States.
I-4
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
------------------------- ----------------------------------------------------
<C> <S>
Raymond L. Loewen 1985-9/93: Chairman of the Board, President and
(Canadian Citizen) Director of the Parent and TLGI; 1985-Present:
Chairman of the Board and Chief Executive Officer
and Director of the Parent and TLGI
Timothy R. Hogenkamp 8/93-Present: President & Chief Operating Officer of
50 East RiverCenter Blvd. the Parent and TLGI; 3/93-8/93: Senior Vice
Suite 800 President of the Parent and TLGI; 10/90-3/93: Vice
Covington, Kentucky 41011 President, Operations of the Parent and TLGI;
Director of TLGI since 3/89 and Director of Parent
since 11/88
A.M. Bruce Watson 8/8/95-Present: Secretary and Treasurer and Director
50 East RiverCenter Blvd. of the Purchaser; 1993-Present: Executive Vice
Covington, KY 41011 President of the Parent and TLGI; 1981-1993: Partner
(Canadian Citizen) at Peat Marwick Thorne; Director of TLGI since 9/93
and Director of the Parent since 3/94
Paul Wagler 4/95-Present: Sr. Vice President, Finance of the
(Canadian Citizen) Parent and TLGI; 3/90-3/95: Sr. Vice President of
ABN Bank, Canada; Director of TLGI and the Parent
since 3/95
Robert O. Wienke 1/95-Present: Sr. Vice President, Law and General
50 East RiverCenter Blvd. Counsel of the Parent and TLGI and Director of the
Suite 800 Parent; 1991-1994: Senior Partner at Ross & Hardies;
Covington, Kentucky 41011 1987-1990: Senior Partner at Burke, Wilson &
McIlvane
Lawrence Miller 8/8/95-Present: President and Director of the
4614 Street Road Purchaser; 3/95-Present: President, Cemetery and
Trevose, PA 19053 Combination Division of the Parent and TLGI, and
Director of the Parent; 3/88-3/95: President & Chief
Executive Officer of Osiris Holding Corporation
William R. Shane 3/95-Present: Sr. Vice President and Chief Financial
383 Street Road East Officer, Cemetery and Combination Division of the
Trevose, PA 19053 Parent and TLGI and Director of the Parent; 3/88-
3/95: Vice President, Secretary, Treasurer & Chief
Financial Officer of Osiris Holding Corporation
Dwight K. Hawes 5/91-Present: Vice President, Finance of the Parent
(Canadian Citizen) and TLGI; 1/88-5/91: Senior Manager of the Parent
and TLGI
Peter W. Roberts 1/91-Present: Vice President, Financial Information
(Canadian Citizen) of the Parent and TLGI; 9/87-12/90: Executive Vice
President of Jim Pattison Industries
Myles S. Cairns 10/94-Present: Vice President, Operations Controller
50 East RiverCenter Blvd. of the Parent and TLGI; 1/94-10/94: Director of Risk
Suite 800 Management of the Parent and TLGI; 6/89-10/94:
Covington, Kentucky 41011 Director of Operation Planing and Control of the
(Canadian Citizen) Parent and TLGI
Peter S. Hyndman 2/90-Present: Corporate Secretary and Vice
(Canadian Citizen) President, Law of the Parent and TLGI; Director of
TLGI since 6/86
Timothy A. Birch 11/90-Present: Vice President, Corporate Development
50 East RiverCenter Blvd. and Law of the Parent and TLGI; 2/88-9/91: Vice
Suite 800 President of Sentinel Group
Covington, Kentucky 41011
</TABLE>
I-5
<PAGE>
6. DIRECTORS OF TLGI. The names, positions and election dates of the
directors of TLGI (other than directors who are also executive officers of
TLGI) are set forth below together with a current business address for each.
Except as otherwise noted, each such person is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND ELECTION
NAME FIVE-YEAR EMPLOYMENT HISTORY DATE
---------------------------- -------------------------------------- --------
<C> <S> <C>
Rev. Kenneth S. Bagnell 1990-Present: Self employed author and 5/89
74 Redpath Ave clergyman
Toronto, Ontario M45257
(Canadian Citizen)
J. Carter Beese, Jr. 11/94-Present: Vice Chairman of Alex 5/95
135 East Baltimore St. Brown International and Managing
Baltimore, MD 21202 Director of Alex Brown & Son; 1992-
1994: Commissioner of the U.S.
Securities and Exchange Commission;
1978-1992: Officer ('84) and Partner
('87) of Alex Brown & Son
Dr. Earl A. Grollman 1982-Present: President of E.A.G. Inc. 6/86
79 Country Club Lane
Belmont, Massachusetts 02178
1990-1993: Chief Executive Officer & 5/92
Senator Harold E. Hughes Chairman of the Board of Harold Hughes
7222 West St. St. John Rd. Centers; 1984-Present: Chairman of the
Glendale, AZ 85308 Board of Harold Hughes Centers
Albert S. Lineberry, Sr. 1989-Present: Vice President, 5/91
Hanes-Lineberry Funeral Home Operations, Eastern Division of TLGI
515 North Elm Street and the Parent
Greensboro, NC 27401
Charles B. Loewen 1990-Present: Vice Chairman of Loewen, 5/90
3512 Aetna Tower Ondaatje, McCuthcheon Limited; 7/94-
Toronto Dominion Center 7/95: President of Corporate Services
79 Wellington Street West International, Inc.; 7/95-Present:
Toronto, Ontario MSK 1K2 Chairman of Ukraine Enterprise
(Canadian Citizen) Corporation
Robert B. Lundgren 1993-Present: Retired; prior to 1993 6/86
21531-85B Court Mr. Lundgren was Sr. Vice President,
Langley, B.C. V1M 2G4 Finance and Corporate Development of
(Canadian Citizen) the Parent and TLGI
James D. McLennan 1/90-Present: President of McLennan 6/93
McLennan Company Company
25 Northwest Highway
Park Ridge, Illinios 60068
Ernest G. Penner 1956-Present: President of Penn-Co. 2/87
447 Elmdale Drive Construction
Steinbach, Manitoba R0A 2A0
(Canadian Citizen)
The Right Honorable 1990-Present: President of Miller, 3/95
John N. Turner, P.C., Q.C. Thomson, Barristers and Solicitors;
Ste. 2700 1984-1993: Member of Parliament for
20 Queen St. West Vancouver Quadra; The Right Honorable
Box 27 John N. Turner, P.C., Q.C. also serves
Toronto, ON as a director of Beatrice Foods Inc.,
M5H 3S1 Noranda Forest, Inc. and McDermott
(Canadian Citizen) International, Inc.
</TABLE>
I-6
<PAGE>
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing Shares and any other required documents
should be sent or delivered by each holder of Shares or such holder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary at
one of its addresses set forth below.
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange (212) 815-6213 Tender & Exchange
Department (For Eligible Institutions Only) Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and
New York, New York Confirm by Telephone Deliver Window
10286-1248 (800) 507-9357 New York, New York 10286
Questions or requests for assistance may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent. A holder of Shares may also contact brokers, dealers,
commercial banks or trust companies for assistance concerning the Offer.
The Information Agent for the offer is:
[LOGO OF GEORGESON & COMPANY APPEARS HERE]
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
All Others Call Toll Free 1-800-223-2064
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(212) 816-7298
<PAGE>
Exhibit 99(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
of
MHI GROUP, INC.
at
$10.25 PER SHARE
PURSUANT TO THE OFFER TO PURCHASE DATED AUGUST 14, 1995
by
SPRT CORP.
a wholly owned subsidiary
of
LOEWEN GROUP INTERNATIONAL, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, SEPTEMBER 11, 1995, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange (212) 815-6213 Tender & Exchange
Department (For Eligible Institutions Only) Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and
New York, New York Confirm by Telephone Deliver Window
10286-1248 (800) 507-9357 New York, New York 10286
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
This Letter of Transmittal is to be used either if certificates evidencing
Shares (as defined below) are to be forwarded herewith or, unless an Agent's
Message (as defined in the Offer to Purchase) is utilized, if delivery of
Shares is to be made by book-entry transfer to the Depositary's account at The
Depository Trust Company, the Midwest Securities Trust Company or the
Philadelphia Depositary Trust Company (each, a "Book-Entry Transfer Facility"
and, collectively, the "Book-Entry Transfer Facilities") pursuant to the
procedures set forth in Section 3 of the Offer to Purchase (as defined below).
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
<PAGE>
Holders of Shares who cannot deliver certificates for their Shares and all
other documents required hereby to the Depositary by the Expiration Date (as
defined in the Offer to Purchase) or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis and who wish to tender their
Shares must tender their Shares pursuant to the guaranteed delivery procedure
set forth in Section 3 of the Offer to Purchase. See Instruction 2.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
----------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN,
IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S))
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------
SHARES TENDERED
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
----------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES TOTAL NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
TOTAL SHARES
----------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by holders of Shares tendering by book-entry
transfer. If a certificate listed in the first column represents Pre-
Split Shares (as defined below), the number of Shares set forth in the
second column should be one-fourth of the number of Pre-Split Shares set
forth on such certificate.
(2) Not to exceed the number of Shares set forth in the second column. Unless
otherwise indicated it will be assumed that all Shares described above
are being tendered. See Instruction 4.
[_] CHECK HERE IF ANY OF THE CERTIFICATES BEING DELIVERED BEARS THE CUSIP
NUMBER 552925109. (IF THIS BOX HAS BEEN CHECKED, PRE-SPLIT SHARES ARE
BEING DELIVERED. SEE INSTRUCTION 12.)
[_] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution ____________________________________________
Account No. ___________________________ at (Check One):
[_] The Depository Trust Company
[_] Midwest Securities Trust Company
[_] Philadelphia Depository Trust Company
Transaction Code No. _____________________________________________________
[_] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s) __________________________________________
Window Ticket No. (if any) _______________________________________________
Date of Execution of Notice of Guaranteed Delivery _______________________
Name of Institution which Guaranteed Delivery ____________________________
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to SPRT Corp., a Florida corporation (the
"Purchaser") and a wholly owned subsidiary of Loewen Group International,
Inc., a Delaware corporation (the "Parent"), the above described shares of
Common Stock, $0.40 par value (collectively, the "Shares"), of MHI Group,
Inc., a Florida corporation (the "Company"), pursuant to the Purchaser's offer
to purchase all outstanding Shares at a price of $10.25 per Share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated August 14, 1995 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer"). The Offer is being made
pursuant to an Agreement and Plan of Merger dated as of August 9, 1995 (the
"Merger Agreement"), among the Parent, the Purchaser and the Company, which
has been unanimously approved by the Company's Board of Directors. The
undersigned understands that the Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to one or more of its
affiliates the right to purchase the Shares tendered pursuant to the Offer.
The Parent is an indirect wholly owned subsidiary of The Loewen Group Inc., a
corporation organized under the laws of the Province of British Columbia
("TLGI").
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns and transfers
to, or upon the order of, the Purchaser all right, title and interest in and
to all the Shares that are being tendered hereby (and any and all other Shares
or other securities issued or issuable in respect thereof on or after August
9, 1995) and irrevocably constitutes and appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to such
Shares (and all such other Shares or securities), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (a) deliver certificates for such Shares (and
all such other Shares or securities), or transfer ownership of such Shares
(and all such other Shares or securities) on the account books maintained by a
Book-Entry Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
the Purchaser, upon receipt by the Depositary, as the undersigned's agent, of
the purchase price (adjusted, if appropriate, as provided in the Offer to
Purchase), (b) present such Shares (and all such other Shares or securities)
for transfer on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and all
such other Shares or Securities), all in accordance with the terms of the
Offer.
The undersigned hereby irrevocably appoints Dwight K. Hawes, Peter S.
Hyndman and Robert O. Wienke, and each of them or any other designees of the
Purchaser as the attorneys and proxies of the undersigned, each with full
power of substitution, to exercise all voting and other rights of the
undersigned in such manner as each such attorney and proxy or his substitute
shall in his sole discretion deem proper with respect to, to execute any
written consent concerning any matter as each such attorney and proxy or his
substitute shall in his sole discretion deem proper with respect to, and to
otherwise act as such attorney and proxy or his substitute shall in his sole
discretion deem proper with respect to, all of the Shares (and any and all
other Shares or other securities issued or issuable in respect thereof on or
after August 9, 1995) tendered hereby which have been accepted for payment by
the Purchaser prior to the time of any vote or other action at any meeting of
holders of Shares of the Company (whether annual or special and whether or not
an adjourned meeting), by written consent or otherwise. This proxy and power
of attorney is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by the Purchaser in accordance with the
terms of the Offer. Such acceptance for payment shall revoke any other proxy
or written consent granted by the undersigned at any time with respect to such
Shares (and all such other Shares or securities), and no subsequent proxies or
powers of attorney will be given or written consents executed by the
undersigned (and if given or executed, will not be deemed to be effective).
In the event certificates for Pre-Split Shares are being delivered herewith
(see Instruction 12), the undersigned hereby submits such certificates for
Pre-Split Shares in exchange for Shares, and irrevocably
<PAGE>
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Pre-Split Shares,
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest) (a) to tender certificates for
such Pre-Split Shares for exchange, together, in any such case, with all
accompanying evidences of transfer and authenticity, as the undersigned's
agent and (b) to receive and act with respect to certificates for Shares, and
any cash in lieu of fractional Shares, received upon such exchange, pursuant
to the terms and conditions hereof. The undersigned understands that the
certificates for Shares to be issued in exchange for such certificates for
Pre-Split Shares will reflect an increase in the par value of such shares to
$0.40 per share and a 1 for 4 reverse stock split. The undersigned
acknowledges that the submission of such certificates for Pre-Split Shares is
subject to the terms, conditions and limitations set forth in (x) the 1 for 4
reverse stock split authorized by the Company's Board of Directors on October
29, 1993, effective November 19, 1993, and (y) the other terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or other securities issued or issuable in
respect thereof on or after August 9, 1995), that the undersigned own(s) the
Shares tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that such
tender of Shares complies with Rule 14e-4 under the Exchange Act, and that,
when the same are accepted for payment by the Purchaser, the Purchaser will
acquire good, marketable and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claims. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Depositary or the Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby (and all such other Shares or securities).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer, this
tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, the Purchaser may not be required to accept
for Payment any of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions", please
issue the check for the purchase price of any Shares purchased, and return any
Shares not tendered or not purchased, in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered" (and, in the case
of Shares tendered by book-entry transfer, by credit to the account at the
Book-Entry Transfer Facility designated above). Similarly, unless otherwise
indicated under "Special Delivery Instructions", please mail the check for the
purchase price of any Shares purchased and any certificates for Shares not
tendered or not purchased (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered" shown below the undersigned's signature(s). In the event that both
"Special Payment Instructions" and "Special Delivery Instructions" are
completed, please issue the check for the purchase price of any Shares
purchased and return any Shares not tendered or not purchased (and
accompanying documents, as appropriate) in the name(s) of, and mail said check
and any certificates (and accompanying documents, as appropriate) to, the
person(s) so indicated. The undersigned recognizes that the Purchaser has no
obligation, pursuant to the "Special Payment Instructions", to transfer any
Shares from the name of the registered holder(s) thereof if the Purchaser does
not accept for payment any of the Shares so tendered.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the To be completed ONLY if the
check for the purchase price of check for the purchase price of
Shares purchased or certificates Shares purchased or certificates
for Shares not tendered or not for Shares not tendered or not
purchased are to issued in the purchased are to mailed to someone
name of someone other than the other than the undersigned or to
undersigned, or if Shares tendered the undersigned at an address
by book-entry transfer that are other than that shown below the
not purchased are to be returned undersigned's signature(s).
by credit to any account at one of
the Book-Entry Transfer Facilities
other than that designated above.
Issue [_] check [_] certificates
to:
Issue [_] check [_] certificates Name: _____________________________
to: (Please Print)
Name: _____________________________ Address: __________________________
(Please Print)
___________________________________
Address: __________________________ (Include Zip Code)
___________________________________ ___________________________________
(Include Zip Code)
___________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL
SECURITY NO.)
(See Substitute Form W-9 Below)
[_]Credit unpurchased Shares
tendered by book-entry transfer
to the account set forth below:
Name of Account Party __________
Account No. ________________ at:
[_]The Depository Trust Company
[_]Midwest Securities Trust
Company
[_]Philadelphia Depository Trust
Company
<PAGE>
SIGN HERE
(Please Complete Substitute Form W-9 below)
-------------------------------------------------------------------------
Signature(s) of Owner(s)
Dated: ________________________, 1995
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting
in a fiduciary or representative capacity, please set forth full title and
see Instruction 5.)
Name(s): ____________________________________________________________________
(Please Print)
Capacity (full title) (See Instruction 5): __________________________________
Address: ____________________________________________________________________
_______________________________________________________________________
(Include Zip Code)
Area Code and Telephone No.: ________________________________________________
Taxpayer Identification or Social Security No: ______________________________
(See Substitute Form W-9 Below)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: _______________________________________________________
Name: _______________________________________________________________________
Name of Firm: _______________________________________________________________
Address: ____________________________________________________________________
_______________________________________________________________________
(Include Zip Code)
Area Code and Telephone No.: ________________________________________________
Dated: ________________________, 1995
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a bank, broker,
dealer, credit union, savings association or other entity that is a member of
a recognized Medallion Program approved by The Securities Transfer
Association, Inc. (an "Eligible Institution"). Signatures on this Letter of
Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed
by the registered holder(s) of the Shares (which term, for purposes of this
document, shall include any participant in one of the Book-Entry Transfer
Facilities whose name appears on a security position listing as the owner of
Shares) tendered herewith and such holder(s) have not completed the
instructions entitled "Special Payment Instructions" or "Special Delivery
Instructions" on this Letter of Transmittal or (b) if such Shares are tendered
for the account of an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal
is to be used either if certificates are to be forwarded herewith or if
delivery of Shares is to be made by book-entry transfer pursuant to the
procedures set forth in Section 3 of the Offer to Purchase. Certificates for
all physically delivered Shares, or a confirmation of a book-entry transfer
into the Depositary's account at one of the Book-Entry Transfer Facilities of
all Shares delivered electronically, as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the front page of this Letter of Transmittal
by the Expiration Date (as defined in the Offer to Purchase). Holders of
Shares who cannot deliver their Shares and all other required documents to the
Depositary by the Expiration Date may tender their Shares pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure: (a) such tender must be made by or through an
Eligible Institution, (b) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Purchaser must
be received by the Depositary by the Expiration Date and (c) the certificates
for all physically delivered Shares, or a confirmation of a book-entry
transfer into the Depositary's account at one of the Book-Entry Transfer
Facilities of all Shares delivered electronically, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees
and any other documents required by this Letter of Transmittal, must be
received by the Depositary within three trading days on the New York Stock
Exchange after the date of execution of such Notice of Guaranteed Delivery,
all as provided in Section 3 of the Offer to Purchase.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal
(or facsimile hereof), the tendering holder of Shares waives any right to
receive any notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (Not Applicable to Holders of Shares Who Tender by Book-
Entry Transfer). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
which are to be tendered in the box entitled "Number of Shares Tendered". In
such case, a new certificate for the remainder of the Shares represented by
the old certificate will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on this Letter of Transmittal, as promptly as practicable
following the expiration or termination of the Offer. All Shares represented
by certificates delivered to the Depositary will be deemed to have been
tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby is held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
<PAGE>
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made, or
Shares not tendered or not purchased are to be returned, in the name of any
person other than the registered holder(s), in which case, the certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such certificate(s). Signatures on any such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the
certificates for such Shares. Signature(s) on any such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Purchaser of the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. The Purchaser will pay any stock transfer taxes
with respect to the sale and transfer of any Shares to it or its order
pursuant to the Offer. If, however, payment of the purchase price is to be
made to, or Shares not tendered or not purchased are to be registered in the
name of, any person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment
of such taxes, or exemption therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE EVIDENCING THE SHARES
TENDERED HEREBY.
7. Special Payment and Delivery Instructions. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or
not purchased are to be returned, in the name of a person other than the
person(s) signing this Letter of Transmittal or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or the
person(s) signing this Letter of Transmittal at an address other than that
shown above, the appropriate boxes on the Letter of Transmittal should be
completed. Holders of Shares tendering Shares by book-entry transfer may
request that Shares not purchased be credited to such account at any of the
Book-Entry Transfer Facilities as such holder of Shares may designate under
"Special Payment Instructions". If no such instructions are given, any such
Shares not purchased will be returned by crediting the account at the Book-
Entry Transfer Facilities designated above.
8. Waiver of Conditions. Subject to the terms of the Offer, the Purchaser
reserves the absolute right in its sole discretion to waive any of the
specified conditions of the Offer (including the Minimum Condition), in whole
or in part, in the case of any Shares tendered.
9. 31% Backup Withholding; Substitute Form W-9. Under U.S. Federal income
tax law, a holder of Shares whose tendered Shares are accepted for payment is
required to provide the Depositary with such holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 above and certify under
penalties of perjury that such number is correct and such holder of Shares is
not subject to backup withholding. If the Depositary is not provided with the
correct TIN, the Internal Revenue Service may subject the holder of Shares or
other payee to a $50 penalty. In addition, payments that are made to such
holder of Shares or other payee with respect to Shares purchased pursuant to
the Offer may be subject to 31% backup withholding.
Certain holders of Shares (including among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, the holder of Shares must submit a Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. A Form W-8
can be obtained from the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
more instructions.
<PAGE>
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the holder of Shares or other payee. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld.
If withholding results in an overpayment of taxes, a refund may be obtained
from the Internal Revenue Service, provided that the required information is
given to the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
holder of Shares has not been issued a TIN and has applied for a TIN or
intends to apply for TIN in the near future. If the box in Part 3 is checked,
the holder of Shares or other payee must also complete the Certificate of
Awaiting Taxpayer Identification Number and provide the Depositary with a
properly certified TIN within sixty days in order to avoid backup withholding.
The holder of Shares is required to give the Depositary the TIN (e.g.,
social security number or employer identification number) of the record owner
of the Shares or of the last transferee appearing on the transfers attached
to, or endorsed on, the Shares. If the Shares are in more than one name or are
not in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
10. Requests for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offer to Purchase, this Letter of Transmittal and the
Notice of Guaranteed Delivery may be obtained from the Information Agent at
its address or telephone number set forth below or from your broker, dealer,
commercial bank or trust company.
11. Lost, Destroyed or Stolen Certificates. If any certificate representing
Shares has been lost, destroyed or stolen, the holder of Shares should
promptly notify the Depositary. The holder of Shares will then be instructed
as to the steps that must be taken in order to replace the certificate(s).
This Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.
12. Delivery and Exchange of Pre-Split Shares. In November 1993, the Company
effected a one-for-four reverse stock split, in which every four shares of the
Company's Common Stock, $0.10 par value ("Pre-Split Shares"), were converted
into one Share. A certificate evidencing Pre-Split Shares now represents only
the right to receive, upon presentation of such certificate to the Company for
exchange, a certificate evidencing a number of Shares equal to one-fourth of
the number of Pre-Split Shares evidenced by such certificate and a cash
payment in lieu of fractional shares. Holders of certificates evidencing Pre-
Split Shares may tender the Shares such holders are entitled to receive upon
exchange of the certificates evidencing Pre-Split Shares by following the
instructions set forth in Section 3 of the Offer to Purchase with respect to
the tender of Shares and this Instruction 12 provided, however, that such
holders must physically deliver the certificates representing Pre-Split
Shares, and may not use the procedures for book-entry transfer.
Upon receipt of (a) a certificate representing Pre-Split Shares and (b) a
properly completed and duly executed Letter of Transmittal in respect of all
or a portion of the Shares into which such Pre-Split Shares are exchangeable,
the Depositary will arrange for the exchange of such certificate into (i)
certificates representing Shares on the basis of one Share for every four Pre-
Split Shares and (ii) cash in lieu of fractional Shares in an amount per Pre-
Split Share based upon the closing price of the Pre-Split Shares reported by
the New York Stock Exchange on November 19, 1993 (as adjusted for the 1 for 4
reverse stock split). Upon such exchange, (x) the certificate representing
Shares will be issued in the name of the registered holder of the Pre-Split
Shares so exchanged, (y) the Shares represented thereby (or such lesser number
of Shares as is specified in the Letter of Transmittal as being tendered) will
be deemed to have been tendered pursuant to the terms of the Offer and (z) a
check representing the amount of cash in lieu of fractional Shares will be
sent to such registered holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, TOGETHER WITH CERTIFICATES OR CONFIRMATION OF
BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF
GUARANTEED DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY AT ONE OF ITS
ADDRESSES SET FORTH HEREIN PRIOR TO THE EXPIRATION DATE.
<PAGE>
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS
(SEE INSTRUCTION 9)
-------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
-------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE Social Security Number
FORM W-9 YOUR TIN IN THE BOX AT OR Employer
DEPARTMENT OF THE TREASURY RIGHT AND CERTIFY BY Identification Number
INTERNAL REVENUE SERVICE SIGNING AND DATING BELOW.
PAYER'S REQUEST FOR TAXPAYER ---------------------
IDENTIFICATION NUMBER ("TIN") (If awaiting TIN write
"Applied For")
---------------------------------------------------
PART 2--CERTIFICATION--UNDER PENALTIES OF PERJURY,
I CERTIFY THAT:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am
waiting for a number to be issued for me) and
(2) I am not subject to backup withholding either
because I have not been notified by the
Internal Revenue Service (IRS) that I am
subject to backup withholding as a result of a
failure to report all interest or dividends,
or the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATION INSTRUCTIONS--YOU MUST CROSS OUT
ITEM (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY
THE IRS THAT YOU ARE CURRENTLY SUBJECT TO
BACKUP WITHHOLDING BECAUSE OF UNDER-REPORTING
INTEREST OR DIVIDENDS ON YOUR TAX RETURN.
HOWEVER, IF AFTER BEING NOTIFIED BY THE IRS
THAT YOU WERE SUBJECT TO BACKUP WITHHOLDING
YOU RECEIVED ANOTHER NOTIFICATION FROM THE IRS
THAT YOU ARE NO LONGER SUBJECT TO BACKUP
WITHHOLDING, DO NOT CROSS OUT SUCH ITEM (2).
---------------------------------------------------
PART 3 [_] Check this box if you have not been
issued a TIN and have applied for one
or intend to apply for one in the near
future.
SIGNATURE _____________________ DATE ____, 1995
--------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9
--------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
sixty (60) days 31% of all reportable payments made to me thereafter will be
withheld until I provide a number.
Signature: __________________________ Date: _______, 1995
--------------------------------------------------------------------------------
<PAGE>
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange (212) 815-6213 Tender & Exchange
Department (For Eligible Department
P.O. Box 11248 Institutions Only) 101 Barclay Street
Church Street Station Receive and
New York, New York Confirm by Telephone Deliver Window
10286-1248 (800) 507-9357 New York, New York 10286
The Information Agent for the Offer is:
[LOGO OF GEORGESON & COMPANY APPEARS HERE]
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
All Others Call Toll Free 1-800-223-2064
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(212) 816-7298
<PAGE>
Exhibit 99(a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
MHI GROUP, INC.
TO
LOEWEN GROUP INTERNATIONAL, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
As set forth in the Offer to Purchase, this Notice of Guaranteed Delivery,
or one substantially in the form hereof, must be used to accept the Offer (as
defined below) if certificates representing shares of Common Stock, par value
$0.40 per share (collectively, the "Shares"), of MHI Group, Inc., a Florida
corporation (the "Company"), are not immediately available or the procedure
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach The Bank of New York (the "Depositary")
prior to the expiration of the Offer. This Notice of Guaranteed Delivery may
be delivered by hand, facsimile transmission or mail to the Depositary. See
Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange (212) 815-6213 Tender & Exchange
Department (For Eligible Institutions Only) Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and
New York, New York Confirm by Telephone Deliver Window
10286-1248 (800) 507-9357 New York, New York 10286
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE
INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST
APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE
APPROPRIATE LETTER OF TRANSMITTAL.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to SPRT Corp., a Florida corporation (the
"Purchaser"), and a wholly owned subsidiary of Loewen Group International,
Inc., a Delaware corporation (the "Parent"), which is an indirect wholly owned
subsidiary of The Loewen Group Inc., a corporation organized under the laws of
the Province of British Columbia ("TLGI"), upon the terms and subject to the
conditions set forth in the Offer to Purchase dated August 14, 1995 (the
"Offer to Purchase") and in the related Letter of Transmittal (which together
constitute the "Offer"), receipt of which is hereby acknowledged, shares
of Common Stock, $0.40 par value (collectively, the "Shares"), of MHI Group,
Inc., a Florida corporation (the '"Company"), pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase.
Name(s) of Record Holder(s):
Certificate No(s).
(if available): ________________ _____________________________________
_____________________________________ _____________________________________
(Please Print)
Address(es): _____________________________________
__________________________________________________
(Zip Code)
Area Code and Tel. No.: __________________________
(Daytime telephone number)
(Check one box if Shares will be tendered by book-entry transfer)
[_] The Depository Trust Company
[_] Midwest Securities Trust Company
[_] Philadelphia Depository Trust Company
Account Number: _____________________ Signature(s): _______________________
Date: _________________________, 1995
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as such term is defined in Section
3 of the Offer to Purchase), hereby guarantees to deliver to the Depositary
the certificates representing Shares tendered hereby, in proper form for
transfer, or a confirmation of a book-entry transfer into the Depositary's
account at one of the Book-Entry Transfer Facilities (as such term is defined
in Section 3 of the Offer to Purchase), in each case with delivery of a
properly completed and executed Letter of Transmittal (or a manually signed
facsimile thereof), and with any other documents required by the Letter of
Transmittal, all within three trading days on the New York Stock Exchange
after the date hereof.
Name of Firm: _______________________ _____________________________________
(Authorized Signature)
Address: ____________________________
Name: _______________________________
_____________________________________ (Please type or print)
(Zip Code)
Title: ______________________________
_____________________________________
Date: _______________________________
Area Code and Tel. No.: _____________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT ONLY TOGETHER WITH
YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
Exhibit 99.(a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
of
MHI GROUP, INC.
at
$10.25 PER SHARE
by
SPRT CORP.
a wholly owned subsidiary
of
LOEWEN GROUP INTERNATIONAL, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, SEPTEMBER 11, 1995, UNLESS THE OFFER IS EXTENDED.
August 14, 1995
To Brokers, Dealers, Commercial Banks,Trust Companies and Other Nominees:
We have been appointed by SPRT Corp., a Florida corporation (the
"Purchaser"), and a wholly owned subsidiary of Loewen Group International,
Inc., a Delaware corporation (the "Parent"), to act as Dealer Manager in
connection with the Purchaser's offer to purchase all outstanding shares of
Common Stock, $0.40 par value (collectively, the Shares), of MHI Group, Inc.,
a Florida corporation (the "Company"), at $10.25 per Share, net to the seller
in cash without interest, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated August 14, 1995, (the "Offer to
Purchase") and the related Letter of Transmittal (which together constitute
the "Offer"). The Parent is an indirect wholly owned subsidiary of The Loewen
Group Inc., a corporation organized under the laws of the Province of British
Columbia ("TLGI").
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase dated August 14, 1995;
2. Letter of Transmittal for your use and for the information of your
clients;
3. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 providing information relating to backup federal
income tax withholding;
4. A letter from the President and Chief Executive Officer of the
Company and the Solicitation/Recommendation Statement of the Company on
Schedule 14D-9;
5. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to The Bank
of New York (the "Depositary") by the Expiration Date (as defined in the
Offer to Purchase) or if the procedure for book-entry transfer cannot be
completed by the Expiration Date;
6. A form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions
with regard to the Offer; and
7. A return envelope addressed to the Depositary.
<PAGE>
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
MONDAY, SEPTEMBER 11, 1995, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates for
such Shares (or a confirmation of a book-entry transfer of such Shares into
the Depositary's account at one of the Book-Entry Transfer Facilities (as
defined in the Offer to Purchase)), a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other required documents.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedure described in Section 3 of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager, the Information Agent or the
Depositary as described in the Offer to Purchase) for soliciting tenders of
Shares pursuant to the Offer. The Purchaser will, however, upon request,
reimburse brokers, dealers, commercial banks and trust companies for
reasonable and necessary costs and expenses incurred by them in forwarding
materials to their customers. The Purchaser will pay all stock transfer taxes
applicable to its purchase of Shares pursuant to the Offer, subject to
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers
set forth on the back cover of the Offer to Purchase.
Very truly yours,
Smith Barney Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF TLGI, THE PARENT, THE PURCHASER, THE DEALER MANAGER, THE
INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO
USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION
WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
2
<PAGE>
Exhibit 99(a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
of
MHI GROUP, INC.
at
$10.25 PER SHARE
by
SPRT CORP.
a wholly owned subsidiary
of
LOEWEN GROUP INTERNATIONAL, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, SEPTEMBER 11, 1995, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated August 14,
1995 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together constitute the "Offer") in connection with the offer by SPRT Corp., a
Florida corporation (the "Purchaser"), and a wholly owned subsidiary of Loewen
Group International, Inc., a Delaware corporation (the "Parent"), to purchase
all outstanding shares of Common Stock, $0.40 par value (collectively, the
"Shares"), of MHI Group, Inc., a Florida corporation (the "Company"), at
$10.25 per Share, net to the seller in cash without interest, upon the terms
and subject to the conditions set forth in the Offer. The Parent is an
indirect wholly owned subsidiary of The Loewen Group Inc., a corporation
organized under the laws of the Province of British Columbia. We are the
holder of record of Shares held for your account. A TENDER OF SUCH SHARES CAN
BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS.
THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND
CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender any or all of
such Shares held by us for your account, pursuant to the terms and subject to
the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $10.25 per Share, net to the seller in cash
without interest.
2. The Offer is being made for all Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Monday, September 11, 1995, unless the Offer is
extended.
<PAGE>
4. The Offer is conditioned upon, among other things, there being validly
tendered by the Expiration Date (as defined in the Offer to Purchase) and
not withdrawn a number of Shares which, together with the Shares then owned
by the Parent and the Purchaser, would represent a majority of the total
number of outstanding Shares, assuming the exercise of all outstanding
options and warrants and the issuance of all Shares that the Company is
obligated to issue.
5. Tendering holders of Shares will not be required to pay brokerage fees
or commissions. Any stock transfer taxes applicable to the sale of Shares
to the Purchaser pursuant to the Offer will be paid by the Purchaser,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
6. The Board of Directors of the Company, by the unanimous vote of all
directors present, determined that the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, are
fair to and in the best interests of the holders of the Shares, approved
the Merger Agreement and the transactions contemplated thereby, including
the Offer and the Merger, and recommends that the holders of Shares accept
the Offer and tender their Shares pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction
form on the detachable part hereof. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares
will be tendered unless otherwise specified on the detachable part hereof.
Your instructions should be forwarded to us in ample time to permit us to
submit a tender on your behalf by the expiration of the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal. The Purchaser is not aware of any jurisdiction where the making
of the Offer is prohibited by any administrative or judicial action pursuant
to any valid state statute. If the Purchaser becomes aware of any valid state
statute prohibiting the making of the Offer or the acceptance of Shares
pursuant thereto, the Purchaser will make a good faith effort to comply with
any such state statute. If, after such good faith effort, the Purchaser cannot
comply with any such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such state.
In any jurisdiction where the securities, blue sky or other laws require that
the Offer be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of the Purchaser by Smith Barney Inc. or by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THIS OFFER
TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MHI GROUP, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated August 14, 1995 (the "Offer to Purchase"), and the related
Letter of Transmittal (which together constitute the "Offer"), in connection
with the offer by SPRT Corp., a Florida corporation (the "Purchaser"), and a
wholly owned subsidiary of Loewen Group International, Inc., a Delaware
corporation (the "Parent"), to purchase all outstanding shares of Common Stock,
$0.40 par value (collectively, the "Shares"), of MHI Group, Inc. The Parent is
an indirect wholly owned subsidiary of The Loewen Group Inc., a corporation
organized under the laws of the Province of British Columbia.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all the Shares) held by
you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
NUMBER OF SHARES TO BE TENDERED: SIGN HERE
__________________________ SHARES*
__________________________________
Account Number: ____________________ __________________________________
Signature(s)
Dated: _______________________, 1995 __________________________________
__________________________________
Please Print Name(s)
Address __________________________
__________________________________
Include Zip Code
__________________________________
Area Code and Telephone Number
__________________________________
Taxpayer Identification or Social
Security Number
--------
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
3
<PAGE>
Exhibit 99.(a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GUIDE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-000-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
---------------------------------------------
GIVE THE
FOR THIS TYPE OF SOCIAL SECURITY
ACCOUNT: NUMBER OF--
---------------------------------------------
1. An individual's The individual
account
2. Two or more The actual owner
individuals (joint of the account
account) or, if combined
funds, any one
of the
individuals(1)
3. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
4. (a) The usual The grantor-
revocable savings trustee(1)
trust account
(grantor is also
trustee)
(b) So-called trust The actual
account that is not owner(1)
a legal or valid
trust under State
law
5. Sole proprietorship The owner(3)
account
---------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF IDENTIFICATION
ACCOUNT: NUMBER--
---------------------------------------------
6. A valid trust, The legal entity
estate, or pension (Do not furnish
trust the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(4)
7. Corporate account The corporation
8. Religious, The organization
charitable, or
educational
organization account
9. Partnership The partnership
10. Association, club, The organization
or other tax-exempt
organization
11. A broker or The broker or
registered nominee nominee
12. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or
prison) that
receives
agricultural
program payments
---------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner. You may also enter your business name. You may
use your Social Security Number of Employer Identification Number.
(4) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An equity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT
TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most receipt of dividend, interest,
or other payments to give taxpayer identification numbers to payers who must
report the payments to IRS. IRS uses the numbers for identification purposes.
Payers must be given the numbers whether or not recipients are required to
file tax returns. Payers must generally withhold 31% of taxable interest,
dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail
to furnish your taxpayer identification number to a payer, you are subject to
a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99(a)(7)
August 9, 1995
For more information contact:
Paul Wagler, Senior. Vice President,
Finance and CFO
Dwight Hawes, Vice President, Finance
The Loewen Group
Tel: (604) 299-9321
Stock Symbols:
TSE: LWN
ME: LWN
Nasdaq: LWNGF
FOR IMMEDIATE RELEASE
---------------------
(all amounts in US dollars)
THE LOEWEN GROUP INC. TO ACQUIRE MHI GROUP, INC.
------------------------------------------------
BURNABY, B.C. - The Loewen Group Inc. (Nasdaq: LWNGF) today announced that it
has entered into a definitive Merger Agreement to acquire MHI Group, Inc. (NYSE:
MH), a funeral home and cemetery operator with facilities in Florida and
Colorado. Pursuant to the Merger Agreement, Loewen will commence a tender offer
for all issued and outstanding shares of MHI for $10.25 per share in cash.
The tender offer and the merger are subject, among other things, to the
acquisition of a majority of the total number of shares of common stock
outstanding on a fully-diluted basis and the expiration of all waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act. The tender offer is not
subject to financing. Following the consummation of the tender offer, all shares
of MHI common stock then outstanding (other than shares held by MHI or Loewen)
will be converted into the right to receive $10.25 per share in cash.
In connection with the transaction MHI, has granted Loewen an option to acquire
19.9% of MHI Group's common stock at a price of $10.25 per share. In addition, a
major shareholder has granted Loewen an option to acquire approximately 7.8% of
the issued and outstanding common stock of MHI.
The transaction will result in Loewen acquiring 13 funeral homes, 4 cemeteries
and 3 crematories in Florida and 3 funeral homes, 1 cemetery and 1 crematory in
Colorado.
"This transaction allows us to further penetrate the attractive Florida funeral
home and cemetery market and establishes a solid base from which to serve the
Jewish community in Florida," said Ray Loewen, Chairman and CEO of The Loewen
Group. "The purchase of MHI continues Loewen's strong record of acquisitions in
1995, further enhancing our growth."
With the purchase of MHI, Loewen has completed or signed letters of intent for
acquisitions totaling approximately $500 million in 1995, including the
acquisition of 94 funeral homes and 42 cemeteries in the United States and
Canada, and letters of intent for the future purchase of a further 69 funeral
homes and 39 cemeteries.
Headquartered in Burnaby, British Columbia and in Cincinnati and Philadelphia,
The Loewen Group is the fastest growing operator of funeral homes and
cemeteries in North America. The Company employs approximately 8,000 people and
owns and operates 733 funeral homes and 158 cemeteries across the United States
and Canada. Approximately 90% of the Company's total revenue is derived from
United States locations.
Smith Barney Inc. is acting as financial advisor to The Loewen Group in this
transaction and will serve as dealer manager in the tender offer.
<PAGE>
EXHIBIT 99(a)(8)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated August
14, 1995 and the related Letter of Transmittal and is being made to all
holders of Shares. The Purchaser is not aware of any state where the
making of the Offer is prohibited by any administrative or judicial
action pursuant to any valid state statute. If the Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer
or the acceptance of Shares pursuant thereto, the Purchaser will
make a good faith effort to comply with any such state statute.
If, after such good faith effort, the Purchaser cannot
comply with any such state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf
of) the holders of Shares in such state. In any juris-
diction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on
behalf of the Purchaser by Smith Barney Inc. or
by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
MHI Group, Inc.
at
$10.25 per Share
by
SPRT Corp.
a wholly owned subsidiary of
Loewen Group International, Inc.
SPRT Corp., a Florida corporation (the "Purchaser") and a wholly
owned subsidiary of Loewen Group International, Inc., a Delaware corporation
(the "Parent"), is offering to purchase all outstanding shares of Common Stock,
$0.40 par value (collectively, the "Shares"), of MHI Group, Inc., a Florida
corporation (the "Company"), at $10.25 per Share, net to the seller in cash
without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated August 14, 1995 (the "Offer to Purchase") and in the
related Letter of Transmittal (which together constitute the "Offer"). The
Parent is an indirect wholly owned subsidiary of The Loewen Group Inc., a
corporation organized under the laws of the Province of British Columbia.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, SEPTEMBER 11, 1995, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING
VALIDLY TENDERED BY THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE)
AND NOT WITHDRAWN A NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES THEN OWNED
BY THE PARENT AND THE PURCHASER, WOULD REPRESENT A MAJORITY OF THE TOTAL NUMBER
OF OUTSTANDING SHARES, ASSUMING THE EXERCISE OF ALL OUTSTANDING OPTIONS AND
WARRANTS AND THE ISSUANCE OF ALL SHARES THAT THE COMPANY IS OBLIGATED TO ISSUE
(THE "MINIMUM CONDITION").
The purpose of the Offer is for the Parent to acquire control of, and
the entire common equity interest in, the Company. The Offer is being made
pursuant to an Agreement and Plan of Merger dated as of August 9, 1995 (the
"Merger Agreement"), among the Parent, the Purchaser and the Company. The
Merger Agreement provides, among other things, that as soon as practicable
after the consummation of the Offer and the satisfaction or waiver of certain
other conditions, the Purchaser will be merged with and into the Company (the
"Merger"). Following consummation of the Merger, the Company will continue as
the surviving corporation and a subsidiary of the Parent. At the effective time
of the Merger, each Share issued and outstanding (other than Shares held in the
treasury of the Company and Shares owned by the Parent or any direct or
indirect subsidiary of the Parent or the Company (which shall be cancelled))
will be converted into the right to receive $10.25 in cash, without interest.
The Parent and the Purchaser have not made, and do not presently intend to
make, any offer to purchase shares of Series B Preferred Stock of the Company
or shares of Series C Preferred Stock of the Company, and all such shares of
Preferred Stock will remain outstanding after the effective time of the Merger.
In connection with the execution and delivery of the Merger
Agreement, (i) the Company and the Parent have entered into a Stock Option
Agreement dated as of August 9, 1995, pursuant to which the Company has granted
the Parent the right to acquire up to 1,253,823 Shares under certain
circumstances at a price per Share of $10.25 and (ii) the Parent and MH
Associates, a New York general partnership ("MH Associates") that holds an
option to purchase 486,352 Shares from the Company (the "Warrant"), have
entered into a Warrant Option Agreement dated as of August 9, 1995, pursuant to
which MH Associates has granted the Parent an option to purchase the Warrant on
the terms and conditions set forth in that agreement. See Section 13 of the
Offer to Purchase for further discussion.
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY, BY THE UNANIMOUS VOTE OF ALL DIRECTORS
PRESENT, DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE BEST
INTERESTS OF THE HOLDERS OF THE SHARES, APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
RECOMMENDS THAT HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
The Offer is subject to certain conditions set forth in Section 16 of
the Offer to Purchase, including satisfaction of the Minimum Condition and
expiration or termination of the waiting period applicable to the Purchaser's
acquisition of Shares pursuant to the Offer under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. If any such condition is not satisfied, the
Purchaser may (i) terminate the Offer and return all tendered Shares to
tendering holders of Shares, (ii) extend the Offer and, subject to withdrawal
rights as set forth in Section 4 of the Offer to Purchase, retain all such
Shares until the expiration of the Offer as so extended, (iii) waive such
condition and, subject to any requirement to extend the period of time during
which the Offer is open, purchase all Shares validly tendered by the Expiration
Date and not withdrawn or (iv) delay acceptance for payment or payment for
Shares, subject to applicable law, until satisfaction or waiver of the
conditions to the Offer.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment validly tendered Shares when, as and if the Purchaser
gives oral or written notice to The Bank of New York (the "Depositary") of its
acceptance of the tenders of such Shares. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price with the Depositary,
which will act as agent for tendering holders of Shares for the purpose of
receiving payments from the Purchaser and transmitting such payments to
tendering holders of Shares. Under no circumstances will interest be paid by
the Purchaser on the consideration paid for Shares pursuant to the Offer,
regardless of any delay in making such payment. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) the certificates evidencing such Shares
(the "Share Certificates") or confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in Section 3 of the Offer to Purchase) pursuant to the
procedure set forth in Section 3 of the Offer to Purchase, (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, and
(iii) any other documents required under the Letter of Transmittal.
The Purchaser reserves the right, at any time or from time to time,
in its sole discretion and regardless of whether or not any of the conditions
specified in Section 16 of the Offer to Purchase shall have been satisfied
(except to the extent otherwise provided in the Merger Agreement), to extend
the period of time during which the Offer is open, by giving oral or written
notice of such extension to the Depositary. Any such extension will be followed
as promptly as practicable by public announcement thereof, such announcement to
be made no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to applicable withdrawal rights.
Tenders of Shares made pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date. Thereafter, such tenders are
irrevocable,except that they may be withdrawn after Thursday, October 12, 1995
unless theretofore accepted for payment as provided in the Offer to Purchase.
For a withdrawal to be effective, a written or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of the Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder of such Shares, if different from that of the person who tendered such
Shares. If the Shares to be withdrawn have been delivered to the Depositary, a
signed notice of withdrawal with (except in the case of Shares tendered by an
Eligible Institution (as defined in Section 3 of the Offer to Purchase))
signatures guaranteed by an Eligible Institution must be submitted prior to the
release of such Shares. In addition, such notice must specify, in the case of
Shares tendered by delivery of certificates, the name of the registered
holder (if different from that of the tendering holder of Shares) and the
serial numbers shown on the particular certificates evidencing the Shares to be
withdrawn or, in the case of Shares tendered by book-entry transfer, the name
and number of the account at one of the Book-Entry Transfer Facilities to be
credited with the withdrawn Shares. All questions as to the form and validity
(including the time of receipt) of any notice of withdrawal will be determined
by the Purchaser, in its sole discretion, which determination shall be final
and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided the Purchaser with the Company's shareholder
list and security position listings for the purpose of disseminating the Offer
to holders of Shares. The Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares whose names appear on
the Company's shareholder list and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the shareholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance, or for additional copies of
the Offer to Purchase, the related Letter of Transmittal or other tender offer
materials may be directed to the Information Agent or the Dealer Manager as set
forth below, and copies will be furnished promptly at the Purchaser's expense.
No fees or commissions will be paid to brokers, dealers or other persons (other
than the Information Agent and the Dealer Manager) for soliciting renders of
Shares pursuant to the Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
--------------
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
ALL OTHERS CALL TOLL FREE: 1-800-223-2064
The Dealer Manager for the Offer is:
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
(212) 816-7298
August 14, 1995
<PAGE>
EXHIBIT 99(b)
===============================================================================
U.S. S400,000,000
AMENDED AND RESTATED
MULTICURRENCY CREDIT AGREEMENT
Dated as of May 11, 1995
Among
LOEWEN GROUP INTERNATIONAL, INC.
as the Borrower,
THE LOEWEN GROUP INC.
as a Guarantor,
THE BANKS NAMED HEREIN
as the Lenders,
and
THE FIRST NATIONAL BANK OF CHICAGO
as the Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
------- ----
ARTICLE I
DEFINITIONS
1.1. Certain Defined Terms............................................. 1
1.2. Amendment and Restatement of Original Credit Agreement............ 19
ARTICLE II
THE CREDITS
2.1. The A Loans....................................................... 19
2.2. Repayment of the A Loans.......................................... 20
2.3. Ratable Loans; Types of A Advances................................ 20
2.4. Minimum Amount of Each A Advance.................................. 20
2.5. Optional Prepayments of A Loans................................... 20
2.6. Method of Selecting Types and Interest Periods for
New A Advances.................................................... 21
2.7 Conversion and Continuation of Outstanding A Advances............. 21
2.8. Payment of Interest on A Loans and A Advances..................... 22
2.9. Changes in Interest Rate, Etc. ................................... 23
2.10. The B Advances.................................................... 23
2.11. Commitment Fee; Mandatory and Voluntary reductions in
Aggregate Commitment.............................................. 27
2.12. Rates Applicable After Default.................................... 28
2.13. Method of Payment................................................. 29
2.14 Notes; Telephonic Notices......................................... 29
2.15. Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions......................................... 29
2.16. Lending Installations............................................. 30
2.17. Non-Receipt of Funds by the Agent................................. 30
2.18. Withholding Tax Exemption......................................... 30
2.19. Extension of Facility Termination Date............................ 31
2.20. Mandatory Prepayments............................................. 32
2.21. Termination....................................................... 32
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection.................................................. 32
3.2. Changes in Capital Adequacy Regulations........................... 33
3.3. Availability of Types of A Advances............................... 34
3.4. Funding Indemnification........................................... 34
3.5. Mitigation; Lender Statements; Survival of Indemnity.............. 34
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Effectiveness: Initial Advance.................................... 35
4.2. Each Advance...................................................... 37
-i-
<PAGE>
Section Page
------- ----
ARTICLE V
GUARANTY
5.1. The Guaranty...................................................... 37
5.2. Guaranty Unconditional............................................ 38
5.3. Discharge Only Upon Payment in Full; Reinstatement in Certain
Circumstances..................................................... 39
5.4. Waiver by the Company............................................. 39
5.5. Waiver of Subrogation Rights...................................... 39
5.6. Stay of Acceleration.............................................. 40
5.7. Gross-up.......................................................... 40
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6. Representations and Warranties.................................... 41
6.1. Corporate Existence and Standing.................................. 41
6.2. Authorization and Validity........................................ 41
6.3. No Conflict; Government Consent................................... 41
6.4. Financial Statements.............................................. 42
6.5. Material Adverse Change........................................... 42
6.6. Taxes............................................................. 42
6.7. Litigation and Contingent Liabilities............................. 43
6.8. Subsidiaries...................................................... 43
6.9. ERISA............................................................. 43
6.10 Accuracy of Information........................................... 44
6.11 Regulation U...................................................... 44
6.12 Material Agreements............................................... 44
6.13 Compliance With Laws.............................................. 44
6.14 Ownership of Properties........................................... 44
6.15 Investment Company Act............................................ 45
6.16 Public Utility Holding............................................ 45
6.17 Post-Retirement Benefits.......................................... 45
ARTICLE VII
COVENANTS
7. Covenants......................................................... 45
7.1. Financial Reporting............................................... 45
7.2. Use of Proceeds................................................... 48
7.3. Notice of Default................................................. 49
7.4. Conduct of Business............................................... 49
7.5. Taxes............................................................. 49
7.6. Insurance......................................................... 49
7.7. Compliance with Laws.............................................. 49
7.8. Maintenance of Properties......................................... 49
7.9. Inspection........................................................ 49
7.10. DistributionS..................................................... 50
7.11. Indebtedness...................................................... 51
7.12. Merger............................................................ 51
7.13. Sale of Assets.................................................... 52
7.14. Prepayments....................................................... 52
-ii-
<PAGE>
Section Page
------- ----
7.15. Affiliates........................................................ 52
7.16. Investments....................................................... 53
7.17. Contingent Obligations............................................ 55
7.18. Liens............................................................. 56
7.19. Minimum Consolidated Net Worth.................................... 57
7.20. Rentals........................................................... 58
7.21. Fixed Charges Coverage............................................ 58
7.22. Restriction on Consolidated Funded Debt........................... 58
7.23. Ownership of the Borrower......................................... 58
7.24. Acquisitions...................................................... 58
7.25. Covenants Not to Compete.......................................... 58
ARTICLE VIII
DEFAULTS
8. Defaults.......................................................... 58
ARTICLE IX
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
9.1. Acceleration...................................................... 62
9.2. Amendments........................................................ 62
9.3. Preservation of Rights............................................ 62
ARTICLE X
GENERAL PROVISIONS
10.1. Survival of Representations....................................... 64
10.2. Governmental Regulation........................................... 64
10.3. Stamp Duties...................................................... 64
10.4. Headings.......................................................... 64
10.5. Entire Agreement; Independence of Covenants....................... 64
10.6. Several Obligations; Benefits of this Agreement................... 64
10.7. Expenses; Indemnification......................................... 64
10.8. Numbers of Documents.............................................. 65
10.9. Accounting; Currency Conversions.................................. 65
10.10. Severability of Provisions........................................ 65
10.11. Nonliability of lenders........................................... 66
10.12. CHOICE OF LAW..................................................... 66
10.13. CONSENT TO JURISDICTION........................................... 66
10.14. WAIVER OF JURY TRIAL.............................................. 67
10.15. Release of LFC Guaranty and Neweol Guaranty....................... 67
10.16. Confidentiality................................................... 67
10.17. Judgment Currency................................................. 67
10.18. Canadian Interest Antidotes....................................... 68
-iii-
<PAGE>
Section Page
------- ----
ARTICLE XI
THE AGENT
11.1. Appointment....................................................... 68
11.2. Powers............................................................ 69
11.3. General Immunity.................................................. 69
11.4. No Responsibility for Loans, Recitals, Etc........................ 69
11.5. Action on Instructions of Lenders.................................. 69
11.6. Employment of Agents and Counsel.................................. 69
11.7. Reliance on Documents; Counsel.................................... 70
11.8. Agent's Reimbursement and Indemnification.......................... 70
11.9. Rights as a Lender................................................ 70
11.10. Lender Credit Decision............................................ 71
11.11. Successor Agent................................................... 71
11.12. Agent's Fee....................................................... 71
ARTICLE XII
SETOFF; RATABLE PAYMENTS
12.1. Setoff............................................................ 72
12.2. Ratable Payments.................................................. 72
ARTICLE XIII
BENEFITS OF AGREEMENT; ASSIGNMENTS; PARTICIPANTS
13.1. Successors and Assigns............................................ 72
13.2. Participations.................................................... 73
13.3. Assignments....................................................... 74
13.4. Dissemination of Information...................................... 75
13.5. Tax Treatment..................................................... 75
ARTICLE XIV
NOTICES
14.1. Giving Notice..................................................... 76
14.2. Change of Address................................................. 76
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<PAGE>
THIS AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT, dated as of
May 11, 1995, is among LOEWEN GROUP INTERNATIONAL, INC., as the Borrower, THE
LOEWEN GROUP INC., as a Guarantor, THE BANKS NAMED HEREIN, as the Lenders, and
THE FIRST NATIONAL BANK OF CHICAGO, as the Agent. The parties hereto agree as
follow s:
ARTICLE I
DEFINITIONS
1.1. Certain Defined Terms. As used in this Agreement the following
---------------------
terms shall have the following meanings, such meanings being equally applicable
to both the singular and plural forms of the terms defined:
"A Advance" means a borrowing consisting of simultaneous A Loans of
---------
the same Type and denominated in the same currency made to the Borrower by each
of the Lenders pursuant to Section 2.1, for, in the case of Fixed Rate Advances,
-----------
the same Interest Period.
"A Advance Borrowing Notice" has the meaning specified in Section 2.6.
-------------------------- -----------
"A Loan" means a loan by a Lender to the Borrower as part of an A
------
Advance.
"A Note" means a promissory note of the Borrower payable to the order
------
of any Lender, in substantially the form of Exhibit A-1 hereto, evidencing the
-----------
aggregate indebtedness of the Borrower to such Lender resulting from the A Loans
made by such Lender to the Borrower.
"Absolute Rate Auction" has the meaning specified in Section
--------------------- -------
2.10(b)(i).
----------
"Acquisition" means any transaction, or any series of related
-----------
transactions, by which the Company or any of its Subsidiaries (a) acquires any
going business or all or substantially all of the assets of any firm,
corporation or division thereof which constitutes a going business, whether
through purchase of assets, merger or otherwise or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership interests of a partnership.
"Advance" means an A Advance or a B Advance.
-------
"Affiliate" of any Person means any other Person directly or
---------
indirectly controlling, controlled by or under common control with such Person.
A Person shall be deemed to control
<PAGE>
another Person if the controlling Person owns 10 or more of any class of voting
securities (or other ownership interests) of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
stock, by contract or otherwise.
"Agent" means First Chicago in its capacity as agent for the Lenders
-----
pursuant to Article XI, and not in its capacity as a Lender, and any successor
----------
Agent appointed pursuant to Article XI.
----------
"Aggregate Commitment" means the aggregate of the Commitments of all
--------------------
the Lenders, as reduced from time to time pursuant to the terms hereof.
"Aggregate One-Year Commitment" means the "Aggregate Commitment" under
-----------------------------
and as defined in the One-Year Credit Agreement from time to time.
"Agreement" means this Amended and Restated Multicurrency Credit
---------
Agreement, as it may from time to time be further amended, restated,
supplemented or otherwise modified.
"Agreement Accounting Principles" means GAAP as in effect from time to
-------------------------------
time, applied in a manner consistent with that used in preparing the financial
statements referred to in Section 6.4.
-----------
"Alternate Base Rate" means, for any day, a rate of interest per annum
-------------------
equal to the higher of (a) the Corporate Base Rate for such day and (b) the sum
of Federal Funds Effective Rate for such day plus 0.50% per annum.
"Alternative currency" means any lawful currency other than Dollars
--------------------
to the extent such currency is readily available in the London interbank market
as a eurocurrency and freely transferable and convertible into Dollars in the
London interbank market, provided, however, that for purposes of A Advances
-----------------
hereunder, no currency shall be an Alternative Currency unless it is readily
available to each of the Lenders in the London interbank market as a
eurocurrency.
"Applicable Commitment Fee Rate" means a per annum rate determined
------------------------------
from time to time by reference to the Company's senior unsecured long-term debt
rating as specified in Schedule 2. Any change in the Applicable Commitment Fee
----------
Rate resulting from a change in the Company's debt ratings will take effect as
of the date of the debt ratings change.
"Applicable Margin" means a per annum rate determined from time to
-----------------
time by reference to the Company's senior unsecured long-term debt rating as
specified in Schedule 2. Any change in the Applicable Margin resulting from a
----------
change in the Company's
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<PAGE>
debt ratings will take effect as of the date of the debt ratings change.
"Article" means an article of this Agreement unless another document
-------
is specifically referenced.
"Assessment Rate" means, for any CD Interest Period, the assessment
---------------
rate per annum (rounded upwards to the next higher multiple of 1/100 of 1% if
the rate is not such a multiple) payable to the Federal Deposit Insurance
Corporation (or any successor) by a member of the Bank Insurance Fund which is
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. (S)327.4(a) (or any successor provision) for the insurance of time
deposits at the offices of such institution in the United States, as estimated
by the Agent on the first day of such Interest Period.
"Authorized Officer" means (a) with respect to the Company, any of the
------------------
President, Executive Vice President, Senior Vice President or Treasurer of the
Company, or any Person designated by any two of the foregoing, acting singly and
(b) with respect to the Borrower any of the President, Executive Vice President,
Senior Vice President or Treasurer of the Borrower, or any Person designated by
any two of the foregoing, acting singly.
"B Advance" means a borrowing consisting of simultaneous B Loans
---------
denominated in the same currency to the Borrower from each of the Lenders whose
offer to make a B Advance as part of such borrowing has been accepted by the
Borrower under the applicable auction bidding procedure described in Section
-------
2.10.
----
"B Advance Borrowing Notice" has the meaning specified in Section
-------------------------- -------
2.10(b)(i).
----------
"B Loan" means a loan by a Lender to the Borrower denominated in
------
Dollars or the Alternative Currency as part of a B Advance resulting from the
applicable auction bidding procedure described in Section 2.10.
------------
"B Note" means a promissory note of the Borrower payable to the order
------
of any Lender, in substantially the form of Exhibit A-2 hereto, evidencing the
-----------
indebtedness of the Borrower to such Lender resulting from the B Loans made by
such Lender to the Borrower.
"B Reduction" has the meaning specified in Section 2.1.
----------- -----------
"Borrower" means Loewen Group International, Inc., a Delaware
--------
corporation, and its successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
--------------
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<PAGE>
"Borrowing Notice" means an A Borrowing Notice or a B Borrowing
----------------
Notice.
"Business Day" means (a) with respect to any borrowing, payment or
------------
rate selection of Eurocurrency Advances, a day (other than a Saturday or Sunday)
on which banks generally are open in Chicago, New York, Vancouver, London and,
in the case of any Eurocurrency Advance denominated in an Alternative Currency,
the principal financial center of the country of such Alternative Currency, for
the conduct of substantially all of their commercial lending activities and (b)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago, New York and Vancouver for the conduct of
substantially all of their commercial lending activities.
"Canadian GAAP" means generally accepted accounting principles in
-------------
Canada at the time.
"Canadian Plan" means a pension plan provided by the Company or any
-------------
other Subsidiary incorporated under the laws of Canada or any Province of
Canada.
"Capitalized Lease" of a Person means any lease of Property by such
-----------------
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
-----------------------------
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"CD Interest Period" means, with respect to a Fixed CD Rate Advance,
------------------
a period of 30, 60, 90 or 180 days commencing on a Business Day selected by the
Borrower pursuant to this Agreement. If such CD Interest Period would end on a
day which is not a Business Day, such CD Interest Period shall end on the next
succeeding Business Day.
"Change of Control" means an event which shall be deemed to have
-----------------
occurred if, during any period of 12 consecutive calendar months, individuals
(a) who were directors of the Company on the first day of such period, or (b)
whose election or nomination for election to the board of directors of the
Company was recommended or approved by at least a majority of the directors then
still in office who were directors of the Company on the first day of such
period, or whose election or nomination for election was so approved, shall
cease to constitute a majority of the board of directors of the Company.
"Chief Financial Officer" means, at any time, the Person who reports
-----------------------
to the board of directors of the Company on the financial affairs of the Company
and the Subsidiaries.
-4-
<PAGE>
"Class B Invested Amount" has the meaning specified in the Pooling and
-----------------------
Servicing Agreement dated as of November 15, 1994, among The First National Bank
of Atlanta, d/b/a Wachovia Bank Card Services, as seller, Wachovia Bank of
Georgia, N.A., as servicer and Banc One Columbus, N.A., as trustee.
"Code" means the Internal Revenue Code of 1986, as amended, reformed
----
or otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to
----------
make A Loans not exceeding the amount set forth opposite its signature below or
as set forth in any Notice of Assignment relating to any assignment that has
become effective pursuant to Section 13.3.2, as such amount may be modified from
--------------
time to time pursuant to the terms hereof.
"Company" means The Loewen Group Inc., a corporation incorporated
-------
under the laws of the Province of British Columbia, Canada.
"Condemnation" has the meaning specified in Section 8.8.
------------ -----------
"Consolidated Distributable Amount" means, at any time of
---------------------------------
determination, the sum of, without duplication,
(a) $10,000,000, plus
(b) 50% of Consolidated Net Income (or if such Consolidated Net Income
is a deficit figure, then minus 100% of such deficit) determined on a cumulative
basis for the period commencing on January 1, 1994, and ending on the date of
determination. plus
(c) any return in cash of capital from any Investment of the Company
or the Borrower or any other Subsidiary made pursuant to Section 7.16(n) upon
---------------
actual realization thereof up to an amount not to exceed the book value of such
Investment (or if such Investment has resulted in a loss, then minus 100% of
such loss upon actual realization thereof up to an amount not to exceed the book
value of such Investment), excluding, in any event, income, profits or earnings
from any such Investment, determined on a cumulative basis for the period
commencing on January 1, 1994, to and including the date of determination, plus
(d) 50% of the aggregate amount of the net cash proceeds received by
the Company and the Borrower and the other Subsidiaries from the issuance or
sale on or after January 1, 1994, (other than sales or issuances to the Company
or the Borrower or any other Subsidiary) of capital stock of the Company or
Indebtedness of the Company, the Borrower or any other Subsidiary which has been
converted into capital stock of the Company.
-5-
<PAGE>
"Consolidated Fixed Charges" for any period shall mean on a
--------------------------
consolidated basis all interest (including the interest component of Capitalized
Lease Obligations) and all amortization of debt discount and expense on all
Indebtedness of the Company and the Borrower and the other Subsidiaries for such
period.
"Consolidated Funded Debt" means at any time of determination, all
------------------------
Funded Debt of the Company, the Borrower and the other Subsidiaries at such time
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" for any period shall mean the gross revenues
-----------------------
of the Company and the Borrower and the other Subsidiaries for such period less
all expenses and other proper charges (including taxes on income), determined on
a consolidated basis after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other disposition of
Investments of fixed or capital assets, and any taxes on such excluded gains and
any tax deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Subsidiary accrued prior to the
date it became a Subsidiary;
(d) net earnings and losses of any corporation (other than a
Subsidiary) substantially all the assets of which have been acquired in any
manner by the Company or any Subsidiary, realized by such corporation prior to
the date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Subsidiary) with which the Company or a Subsidiary shall have consolidated or
which shall have merged into or amalgamated with the Company or a Subsidiary
prior to the date of such consolidation, merger or amalgamation;
(f) net earnings of any business entity (other than a Subsidiary) in
which the Company or any Subsidiary has an ownership interest unless such net
earnings shall have actually been received by the Company or such Subsidiary in
the form of cash distributions;
(g) any portion of the net earnings of any Subsidiary which for any
reason is unavailable for payment of dividends to the Company or any other
Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or write-up
of assets;
-6-
<PAGE>
(i) any deferred or other credit representing any excess of the equity
in any Subsidiary at the date of the acquisition thereof over the amount
invested in such Subsidiary;
(j) any gain or loss arising from the acquisition of any securities of
the Company or any Subsidiary;
(k) any reversal of any contingency reserve, except to the extent that
provision for such contingency reserve shall have been made from income arising
during such period; and
(l) any other unusual or extraordinary gain.
"Consolidated Net Worth" means, as of the date of any determination
----------------------
thereof, the amount of the shareholders' equity of the Company and the Borrower
and the other Subsidiaries as would be shown on the consolidated balance sheet
of the Company and the Borrower and the other Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Consolidated Tangible Net Worth" means, as of the date of any
-------------------------------
determination thereof, (a) Consolidated Net Worth as of such date, less (b) the
amount (to the extent reflected in determining Consolidated Net Worth) of (i)
all write-ups (other than write-ups resulting from foreign currency translations
and write-ups of assets of a going concern business made within 12 months after
the acquisition of such business) subsequent to December 31, 1993, in the book
value of any asset owned by the Company, the Borrower or any other Subsidiary
and (ii) all unamortized debt discount and expense, all unamortized deferred
charges, goodwill, covenants not to compete, names and reputations, patents,
trademarks, service marks, trade names, copyrights, organization or
developmental expenses and other intangible items.
"Contingent Obligation" of a Person means any agreement, undertaking
---------------------
or arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a Letter of Credit; provided,
--------
however, that notwithstanding the foregoing, the WLSP Contingent Obligation
-------
shall not constitute a Contingent Obligation of the Company, the Borrower or any
other Subsidiary for any purpose under this Agreement so long as the Class B
Invested Amount at least equals $12,000,000.
"Conversion/Continuation Notice" has the meaning specified in Section
------------------------------ -------
2.7.
---
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<PAGE>
"Controlled Group" means all members of a controlled group of
----------------
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Corporate Base Rate" means a rate per annum equal to the corporate
-------------------
base rate of interest announced by First Chicago from time to time, changing
when and as said corporate base rate changes.
"Debt" of any Person means and includes all obligations of such Person
----
for money borrowed which in accordance with GAAP shall be classified upon a
balance sheet of such Person as liabilities of such Person, and in any event
shall include (a) all Capitalized Lease Obligations of such Person and (b) all
Contingent Obligations of such Person with respect to obligations of others of
the character referred to in this definition, but shall exclude (i) notes, bills
and checks presented in the ordinary course of business by such Person to banks
for collection or deposit and (ii) with reference to the Company, the Borrower
and the other Subsidiaries, all obligations of the Company, the Borrower and the
other Subsidiaries of the character referred to in this definition to the extent
owing to the Company, the Borrower or any other Subsidiary.
"Default" means an event described in Article VIII.
------- ------------
"Distribution" in respect of any corporation shall mean (a) dividends
------------
or other distributions on capital stock of the corporation (except dividends or
other distributions payable solely in shares of capital stock), and (b) the
redemption, retirement or acquisition of such stock or of warrants, rights or
other options to purchase such stock (except when solely in exchange for such
stock).
"Distribution Date" has the meaning specified in Section 7.10(c)
----------------- ---------------
"Dollar Amount" means in relation to any indebtedness (a) if
-------------
denominated in Dollars, the amount of such indebtedness and (b) if denominated
in a currency other than Dollars, the amount of Dollars required to purchase the
amount of such indebtedness at the Exchange Rate on the day such Dollar Amount
is determined.
"Dollars" and "S" mean the lawful money of the United States.
-------- ---
"Duff & Phelps" means Duff & Phelps Credit Rating Co.
-------------
"EBITDA" for any period shall mean the sum of (a) Consolidated Net
------
Income during such period, plus (to the extent deducted in determining
consolidated Net Income) (b) all
-8-
<PAGE>
provisions for any income or similar taxes paid or accrued by the Company and
the Borrower and the other Subsidiaries during such period, (c) depreciation,
depletion and amortization for such period, (d) other non-cash charges, and (e)
Consolidated Fixed Charges of the Company and the Borrower and the other
Subsidiaries during such period.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any rule or regulation issued thereunder.
"Eurocurrency Advance" means an A Advance denominated in Dollars or an
--------------------
Alternative Currency that bears interest at a Eurocurrency Rate.
"Eurocurrency Base Rate" means, with respect to a Eurocurrency Advance
----------------------
for the relevant Eurocurrency Interest Period, (a) the per annum rate for
deposits in Dollars or the relevant Alternative Currency, as applicable, for a
period corresponding to the duration of the relevant Eurocurrency Interest
Period, which appears on Telerate Page 3740 or Telerate Page 3750, as
applicable, at approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Eurocurrency Interest Period and (b) if such rate does not
appear on Telerate Page 3740 or Telerate Page 3750, as applicable, on such day,
the per annum rate at which deposits in Dollars or the relevant Alternative
Currency, as applicable, are offered by First Chicago to first-class banks in
the London interbank market at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Eurocurrency Interest Period, in
the approximate amount of First Chicago's relevant Eurocurrency Loan and having
a maturity approximately equal to such Eurocurrency Interest Period. The
references to Telerate Page 3740 and Telerate Page 3750 in this definition shall
be construed to be a reference to the relevant page or any other page that may
replace such page on the Telerate service or any other service that may be
nominated by the British Bankers' Association as the information vendor for the
purpose of displaying British Bankers Association Interest Settlement Rates for
the relevant currency.
"Eurocurrency Interest Period" means, with respect to a Eurocurrency
----------------------------
Advance, a period of one, two, three or six months commencing on a Business Day
selected by the Borrower pursuant to this Agreement. Such Eurocurrency Interest
Period shall end on (but exclude) the day which corresponds numerically to such
date one, two, three or six months thereafter, unless there is no such
numerically corresponding day in such next, second, third or sixth succeeding
month, in which case such Eurocurrency Interest Period shall end on the last
Business Day of such next, second, third or sixth succeeding month. If a
Eurocurrency Interest Period would otherwise end on a day which is not a
Business Day, such Eurocurrency Interest Period shall end on the next succeeding
Business Day, unless said next succeeding Business Day falls in a new calendar
month, in which case such Eurocurrency
-9-
<PAGE>
Interest Period shall end on the immediately preceding Business Day.
"Eurocurrency Loan" means an A Loan denominated in Dollars or an
-----------------
Alternative Currency which bears interest at a Eurocurrency Rate.
"Eurocurrency Rate" means, with respect to a Eurocurrency Advance for
-----------------
the relevant Eurocurrency Interest Period, the sum of (a) the quotient of (i)
the Eurocurrency Base Rate applicable to such Eurocurrency Interest Period,
divided by (ii) one minus the Reserve Requirement (expressed as a decimal)
applicable to such Eurocurrency Interest Period, plus (b) the Applicable Margin
in effect from time to time during such Eurocurrency Interest Period. The
Eurocurrency Rate shall be rounded to the next higher multiple of 1/16 of 1% if
the rate is not such a multiple.
"Exchange Rate" means, in relation to the purchase of one currency
-------------
(for purposes of this definition, the "first currency") with another currency
----------------
(for purposes of this definition, the "second currency") on a given date, the
-----------------
spot rate of exchange quoted by the Agent for the amount in question on such
date for the purchase of the first currency with the second currency.
"Extension Notification Date" has the meaning specified in Section
--------------------------- -------
2.19.
----
"Extension Request" has the meaning specified in Section 2.19.
----------------- ------------
"Facility Termination Date" means May 11, 2000, or such later date in
-------------------------
effect from time to time as the Facility Termination Date, determined in
accordance with the procedures described in Section 2.19.
------------
"Fair Value" means the value of the relevant asset determined in an
----------
arm's-length transaction conducted in good faith between an informed and willing
buyer and an informed and willing seller under no compulsion to buy.
"Federal Funds Effective Rate" means, for any day, an interest rate
----------------------------
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
-10-
<PAGE>
"Financial Undertaking" of a Person means (a) any repurchase
---------------------
obligation or liability of such Person or any of its Subsidiaries with respect
to accounts or notes receivable sold by such Person or any of its Subsidiaries,
(b) any liability under any sale and leaseback transactions which do not create
a liability on the consolidated balance sheet of such Person and its
Subsidiaries, (c) obligations arising with respect to any other transaction
which is the functional equivalent of or takes the place of borrowing but which
does not constitute a liability on the consolidated balance sheets of such
Person and its Subsidiaries or (d) net liabilities under any agreements,
devices or arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange transactions,
including, but not limited to, interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options.
"First Chicago" means The First National Bank of Chicago in its
-------------
individual capacity, and its successors.
"Fixed CD Base Rate" means, with respect to a Fixed CD Rate Advance for
------------------
the relevant CD Interest Period, the rate determined by the Agent to be the
arithmetic average of the prevailing bid rates quoted to the Agent at or before
10:00 a.m. (Chicago time) on the first day of such CD Interest Period by three
New York or Chicago certificate of deposit dealers of recognized standing
selected by the Agent in its sole discretion for the purchase at face value of
certificates of deposit of First Chicago in the approximate amount of First
Chicago's relevant Fixed CD Rate Loan and having a maturity approximately equal
to such CD Interest Period.
"Fixed CD Rate" means, with respect to a Fixed CD Rate Advance for the
-------------
relevant CD Interest Period, a rate per annum equal to the sum of (a) the
quotient of (i) the Fixed CD Base Rate applicable to such CD Interest Period,
divided by (ii) one minus the Reserve Requirement (expressed as a decimal)
applicable to such CD Interest Period, plus (b) the Assessment Rate applicable
to such CD Interest Period, plus (c) the Applicable Margin in effect from time
to time during such CD Interest Period. The Fixed CD Rate shall be rounded to
the next higher multiple of 1/100 of 1% if the rate is not such a multiple.
"Fixed CD Rate Advance" means an A Advance denominated in Dollars
---------------------
which bears interest at a Fixed CD Rate.
"Fixed CD Rate Loan" means an A Loan denominated in Dollars which
-------------------
bears interest at a Fixed CD Rate.
"Fixed Rate" means the Fixed CD Rate or the Eurocurrency Rate.
----------
-11-
<PAGE>
"Fixed Rate Advance" means an A Advance which bears interest at a
------------------
Fixed Rate.
"Fixed Rate Loan" means an A Loan which bears interest at a Fixed Rate.
---------------
"Floating Rate" means, for any day, a rate per annum equal to the
-------------
Alternate Base Rate for such day, changing when and as the Alternate Base Rate
changes.
"Floating Rate Advance" means an A Advance denominated in Dollars which
---------------------
bears interest at the Floating Rate.
"Floating Rate Loan" means an A Loan denominated in Dollars which bears
------------------
interest at the Floating Rate.
"Funded Debt" of any Person means, without duplication, (a) all Debt
-----------
of such Person having a final maturity of one year or more than one year from
the date of determination thereof (or which is renewable or extendible at the
option of the obligor for a period or periods more than one year from the date
of determination), (b) all Capitalized Lease Obligations of such Person and (c)
all Contingent Obligations of such Person with respect to Funded Debt of
others. In addition, Funded Debt of the Borrower shall include all Debt
outstanding under this Agreement and the Notes and all Debt outstanding under
the One-Year Credit Agreement and the notes referenced therein
"GAAP" means the generally accepted accounting principles as generally
----
applied by the Company as at December 31, 1994, and thereafter, Canadian GAAP
until such time as the Company and the Borrower shall prepare their respective
books of record and account in accordance with U.S. GAAP, at which time and at
all times thereafter, "GAAP" shall mean U.S. GAAP.
----
"Governmental Authority" means any country or nation, any political
----------------------
subdivision of such country or nation, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government of any country or nation or political subdivision thereof.
"Guarantor" means each of the Company, LFC and Neweol and their
---------
respective successors and assigns.
"Guaranty" means each of (a) the TLGI Guaranty; (b) the LFC Guaranty;
and (c) the Neweol Guaranty.
"Indebtedness" of a Person means, without duplication, such Person's
------------
(a) obligations for borrowed money, (b) obligations representing the deferred
purchase price of Property or services (other than accounts payable arising in
the ordinary course of such Person's business payable on terms customary in the
trade), (c) obligations, whether or not assumed, secured by Liens or payable
out of the proceeds or production from property now or
-12-
<PAGE>
hereafter owned or acquired by such Person, (d) obligations which are evidenced
by notes, acceptances, or other instruments, (e) Capitalized Lease Obligations,
(f) Financial Undertakings, (g) Contingent Obligations and (h) obligations
under or in connection with a Letter of Credit; but excluding, in any event,
(i) amounts payable by such Person in respect of covenants not to compete, and
(ii) with reference to the Company, the Borrower and the other Subsidiaries,
all obligations of the Company, the Borrower and the other Subsidiaries of the
character referred to in this definition to the extent owing to the Company,
the Borrower or any other Subsidiary.
"Indexed Rate Auction" has the meaning specified in Section 2.10(b)(i)
-------------------- ------------------
"Interest Period" means a CD Interest Period or a Eurocurrency
---------------
Interest Period.
"Investment" of a Person means any loan, advance (other than
----------
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade), deposit account or contribution of capital by such Person to any other
Person or any investment in, or purchase or other acquisition of, the stock,
partnership interests, notes, debentures or other securities of any other
Person made by such Person.
"Lenders" means the lending institutions listed on the signature
-------
pages of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender, any office,
--------------------
branch, subsidiary or affiliate of such Lender.
"Letter of Credit" of a Person means a letter of credit or similar
----------------
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"LFC" means Loewen Financial Corporation, a company incorporated
---
under the laws of Barbados.
"LFC Guaranty" means that certain Guaranty dated as of February 16,
------------
1994, executed by LFC in favor of the Agent and the Lenders, as it may be
amended or modified and in effect from time
to time.
"Lien" means any lien (statutory or other), mortgage, pledge,
----
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (Including, without limitation, the interest of a vendor or
-13-
<PAGE>
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"LMIC" means Loewen Management Investment Corporation, a Delaware
----
corporation and a Wholly-Owned Subsidiary of the Borrower.
"Loan" means an A Loan or a B Loan.
----
"Loan Documents" means this Agreement, the Notes and the Guaranties
--------------
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Company, the Borrower and the other Subsidiaries taken as a
whole, (b) the ability of the Company, the Borrower, LFC and Neweol to perform
their respective obligations under the Loan Documents, or (c) the validity or
enforceability of any of the Loan Documents or the rights or remedies of the
Agent or the Lenders thereunder
"Minority Interests" means any shares of stock of any class of a
------------------
Subsidiary (other than directors' qualifying shares as required by law or
shares of stock having no right to vote or receive dividends) that are not
owned by the Company and/or one or more of its Subsidiaries. Minority Interests
shall be valued by valuing Minority Interests constituting preferred stock at
the voluntary or involuntary liquidating value of such preferred stock,
whichever is greater, and by valuing Minority Interests constituting common
stock at the book value of capital and surplus applicable thereto adjusted, if
necessary, to reflect any changes from the book value of such common stock
required by the foregoing method of valuing Minority Interests in preferred
stock.
"MIPS" means the 9.45% Cumulative Monthly Income Preferred Securities,
----
Series A, issued by Loewen Group Capital, L.P. and the related Series A Junior
Subordinated Debentures issued by the Borrower and purchased by Loewen Group
Capital, L.P. with the proceeds of the sale of the 9.45% Cumulative Monthly
Income Preferred Securities, Series A.
"Moody's" means Moody's Investors Service, Inc.
-------
"Multiemployer Plan" means a Plan maintained pursuant to a collective
-------------------
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"Neweol" means Neweol Finance B.V., a company incorporated under the
------
laws of the Netherlands.
-14-
<PAGE>
"Neweol Guaranty" means that certain Guaranty dated as of February
---------------
16, 1994, executed by Neweol in favor of the Agent and the Lenders, as it may
be amended or modified and in effect from time to time.
"Non-Consenting Lender" has the meaning specified in Section 2.19.
--------------------- ------------
"Note" means an A Note or a B Note.
----
"Note Agreements" means the agreements dated for reference October 1,
---------------
1991, and September 1, 1993, and any and all other warrant agreements and/or
note agreements from time to time entered into by the Company, the Borrower, or
either of them, and the relevant holders of notes issued and sold thereunder,
in each case as may be amended, supplemented or otherwise modified from time to
time.
"Notice of Assignment" has the meaning specified in Section 13.3.2.
--------------------
--------------
"Obligations" means all unpaid principal of and accrued and unpaid
-----------
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the
Lenders or to any Lender, the Agent or any indemnified party hereunder arising
under the Loan Documents.
"One-Year Credit Agreement" means the $100,000,000 Multicurrency Credit
-------------------------
Agreement dated as of May 11, 1995, among the Company, the Borrower, the
financial institutions parties thereto as Lenders and The First National Bank
of Chicago, as agent, as amended, restated, supplemented or otherwise modified
from time to time.
"Original Credit Agreement" means the $200,000,000 Multicurrency Credit
-------------------------
Agreement dated as of February 16, 1994, among the Company, the Borrower, the
financial institutions parties thereto as lenders and The First National Bank
of Chicago, as agent, as amended, supplemented or otherwise modified prior to
the date hereof.
"Participants" has the meaning specified in Section 13.2.1.
------------ --------------
"Payment Office" means (a) for Dollars, the principal office of the
--------------
Agent in Chicago, Illinois, located on the date hereof at One First National
Plaza, Chicago, Illinois 60670 or such other office of the Agent as the Agent
may from time to time designate by written notice to the Borrower and the
Lenders and (b) for any Alternative Currency, such office of the Agent as the
Agent may from time to time designate by written notice to the Borrower and
the Lenders.
-15-
<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation or any
----
successor thereto.
"Permitted Acquisition" means any Acquisition made by the Company, the
---------------------
Borrower or any other Subsidiary from a willing seller or other transferee.
"Person" means any natural person, corporation, firm, joint venture,
------
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
----
IV of ERISA or subject to the minimum funding standards under Section 412 of
the Code as to which the Borrower or any member of the Controlled Group may
have any liability.
"Prepayment Notice" has the meaning specified in Section 2.5.
----------------- -----------
"Process Agent" has the meaning specified in Section 10.13.
------------- -------------
"Property" of a Person means any and all property, whether real,
--------
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Purchasers" has the meaning specified in Section 13.3.1.
---------- --------------
"Regional Partner" means any Subsidiary, all of the outstanding voting
----------------
securities of which and all of the outstanding shares entitled to receive
dividends of which, shall at the time be owned or controlled, directly or
indirectly, by the Company or a Wholly-Owned Subsidiary of the Company.
"Requlation D" means Regulation D of the Board of Governors of the
------------
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by banks for the purpose of purchasing or carrying
margin stocks applicable to member banks of the Federal Reserve System.
"Relevant Tax" has the meaning specified in Section 5.7
------------ -----------
-16-
<PAGE>
"Rentals" of a Person means the aggregate fixed amounts payable by
-------
such Person under any lease of Property having an original term (including any
required renewals or any renewals at the option of the lessor or lessee) of one
year or more.
"Reportable Event" means a reportable event as defined in Section 4043
----------------
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event; provided, however, that a failure to meet the
-------- -------
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of
the notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least 66-
----------------
2/3% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 66-2/3% of the aggregate
unpaid principal amount of the outstanding Advances.
"Reserve Requirement" means, with respect to a CD Interest Period or a
-------------------
Eurocurrency Interest Period, the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed under Regulation D on new non-personal time deposits of $100,000 or
more with a maturity equal to that of such CD Interest Period (in the case of
Fixed CD Rate Advances) or on Eurocurrency liabilities (in the case of
Eurocurrency Advances).
"Section" means a numbered section of this Agreement, unless another
-------
document is specifically referenced.
"Specified Remittance Time" means (a) if the relevant Payment Office is
-------------------------
located in Chicago, 12:00 noon (Chicago time) and (b) if the relevant Payment
Office is located elsewhere, such time as the Agent shall specify after
consultation with the Borrower and the lenders.
"Standard & Poor's" means Standard & Poor's Ratings Group, a division
-----------------
of McGraw-Hill, Inc.
"Single Employer Plan" means a Plan maintained by the Borrower or any
--------------------
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Subsidiary" of a Person means (a) any corporation more than 50% of the
----------
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (b) any partnership, association, joint venture
-17-
<PAGE>
or similar business organization more than 50% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Company.
"Substantial Portion" means, with respect to the Property of the
-------------------
Company and the Borrower and the other Subsidiaries, Property that has a Fair
Value representing more than 5% of Consolidated Tangible Net Worth determined
as of the end of the fiscal quarter of the Company most recently ended prior to
the date on which such determination is made.
"Taxing Jurisdiction" has the meaning specified in Section 5.7.
------------------- -----------
"TLGI Guaranty" means the guaranty, pursuant to Article V of this
------------- ---------
Agreement, of the Obligations of the Borrower hereunder by the Company in favor
of the Agent and the Lenders.
"Transferee" has the meaning specified in Section 13.4.
---------- ------------
"Type" means, (a) with respect to any A Loan, its nature as a
----
Floating Rate Loan, Eurocurrency Loan or Fixed CD Rate Loan and (b) with
respect to any A Advance, its nature as a Floating Rate Advance, Eurocurrency
Advance or Fixed CD Rate Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
--------------------
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the Fair Value of all such Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans.
"United States" and "U.S." mean the United States of America.
------------- ----
"Unmatured Default" means an event which but for the lapse of time or
-----------------
the giving of notice, or both, would constitute a Default.
"U.S. GAAP" means generally accepted accounting principles in the
---------
United States at the time.
"Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all
-----------------------
of the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, association, joint venture
or similar business organization 100% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
-18-
<PAGE>
"WLSP Contingent Obligation" means the joint and several liability of
--------------------------
Neweol to repay the $160,273,742 Zero Coupon Note dated November 1, 1994,
executed by WLSP Investment Partners I, a partnership formed under the laws of
Switzerland, and payable to Wachovia Bank of Georgia, N.A.
1.2. Amendment and Restatement of Original Credit Agreement. The
------------------------------------------------------
Borrower, the Company, the financial institutions party to the Original Credit
Agreement as "Lenders" (each of which is a Lender hereunder) and the Agent
agree that upon (a) the execution and delivery of this Agreement by each of the
parties hereto and (b) satisfaction of the conditions precedent set forth in
Section 4.1, the terms and provisions of the Original Credit Agreement shall be
-----------
and hereby are amended, superseded and restated in their entirety by the terms
and provisions of this Agreement. All Advances made under the Original Credit
Agreement shall, (a) to the extent outstanding on the effective date hereof be
repaid with the proceeds of the initial Advances hereunder, it being understood
that the Borrower and each Guarantor shall remain liable pursuant to Section
-------
3.4 to indemnify each Lender against any loss or liability which that Lender
---
incurs as a consequence of such repayment and (b) otherwise be deemed to
constitute Advances under this Agreement. Upon the execution and delivery of
the Notes hereunder, the notes delivered under the Original Credit Agreement
shall be cancelled.
ARTICLE II
THE CREDITS
2.1. The A Loans. From and including the date of this Agreement and
-----------
prior to the Facility Termination Date, each Lender severally agrees, on the
terms and conditions set forth in this Agreement (including, without
limitation, the terms and conditions of Section 2.11 and Section 9.1 relating
------------ -----------
to the reduction, suspension or termination of the Aggregate Commitment), to
make A Loans to the Borrower from time to time in an aggregate Dollar Amount
not to exceed at any one time outstanding (except as otherwise contemplated in
Section 2.20) the amount of such Lender's Commitment; Provided, however, that
------------ -------- -------
the Aggregate Commitment shall be deemed used from time to time to the extent
of the aggregate amount of the B Loans then outstanding, and such deemed use of
the Aggregate Commitment shall be applied to the Lenders ratably according to
their respective Commitments (such deemed use of the aggregate amount of the
Commitments being a "B Reduction"). Subject to the terms of this Agreement
-----------
(including, without limitation, the terms and conditions of Section 2.11 and
------------
Section 9.1 relating to the reduction, suspension or termination of the
-----------
Aggregate Commitment), the Borrower may borrow, repay and reborrow A Loans at
any time prior to the Facility Termination Date. Unless earlier terminated in
accordance with the terms and conditions of this Agreement, the Commitments of
the Lenders to lend hereunder shall expire on the Facility Termination Date.
-19-
<PAGE>
2.2. Repayment of the A Loans. Any outstanding A Loans shall be paid
------------------------
in full by the Borrower on the Facility Termination Date; provided, however,
-------- -------
that nothing in this Section 2.2 shall be construed as limiting or modifying
------- ---
the obligation of the Borrower to repay any or all of the outstanding A Loans
at any earlier time in accordance with the terms of this Agreement.
2.3. Ratable Loans; Types of A Advances. Each A Advance hereunder shall
----------------------------------
consist of A Loans made from the several Lenders ratably in proportion to the
ratio that their respective Commitments bear to the Aggregate Commitment. Any A
Advance may be a Floating Rate Advance, a Fixed CD Rate Advance or a
Eurocurrency Advance, as the Borrower shall select in accordance with Sections
--------
2.6 and 2.7; provided, however, that the Eurocurrency Advances outstanding at
--- --- -------- -------
any time may not be denominated in more than three Alternative Currencies and
Dollars.
2.4. Minimum Amount of Each A Advance. Each A Advance shall, (a) in the
--------------------------------
case of an A Advance to be denominated in Dollars, be in a minimum amount not
less than $4,000,000 or an integral multiple of $1,000,000 in excess thereof
and (b) in the case of an A Advance to be denominated in an Alternative
Currency, be in such minimum amount comparable to the minimum amount specified
for A Advances denominated in Dollars in the foregoing clause (a) as shall be
advised by the Agent as being appropriate in light of the prevailing market
conditions and conventions at the time notice is given pursuant to Section 2.6
-----------
or 2.7; provided, however, that any A Advance may be in the account of the
--- -------- -------
unused Aggregate Commitment.
2.5. Optional Prepayments of A Loans. Subject to Section 3.4 hereof and
------------------------------- -----------
the requirements of Section 2.4 hereof, the Borrower may (a) following notice
-----------
given to the Agent by the Borrower, in the form attached hereto as Exhibit G (a
---------
"Prepayment Notice") by not later than 10:00 a.m. (Chicago time) on the date of
---------- ------
the proposed prepayment, such notice specifying the aggregate principal amount
of and the proposed date of the prepayment, and if such notice is given the
Borrower shall, prepay the outstanding principal amounts of the Floating Rate
Loans comprising part of the same A Advance in whole or ratably in part,
together with accrued interest to the date of such prepayment on the principal
amount prepaid and (b) following a Prepayment Notice given to the Agent by the
Borrower by not later than 10:00 a.m. (Chicago time) on (i) if the Advance to
be prepaid is a Fixed CD Rate Advance, the second Business Day preceding the
date of the proposed prepayment, (ii) if the Advance to be prepaid is a
Eurocurrency Advance denominated in Dollars, the third Business Day preceding
the date of the proposed prepayment and (iii) if the Advance to be prepaid is a
Eurocurrency Advance denominated in an Alternative Currency, the fourth
Business Day preceding the date of the proposed prepayment, such notice
specifying the Advance to be prepaid and the proposed date of the prepayment,
and if such notice is given
-20-
<PAGE>
such Borrower shall, prepay the outstanding principal amounts of the Fixed Rate
Loans comprising a Fixed Rate Advance in whole (and not in part), together with
accrued interest to the date of such prepayment on the principal amount
prepaid. In the case of a Floating Rate Advance, each partial prepayment shall
be in an aggregate principal amount not less than $1,000,000.
2.6. Method of Selecting Types and Interest Periods for New A Advances.
---------------------------------------------- ------------------
The Borrower shall select the Type of each A Advance and, in the case of a
Fixed Rate Advance, the Interest Period applicable to such A Advance from time
to time. The Borrower shall give the Agent irrevocable notice, in the form
attached hereto as Exhibit F-1 (an "A Advance Borrowing Notice"), not later
----------- --------------------------
than 10:00 a.m. (Chicago time) (i) on the Borrowing Date for each Floating Rate
Advance, (ii) at least two Business Days before the Borrowing Date for each
Fixed CD Rate Advance (iii) at least three Business Days before the Borrowing
Date for each Eurocurrency Advance denominated in Dollars and (iv) at least
four Business Days before the Borrowing Date for each Eurocurrency Advance
denominated in an Alternative Currency, specifying:
(a) the Borrowing Date, which shall be a Business Day, of such Advance,
(b) the aggregate amount of such Advance,
(c) the Type of such Advance and, if it is a Eurocurrency Advance,
whether such Advance is to be denominated in Dollars or a specified Alternative
Currency, and
(d) in the case of each Fixed Rate Advance, the Interest Period
applicable thereto.
Not later than the Specified Remittance Time on each Borrowing Date, each
Lender shall make available its Loan or Loans to the Agent in immediately
available funds at the relevant Payment Office. To the extent that the Agent
has received funds from the Lenders as specified in the preceding sentence, the
Agent will make such funds available to the Borrower at the relevant Payment
Office within two hours following the Specified Remittance Time, it being
understood that if the relevant Payment Office is located in Chicago, the Agent
will make the applicable funds available to the Borrower by depositing such
funds to such account with First Chicago as the Borrower shall designate.
2.7. Conversion and Continuation of Outstanding A Advances. Floating
-----------------------------------------------------
Rate Advances shall continue as Floating Rate Advances unless and until such
Floating Rate Advances are converted into Fixed Rate Advances or prepaid
pursuant to Section 2.5. Each Fixed Rate Advance of any Type shall continue as
-----------
a Fixed Rate Advance of such Type until the end of the then applicable
Interest Period therefor, at which time such Fixed
-21-
<PAGE>
Rate Advance shall be automatically converted into a Floating Rate Advance
unless the Borrower shall have given the Agent a Conversion/Continuation Notice
requesting that, at the end of such Interest Period, such Fixed Rate Advance
either continue as a Fixed Rate Advance of such Type for the same or another
Interest Period or be converted into an Advance of another Type, it being
-- -----
understood that if the Borrower fails either to repay or give the Agent a
----------
timely and valid Conversion/Continuation Notice with respect to any Fixed Rate
Advance denominated in an Alternative Currency prior to the end of the then
applicable Interest Period therefor, such Fixed Rate Advance shall be converted
into a Floating Rate Advance denominated in Dollars on the basis of the
applicable Exchange Rate in effect on the last day of such Interest Period.
Subject to the terms of Section 2.6, the Borrower may elect from time to time
------- ---
to convert all or any part of an A Advance of any Type into any other Type or
Types of Advances; provided that any conversion of any Fixed Rate Advance shall
be made on, and only on, the last day of the Interest Period applicable
thereto. The Borrower shall give the Agent irrevocable notice in the form of
Exhibit I hereto (a "Conversion/Continuation Notice") of each conversion of an
--------- ------------------------------
Advance or continuation of a Fixed Rate Advance not later than 10:00 a.m.
(Chicago time) (i) in the case of a conversion into a Floating Rate Advance on
the date of such conversion, (ii) in the case of a conversion into or
continuation of a Fixed CD Rate Advance, at least two Business Days before the
date of such conversion or continuation, (iii) in the case of a conversion into
or continuation of a Eurocurrency Advance denominated in Dollars, at least
three Business Days before the date of such conversion or continuation, and
(iv) in the case of a conversion into or continuation of a Eurocurrency Advance
denominated in an Alternative Currency, at least four Business Days before the
date of such conversion or continuation, specifying:
(a) the requested date, which shall be a Business Day, of such
conversion or continuation
(b) the aggregate amount and Type of the Advance which is to be
converted or continued; and
(c) the amount and Type(s) of Advance(s) into which such Advance is
to be converted or continued and, in the case of a conversion into or
continuation of a Fixed Rate Advance, the duration of the Interest Period
applicable thereto.
Except as otherwise contemplated above with respect to maturing Fixed Rate
Advances as to which the Borrower has not given the Agent a
Conversion/Continuation Notice, no A Advance denominated in one currency may be
continued as or converted into an A Advance denominated in another currency.
2.8. Payment of Interest on A Loans and A Advances. Interest accrued
---------------------------------------------
on each Floating Rate Advance shall be payable
-22-
<PAGE>
on the second Business Day following the 15th day (or if such 15th day is not a
Business Day, the next succeeding Business Day) of each calendar month and on
the earliest of the Facility Termination Date, the date of the reduction to
zero of the Aggregate Commitment pursuant to Section 2.11 and the date of the
------------
acceleration of the Obligations pursuant to Section 9.1 hereof. Interest
-----------
accrued on each Fixed Rate Advance shall be payable on the last day of its
applicable Interest Period, on any date on which the Fixed Rate Advance is
prepaid, whether by acceleration or otherwise, and at maturity. Interest
accrued on each Fixed Rate Advance having an Interest Period longer than three
months shall also be payable on the last day of each three-month interval
during such Interest Period. Interest on Floating Rate Advances shall be
calculated for actual days elapsed on the basis of a 365/366-day year. Interest
on Fixed Rate Advances shall be calculated for actual days elapsed on the basis
of a 360-day year. Interest shall be payable for the day an A Advance is made
but not for the day of any payment on the amount paid if payment is received
prior to noon (local time) at the place of payment. If any payment of principal
of or interest on an A Advance shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment.
2.9. Changes in Interest Rate, Etc. Each Floating Rate Advance shall
------------------------------
bear interest on the outstanding principal amount thereof, for each day from
and including the date such Advance is made or is converted from a Fixed Rate
Advance into a Floating Rate Advance pursuant to Section 2.9 to but excluding
-----------
the date it becomes due or is converted into a Fixed Rate Advance pursuant to
Section 2.9 hereof, at a rate per annum equal to the Floating Rate for such
-----------
day. Changes in the rate of interest on each A Advance maintained as a Floating
Rate Advance will take effect simultaneously with each change in the Alternate
Base Rate. Each Fixed Rate Advance shall bear interest from and including the
first day of the Interest Period applicable thereto to (but not including) the
last day of such Interest Period at the interest rate determined as applicable
to such Fixed Rate Advance. No Interest Period may end after the Facility
Termination Date.
2.10. The B Advances. (a) Each Lender severally agrees that, on the
--------------
terms and conditions set forth in this Agreement, the Borrower may request and
receive B Advances under this Section 2.10 from time to time on any Business
------------
Day during the period from the date hereof until the date occurring 30 days
prior to the Facility Termination Date in the manner set forth below; provided,
--------
however, that, following the making of each B Advance, the aggregate Dollar
-------
Amount of the Advances then outstanding shall not exceed the Aggregate
Commitment of the Lenders (computed without regard to any B Reduction).
-23-
<PAGE>
(b) The procedures for the solicitation and acceptance of B Loans are
set forth below:
(i) The Borrower may request a B Advance under this Section 2.10(b) by
---------------
giving the Agent irrevocable notice, in the form attached hereto as Exhibit F-2
-----------
(a "B Advance Borrowing Notice"), specifying the date and aggregate amount of
--------------------------
the proposed B Advance, whether the proposed B Advance is to be denominated in
Dollars or a specified Alternative Currency, the maturity date for repayment of
each B Loan to be made as part of such B Advance (which maturity date may not
be earlier than in the case of an Absolute Rate Auction, the date occurring
seven days, and in the case of an Indexed Rate Auction, the date occurring 30
days after the date of the related B Advance or later than, in either case, the
earlier of the day occurring 270 days after the date of such B Advance and the
Facility Termination Date), the interest payment date or dates relating
thereto, and any other terms to be applicable to such B Advance, not later than
10:00 a.m. (Chicago time) (A) one Business Day prior to the date of the
proposed B Advance, if the Borrower shall specify in the B Advance Borrowing
Notice that the rates of interest to be offered by the Lenders shall be
absolute rates per annum (such type of solicitation being an "Absolute Rate
-------- ----
Auction"), in which case such B Advance shall be denominated in Dollars and (B)
-------
five Business Days prior to the date of the proposed B Advance, if the Borrower
shall specify in the B Advance Borrowing Notice an index or other basis to be
used by the Lenders in determining the rates of interest to be offered by them
(such type of solicitation being an "Indexed Rate Auction") and that the
------------ -------
proposed B Advance is to be denominated in Dollars and (C) six Business Days
prior to the date of the proposed B Advance, if the Borrower instead specifies
in the B Advance Borrowing Notice an Indexed Rate Auction and that the proposed
B Advance is to be denominated in a specified Alternative Currency. The Agent
shall, promptly following its receipt of a B Advance Borrowing Notice under
this Section 2.lO(b) notify each Lender of such request by sending such Lender
----------------
a copy of such B Advance Borrowing Notice.
(ii) Each Lender may, if, in its sole discretion, it elects to do so,
irrevocably offer to make one or more B Loans to the Borrower as part of such
proposed B Advance at a rate or rates of interest specified by such Lender in
its sole discretion, by notifying the Agent (which shall give prompt notice
thereof to the Borrower), before 10:00 a.m. (Chicago time) (or if such Lender
is the Agent, before 9:45 a.m. (Chicago time)) (A) on the date of such proposed
B Advance, in the case of an Absolute Rate Auction, (B) four Business Days
-24-
<PAGE>
before the date of such proposed B Advance, in the case of an Indexed Rate
Auction for a B Advance denominated in Dollars and (C) five Business Days
before the date of such proposed B Advance, in the case of an Indexed Rate
Auction for a B Advance denominated in a specified Alternative Currency, of the
minimum amount and maximum amount of each B Loan which such Lender would be
willing to make as part of such proposed B Advance (which amounts may, subject
to the proviso to the first sentence of Section 2.10(a), exceed such Lender's
---------------
Commitment), the rate or rates of interest therefor and such Lender's Lending
Installation with respect to such B Loan.
(iii) The Borrower shall, in turn, before (A) 11:00 a.m. (Chicago
time) on the date of such proposed B Advance, in the case of an Absolute Rate
Auction, (B) 10:00 a.m. (Chicago time) three Business Days before the date of
such proposed B Advance, in the case of an Indexed Rate Auction for a B Advance
denominated in Dollars and (C) 10:00 a.m. (Chicago time) four Business Days
before the date of such proposed B Advance, in the case of an Indexed Rate
Auction for a B Advance denominated in a specified Alternative CurrencY,
either:
(x) cancel such B Advance by giving the Agent notice to that effect,
or
(y) accept, subject to Section 2.10(d), one or more of the offers
---------------
made by any Lender or Lenders pursuant to Section 2.10(b)(ii) above, in its
-------------------
sole discretion, by giving notice to the Agent of the amount of each B Loan
(which amount shall be equal to or greater than the minimum amount, and equal
to or less than the maximum amount, notified to the Borrower by the Agent on
behalf of such Lender for such B Loan pursuant to Section 2.10(b)(ii) above) to
------- -----------
be made by each Lender as part of such B Advance, and reject any remaining
offers made by Lenders pursuant to Section 2.10(b)(ii) above by giving the
------- -----------
Agent notice to that effect.
(iv) If the Borrower notifies the Agent that such B Advance is
cancelled pursuant to Section 2.10(b)(iii)(x) above, the Agent shall give
------- ---------------
prompt notice thereof to the Lenders and such B Advance shall not be made.
(v) If the Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to Section 2.10 b)(iii)(y) above, the Agent shall in
-----------------------
turn promptly notify (A) each Lender that has made an offer
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<PAGE>
as described in Section 2.10(b)(ii) above of the date, and aggregate
-------------------
amount of such B Advance and whether or not any offer or offers made
by such Lender pursuant to Section 2.10(b)(ii) above have been
-------------------
accepted by the Borrower and (B) each Lender that is to make a B Loan
as part of such B Advance, of the amount of each B Loan to be made by
such Lender as part of such B Advance. Each Lender that is to make a B
Loan as part of such B Advance shall, not later than the Specified
Remittance Time on the date of such B Advance specified in the notice
received from the Agent pursuant to clause (A) of the preceding
sentence, make available for the account of its Lending Installation
to the Agent at the relevant Payment Office such Lender's portion of
such B Advance, in same day funds. Upon fulfillment of the applicable
conditions set forth in Article IV and after receipt by the Agent of
----------
such funds, the Agent will make such funds available to the Borrower
at the Agent's aforesaid address. Promptly after each B Advance the
Agent will notify each Lender of the amount of the B Advance, the
consequent B Reduction and the dates upon which such B Reduction
commenced and will terminate.
(c) Each B Advance shall, (i) in the case of a B Advance to
be denominated in Dollars, be in an aggregate amount not less than
$4,000,000 or an integral multiple of $1,000,000 in excess thereof and
(ii) in the case of a B Advance to be denominated in an Alternative
Currency, be in such minimum amount as shall be advised by the Agent
as being appropriate in light of the prevailing market conditions and
conventions at the time notice is given pursuant to Section
-------
2.10(b)(i), and, following the making of each B Advance, the Borrower
----------
shall be in compliance with the limitation set forth in the proviso to
the first sentence of Section 2.10(a) above.
---------------
(d) Each acceptance by the Borrower pursuant to Section
-------
2.10(b)(iii)(y) of the offers made in response to a B Advance
---------------
Borrowing Notice shall be treated as an acceptance of such offers in
ascending order of the rates or margins, as applicable, at which the
same were made but if, as a result thereof, two or more offers at the
same such rate or margin would be partially accepted, then the amounts
of the B Loans in respect of which such offers are accepted shall be
treated as being the amounts which bear the same proportion to one
another as the respective amounts of the B Loans so offered bear to
one another but, in each case, rounded as the Agent may consider
necessary to ensure that the amount of each such B Loan is $500,000
(or, if the currency in which such B Loan is denominated is an
Alternative Currency, such comparable and convenient multiple thereof
as the Agent shall consider appropriate for the purpose) or an
integral multiple thereof.
(e) Within the limits and on the conditions set forth in
this Section 2.10, the Borrower may from time to time borrow
------------
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<PAGE>
under this Section 2.10, repay pursuant to Section 2.10(f) below, and reborrow
------------ ---------------
under this Section 2.10.
------------
(f) The Borrower shall repay to the Agent for the account of each
Lender which has made a B Loan to it, on the maturity date of each B Loan (such
maturity date being that specified by the Borrower for repayment of such B Loan
in the related B Advance Borrowing Notice), or, if earlier, the acceleration of
the Obligations pursuant to Section 9.1, the then unpaid principal amount of
-----------
such B Loan. The Borrower shall have no right to prepay any principal amount of
any B Loan unless, and then only on the terms, specified by the Borrower for
such B Loan in the related B Advance Borrowing Notice.
(g) The Borrower shall pay interest on the unpaid principal amount of
each B Loan made to it, from the date of such B Loan to the date the principal
amount of such B Loan is repaid in full, at the rate of interest for such B
Loan specified by the Lender making such B Loan in the related notice submitted
by such Lender pursuant to Section 2.10(b)(ii), payable on the interest payment
-------------------
date or dates specified by the Borrower for such B Loan in such B Advance
Borrowing Notice and on any date on which the such B Loan is prepaid, whether
by acceleration or otherwise. In the event the term of any B Loan shall be
longer than three months, interest thereon shall be payable not less frequently
than once each three-month period during such term.
2.11. Commitment Fee; Mandatory and Voluntary Reductions in Aggregate
--------------------------------------- -----------------------
Commitment. (a) The Borrower agrees to pay to the Agent for the account of each
----------
Lender a commitment fee at a rate per annum equal to the Applicable Commitment
Fee Rate in effect from time to time on the daily unborrowed portion of such
Lender's Commitment (determined without giving effect to any B Reduction) from
the date hereof to but excluding the earliest of the Facility Termination Date,
the date of the reduction to zero of the Aggregate Commitment pursuant to
Section 2.11 and the date of the termination of the Aggregate Commitment
------------
pursuant to Section 9.1 hereof. Such commitment fees shall be payable on the
-----------
second Business Day following the 15th day (or if such 15th day is not a
Business Day, the next succeeding Business Day) of each January, April, July
and October, and on the earliest of the Facility Termination Date, the date of
the reduction to zero of the Aggregate Commitment pursuant to Section 2.11 and
------------
the date of the termination of the Aggregate Commitment pursuant to Section 9.1
-----------
hereof. Commitment fees shall be calculated for actual days elapsed on the
basis of a 360-day year. In addition, as a condition to the effectiveness of
this Agreement, the Borrower shall pay to the Agent for the account of each
Lender, a one-time facility fee equal to 0.05% of the relevant Lender's
Commitment set forth opposite its signature below.
(b) If as of the end of any fiscal year of the Company, the aggregate
Fair Value of all Property, whether of the Company, the Borrower or any other
Subsidiary, sold during such
-27-
<PAGE>
fiscal year pursuant to Section 7.13(d) hereof exceeds the aggregate Fair Value,
---------------
as determined by the board of directors of the Company, of all consideration
actually paid during such fiscal year in respect of Acquisitions, by at least
$5,000,000, then within ten Business Days following the date on which the
Company delivers to the Agent financial statements in respect of such fiscal
year pursuant to Section 7.1(a) hereof, the Borrower will, by written notice to
--------------
the Agent given on or before the date such financial statements are delivered,
reduce the Aggregate Commitment by an amount equal to the product of (i) such
excess, rounded down to the nearest $100,000 and (ii) a fraction, having as its
numerator, the Aggregate Commitment on such date (determined before giving
effect to any reduction thereto on such date) and as its denominator, the sum of
the Aggregate Commitment on such date (determined before giving effect to any
reduction thereto on such date) and the Aggregate One-Year Commitment on such
date (determined before giving effect to any reduction thereto on such date).
Any such reduction in the Aggregate Commitment shall be allocated ratably among
the Lenders. To the extent that the amount of any such mandatory reduction of
the Aggregate Commitment exceeds the lesser of (1) the unused Aggregate
Commitment and (2) that portion of the unused Aggregate Commitment that could
actually be drawn, in either case, on the date of such mandatory reduction, the
Borrower shall, immediately prior to making such mandatory reduction of the
Aggregate Commitment, prepay the outstanding Advances (as selected by the
Borrower) in an amount at least equal to such excess; it being understood that
the Borrower and each Guarantor shall remain liable pursuant to Section 3.4 to
-----------
indemnify each Lender against any loss or liability which that Lender incurs as
a consequence of any prepayment under this Section 2.11(b).
---------------
(c) The Borrower may permanently reduce the Aggregate Commitment in whole, or
in part ratably among the Lenders in integral multiples of $10,000,000, upon at
least three Business Days' written notice to the Agent, which notice shall
specify the amount of any such reduction; provided, however, that the amount of
-------- -------
the Aggregate Commitment may not be reduced below the aggregate principal Dollar
Amount of the outstanding Advances.
2.12. Rates Applicable After Default. Notwithstanding anything to the contrary
------------------------------
contained in Section 2.8 or 2.9, during The continuance of a Default or
----------- ---
Unmatured Default no Advance may be made as, converted into or continued as a
Fixed Rate Advance, it being understood that in the case of any Fixed Rate
-- ----- ----------
Advance denominated in an Alternative Currency, such Fixed Rate Advance shall be
converted into a Floating Rate Advance denominated in Dollars on the basis of
the applicable Exchange Rate in effect on the last day of the then current
Interest Period applicable to such Fixed Rate Advance. During the continuance of
a Default pursuant to Section 8.2 and, if the Required Banks so elect, during
-----------
the continuance of any other Default, (a) each Fixed Rate Advance shall bear
interest until paid in full or converted to a Floating Rate Advance at the Fixed
Rate then applicable to such
-28-
<PAGE>
Advance plus 2% per annum, (b) each Floating Rate Advance shall bear interest
until paid in full at a rate per annum equal to the Floating Rate plus 2% per
annum and (c) each B Advance shall bear interest until paid in full at the
interest rate then applicable to such Advance plus 2% per annum.
2.13. Method of Payment. All payments of the Obligations hereunder
-----------------
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Agent at the Agent's address specified pursuant to
Article XIV, or at any other Lending Installation of the Agent specified in
-----------
writing by the Agent to the Borrower, by 12:00 noon (local time) on the date
when due and shall be remitted by the Agent to the Lenders according to their
respective interests therein. Each payment delivered to the Agent for the
account of any Lender shall be delivered promptly by the Agent to such Lender in
the same type of funds and the same currency that the Agent received at its
address specified pursuant to Article XIV or at any Lending Installation
-----------
specified in a notice received by the Agent from such Lender. The Agent is
hereby authorized, but is not obligated, to charge the accounts of the Borrower
maintained with First Chicago into which proceeds of Advances are remitted
pursuant to Section 2.6 for each payment of interest and fees as it becomes due
-----------
hereunder and for payments of principal, in accordance with the applicable
Prepayment Notice or when otherwise due and payable in accordance with the terms
hereof.
2.14. Notes; Telephonic Notices. Each Lender is hereby authorized to
-------------------------
record the date, principal amount and currency of each of its A Loans and the
date and amount of each repayment on the schedule attached to its A Note;
provided, however, that the failure to so record shall not affect the Borrower's
-------- -------
obligations under such A Note. Each Lender making a B Loan is hereby authorized
to record the principal amount, interest rate, maturity date and other terms of
such B Loan, as specified in the relevant B Advance Borrowing Notice and the
related notice submitted by such Lender pursuant to Section 2.10(b)(ii), on the
-------------------
schedule attached to its B Note; provided, however, that the failure to so
-------- -------
record shall not affect the Borrower's obligations under such B Note. The
Borrower hereby authorizes the Lenders and the Agent to extend, convert or
continue Advances and effect selections of Types of Advances based on telephonic
notices made by any person or persons the Agent in good faith believes to be
acting on behalf of the Borrower. The Borrower agrees to deliver promptly to the
Agent a written confirmation, if such confirmation is requested by the Agent or
any Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Agent and the Lenders, the records of the Agent of the relevant telephonic
notice shall govern absent manifest error.
2.15 Notification of Advances, Interest Rates, Prepayments and
---------------------------------------------------------
Commitment Reductions. Promptly after receipt
---------------------
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<PAGE>
thereof, the Agent will notify each Lender of the contents of each Aggregate
Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice,
and prepayment notice received by it hereunder. The Agent will notify each
Lender of the interest rate applicable to each Fixed Rate Advance promptly upon
determination of such interest rate and will give each Lender prompt notice of
each change in the Alternate Base Rate.
2.16. Lending Installations. Each Lender may book its Loans at any one
---------------------
or more Lending Installations selected by such Lender and may change any such
Lending Installation from time to time. All terms of this Agreement shall apply
to any such Lending Installation and the Notes shall be deemed held by each
Lender for the benefit of such Lending Installation. Each Lender may, by written
or telex notice to the Agent and the Borrower, designate a Lending Installation
through which Loans will be made by it and for whose account Loan payments are
to be made.
2.17. Non-Receipt of Funds by the Agent. Unless the Borrower or a
---------------------------------
Lender, as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (a) in the case of a Lender, the
proceeds of a Loan or (b) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (a) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day or (b) in the case of payment by the
Borrower, the interest rate applicable to the relevant Loan.
2.18. Withholding Tax Exemption. At least five Business Days prior to
-------------------------
the first date on which interest or fees are payable hereunder for the account
of any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to each of
the Borrower and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Lender
which so delivers a Form 1001 or 4224 further undertakes to deliver to each of
the Borrower and the Agent two additional copies of such form (or any successor
form or related form as may from time to time be required under applicable law)
on or before the date that such form expires (currentlY, three successive
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<PAGE>
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the Agent, in
each case certifying that such Lender is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes, unless an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender advises the Borrower and the Agent that
it is not capable of receiving payments without any deduction or withholding of
United States federal income tax.
2.19. Extension of Facility Termination Date. The Borrower may request an
--------------------------------------
extension of the Facility Termination Date for a period of one year on each of
the first and, if such first extension shall have become effective in accordance
with the provisions of this Section 2.19, second anniversary dates of this
------------
Agreement by delivering a notice of such request in the form attached hereto as
Exhibit H (an "Extension Request") to the Agent no more than 90 days and no
--------- -----------------
fewer than 60 days preceding the relevant anniversary date. The Agent shall
promptly notify each Lender of a requested extension. On or before the 30th day
(or if such day is not a Business Day, the next succeeding Business Day)
preceding the relevant anniversary date (the "Extension Notification Date"),
---------------------------
each Lender shall notify the Agent whether that Lender consents to the requested
extension of the Facility Termination Date, which consent may be given or
withheld by each Lender in its sole and absolute discretion. Any Lender that
fails to notify the Agent of its consent or nonconsent by the Extension
Notification Date will be deemed to have withheld consent (each such Lender
together with each Lender that has provided notice of its non-consent to be
referred to herein as a "Non-Consenting Lender"). If as of the close of business
---------------------
on the Extension Notification Date, any Lender is a Non-Consenting Lender, the
Agent shall immediately so advise the Borrower. During the period beginning on
the first day following the Extension Notification Date and ending on the
relevant anniversary date, each Non-Consenting Lender will, at the request of
the Borrower, either (a) assign all of its rights and obligations under this
Agreement (i) first, to the Lenders who have consented to the extension and are
willing to accept such assignment, subject to ratable allocation by the Agent
among such Lenders and (ii) to the extent such Non-Consenting Lender's rights
and obligations hereunder have not been assigned to an existing Lender as
contemplated in the foregoing clause (i), to another financial Institution,
nominated by the Borrower and acceptable to the Agent, that is willing to become
a Lender hereunder through the Facility Termination Date as extended in
accordance with the relevant Extension Request or (b) terminate
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<PAGE>
its Commitment hereunder. The obligation of a Non-Consenting Lender to assign
its rights and obligations hereunder or terminate its Commitment hereunder as
contemplated by this Section 2.19 is subject to the requirements that (x) all
------------
amounts owing to that Non-Consenting Lender under the Loan Documents are paid in
full upon the completion of such assignment or prior to such termination and (y)
any assignment is effected in accordance with the terms of Section 13.3 and on
------------
terms otherwise satisfactory to the Non-Consenting Lender. A requested extension
of the Facility Termination Date shall become effective only if (1) it has been
approved by the Required Lenders as of the close of business on the Extension
Notification Date, and (2) prior to the expiration of the ensuing period
described above, each Non-Consenting Lender has either (A) assigned all of its
rights and obligations hereunder to a successor financial institution or (B)
terminated its Commitment hereunder and the Aggregate Commitment has been
reduced correspondingly. In any other event, the requested extension will be
deemed to have been denied and the Facility Termination Date will remain
unchanged without liability to any Non-Consenting Lender.
2.20. Mandatory Prepayments. Without limitation to the prepayment
---------------------
obligations of the Borrower under Section 2.11(b), if, as of the last day of any
---------------
Interest Period, the aggregate principal Dollar Amount of the then outstanding
Loans, as determined by the Agent, equals or exceeds 105% of the Aggregate
Commitment as of such date, the Borrower shall, following demand by the Agent
setting forth, in reasonable detail, the relevant calculations, prepay or, in
the case of B Loans, repay outstanding Loans in accordance with the provisions
of this Agreement until the aggregate principal Dollar Amount of all outstanding
Loans as of the last day of any succeeding Interest Period does not exceed 100%
of the Aggregate Commitment as of such date. The Borrower and each Guarantor
shall remain liable pursuant to Section 3.4 to indemnify each Lender against any
-----------
loss or liability which that Lender incurs as a consequence of any prepayment
under this Section 2.20.
------------
2.21. Termination. All unpaid Obligations shall be paid in full by the
-----------
Borrower on the Facility Termination Date; provided, however, that nothing in
-------- -------
this Section 2.21 shall be construed as limiting or modifying the obligation of
------------
the Borrower to repay any or all of the outstanding Obligations at any earlier
time in accordance with the terms of this Agreement.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If any law or any governmental or quasi-
----------------
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law), or any interpretation thereof, or the compliance of
any Lender therewith.
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<PAGE>
(a) subjects any Lender or any applicable Lending Installation to any
tax, duty, charge or withholding on or from payments due from the Borrower or
the Company (excluding federal taxation of the overall net income of any Lender
or applicable Lending Installation or other taxes in lieu of such taxes imposed
by the United States or any jurisdiction in which such Lender has its principal
office or applicable Lending Installation or is engaged in business), or
changes the basis of taxation of payments to any Lender in respect of its Loans
or other amounts due it hereunder. or
(b) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Fixed Rate Advances), or
(c) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation of making,
funding or maintaining loans or reduces any amount receivable by any Lender or
any applicable Lending Installation in connection with loans, or requires any
Lender or any applicable Lending Installation to make any payment calculated by
reference to the amount of loans held or interest received by it, by an amount
deemed material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making, funding
and maintaining its Loans and its Commitment.
3.2. Changes in Capital Adequacy Regulations. If a Lender determines
---------------------------------------
that the amount of capital required or expected to be maintained by such
Lender, any Lending Installation of such Lender or any corporation controlling
such Lender is increased as a result of a Change (as defined below in this
Section 3.2), then, within 15 days of demand by such Lender, the Borrower shall
-----------
pay such Lender the amount necessary to compensate for any shortfall in the
rate of return on the portion of such increased capital which such Lender
determines is attributable to this Agreement, its Loans or its obligation to
make Loans hereunder (after taking into account such Lender's or such
controlling corporation's policies as to capital adequacy). "Change" means (a)
------
any change after the date of this Agreement in the Risk-Based Capital
Guidelines (as defined below in this Section 3.2) or (b) any adoption of or
-----------
change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the
force of law) after the date of this Agreement which affects the amount of
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<PAGE>
capital required or expected to be maintained by any Lender or any Lending
Installation or any corporation controlling any Lender. "Risk-Based Capital
------------------
Guidelines" means (a) the risk-based capital guidelines in effect ln the United
----------
States on the date of this Agreement, including transition rules, and (b) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled "International Convergence
of Capital Measurements and Capital Standards," including transition rules, and
any amendments to such regulations adopted prior to the date of this Agreement.
3.3. Availability of Types of A Advances. If any Lender determines
-----------------------------------
that maintenance of its Eurocurrency Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (a) deposits
in the requisite currency or of a type and maturity appropriate to match fund
Fixed Rate Advances are not available or (b) the interest rate applicable to a
Type of A Advance denominated in any currency does not accurately reflect the
cost of making or maintaining such Advance, then the Agent shall suspend the
availability of the affected Type of Advance denominated in the relevant
currency and require any Fixed Rate Advances of the affected Type and
denominated in such currency to be prepaid.
3.4. Funding Indemnification. If any payment of a fixed Rate Advance
-----------------------
or a B Advance occurs on a date which is not the last day of the applicable
Interest Period in the case of a Fixed Rate Advance, or the applicable maturity
date in the case of a B Advance, whether because of acceleration, prepayment or
otherwise, or a Fixed Rate Advance or a B Advance is not made on the date
specified by the Borrower for any reason other than default by the Lenders, or
an optional prepayment, notice of which has been given in accordance with
Section 2.5, is not made on the date specified therefor in such notice, the
-----------
Borrower will indemnify each Lender for any loss or cost incurred by it
resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain the Fixed Rate
Advance or B Advance, as the case may be, or in liquidating or terminating prior
to scheduled maturity any foreign exchange contract, currency swaps or other
similar hedging arrangements entered into in connection with the Fixed Rate
Advance or B Advance, as the case may be.
3.5. Mitigation; Lender Statements; Survival of Indemnity. (a) To the
------------------------------------------ ---------
extent reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Fixed Rate Loans to reduce any liability of the
Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the
------------ ---
unavailability of a Type of A Advance under Section 3.3, so long as such
-----------
designation is not disadvantageous to such Lender. If the obligation of the
Lenders to make Eurocurrency Advances has
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<PAGE>
been suspended pursuant to Section 3.3 as a consequence of a determination by
-----------
any Lender that maintenance of its Eurocurrency Loans at a suitable Lending
Installation would violate any applicable law or any Lender has demanded
compensation under Section 3.1 or 3.2, the Borrower may elect (i) subject to
----------- ---
Section 3.4, to prepay any outstanding A Advances to the extent necessary to
------- ---
mitigate its liability under Section 3.1 or 3.2, (ii) to terminate the
----------- ---
applicable Lender's Commitment hereunder or (iii) to require the applicable
Lender to assign its outstanding A Loans and Commitment hereunder to another
financial institution designated by the Borrower and reasonably acceptable to
the Agent. The obligation of a Lender to assign its rights and obligations
hereunder or terminate its Commitment hereunder as contemplated by this Section
-------
3.5(a) is subject to the requirements that (x) all amounts owing to that Lender
------
under the Loan Documents are paid in full upon the completion of such assignment
or prior to such termination and (y) any assignment is effected in accordance
with the terms of Section 13.3 and on terms otherwise satisfactory to that
------------
Lender.
(b) Each Lender shall deliver a written statement of such Lender as to
the amount due, if any, under Section 3.1, 3.2 or 3.4. Such written statement
----------- --- ---
shall set forth in reasonable detail the calculations upon which such Lender
determined such amount and shall be final, conclusive and binding on the
Borrower in the absence of manifest error. Determination of amounts payable
under such Sections in connection with a Fixed Rate Loan or B Loan made pursuant
to an Indexed Rate Auction shall be calculated as though each Lender funded such
Loan through the purchase of a deposit of the type and maturity corresponding to
the deposit used as a reference in determining the interest rate applicable to
such Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement shall be payable on demand
after receipt by the Borrower of the written statement. The obligations of the
Borrower under Sections 3.1, 3.2 and 3.4 shall survive payment of the
------------ --- ---
Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Effectiveness: Initial Advance. This Agreement shall become
------------------------------
effective to amend and restate the Original Credit Agreement and the Lenders
shall be obligated to make the initial Advance hereunder only after the Agent
shall have received from the Borrower, with sufficient copies (other than in the
case of the Notes) for each of the Lenders, each of the following items in form
and substance satisfactory to the Agent:
(a) copies of the articles of incorporation or comparable
constitutive documents of each of the Company, the Borrower, LFC and Neweol,
together with all amendments, and, to the extent applicable, a certificate
of good
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standing, in each case certified by the appropriate governmental officer in
the relevant jurisdiction of incorporation;
(b) copies, certified by the Secretary, Assistant Secretary or
other appropriate officer or director of each of the Company, the Borrower,
LFC and Neweol, of its by-laws (or any comparable constitutive laws, rules
or regulations) and of its board of directors' resolutions (and resolutions
of other bodies, if any are deemed necessary by counsel for any Lender)
authorizing the execution of the relevant Loan Documents;
(c) incumbency certificates, executed by the Secretary or
Assistant Secretary or other appropriate officer or director of each of the
Company, the Borrower, LFC and Neweol, which shall identify by name and
title and bear the signature of the officers of the Company, the Borrower,
LFC and Neweol authorized to sign the relevant Loan Documents and to make
borrowings hereunder, as applicable, upon which certificate the Agent and
the Lenders shall be entitled to rely until informed of any change in
writing by the Company, the Borrower, LFC or Neweol, as applicable;
(d) a certificate, signed by the Chief Financial Officer, stating
that on the date hereof no Default or Unmatured Default has occurred and is
continuing;
(e) the following opinions of counsel to the Company, the Borrower
and the other Guarantors;
(i) an opinion of Thelen, Marrin, Johnson & Bridges, United
States counsel to the Company, the Borrower, LFC and Neweol;
(ii) an opinion of Russell & DuMoulin, Canadian counsel to the
Company;
(iii) an opinion of Clarke & Company, Barbados counsel to LFC;
and
(iv) an opinion of Trenite Van Doorne, Netherlands counsel to
Neweol;
(f) the A Notes and the B Notes payable to the order of each
of the Lenders;
(g) written money transfer instructions, in substantially the form
of Exhibit E hereto, addressed to the Agent and signed by an Authorized
---------
Officer, together with such other related money transfer authorizations as
the Agent may have reasonably requested, which instructions shall, among
other things, direct the Agent to repay in full (i) the Advances outstandinq
under the Original Credit
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<PAGE>
Agreement as of the effective date of this Agreement, together with all
accrued and unpaid interest thereon and all breakage fees and other amounts
payable with respect thereto, (ii) all commitment fees accrued and unpaid
under the Original Credit Agreement as of the effective date of this
Agreement and (iii) all amounts owing under a letter agreement dated April
5, 1995, between First Chicago and the Borrower and the note executed by the
Borrower in connection therewith;
(h) an amendment and reaffirmation relating to the Neweol
Guaranty;
(i) an amendment and reaffirmation relating to the LFC
Guaranty; and
(j) such other documents as any Lender or its counsel may have
reasonably requested.
4.2. Each Advance. The Lenders shall not be required to make any
------------
Advance unless on the applicable Borrowing Date:
(a) there exists no Default or Unmatured Default;
(b) the representations and warranties contained in Article VI
----------
are true and correct as of such Borrowing Date except to the extent any
such representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall be true and
correct on and as of such earlier date;
(c) after giving effect to such Advance, the aggregate
outstanding principal Dollar Amount of all Advances does not exceed the
Aggregate Commitment; and
(d) all legal matters incident to the making of such Advance
shall be satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance shall constitute a
representation and warranty by the Borrower that the conditions contained in
Sections 4.2(a), (b) and (c) have been satisfied.
--------------- --- ---
ARTICLE V
GUARANTY
5.1. The Guaranty. The Company hereby unconditionally and irrevocably
------------
guarantees the due and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Loan made
to the Borrower pursuant to this Agreement, and the due and punctual payment
and performance of all other Obligations (including, without
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limitation, interest accruing following the filing of a bankruptcy petition by
or against the Borrower, at the applicable rate or rates specified herein,
whether or not such interest is allowed as a claim in bankruptcy). Upon failure
by the Borrower to pay or perform any Obligation, the Company shall forthwith on
demand pay or perform such Obligation in the currency, at the place, in the
manner and with the effect otherwise specified in this Agreement. The Company
hereby agrees that its guaranty of the Obligations pursuant to this Article V is
-------
an absolute guaranty of payment and is not a guaranty of collection
5.2. Guaranty Unconditional. The obligations of the Company hereunder
----------------------
shall be unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under this Agreement or
any Note or the exchange, release or non-perfection of any collateral
security therefor:
(b) any modification or amendment of or supplement to this
Agreement, any Note, the LFC Guaranty or the Neweol Guaranty or the release
or termination of the LFC Guaranty or the Neweol Guaranty;
(c) any change in the corporate existence, structure or ownership
of the Borrower, LFC or Neweol or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the Borrower, LFC, Neweol or their
respective assets:
(d) the existence of any claim, set-off or other rights which the
Company may have at any time against the Borrower, any other Guarantor, the
Agent, any Lender or any other Person, whether in connection herewith or any
unrelated transactions, provided that nothing herein shall prevent the
--------
assertion of any such claim by separate suit or compulsory counterclaim;
(e) any invalidity or unenforceability relating to or against the
Borrower, LFC or Neweol for any reason of any provision or all of this
Agreement, any Note, the LFC Guaranty or the Neweol Guaranty, or any
provision of applicable law or regulation purporting to prohibit the payment
by the Borrower of the principal of or interest on any Loan or the payment
or performance by the Borrower of any other Obligation hereunder or the
payment or performance by LFC or Neweol of any of its obligations under the
LFC Guaranty or the Neweol Guaranty, as applicable; or
(f) any other act or omission to act or delay of any kind by the
Borrower, any other Guarantor, the Agent, any
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Lender or any other Person or any other circumstance whatsoever which
might, but for the provisions of this Section 5.2, constitute a legal or
-----------
equitable discharge of the Company's obligations hereunder.
5.3. Discharge Only Upon Payment in Full; Reinstatement in Certain
------------------------------------ ------------------------
Circumstances. The Company's obligations hereunder shall remain in full force
-------------
and effect until the principal of and interest on the Loans and all other
Obligations shall have been paid or performed in full and shall survive the
Facility Termination Date. If at any time any payment of the principal of or
interest on any Loan or any payment of any other Obligation hereunder is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Borrower or any other Person or otherwise,
the company's obligations hereunder with respect to such payment shall be
reinstated at such time as though such payment had been due but not made at such
time.
5.4. Waiver by the Company. The Company irrevocably waives acceptance
---------------------
hereof, presentment, demand, protest and any notice not provided for herein, as
well as any requirement that at any time any right be exhausted or any action be
taken by the Agent, any Lender or any other Person against the Borrower, any
Guarantor or any other Person or any collateral security. In addition, the
Lenders, either themselves or acting through the Agent, are hereby authorized,
without notice or demand and without affecting the liability of the Company
hereunder, from time to time, (a) to renew, extend, accelerate or otherwise
change the time for payment of, or other terms relating to, all or any part of
then Obligation, or to otherwise modify, amend or charge the terms of any of the
Loan Documents; (b) to accept partial payments on all or any part of the
Obligations; (c) to take and hold security or collateral for the payment of all
or any part of the Obligations, the Company's obligations hereunder, or any
other guaranties of all or any part of the Obligations or other liabilities of
the Borrower, (d) to exchange, enforce, waive and release any such security or
collateral; (e) to apply such security or collateral and direct the order or
manner of sale thereof as in their discretion they may determine; (f) to settle,
release, exchange, enforce, waive, compromise or collect or otherwise liquidate
all or any part of the Obligations, the Company's obligations hereunder, any
other guaranty of all or any part of the Obligations, and any security or
collateral for the obligations or for any such guaranty. Any of the foregoing
may be done in any manner, without affecting or impairing the obligations of the
Company hereunder.
5.5. Waiver of Subrogation Rights. The Company hereby waives all rights of
----------------------------
subrogation (whether contractual, under Section 509 of the United States
Bankruptcy Code, as amended, or otherwise) to the claims of the Lenders and the
Agent against the Borrower and all contractual, statutory or common law rights
of reimbursement, contribution or indemnification from the Borrower
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<PAGE>
and all "claims" (as such term is defined in the United States Bankruptcy Code,
as amended) against, the Borrower, which, in any such case, may otherwise have
arisen in connection with this Agreement .
5.6. Stay of Acceleration. In the event that acceleration of the time
--------------------
for payment of any of the Obligations hereunder is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower or any other Person, all such
Obligations otherwise subject to acceleration under the terms of this Agreement
shall nonetheless be payable by the Company hereunder forthwith on demand by the
Agent for the account of the Lenders.
5.7. Gross-up. All payments made by the Company under this Article V shall
-------- ---------
be made in full, without set-off or counterclaim, and free of and without
deduction or withholding for or on account of any present or future tax, duty,
assessment, impost, levy or other similar charge, or any penalties, fines or
interest thereon (a "Relevant Tax") imposed upon the Company, the Borrower, the
------------
Agent or any Lender by the government of Canada (or a=y Governmental Authority
thereof) or by the government of any other country or jurisdiction (or any
Governmental Authority thereof) from or through which payments hereunder are
actually made (each a "Taxing Jurisdiction"). The Company, for the benefit
-------------------
of the Agent and the Lenders, agrees that in the event any payments made by the
Company hereunder are subject to any deduction or withholding for or on account
of any Relevant Tax, the Company will pay to the Agent or such Lender such
additional amounts as may be necessary in order that the net amounts paid to
the Agent or such Lender pursuant to the terms of this Article V after
---------
imposition of any such Relevant Tax (including deductions or withholdings
applicable to additional amounts paid under this decision 5.7) shall be not less
-----------
than the amounts specified in this Article V to be then due and payable, except
---------
that no such additional amounts shall be payable hereunder to the Agent or any
Lender than is liable for such Relevant Tax in respect of the relevant payment
solely by reason of such recipient (a) having a permanent establishment in the
Taxing Jurisdiction; (b) being organized under the laws of the Taxing
Jurisdiction or any political subdivision thereof; or (c) being resident in the
Taxing Jurisdiction by virtue of its domicile or place of management being in
the Taxing Jurisdiction. If the Agent or any Lender pays any amount in respect
of Relevant Tax, the Company shall indemnify the Agent or the Lender, as the
case may be, for such payment within 15 days of demand therefor by the Agent or
such Lender (made through the Agent).
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<PAGE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6. Representations and Warranties. Each of the Company and, with respect to
------------------------------
itself and its Subsidiaries, the Borrower, represents and warrants to the
Lenders that:
6.1. Corporate Existence and Standing. Each of the Company, the Borrower
--------------------------------
and the other Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation and has
all requisite authority to conduct its business in each jurisdiction in which
its business is conducted, except to the extent that, in the case of any
Subsidiary other than the Borrower, LFC or Neweol, the failure to be in good
standing or authorized to conduct business in any jurisdiction could not, when
taken together with all similar failures by such Subsidiary and each other
Subsidiary, reasonably be expected to have a Material Adverse Effect.
6.2. Authorization and Validity. Each of the Company, the Borrower and each
--------------------------
other Guarantor has the corporate power and authority and legal right to execute
and deliver the Loan Documents to which it is party and to perform its
obligations thereunder. The execution and delivery by each of the Company, the
Borrower and each other Guarantor of the Loan Documents to which it is party and
the performance of its obligations thereunder have been duly authorized by
proper corporate proceedings, and each Loan Document to which the Company, the
Borrower or any other Guarantor is party constitutes the legal, valid and
binding obligation of the Company, the Borrower or such other Guarantor, as
applicable, enforceable against the Company, the Borrower or such other
Guarantor, as applicable, in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity,
regardless of whether the application of such principles is considered in a
proceeding in equity or law.
6.3. No Conflict, Government Consent. Neither the execution and delivery by
-------------------------------
each of the Company, the Borrower and each other Guarantor of the Loan Documents
to which it is party, nor the consummation of the transactions therein
contemplated, nor compliance with the provisions thereof will violate any law,
rule, regulation, order, writ, judgment, injunction, decreed or award binding on
the Company, the Borrower or any Subsidiary or the Company's, the Borrower's or
any Subsidiary's articles of incorporation or by-laws or comparable constitutive
documents or the provisions of any indenture, instrument or agreement to which
the Company, the Borrower or any Subsidiary is a party or is subject, or by
which it, or its Property, is bound, or
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<PAGE>
conflict with or constitute a default thereunder, or result in the creation or
imposition of any Lien in, of or on the Property of the Company, the Borrower or
any Subsidiary pursuant to the terms of any such indenture, instrument or
agreement. No order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
any of the Loan Documents.
6.4. Financial Statements. Each of (a) the December 31, 1994, consolidated
--------------------
financial statements of the Company and its Subsidiaries and (b) the December
31, 1994, consolidated financial statements of the Borrower and its
Subsidiaries, heretofore delivered to the Lenders, were prepared in accordance
with GAAP in effect on the date such statements were prepared and fairly present
the consolidated financial condition and operations of the Company and its
Subsidiaries and of the Borrower and its Subsidiaries, respectively, at the date
thereof and the consolidated results of their respective operations for the
period then ended.
6.5. Material Adverse Change. Since December 31, 1994, there has been no
-----------------------
change in the business, Property, prospects, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries or of the Borrower
and its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect.
6.6. Taxes. All tax returns required to be filed by the Company, the
-----
Borrower or any Subsidiary in any Jurisdiction have, in fact, been filed, all
such tax returns have been prepared in accordance with applicable laws, and all
taxes, assessments, fees and other governmental charges upon the Company, the
Borrower or any Subsidiary or upon any of their respective properties, income or
franchises, which are shown on such returns have been paid. For all taxable
years ending on or before December 31, 1987, the United States Federal income
tax liability of the Company, the borrower and the other Subsidiaries has been
satisfied and either the period of limitations on assessment of additional
United States Federal income tax has expired or the Company, the Borrower or the
applicable other Subsidiary has entered into an agreement with the United States
Internal Revenue Service closing conclusively the total tax liability for the
taxable year. None of the Company, the Borrower and the other Subsidiaries knows
of any proposed additional tax assessment against it or any of them for which
adequate provision has not been made on its or their accounts, and no material
controversy in respect of additional income or
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<PAGE>
other taxes due or claimed to be due to any Governmental Authority is pending or
to the knowledge of the Company, the Borrower or the other Subsidiaries
threatened. The charges, accruals and reserves on the books of the Company, the
Borrower and the other Subsidiaries in respect of any taxes or other
governmental charges are adequate.
6.7. Litigation and Contingent Liabilities. Except as set forth on
-------------------------------------
Schedule 1 hereto, there is no litigation, arbitration, governmental
----------
investigation, proceeding or inquiry pending or, to the knowledge of any of
their officers, threatened against or affecting the Company, the Borrower or any
other Subsidiary which could have a Material Adverse Effect. Other than any
liability Incident to such litigation, arbitration or proceedings, none of the
Company, the Borrower or any other Subsidiary has any material contingent
liabilities not provided for or disclosed in the financial statements referred
to in Section 6.4.
-----------
6.8. Subsidiaries. Schedule 1 hereto, together with the most recent
------------ ----------
update, if any, delivered pursuant to Section 7.1(k), contains an accurate list
--------------
of all of the Subsidiaries (except for inactive Subsidiaries with immaterial
assets and liabilities) of each of the Company and the Borrower, setting forth
their respective jurisdictions of incorporation and the percentage of their
respective capital stock owned by the Company, the Borrower or other
Subsidiaries. All of the issued and outstanding shares of capital stock of the
Subsidiaries of the Company and the Borrower listed on Schedule 1 hereto,
----------
together with the most recent update, if any, delivered pursuant to Section
-------
7.1(k), have been duly authorized and issued and are fully paid and non-
------
assessable.
6.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do
-----
not in the aggregate exceed $1,000,000. Neither the Company, the Borrower nor
any other member of the Controlled Group has incurred, or is reasonably expected
to incur, any withdrawal liability to Multiemployer Plans in excess of
$5,000,000 in the aggregate. Each Plan complies in all material respects with
all applicable requirements of law and regulations, no Reportable Event has
occurred with respect to any Plan, none of the Company, the Borrower or any
other member of the Controlled Group has withdrawn from any Plan or initiated
steps to do so, and no steps have been taken to reorganize or terminate any
Plan. Each Canadian Plan is registered under, and is in compliance with, the
Income Tax Act (Canada), applicable provincial pensions legislation and all
other applicable requirements of law and regulations and all reports, returns
and filings required to be made thereunder have been made. The Canadian Plans
have been at all times administered in accordance with their terms and the
provisions of all applicable requirements of law and regulations. There are no
unfunded liabilities
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<PAGE>
under the Canadian Plans and, without limiting the generality of the foregoing,
there is no going concern unfunded actuarial liability, past service unfunded
actuarial liability or solvency deficiency. Neither the Company nor any
Subsidiary has received any payment of surplus from any of the Canadian Plans,
other than payments received after January 1, 1988 with the approval of all
necessary pension regulatory and taxation authorities.
6.10. Accuracy of Information. No written information, exhibit or
-----------------------
report prepared and furnished by the Company, the Borrower or any other
Subsidiary to the Agent or to any Lender in connection with the negotiation of,
or compliance with, the Loan Documents, taken as a whole, contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not misleading.
6.11. Regulation U. Margin stock (as defined in Regulation U)
------------
constitutes less than 25% of those assets of the Company and the Borrower and
other Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.
6.12. Material Agreements. None of the Company, the Borrower or any
-------------------
Subsidiary is in default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement to which it
is a party, which default could have a Material Adverse Effect.
6.13. Compliance With Laws. The Company, the Borrower and the other
--------------------
Subsidiaries have complied in all material respects with all applicable
statutes, rules, regulations, orders and restrictions of any Governmental
Authority having jurisdiction over the conduct of their respective businesses or
the ownership of their respective Property. None of the Company, the Borrower or
any Subsidiary has received any notice to the effect that, or is otherwise aware
that, its operations are not in material compliance with any of the requirements
of applicable environmental, health and safety statutes and regulations of any
Governmental Authority or the subject of any investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could have a Material Adverse Effect.
6.14. Ownership of Properties. Except as set forth on Schedule 1 hereto, on
----------------------- --------
the date of this Agreement, the Company, the Borrower and each other Subsidiary
will have good title, free of all Liens other than those permitted by Section
-------
7.18, to all of the Property and assets reflected as
----
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<PAGE>
owned by it in the financial statements delivered by it from time to time
Pursuant hereto
6.15. Investment Company Act. None of the Company, the Borrower or
----------------------
any other Subsidiary is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
6.16. Public Utility Holding Company Act. None of the Company, the
----------------------------------
Borrower or any other Subsidiary is a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.17. Post-Retirement Benefits. The present value of the expected cost
------------------------
of post-retirement medical and insurance benefits payable by the Company, the
Borrower and the other Subsidiaries to its employees and former employees, as
estimated by the Company in accordance with procedures and assumptions specified
by the Required Lenders, or in the absence of such specification, deemed prudent
and reasonable by the Company, does not exceed $1,000,000.
ARTICLE VII
COVENANTS
7. Covenants. During the term of this Agreement, unless the
---------
Required Lenders shall otherwise consent in writing:
7.1. Financial Reporting. The Company will maintain, and cause the
-------------------
Borrower and each other Subsidiary to maintain, a system of accounting
established and administered in accordance with generally accepted accounting
principles, and will furnish or cause to be furnished to the Lenders:
(a) (i) within 120 days after the close of each of the Company's
fiscal years, an unqualified (except for qualifications relating to changes in
accounting principles or practices reflecting changes in GAAP and required or
approved by the Company's independent chartered accountants or independent
public accountants) audit report certified by independent chartered accountants
or independent public accountants, acceptable to the Lenders, prepared in
accordance with Agreement Accounting Principles on a consolidated and
consolidating basis (consolidating statements need not be certified by such
accountants) for itself and its Subsidiaries, including balance sheets as of
the end of such period, related profit and loss and reconciliation of surplus
statements, and a
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statement of cash flows, accompanied by a review engagement report of said
accountants in accordance with the standards of Section 8600 of the CICA
Handbook stating that, in connection with the foregoing, they have obtained no
knowledge of any failure of the Company to comply with the requirements
specified in each of Sections 7.10 through 7.25, or if, in the opinion of such
------------- ----
accountants, the Company has failed to comply with the requirements specified in
any such Section, stating the nature and status of such failure; and (ii) within
180 days after the close of each of the Company's fiscal years, the management
letter prepared by the applicable accountants in connection with the financial
statements for such fiscal year delivered pursuant to the foregoing clause (i);
(b) (i) within 120 days after the close of each of the Borrower's
fiscal years, an unqualified (except for qualifications relating to changes in
accounting principles or practices reflecting changes in GAAP and required or
approved by the Borrower's independent chartered accountants or independent
public accountants) audit report certified by independent chartered accountants
or independent public accountants, acceptable to the Lenders, prepared in
accordance with Agreement Accounting Principles on a consolidated and
consolidating basis (consolidating statements need not be certified by such
accountants) for itself and its Subsidiaries, including balance sheets as of the
end of such period, related profit and loss and reconciliation of surplus
statements, and a statement of cash flows; and (ii) within 180 days after the
close of each of the Borrower's fiscal years, the management letter prepared by
the applicable accountants in connection with the financial statements for such
fiscal year delivered pursuant to the foregoing clause (i);
(c) within 60 days after the close of the first three quarterly
periods of each of the Company's fiscal years, for the Company and its
Subsidiaries, consolidated unaudited balance sheets as at the close of each such
period and consolidated profit and loss and reconciliation of surplus statements
and a statement of cash flows for the period from the beginning of such fiscal
year to the end of such quarter, all certified by the Chief Financial Officer
(d) within 60 days after the close of the first three quarterly
periods of each of the Borrower's fiscal years, for the Borrower and its
Subsidiaries, consolidated unaudited balance sheets as at the close of each such
period and consolidated profit and loss and reconciliation of surplus statements
and a
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<PAGE>
statement of cash flows for the period from the beginning of such fiscal year
to the end of such quarter, all certified by the Chief Financial Officer:
(e) together with the financial statements required pursuant to the
foregoing clauses (a), (b), (c) and (d), a compliance certificate in
substantially the form of Exhibit C hereto signed by the Chief Financial
---------
Officer showing the calculations necessary to determine compliance with this
Agreement and stating that no Default or Unmatured Default exists, or if any
Default or Unmatured Default exists, stating the nature and status thereof;
(f) within 270 days after the close of each fiscal year, a statement of the
Unfunded Liabilities of each Single Employer Plan, certified as correct by an
actuary enrolled under ERISA;
(g) as soon as possible and in any event within ten days after the Company
or the Borrower knows that any Reportable Event has occurred with respect to
any Plan, the occurrence of which may reasonably be expected to give rise to a
Material Adverse Effect, a statement, signed by the Chief Financial Officer,
describing said Reportable Event and the action which the Company and the
Borrower propose to take with respect thereto;
(h) as soon as possible and in any event within 30 days after receipt by the
Company or any of its Subsidiaries, a copy of (i) any notice or claim to the
effect that the Company or any of its Subsidiaries is or may reasonably be
expected to be liable for $2,000,000 or more of potential liability (when
aggregated with other similar potential liability) to any Person as a result of
the release by the Company, any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or substance into the environment, and (ii) any notice
alleging any violation of any federal, state or local environmental, health or
safety law or regulation by the Company or any of its Subsidiaries, which
violation could reasonably be expected to give rise to a Material Adverse
Effect;
(i) promptly upon the furnishing thereof to the shareholders of the Company,
copies of all financial statements, reports and proxy statements so furnished;
(j) promptly upon their becoming available, one copy of each financial
statement, report, notice or proxy statement sent by the Company or the
Borrower to stockholders generally (excluding those statements, reports and
notices sent by the Borrower to the Company
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<PAGE>
which are not sent to the Company solely in its capacity as a
stockholder) and of each regular report and any registration statement
or prospectus, filed by the Company, the Borrower or any other
Subsidiary with the Ontario Securities Commission, the Toronto Stock
Exchange, the British Columbia Securities Commission, the United States
Securities and Exchange Commission or any successor agency to any of
the foregoing or any other Canadian or United States federal or state
or provincial securities exchange, securities trading system or with
any United States or Canadian national stock exchange and one copy of
each periodic report filed by the Company with any Canadian regulatory
authority, in all cases without duplication; provided, however, that
-------- -------
neither the Company nor the Borrower shall be obligated to provide to
the Agent and the Lenders routine reports which are required to be
provided to any of the above-listed entities concerning the management
of employee benefit plants, including, without limitation, stock
purchases or the exercise of stock options made under any such employee
benefit plan;
(k) together with the financial statements delivered pursuant
to Section 7.1(a), a current list of all of the Subsidiaries of each of
--------------
the Company and the Borrower, setting forth their respective
jurisdictions of incorporation and the percentage of their respective
capital stock owned by the Company, the Borrower or other Subsidiaries;
(1) so long as the WLSP Contingent Obligation shall be
outstanding, together with the financial statements required pursuant
to Sections 7.1(a), 7.1(b), 7.1(c) and 7.1(d), a report specifying the
---------------
Class B Invested Amount as of the end of such calendar quarter; and
(m) promptly, such other information (including non-financial
information) as the Agent or any Lender may from time to time
reasonably request.
7.2. Use of Proceeds. The Borrower will, and will cause each
---------------
of its Subsidiaries to, use the proceeds of the Advances to repay outstanding
Advances made under the Original Credit Agreement, to repay Advances, to make
Permitted Acquisitions or for general corporate purposes. The Borrower will
not, nor will it permit any of its Subsidiaries to, use any of the proceeds of
the Advances to purchase or carry any "margin stock" (as defined in Regulation
U). The Company will not, nor will it permit any Subsidiary, to use proceeds of
the Advances other than as contemplated in this Section 7.2.
-----------
-48-
<PAGE>
7.3. Notice of Default. The Company will, and will cause the Borrower and
-----------------
each other Subsidiary to, give notice in writing to the Lenders of the
occurrence (a) of any Default or Unmatured Default and (b) of any other
development, financial or otherwise, which could reasonably be expected to have
a Material Adverse Effect, which notice, in either case, shall be given
promptly and in any event within five Business Days after the Company, Borrower
or relevant Subsidiary becomes aware of the Default, Unmatured Default or other
development.
7.4. Conduct of Business. The Company will, and will cause the Borrower and
-------------------
each other Subsidiary to, carry on and conduct its business in substantially
the same manner and in substantially the same fields of enterprise as it is
presently conducted and to do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted.
7.5. Taxes. The Company will, and will cause the Borrower and each other
-----
Subsidiary to, pay when due all taxes, assessments and governmental charges and
levies upon it or its income, profits or Property, except those WHICH are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been set aside.
7.6. Insurance. The Company will, and will cause the Borrower and each other
---------
Subsidiary to, maintain with financially sound and reputable insurance
companies insurance on all their Property in such amounts and covering such
risks as is consistent with sound business practice, and the Company will
furnish to any Lender upon request full information as to the insurance
carried.
7.7. Compliance with Laws. The Company will, and will cause the Borrower and
--------------------
each other Subsidiary to, comply in
all material respects with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject.
7.8. Maintenance of Properties. The Company will, and will cause the
-------------------------
Borrower and each other Subsidiary to, do all things necessary to maintain,
preserve, protect and keep its Property in good repair, working order and
condition, ordinary wear and tear excepted, and make all necessary and proper
repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
7.9. Inspection. The Company will, and will cause the Borrower and each
----------
other Subsidiary to, permit the Agent and
-49-
<PAGE>
any or each Lender, by its respective representatives and agents, to inspect
any of the Property, corporate books and financial records of the Company, the
Borrower and each other Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Company, the Borrower and each
other Subsidiary, and to discuss the affairs, finances and accounts of the
Company, the Borrower and each other Subsidiary with, and to be advised as to
the same by, their respective officers at such reasonable times and intervals
as the Agent or such Lender may designate.
7.10. Distributions. The Company will not, nor will it permit the Borrower
-------------
or any other Subsidiary to, declare or make or incur any liability to make any
Distribution, except:
(a) dividends payable in the capital stock of the Company, the Borrower or
such other Subsidiary;
(b) Distributions to the Company, a Regional Partner or a Wholly-Owned
Subsidiary of the Company or a Regional Partner; and
(c) other Distributions (in addition to those described in the clauses (a)
and (b)) so long as, immediately after giving effect to the declaration thereof
in the case of dividends or the making thereof in the case of other proposed
Distributions (the date of such event being referred to hereinafter as the
"Distribution Date"), (i) (A) the aggregate amount of Distributions declared in
-------------------
the case of dividends or made in the case of other Distributions pursuant to
this clause (c), during the period from and after January 1, 1994, to and
including the Distribution Date, plus (B) the aggregate amount of Investments
by the Company and the Borrower and the other Subsidiaries (valued at book
value on the Distribution Date) made pursuant to Section 7.16(n) during the
---------------
period from and after January 1, 1994, to and including the Distribution Date,
would not exceed (C) the Consolidated Distributable Amount as of the
Distribution Date, and (ii) no Default or Unmatured Default shall have occurred
and be continuing.
For the purposes of making the foregoing computations, the amount of any
Distribution declared, paid or distributed ln property or assets of the Company
or the Borrower or any other Subsidiary shall be deemed to be the greater of
the book value or Fair Value (as determined in good faith by the board of
directors of the Company) of such property or assets as of the date of
declaration in the case of a dividend and the date of payment in the case of
any other Distribution.
-50-
<PAGE>
7.11. Indebtedness. The Company will not, nor will it permit the Borrower
------------
or any other Subsidiary to, create, incur or suffer to exist any Indebtedness,
except:
(a) the Loans;
(b) Indebtedness outstanding under the One-Year Credit Agreement and the
related notes;
(c) Indebtedness (i) existing as of the close of business on December 31,
1994, and described in Schedule 1 hereto or (ii) incurred on or after January
----------
1, 1995, but only to the extent expressly described on Schedule 1 hereto;
----------
(d) Rentals other than Capitalized Lease Obligations;
(e) additional Indebtedness (other than Indebtedness constituting
Consolidated Funded Debt) of the Company, the Borrower and the other
Subsidiaries so long as at the time such Indebtedness is issued or incurred by
the Company, the Borrower or such other Subsidiary, as applicable, after giving
effect thereto and the application of the proceeds thereof, the aggregate
Indebtedness (other than Indebtedness constituting Consolidated Funded Debt),
excluding any such Indebtedness described on Schedule 1, would not exceed 5% of
----------
Consolidated Net Worth; and
(f) additional Indebtedness constituting Consolidated Funded Debt of the
Company, the Borrower and the other Subsidiaries so long as at the time such
Indebtedness is issued or incurred by the Company, the Borrower or such other
Subsidiary, as applicable, after giving effect thereto and the application of
the proceeds thereof, (i) Consolidated Funded Debt would not exceed 175% of
Consolidated Net Worth and (ii) if such Indebtedness is issued or incurred by a
Subsidiary (other than the Borrower) and does not arise hereunder, such
Indebtedness, together with all other Indebtedness issued or incurred by a
Subsidiary (other than the Borrower) and not arising hereunder, would not
exceed 15% of Consolidated Funded Debt; it being understood, however, that
nothing in this Section 7.11(f) shall be construed as limiting or modifying the
---------------
obligation of the Company to comply, and to cause the Borrower and the other
Subsidiaries to comply, with the requirements of Section 7.22 hereof.
------------
7.12. Merqer. The Company will not, nor will it permit the Borrower or any
------
other Subsidiary to, merge, amalgamate or consolidate with or into any other
Person, except that (a) a Subsidiary (other than the Borrower) may
-51-
<PAGE>
merge with the Company, the Borrower, a Regional Partner or a Wholly-Owned
Subsidiary of the Company or a Regional Partner, subject to the further
condition that if the Company or the Borrower is a party to any such permitted
merger, the Company or the Borrower, as applicable, shall be the surviving
corporation and (b) a Regional Partner or a Wholly-Owned Subsidiary of the
Company or a Regional Partner incorporated under the laws of Canada or any
Province thereof may amalgamate with another Regional Partner or Wholly-Owned
Subsidiary of the Company or a Regional Partner incorporated under the laws of
Canada or any Province thereof, it being understood that neither the Company
nor the Borrower may so amalgamate.
7.13. Sale of Assets. The Company will not, nor will it permit the Borrower
--------------
or any other Subsidiary to, lease, sell or otherwise dispose of its Property,
to any other Person except for (a) sales of inventory in the ordinary course of
business, (b) sales of accounts receivable or comparable financial assets,
provided that (i) none of the Company, the Borrower or the other Subsidiaries
retains any liability to the purchaser or purchasers of such assets for credit
or other losses with respect thereto and (ii) the net cash proceeds of such
sale equals or exceeds 90% of the face amount of the assets sold, (c) leases,
sales or other dispositions of its Property to a Regional Partner or a Wholly-
Owned Subsidiary of the Company or a Regional Partner, and (d) subject to the
requirements of Section 2.11 (b) hereof, other leases, sales or other
------- -------
dispositions of its Property subject to the requirement that the net proceeds
of each such lease, sale or other disposition of Property are reinvested in the
business of the Company, the Borrower and the other Subsidiaries as conducted
in accordance with the requirements of Section 7.4.
------------
7.14. Prepayments. The Company will not, nor will it permit the Borrower or
-----------
any other Subsidiary to, either directly or indirectly, voluntarily redeem,
retire or otherwise pay prior to its scheduled maturity, or accelerate the
maturity of, Indebtedness of the Company or the Borrower or any other
Subsidiary, other than (a) Indebtedness arising hereunder or under other credit
facilities of a revolving nature and (b) other Indebtedness so long as such
Indebtedness either (i) (A) was incurred in connection with an Acquisition and
(B) is prepaid within 180 days of the closing of such Acquisition or (ii) (A)
is prepaid in full and (B) does not exceed $5,000,000 (such limitation to apply
to each individual prepayment pursuant to this clause (ii) and not in the
aggregate).
7.15. Affiliates. The Company will not, nor will it permit the Borrower or
----------
any other Subsidiary to, enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with, or make any
-52-
<PAGE>
payment or transfer to, any Affiliate except in the ordinary course of business
and pursuant to the reasonable requirements of the Company's, the Borrower's or
such Subsidiary's business and upon fair and reasonable terms no less favorable
to the Company, the Borrower or such Subsidiary than the Company, the Borrower
or such Subsidiary would obtain in a comparable arm's-length transaction.
7.16. Investments. The Company will not, nor will it permit the
-----------
Borrower or any other Subsidiary to, make or suffer to exist any Investments,
or commitments therefor, except:
(a) Investments (i) in existence as of the close of business on
December 31, 1994, and described in Schedule l hereto or (ii) arising
----------
on or after January 1, 1995, but only to the extent expressly
described on Schedule l hereto;
----------
(b) Investments by the Company or the Borrower or any other
Subsidiary in and to (i) any Subsidiary (other than LMIC or any other
Subsidiary not engaged in the ordinary course of business of the
Company and the Borrower and the other Subsidiaries conducted as
described in Section 7.4 of this Agreement), including any Investment
-----------
in a corporation which, after giving effect to such Investment, will
become a Subsidiary (other than as specified in the foregoing
parenthetical) and (ii) LMIC, but only to the extent of the aggregate
initial par value of the capital stock thereof issued to the Borrower
upon the incorporation of LMIC;
(c) Investments in property or assets to be used in the
ordinary course of business of the Company and the Borrower and the
other Subsidiaries conducted as described in Section 7.4 of this
-----------
Agreement;
(d) Investments in commercial paper maturing in 270 days or
less from the date of issuance which, at the time of acquisition by the
Company or the Borrower or any other Subsidiary, is accorded one of the
two highest commercial paper ratings by Standard & Poor's or Moody's or
any other United States nationally recognized credit rating agency of
similar standing;
(e) Investments in direct obligations of the United States,
any agency or instrumentality of the United States, the federal
government of Canada or any agency or instrumentality of the federal
government of Canada, the payment or guarantee of which constitutes a
full faith and credit obligation of the United States or Canada, as the
case may be, in either case, maturing
-53-
<PAGE>
in three years or less from the date of acquisition thereof;
(f) Investments in direct obligations of any Province of Canada or
any municipality within a Province of Canada or any State or municipality
within the United States maturing in three years or less from the date of
acquisition thereof which, in any such case, at the time of acquisition by the
Company or the Borrower or any other Subsidiary, is accorded one of the two
highest long-term debt ratings by Standard & Poor's or Moody's or any other
United States nationally recognized credit rating agency of similar standing;
(g) Investments in certificates of deposit or bankers' acceptances
issued by a bank or trust company organized under the laws of the United States
or any State thereof, Canada or any Province thereof, Japan or any member of
the European Union, having capital, surplus and undivided profits aggregating
at least $100,000,000 and having a short-term unsecured debt rating of at least
"P-1" by Moody's or "A-1" by Standard & Poor's;
(h) Investments in money market and auction rate preferred stock
issued by Persons organized under the laws of the United States of America or
any State thereof or of Canada or any Province thereof rated "A" or better by
Standard & Poor's or "A" or better by Moody's, or an equivalent rating by any
other United States nationally recognized credit rating agency of similar
standing;
(i) Investments in mutual funds investing in assets described in
clauses (d), (e), (f) or (g) above which in any such case would be classified
as a current asset in accordance with U.S. GAAP and which are managed by a fund
manager of recognized United States or Canadian national standing and having
share capital of at least $100,000,000 or having at least $250,000,000 under
management;
(j) Investments of funds received by the Company or the Borrower or
any other Subsidiary in the ordinary course of business, which funds are
required to be held in trust for the benefit of others by the Company, the
Borrower or such Subsidiary, as the case may be, and which funds do not
constitute assets or liabilities of the Company or the Borrower or any other
Subsidiary;
(k) Investments of funds by any Subsidiary which is engaged in the
insurance business which are invested and managed by such Subsidiary in the
ordinary course
-54-
<PAGE>
of its regulated insurance business and insurance operations;
(l) Investments made in connection with Permitted Acquisitions;
(m) other Investments (in addition to those permitted by
clauses (a) through (l) above) so long as immediately after giving
effect to the making of any such Investment the aggregate amount of
all outstanding Investments made pursuant to this Section 7.16(m)
---------------
would not exceed an amount equal to 10% of Consolidated Net Worth;
and
(n) other Investments (in addition to those permitted by
clauses (a) through (m) above) so long as immediately after giving
effect to the making of any such Investment (the "Relevant
--------
Investment"), (i) (A) the aggregate amount of Investments made
pursuant to this clause (m), during the period from and after January
1, 1994, to and including the date of such Relevant Investment, plus
(B) the aggregate amount of all Distributions made pursuant to Section
-------
7.10 (c) during the period from and after January 1, 1994, to and
--------
including the date of such Relevant Investment, would not exceed (C)
the Consolidated Distributable Amount as of the date of such Relevant
Investment, and (ii) no Default or Unmatured Default shall have
occurred and be continuing
provided, however, that notwithstanding any provision to the contrary herein,
-----------------
none of the Company, the Borrower or any other Subsidiary shall make any
Investment in any Person effectively located outside of the United States or
Canada if after giving effect to such Investment, the aggregate amount of
Investments of the Company, the Borrower or any Subsidiary in any Persons
effectively located outside of the United States or Canada would exceed an
amount equal to 5% of Consolidated Net Worth. For the purpose of any
computation required to be made pursuant to this Agreement, Investments shall
be valued at lower of the cost or Fair Value thereof as of the date of
computation.
7.17. Continent Obligations. The Company will not, nor will it permit
----------------------
the Borrower or any other Subsidiary to, make or suffer to exist any Contingent
Obligation, except (a) by endorsement of instruments for deposit or collection
in the ordinary course of business, (b) pursuant to the Guaranties, (c)
Contingent Obligations of the Company, the Borrower and the other Subsidiaries
described on Schedule 1, (d) Contingent Obligations in respect of the
----------
obligations of any Subsidiary and (e) Contingent Obligations in respect
of the obligations of any Person (other than a Subsidiary) to the extent that
the aggregate amount of such obligations in
-55-
<PAGE>
respect of which such Contingent Obligations have been made or suffered to
exist does not at any time of determination exceed 15% of Consolidated Funded
Debt at such time.
7.18. Liens. The Company will not, nor will it permit the Borrower or
-----
any other Subsidiary to, create, incur, or suffer to exist any Lien in, of or
on the Property of the Company, the Borrower or such other Subsidiary, as
applicable, except:
(a) Liens for taxes, assessments or governmental charges or levies on
its Property if the same shall not at the time be delinquent or thereafter can
be paid without penalty, or are being contested in good faith and by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(b) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its books;
(c) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits. or similar legislation;
(d) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the same or interfere with the use thereof in the
business of the Company, the Borrower or any other Subsidiary;
(e) Liens existing as of the close of business on December 31, 1994,
and described in Schedule 1 hereto or (ii) created or incurred on or after
--------
January 1, 1995, but only to the extent expressly described on Schedule 1
----------
hereto;
(f) Liens created or incurred after December 31, 1994, given to
secure the Indebtedness incurred or assumed ln connection with the acquisition
or construction of property or assets useful and intended to be used in
carrying on the business of the Company, the Borrower or any other Subsidiary,
including Liens existing on such property or assets at the time of acquisition
or construction thereof or at the time of acquisition by the Company, the
Borrower or such other
-56-
<PAGE>
Subsidiary, as applicable, of an interest in any business entity then
owning such property or assets, whether or not such existing Liens
were given to secure the consideration for the property or assets to
which they attach, subject to the requirements that (i) the Lien shall
attach solely to the fixed assets acquired or purchased, (ii) the Lien
shall have been created or incurred within 180 days after the date of
acquisition or completion of construction of such property or assets
and (iii) all such Indebtedness shall have been incurred or assumed
within the limitations provided in Section 7.11(e), as applied to the
---------------
Company, the Borrower and the other Subsidiaries:
(g) Liens arising in connection with any sale of accounts
receivable or other comparable financial assets pursuant to Section
-------
7.13(b);
-------
(h) Liens granted to the Company, a Regional Partner or a
Wholly-Owned Subsidiary of the Company or a Regional Partner by any
Subsidiary (other than the Borrower); and
(i) any extension, renewal or replacement of any Lien
permitted by the preceding clauses (e) and (f) hereof in respect of
the same property or assets theretofore subject to such Lien in
connection with the extension, renewal or refunding of the
Indebtedness secured thereby; provided that (i) such Lien shall attach
solely to the same property or assets, and (ii) such extension,
renewal or refunding of such Indebtedness shall be without increase in
the principal remaining unpaid as of the date of such extension,
renewal or refunding.
7.19. Minimum Consolidated Net Worth. The Company will
------------------------------
maintain at all times a Consolidated Net Worth (excluding the
cumulative effect of currency translation adjustments) of at least the
sum of
(a) Consolidated Net Worth (excluding the cumulative effect
of currency translation adjustments) as of December 31, 1993, plus
(b) the sum of 50% of Consolidated Net Income for each
fiscal quarter ended after January 1, 1994 (but only to the extent
that, in the case of any such fiscal quarter, Consolidated Net Income
for such fiscal quarter is at least $1.00), plus
(c) 50% of the aggregate amount of the net cash proceeds
received by the Company and the Borrower and the other Subsidiaries
from the issuance or sale on and after January 1, 1994 (other than
sales or issuances to
-57-
<PAGE>
the Company or the Borrower or any other Subsidiary), of capital stock of the
Company or Indebtedness of the Company, the Borrower or any other Subsidiary
which has been converted into capital stock of the Company.
7.20. Rentals. The Company will not, nor will it permit the Borrower or
-------
any other Subsidiary to, create, incur or suffer to exist obligations for
Rentals (excluding Rentals constituting Capitalized Lease Obligations),
determined in the aggregate for the Company, the Borrower and the other
Subsidiaries, and payable during any one fiscal year, in excess of 5% of the
gross revenues of the Company and the Borrower and the other Subsidiaries for
such fiscal year.
7.21. Fixed Charges Coverage. The Company will at all times maintain a
----------------------
ratio of EBITDA for the most recently ended period of four consecutive fiscal
quarters to Consolidated Fixed Charges for the most recently ended period of
four consecutive fiscal quarters of at least 2.75 to 1.00
7.22. Restriction on Consolidated Funded Debt. The Company will not
---------------------------------------
permit the ratio of Consolidated Funded Debt to Consolidated Net Worth to
exceed (a) 1.75 to 1.00 at any time or (b) 1.50 to 1.00 as of the end of any
fiscal quarter of the Company if such ratio was in excess of 1.50 to 1.00 as of
the end of each of the two fiscal quarters of the Company immediately preceding
such fiscal quarter.
7.23. Ownership of the Borrower. The Company will at all Times
-------------------------
maintain the Borrower as a Wholly-Owned Subsidiary of the Company.
7.24. Acquisitions. The Company will not, nor will it permit the Borrower
------------
or any other Subsidiary to, make any Acquisition of any Person other than a
Permitted Acquisition.
7.25. Covenants Not to Compete. The Company will not, nor will it
------------------------
permit the Borrower or any other Subsidiary to, create, incur or suffer to exist
obligations to make payments in respect of covenants not to compete, determined
ln the aggregate for the Company, the Borrower and the other Subsidiaries, and
payable during any one fiscal year, in excess of 5% of the gross revenues of the
Company, the Borrower and the other Subsidiaries for such fiscal year.
ARTICLE VIII
DEFAULTS
8. Defaults. The occurrence of any one or more of the following events shall
--------
constitute a Default:
-58-
<PAGE>
8.1. Any representation or warranty made or deemed made by or on behalf of the
Company, the Borrower, LFC, Neweol or any other Subsidiary to the Lenders or the
Agent under or in connection with this Agreement, any Loan, any Guaranty or any
certificate or information delivered in connection with this Agreement or any
other Loan Document shall be materially false on the date as of which made.
8.2. Nonpayment of principal of any Loan or Note when due, or nonpayment of
interest upon any Loan or Note or of any commitment fee or other obligations
under any of the Loan Documents within three Business Days after the same
becomes due.
8.3. The breach by the Company, the Borrower or any other Subsidiary of any
of the terms or provisions of Section 7.2, 7.3(a), 7.10, 7.11, 7.12, 7.13, 7.14,
----------- ------ ---- ---- ---- ---- ----
7.16, 7.17, 7.18, 7.19, 7.20, 7.21, 7.22, 7.23, 7.24 or 7.25; provided, however,
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -------- -------
any failure to provide notice of any Unmatured Default pursuant to Section
-------
7.3(a) shall not give rise to a Default under this Section 8.3 if such Unmatured
------ -----------
Default may be cured pursuant to the terms of this Agreement and is in fact
cured prior to maturing into a Default.
8.4. The breach by the Company, the Borrower or any other Subsidiary (other
than a breach which constitutes a Default under Section 8.1, 8.2 or 8.3) of any
----------- --- ---
of the terms or provisions of this Agreement which is not remedied within 30
days after written notice from the Agent or any Lender.
8.5. Failure of the Company or any of its Subsidiaries to pay any
Indebtedness equal to or exceeding $5,000,000 in the aggregate when due; or the
default by the Company or any of its Subsidiaries in the performance of any
term, provision or condition contained in any agreement under which any
Indebtedness equal to or exceeding $55,000,000 in the aggregate was created or
is governed, or any other event shall occur or condition exist, the effect of
which is to cause, or to permit the holder or holders of such Indebtedness to
cause, such Indebtedness to become due prior to its stated maturity; or any
Indebtedness of the Company or any of its Subsidiaries equal to or exceeding
$5,000,000 in the aggregate shall be declared to be due and payable or required
to be prepaid (other than by a regularly scheduled payment) prior to the stated
maturity thereof; or the Company or any of its Subsidiaries shall not pay, or
admit ln writing its inability to pay, its debts generally as they become due.
8.6. The Company or any of its Subsidiaries shall (a) have an order for
relief entered with respect to it under the United States bankruptcy laws as now
or hereafter in effect or cause or allow any similar event to occur under any
bankruptcy or similar law or laws for the relief of
-59-
<PAGE>
debtors as now or hereafter in effect in any other jurisdiction, (b) make an
assignment for the benefit of creditors, (c) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee, examiner,
liquidator, monitor or similar official for it or any Substantial Portion of its
Property, (d) institute any proceeding seeking an order for relief under the
United States bankruptcy laws as now or hereafter in effect or seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it or any
of its property or its debts under any law relating to bankruptcy, insolvency or
reorganization or compromise of debt or relief of debtors as now or hereafter in
effect in any jurisdiction including, without limitation, any application under
the Bankruptcy and Insolvency Act (Canada) or The Companies' Creditors
Arrangement Act (Canada), the filing of a proposal or notice under The
Bankruptcy and Insolvency Act (Canada) or any organization, arrangement or
compromise of debt under the laws of its jurisdiction of incorporation or fail
to promptly file an answer or other pleading denying the material allegations of
any such proceeding filed against it, (e) take any corporate action to authorize
or effect any of the foregoing actions set forth in this Section 8.6 or (f) fail
-----------
to contest in good faith any appointment or proceeding described in Section 8.7;
-----------
provided, however, that the occurrence of any of the events described in the
-------- -------
foregoing clauses (a) through (f) with respect to any Subsidiary (other than the
Borrower or any Guarantor) shall not give rise to a Default under this Section
-------
8.6 so long as (x) the operations of such Subsidiary have generated no more than
---
$1,000,000 of the gross revenues of the Company, the Borrower and the other
Subsidiaries during the period of twelve fiscal months ending as of the end of
the most recently ended fiscal quarter preceding the occurrence of such event
with respect to such Subsidiary (any such Subsidiary being an "Immaterial
----------
Subsidiary") and (y) after giving effect to the occurrence of such event with
----------
respect to such Immaterial Subsidiary, the aggregate amount of gross revenues of
the Company, the Borrower and the other Subsidiaries generated by all Immaterial
Subsidiaries as to which an event described ln the foregoing clauses (a) through
(f) has occurred since January 1, 1994 (measured, in the case of each Immaterial
Subsidiary, as described in the foregoing clause (x), as of the date of the
occurrence of such event with respect to such Subsidiary), does not exceed
$5,000,000.
8.7. Without the application, approval or consent of the Company or
any of its Subsidiaries, a receiver, custodian, trustee, examiner, liquidator or
similar official shall be appointed (either privately or by a court) for the
Company or any of its Subsidiaries or any Substantial Portion of its Property,
or a proceeding described in
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Section 8.6(d) shall be instituted against the Company or any of its
--------------
Subsidiaries and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 30 consecutive days.
8.8. Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of (each a "Condemnation"),
------------
all or any portion of the Property of the Company and its Subsidiaries which,
when taken together with all other Property of the Company and its Subsidiaries
so condemned, seized, appropriated, or taken custody or control of, during the
twelve-month period ending with the month in which any such Condemnation occurs,
constitutes a Substantial Portion.
8.9. The Company, the Borrower or any other Subsidiary shall fail within
30 days to pay, bond or otherwise discharge any judgment or order for the
payment of money in excess of $5,000,000, which is not stayed on appeal or
otherwise being appropriately contested in good faith.
8.10. The Unfunded Liabilities of all Single Employer Plans shall exceed
in the aggregate $5,000,000 or any Reportable Event, the occurrence which may
reasonably be expected to give rise to Material Adverse Effect, shall occur in
connection with any Plan.
8.11. The Company or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multiemployer Plans by
the Company or any other member of the Controlled Group as withdrawal liability
(determined as of the date of such notification), exceeds $5,000,000 or requires
payments exceeding $1,000,000 per annum.
8.12. The Company or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of Title IV
of ERISA, if as a result of such reorganization or termination the aggregate
annual contributions of the Company and the other members of the Controlled
Group (taken as a whole) to all Multiemployer Plans which are then in
reorganization or being terminated have been or will be increased over the
amounts contributed to such Multiemployer Plans for the respective plan years of
each such Multiemployer Plan immediately preceding the plan year in which the
reorganization or termination occurs by an amount exceeding $1,000,000.
8.13. The Company, the Borrower or any other Subsidiary shall be the
subject of any proceeding or
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investigation pertaining to the release by the Company, the Borrower or any such
other Subsidiary, or any other Person of any toxic or hazardous waste or
substance into the environment, or any violation of any environmental, health or
safety law or regulation of any Governmental Authority, which, in either case,
could reasonably be expected to have a Material Adverse Effect.
8.14. Any Change of Control shall occur.
8.15. Any Guaranty shall fail to remain in full force or effect
(other than in accordance with Section 10.15) or any action shall be taken to
-------------
discontinue or to assert the invalidity or unenforceability of any Guaranty, or
any Guarantor shall fail to perform its obligations under or otherwise comply
with any of the terms or provisions of any Guaranty to which it is a party, or
any Guarantor denies that it has any further liability under any Guaranty to
which lt is a party, or gives notice to such effect.
ARTICLE IX
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
9.1. Acceleration. If any Default described in Section 8.6 or 8.7
------------ ----------- ---
occurs with respect to the Company, the Borrower, LFC, Neweol or any other
Subsidiary, the obligations of the Lenders to make Loans hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Agent or any Lender.
If any other Default occurs, the Required Lenders may terminate or suspend the
obligations of the Lenders to make Loans hereunder, or declare the Obligations
to be due and payable, or both., whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Company and the Borrower hereby expressly waive.
If, within 30 days after acceleration of the maturity of the Obligations
or termination of the obligations of the Lenders to make loans hereunder as a
result of any Default (other than any Default as described in Section 8.6 or 8.7
----------- --
with respect to the Company, the Borrower, LFC, Neweol or any other Subsidiary)
and before any judgment or decree for the payment of the Obligations due shall
have been obtained or entered, the Required Lenders (in their sole discretion)
shall so direct, the Agent shall, by notice to the Company and the Borrower,
rescind and annul such acceleration and/or termination.
9.2. Amendments. Subject to the provisions of this Article IX, the
---------- ----------
Required Lenders (or the Agent with the consent ln writing of the Required
Lenders), the Company and the Borrower may enter into agreements supplemental
hereto for the purpose of adding or modifying any provisions to the Loan
Documents or
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changing in any manner the rights of the Lenders, the Company or the Borrower
hereunder or waiving any Default hereunder; provided, however, that no such
-------- -------
supplemental agreement shall, without the consent of each Lender affected
thereby:
(a) extend the maturity of any Loan or Note or forgive all or any
portion of the principal amount thereof or any interest or fees, or reduce
the rate or extend the time of payment of interest or fees thereon;
(b) reduce the percentage specified in the definition of Required
Lenders;
(c) reduce the amount or extend the payment date for, the mandatory
payments required under Section 2.2, 2.10 or 2.21, reduce the amount of or
----------- ---- ----
extend the reduction date for any mandatory reduction of the Aggregate
Commitment required by Section 2.11(b), or increase the amount of the
---------------
Commitment of any Lender hereunder, or permit the Company or the Borrower
to assign its rights under this Agreement;
(d) amend this Section 9.2; or
-----------
(e) release any Guarantor other than as contemplated in Section
-------
10.15.
-----
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 13.3.2 without obtaining the consent of any
--------------
other party to this Agreement.
9.3. Preservation of Rights. No delay or omission of, the Lenders or
----------------------
any of them or the Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Loan notwithstanding the existence of
a Default or the inability of the Borrower to satisfy the conditions precedent
to such Loan shall not constitute any waiver or acquiescence. Any single or
partial exercise of any such right shall not preclude other or further exercise
thereof or the exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by (or with the consent of)
the Lenders required pursuant to Section 9.2, and then only to the extent
-----------
specifically set forth in such writing. All remedies contained in the Loan
Documents or afforded by law shall be cumulative and all shall be available to
the Agent and the Lenders until the Obligations have been paid in full.
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ARTICLE X
GENERAL PROVISIONS
10.1. Survival of Representations. All representations and warranties of
---------------------------
the Company and the Borrower contained in this Agreement shall survive delivery
of the Notes and the making of the Loans herein contemplated.
10.2. Governmental Regulation. Anything contained in this Agreement to the
-----------------------
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
10.3. Stamp Duties. The Borrower shall pay and forthwith on demand
------------
indemnify each of the Agent and each Lender against any liability it incurs in
respect of any stamp, registration and similar tax which is or becomes payable
in connection with the entry into, performance or enforcement of any Loan
Document.
10.4. Headings. Section headings in the Loan Documents are for convenience
--------
of reference only and shall not govern the interpretation of any of the
provisions of the Loan Documents.
10.5. Entire Agreement; Independence of Covenants. The Loan Documents
-------------------------------------------
embody the entire agreement and understanding among the Company, the Borrower,
the Agent and the Lenders and supersede all prior agreements and understandings
among the Company, the Borrower, the Agent and the Lenders relating to the
subject matter thereof. Except as otherwise expressly provided herein, no
provision of this Agreement shall be construed as waiving, negating or otherwise
qualifying any restriction, limitation or other condition imposed by any other
provision of this Agreement.
10.6. Several Obligations; Benefits of this Agreement. The respective
-----------------------------------------------
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.
10.7. Expenses; Indemnification. The Borrower shall reimburse the Agent for
-------------------------
any costs, internal charges and out-of-pocket expenses (including reasonable
attorneys' fees and tame charges of attorneys for the Agent, which attorneys may
be employees of the Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution,
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delivery, review, amendment, modification, and administration of the Loan
Documents. The Borrower also agrees to reimburse the Agent and the Lenders for
any costs, internal charges and out-of-pocket expenses (including reasonable
attorneys' fees and time charges of attorneys for the Agent and the Lenders,
which attorneys may be employees of the Agent or the Lenders) paid or incurred
by the Agent or any Lender in connection with the collection and enforcement of
the Loan Documents. The Borrower further agrees to indemnify the Agent and each
Lender, its directors, officers and employees against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all expenses of litigation or preparation therefor whether or not
the Agent or any Lender is a party thereto) which any of them may pay or incur
arising out of or relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Loan hereunder. The obligations of
the Borrower under this Section shall survive the termination of this Agreement.
10.8. Numbers of Documents. ALL statements, notices, closing documents, and
--------------------
requests hereunder shall be furnished to the Agent with sufficient counterparts
so that the Agent may furnish one to each of the Lenders.
10.9. Accounting; Currency Conversions. Except as provided to the contrary
--------------------------------
herein, all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles; provided, however, that (a) to the extent that any change in GAAP
-------- -------
shall alter the result of any financial covenant or test or any other accounting
determination to be computed or made hereunder, the Company and the Borrower
agree that such covenant, test or other determination shall continue to be
computed or made on the basis of Agreement Accounting Principles as in effect
prior to such change in GAAP, unless the Required Lenders shall otherwise
consent and (b) the MIPS shall be deemed to constitute capital stock of the
Company for purposes of this Agreement. To the extent that for purposes of
computing any financial covenant or test or making any other accounting
determination hereunder, any amount denominated in one currency must be
converted into another currency, such conversion shall be made in a manner that
accords with the currency conversion policies and procedures used in preparing
the financial statements of the Company, the Borrower and the other Subsidiaries
on the basis of which the relevant computations or determinations are or will be
made, unless the Required Lenders shall have specified an alternative basis for
makinq such conversions.
10.10. Severability of Provisions. Any provision in any Loan Document that
--------------------------
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
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<PAGE>
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
10.11. Nonliability of Lenders. The relationship between the Borrower, on
the one hand, and the Lenders and the Agent, on the other hand, shall be solely
that of borrower and lender and the relationship between the Company and the
Subsidiaries (other than the Borrower), on the one hand, and the Tenders and the
Agent, on the other hand, shall be construed accordingly. Neither the Agent nor
any Lender shall have any fiduciary responsibilities to the Company, the
Borrower or any other Subsidiary. Neither the Agent nor any Lender undertakes
any responsibility to the Company, the Borrower or any other Subsidiary to
review or inform the Company, the Borrower or any other Subsidiary of any matter
in connection with any phase of the business or operations of the Company, the
Borrower or any other Subsidiary.
10.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
-------------
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
10.13. CONSENT TO JURISDICTION. EACH OF THE COMPANY AND THE BORROWER HEREBY
-----------------------
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH OF THE COMPANY AND THE
BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST THE COMPANY OR THE BORROWER IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE COMPANY OR THE BORROWER
AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING GUT OF, RELATED
TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN
CHICAGO, ILLINOIS.
EACH OF THE BORROWER AND THE COMPANY HEREBY IRREVOCABLY APPOINTS DONALD J.
MALLOY (THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT WINSTON &
STRAWN, 35 WEST WACKER DRIVE, CHICAGO, ILLINOIS 60601-9703, AS ITS AGENT TO
RECEIVE ON BEHALF OF THE BORROWER OR THE COMPANY, AS APPLICABLE, AND ITS
PROPERTY SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS
WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE
BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO THE BORROWER OR THE COMPANY,
AS APPLICABLE, IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS
WITH A
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COPY TO THE BORROWER OR THE COMPANY, AS APPLICABLE, AT ITS ADDRESS FOR NOTICES
HEREUNDER, AND THE BORROWER OR THE COMPANY, AS APPLICABLE, HEREBY IRREVOCABLY
AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF.
AS AN ALTERNATIVE METHOD OF SERVICE, EACH OF THE COMPANY AND THE BORROWER ALSO
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO ITS ADDRESS FOR NOTICES
HEREUNDER. EACH OF THE COMPANY AND THE BORROWER AGREES THAT A FINAL JUDGMENT IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
10.14. WAIVER OF JURY TRIAL. THE COMPANY, THE BORROWER, THE AGENT AND EACH
--------------------
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
10.15. Release of LFC Guaranty and Neweol Guaranty. The Agent and the
-------------------------------------------
Lenders agree that upon confirmation to the satisfaction of the Agent and the
Required Lenders that any and all guaranties or other Contingent Obligations of
LFC and Neweol with respect to all liabilities of the Company, the Borrower and
each other Subsidiary arising under or in connection with the Note Agreements
have been released and terminated, the Agent, for itself and on behalf of the
Lenders, shall release and terminate the LFC Guaranty and the Neweol Guaranty.
10.16. Confidentiality. Each of the Agent and each Lender agrees to hold
---------------
any confidential information which it may receive from The Company, the Borrower
or any other Subsidiary pursuant to -his Agreement in confidence, except for
disclosure (a) to other Lenders and their respective Affiliates, (b) to legal
counsel, accountants, and other professional advisors to that Lender or to a
Transferee, (c) to regulatory officials and examiners, (d) to any Person as
requested pursuant to or as required by law, regulation, or legal process, (e)
to any Person in connection with any legal proceeding to which that Lender is a
party, and (f) permitted by Section 13.4.
10.17. Judgment Currency. If the Agent or any Lender receives an amount in
-----------------
respect of the Borrower's or the Company's liability under the Loan Documents or
if that liability is converted into a claim, proof, judgment or order in a
currency other than the currency (the "contractual currency") in which the
--------------------
amount is expressed to be payable under the relevant Loan Document, (a) the
Company and the Borrower, as applicable, shall indemnify the Agent or such
Lender, as applicable, as an independent obligation against any loss, cost,
expense or liability arising out of or as a result of the conversion; (b) if the
amount received by the Agent or such Lender, as applicable, when converted into
the contractual currency at a market rate on
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the date of receipt by the Agent or such Lender in the usual course of its
business, is less than the amount owed in the contractual currency, the Borrower
or the Company, as applicable, shall forthwith on demand pay to the Agent or
such Lender, as applicable, an amount in the contractual currency equal to the
deficit; and (c) the Company or the Borrower, as applicable, shall pay to the
Agent or such Lender, as applicable, on demand any exchange costs and taxes
payable. In connection with any such conversion. Each of the Borrower and the
Company waives any right it may have in any jurisdiction to the extent permitted
by law to pay any amount under the Loan Documents in a currency other than that
in which it is expressed to be payable.
10.18. Canadian Interest Antidotes. (a) Notwithstanding any other
---------------------------
provision of this Agreement, if and to the extent that the laws of Canada are
applicable to interest payable under this Agreement, no interest on the credit
advanced will be payable in excess of that permitted by the laws of Canada. If
the effective annual rate of interest, calculated in accordance with generally
accepted actuarial practices and principles, would exceed 60k (or such other
rate as the Parliament of Canada may determine from time to time as the criminal
rate) on the credit advanced, then, (i) the amount of any charges for the use of
money, expenses, fees, bonuses, commissions or other charges payable in
connection therewith will be reduced to the extent necessary to eliminate such
excess; (ii) any remaining excess that has been paid will be credited towards
repayment of the principal amount; and (iii) any overpayment that may remain
after such crediting will be returned forthwith on demand. In this paragraph the
terms "interest," "criminal rate" and "credit advanced" have the meaning
ascribed to them in Section 347 of the Criminal Code.
(b) If and to the extent that the laws of Canada are applicable to
interest payable under this Agreement, for the purpose of the Interest Act
(Canada) the yearly rate of interest to which interest calculated on the basis
of a 360 or 365 day year is equivalent, is the rate of interest determined as
herein provided multiplied by the number of days in such year divided by 360 or
365, as the case may be.
ARTICLE XI
THE AGENT
11.1. Appointment. First Chicago is hereby appointed Agent hereunder and
-----------
under each other Loan Document, and each of the Lenders irrevocably authorizes
the Agent to act as the agent of such Lender. The Agent agrees to act as such
upon the express conditions contained in this Article XI. The Agent shall not
have a fiduciary relationship in respect of the Company, the Borrower, any
other Subsidiary or any Lender by reason of this Agreement.
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11.2. Powers. The Agent shall have and may exercise such powers under
------
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
11.3. General Immunity. Neither the Agent nor any of its directors,
----------------
officers, agents or employees shall be liable to any or all of the Company, the
Borrower, any other Subsidiary or the Lenders for any action taken or omitted to
be taken by it or them hereunder or under any other Loan Document or in
connection herewith or therewith except for its or their own gross negligence or
willful misconduct.
11.4. No Responsibility for Loans, Recitals. Etc. Neither the Agent nor
-------------------------------------------
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (a) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly tO each
Lender; (c) the satisfaction of any condition specified in Article IV, except
----------
receipt of items required to be delivered to the Agent; or (d) the validity,
effectiveness or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith. The Agent shall have no duty to
disclose to the Lenders information that is not required to be furnished by the
Company or the Borrower to the Agent at such time, but is voluntarily furnished
by the Company or the Borrower to the Agent (either in its capacity as Agent or
in its individual capacity).
11.5. Action on Instructions of Lenders. The Agent shall in all cases be
---------------------------------
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders or, in the case of any act or failure to act calculated to give
rise to any of the events or circumstances described in clauses (a) through (e)
of Section 9.2, each affected Lender, and such instructions and any action taken
-----------
or failure to act pursuant thereto shall be binding on all of the
Lenders and on all holders of Notes. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction by the Lenders
pro rata against any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.
11.6. Employment of Agents and Counsel. The Agent may execute any of its
--------------------------------
duties as Agent hereunder and under any other
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Loan Document by or through employees, agents, and attorneys-in-fact and shall
not be answerable to the Lenders, except as to money or securities received by
it or its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be
entitled to advice of counsel concerning all matters pertaining to the agency
hereby created and its duties hereunder and under any other Loan Document.
11.7. Reliance on Documents; Counsel. The Agent shall be entitled to
------------------------------
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
11.8. Agent's Reimbursement and Indemnification. The Lenders agree to
-----------------------------------------
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (a) for any amounts not reimbursed by the Borrower for which the
Agent is entitled to reimbursement by the Borrower under the Loan Documents, (b)
for any other expenses incurred by the Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents and (c) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent. The obligations of the Lenders under this
Section 11.8 shall survive payment of the Obligations and termination of this
------------
Agreement.
11.9. Rights as a Lender. In the event the Agent is a Lender, the Agent
------------------
shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Company, the Borrower or any other Subsidiary in which the Company, the
Borrower or any such other Subsidiary is not restricted hereby from engaging
with any other Person. The Agent, in its individual capacity, is not obligated
to remain a Lender.
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11.10. Lender Credit Decision. Each Lender acknowledges that it has,
----------------------
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Company and the Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents.
11.11. Successor Agent. The Agent may resign at any time by giving
---------------
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, 45 days after the resigning Agent gives notice of its
intention to resign. The Agent shall so resign if at any time it ceases to be a
Lender. Upon any such resignation or removal the Required Lenders shall have the
right to appoint, on behalf of the Borrower and the Lenders, a successor Agent.
If no successor Agent shall have been so appointed by the Required Lenders
within 30 days after the resigning Agent's giving notice of its intention to
resign, then the resigning Agent may appoint, on behalf of the Company, the
Borrower and the Lenders, a successor Agent. If the Agent has resigned or been
removed and no successor Agent has been appointed, the Lenders may perform all
the duties of the Agent hereunder and the Borrower shall make all payments in
respect of the Obligations to the applicable Lender and for all other purposes
shall deal directly with the Lenders. No successor Agent shall be deemed to be
appointed hereunder until such successor Agent has accepted the appointment. Any
such successor Agent shall be a commercial bank having capital and retained
earnings of at least $50,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning or removed Agent. Upon the effectiveness of the resignation or
removal of the Agent, the resigning or removed Agent shall be discharged from
its duties and obligations hereunder and under the Loan Documents. After the
effectiveness of the resignation or removal of an Agent, the provisions of this
Article XI shall continue in effect for the benefit of such Agent in
----------
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent hereunder and under the other Loan Documents.
11.12. Agent's Fee. The Borrower agrees to pay to the Agent, for its own
-----------
account, the fees agreed to by the Borrower and the Agent pursuant to that
certain letter agreement dated March 31, 1995, or as otherwise agreed from time
to time.
-71-
<PAGE>
ARTICLE XII
SETOFF; RATABLE PAYMENTS
12.1. Setoff. In addition to, and without limitation of, any rights of
------
the Lenders under applicable law, if the Company or the Borrower becomes
insolvent, however evidenced, or any Default or Unmatured Default occurs, any
and all deposits (including all account balances, whether provisional or final
and whether or not collected or available) and any other Indebtedness at any
time held or owing by any Lender to or for the credit or account of the Company
or the Borrower may be offset and applied toward the payment of the Obligations
owing to such Lender, whether or not the Obligations, or any part hereof, shall
then be due.
12.2. Ratable Payments. If any Lender, whether by setoff or otherwise,
----------------
has payment made to it upon its A Loans (other than payments received pursuant
to Section 3.1, 3.2 or 3.4) in a greater proportion than that received by any
----------- --- ---
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the A Loans held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of A Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in proportion to their A Loans. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall
be made.
ARTICLE XIII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
13.1. Successors and Assigns. The terms and provisions of the Loan
----------------------
Documents shall be binding upon and inure to the benefit of the Company, the
Borrower, the Agent and the Lenders and their respective successors and assigns,
except that (a) neither the Company nor the Borrower shall have the right to
assign its rights or obligations under the Loan Documents and (b) any assignment
by any Lender must be made in compliance with Section 13.3. Notwithstanding
------------
clause (b) of the preceding sentence, any Lender may at any time, without the
consent of the Company, the Borrower or the Agent, assign all or any portion of
its rights under this Agreement and its Notes to a Federal Reserve Bank;
provided, however, that no such assignment shall release the transferor Lender
-------- -------
from its obligations hereunder. The Agent may treat the payee of any Note as the
owner thereof for all purposes hereof unless and until such payee complies with
Section 13.3 in the case of an assignment thereof or, in the case of any other
------------
transfer, a written notice of the transfer is filed with the Agent. Any assignee
or transferee of a Note agrees by
-72-
<PAGE>
acceptance thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the time of
making such request or giving such authority or consent is the holder of any
Note, shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
13.2. Participations.
--------------
13.2.1 Permitted Participants; Effect. Any Lender may, in the ordinary
------------------------------
course of its business and in accordance with applicable law, (a) with
contemporaneous notice to the Borrower, at any time sell to one or more
banks or (b) with the consent of the Borrower, which consent shall not be
unreasonably withheld, at any time sell to one or more other entities (each
such bank or other entity being referred to herein as a "Participant")
-----------
participating interests in any Loan owing to such Lender, any Note held by
such Lender, the Commitment of such Lender or any other interest of such
Lender under the Loan Documents. In the event of any such sale by a Lender
of participating interests to a Participant, such Lender's obligations under
the Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Borrower under
this Agreement shall be determined as if such Lender had not sold such
participating interests, and the Company, the Borrower and the Agent shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under the Loan Documents. The
participation agreement effecting the sale of any participating interest
shall contain a representation by the Participant to the effect that none of
the consideration used to make the purchase of the participating interest in
the Commitment and Loans under such participation agreement are "plan
assets" as defined under ERISA and that the rights and interests of the
Participant in and under the Loan Documents will not be "plan assets" under
ERISA.
13.2.2. Voting Rights. Each Lender shall retain the sole right to
-------------
approve, without the consent of any Participant, any amendment, modification
or waiver of any provision of the Loan Documents other than any amendment,
modification or waiver with respect to any Loan or Commitment in which such
Participant has an interest which forgives principal, interest or fees or
reduces the interest rate or fees payable with respect to any such Loan or
Commitment, postpones any date fixed for any regularly-scheduled payment of
principal of, or interest or fees on, any such Loan or Commitment, reduces
the amount of or extends the reduction date for any mandatory reduction of
-73-
<PAGE>
the Aggregate Commitment required by Section 2.11(b), or releases any guarantor
---------------
of any such Loan (other than as contemplated in Section 10.15 with respect to
-------------
the LFC Guaranty and the Neweol Guaranty).
13.2.3. Benefit of Setoff. Each of the Company and the Borrower agrees
-----------------
that each Participant shall be deemed to have the right of setoff provided in
Section 12.1 in respect of its participating interest in amounts owing
------------
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of setoff provided
in Section 12.1 with respect to the amount of participating interests
------------
sold to each Participant. The Lenders agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in Section 12.1,
------------
agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in accordance with
Section 12.2 as if each Participant were a Lender.
------------
13.3. Assignments.
-----------
13.3.1. Permitted Assignments. Any Lender may, in the ordinary course of
---------------------
its business and in accordance with applicable law, at any time assign to one or
more banks or other entities ("Purchasers") all or any part of its Commitment
----------
and outstanding Loans, together with its rights and obligations under the Loan
Documents with respect thereto; provided, however, that (a) each such assignment
-------- -------
shall be of a constant, and not a varying, percentage of all of the assigning
Lender's rights and obligations so assigned; (b) the amount of the Commitment of
the assigning Lender being assigned pursuant to each such assignment (determined
as of the date of such assignment) may be in the amount of such Lender's entire
Commitment but otherwise shall not be less than $10,000,000 or an integral
multiple of$l,000,000 in excess of that amount; and (c) notwithstanding the
foregoing clause (b), (i) if the assignment is made to a Lender, the amount of
the Commitment assigned shall not be less than $1,000,000 or an integral
multiple thereof and (ii) if the assignment is made pursuant to Section
-------
2.19(a)(ii), the Commitment assigned may be in the amount of the relevant Non-
-----------
Consenting Lender's entire remaining Commitment after giving effect to all
assignments pursuant to Section 2.19(a)(i). Such assignment shall be
------------------
substantially in the form of Exhibit D hereto or in such other form as may be
---------
agreed to by the parties thereto. The consent of the Company, the Borrower and
the Agent shall be required prior to an assignment becoming effective with
respect to a Purchaser which is not a Lender; provided, however, that if a
-------- -------
Default has occurred and is continuing, the consent of neither the Company nor
the Borrower shall be required. Such consents shall not be unreasonably
withheld.
-74-
<PAGE>
13.3.2. Effect; Effective Date. Upon (a) delivery to the Agent of a
----------------------
notice of assignment, substantially in the form attached to Exhibit D hereto
---------
(a "Notice of Assignment"), together with any consents required by Section
-------------------- -------
13.3.1, and (b) payment of a $3,000 fee to the Agent for processing such
------
assignment, such assignment shall become effective on the effective date
specified in such Notice of Assignment. The Notice of Assignment shall
contain a representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Loans under
the applicable assignment agreement are "plan assets" as defined under ERISA
and that the rights and interests of the Purchaser in and under the Loan
Documents will not be "plan assets" under ERISA. On and after the effective
date of such assignment, such Purchaser shall for all purposes be a Lender
party to this Agreement and any other Loan Document executed by the Lenders
and shall have all the rights and obligations of a Lender under the Loan
Documents, to the same extent as if it were an original party hereto and
thereto, and no further consent or action by the Company, the Borrower, the
Lenders or the Agent shall be required to release the transferor Lender with
respect to the percentage of the Aggregate Commitment and Loans assigned to
such Purchaser. Upon the consummation1on of any assignment to a Purchaser
pursuant to this Section 13.3.2, the transferor Lender, the Agent, and the
--------------
Borrower shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting its Commitment, as adjusted pursuant to such assignment.
13.4. Dissemination of Information. Each of the Company and the
----------------------------
Borrower authorizes each Lender to disclose to any Participant or Purchaser or
any other Person acquiring an interest in the Loan Documents by operation of law
(each a "Transferee") and any prospective Transferee any and all information in
such Lender's possession concerning the creditworthiness of the Company and the
Borrower and the other Subsidiaries; provided that each Transferee and
prospective Transferee agrees to be bound by Section 10.16 of this Agreement.
13.5. Tax Treatment. If any interest in any Loan Document is transferred
-------------
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 2.18
------------
-75-
<PAGE>
ARTICLE XIV
NOTICES
14.1. Giving Notice. Except as otherwise permitted by Section 2.13
------------- ------------
with respect to Borrowing Notices, all notices and other communications provided
to any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address as may
be designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by telex or facsimile, shall be deemed
given when transmitted (answerback confirmed in the case of telexes).
14.2. Change of Address. The Borrower, the Company, the Agent and any
-----------------
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
ARTICLE XV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. Subject to
Section 4.1, this Agreement shall be effective when it has been executed by the
-----------
Company, the Borrower, the Agent and the Lenders and each party has notified the
Agent by telex or telephone, that it has taken such action.
-76-
<PAGE>
IN WITNESS WHEREOF, the Borrower, the Company, the Lenders and the Agent
have executed this Agreement as of the date first above written.
LOEWEN GROUP INTERNATIONAL, INC.
By:________________________________
Print Name: Dwight K. Hawes
Title: Vice President, Finance
Address:
Loewen Group International, Inc.
50 East River Center Boulevard
Suite 820
Covington, Kentucky 51011
U.S.A
Attention: Vice President, Finance
Facsimile No.: (606) 431-8894
with a copy to:
The Loewen Group Inc.
4126 Norland Avenue
Burnaby, British Columbia V5G 3S8
Canada
Attention: Vice President, Finance
Facsimile No.: (604) 473-7305
-77-
<PAGE>
THE LOEWEN GROUP INC.
By:_______________________________
Print Name: Dwight K. Hawes
Title: Vice President, Finance
Address:
The Loewen Group Inc.
4126 Norland Avenue
Burnaby, British Columbia V5G 3S8
Canada
Attention: Vice President, Finance
Facsimile No.: (604) 473-7305
-78-
<PAGE>
Commitment:
----------
$56,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
as a Lender and as Agent
By:_____________________________
Print Name: Robert R. Bourke
Title: Senior Vice President
Address:
One First National Plaza
Chicago, Illinois 60670
Attention: Robert R. Bourke
Facsimile No.: (312) 732-1712
-79-
<PAGE>
Commitment:
----------
$40,00O,000
ABN AMRO BANK N.V.
By:__________________________________
Print Name: Guy Heywood
Title: Senior Account Manaqer
By:__________________________________
Print Name: P.K. Chan
Title: Assistant Vice President
Address:
2510-650 West Georgia Street
Vancouver, British Columbia V6B 4N8
Canada
Attention: Guy Heywood
Facsimile No.: (604) 682-2936
-80-
<PAGE>
Commitment:
$40,000,000
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:__________________________________
Print Name: Adam Balbach
Title: Vice President
Address:
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Adam Balbach
Facsimile No.: (312) 987-5833
-81-
<PAGE>
Commitment:
----------
$40,000,000
NATIONSBANK OF TEXAS, N.A.
By:____________________________
Print Name: Laura B. Whitley
Title: Senior Vice President
Address:
901 Main Street
11th Floor
Dallas, Texas 75202-3714
Attention: Laura B. Whitley
Facsimile No.: (214) 508-2014
-82-
<PAGE>
Commitment:
$40,000,000
WACHOVIA BANK OF GEORGIA, N.A.
By:_______________________________
Print Name: William F. Hamlet
Title:_____________________________
Address:
191 Peachtree Street, N.E.
28th Floor
Atlanta, Georgia 30303
Attention: John A. Whitner
Facsimile No.: (404) 332-6898
-83-
<PAGE>
Commitment:
----------
$32,000,000 BANK OF MONTREAL, CHICAGO
By:_________________________
Print Name: Jonathan D. Hook
Title:______________________
Address:
115 South LaSalle Street llW
Chicago, Illinois 60603
Attention: Jonathan D. Hook
Facsimile No.: (312) 750-6057
-84-
<PAGE>
Commitment:
----------
$32,000,000
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By:________________________________
Print Name:________________________
Title:_____________________________
Address:
301 South Tryon Street
Charlotte, North Carolina 28288-0744
Attention: Thomas F. Quigley
Facsimile No.: (704) 374-2430
-85-
<PAGE>
Commitment:
----------
$32,000,000
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A.
By:_________________________________
Print Name:_________________________
Title:______________________________
By:_________________________________
Print Name:_________________________
Title:______________________________
Address:____________________________
245 Park Avenue
New York, New York 10167
Attention: Debra Rivers
Facsimile: (212) 910-7930
-86-
<PAGE>
Commitment:
----------
$24,000,000
ROYAL BANK OF CANADA
By:______________________________
Print Name: Karen T. Hull
Title: Manager, Corporate Banking
Address:
Grand Cayman (North America
No. 1 Branch) c/o New York Branch
Financial Square, 23rd Floor
New York, New York 10005-3531
Attention: Manager, Loans
Administration
Facsimile No.: (212) 428-2372
with a copy to:
One North Franklin Street
Suite 700
Chicago, Illinois 60606
Attention: Karen T. Hull, Manager
Facsimile No.: (312) 551-0805
-87-
<PAGE>
Commitment:
----------
$16,000,000
THE BANK OF NOVA SCOTIA
By:______________________________
Print Name: Claude Ashby
Title: Senior Manager
Address:
Suite 2700
600 Peachtree Street N.E.
Atlanta, Georgia 30308
Attention: Claude Ashby
Facsimile No.: (404) 888-8998
with a copy to:
181 West Madison Street
Chicago, Illinois 60602
Attention: Phil Armstrong
Facsimile No.: (312) 201-4108
-88-
<PAGE>
Commitment:
----------
$16,000,000
DRESDNER BANK AG,
New York and Grand Cayman Branches
By:________________________________
Print Name: Susan A. Hodge
Title: Vice President
By:________________________________
Print Name: J. Curtin Beaudouin
Title: Vice President
Address:
New York and Grand Cayman Branches
75 Wall Street
New York, New York 10005-2889
Attention: Susan A. Hodge, Corporate
Banking (credit matters)
Facsimile: (212) 898-0524
Lora Lam, Credit Services
(operational matters)
Facsimile No.: (212) 574-0130
-89-
<PAGE>
Commitment:
----------
316,000,00:
PNC BANK, OHIO, NATIONAL
ASSOCIATION
By:__________________________________
Print Name: David C. Melin
Title: Assistant Vice President
Address:
201 East 5th Street
Cincinnati, Ohio 45201
Attention: David C. Melin
Facsimile No.: (513) 651-8952
-90-
<PAGE>
Commitment:
----------
$16,000,000
SEATTLE-FIRST NATIONAL BANK
By:____________________________________
Print Name: Mike Loken
Title: Vice President
Address:
701 Fifth Avenue
11th Floor
Seattle, Washington 98104
Attention: Mike Loken
Facsimile No.: (206) 358-3124
-91-
<PAGE>
SCHEDULE 1
DISCLOSURE SCHEDULE
A. Indebtedness and Liens (See Sections 6.14, 7.11 and 7.18)
------------- ---- ----
See Annex I
B. Subsidiaries and Other Investments (See Sections 6.8 and 7.16)
------------ ----
1. Subsidiaries:
------------
See Annex II
2. Other Investments:
-----------------
See Annex III
C. Litigation and Contingent Liabilities (See Section 6.7)
-----------
None.
D. Contingent Obligations (See Section 7.17)
------------
1. Guaranties of the Series C Senior Guaranteed Notes of The Loewen Group
Inc., Due November 1, 1998, in an aggregate principal amount of
$25,000,000, executed by each of Loewen Group International, INC.,
Loewen Financial Corporation and Neweol Finance B.V.
2. Guaranties of the Series D Senior Guaranteed Notes of The Loewen Group
Inc., Due September 11, 2003, in an aggregate principal amount of
$60,000,000, executed by each of Loewen Group International, Inc.,
Loewen Financial Corporation and Neweol Finance B.V.
3. Other contingent obligations described on Annex I (page a-2).
<PAGE>
SCHEDULE 2
APPLICABLE MARGIN AND APPLICABLE COMMITMENT FEE RATE
Credit Quality
If the If the If the If the
Company's Company's Company's Company's
long-term long-term long-term long-term
senior senior senior senior
unsecured and unsecured and unsecured and unsecured and
unenhanced unenhanced unenhanced unenhanced
debt is rated debt is rated debt is rated debt is rated
at least A- at least BBB+ at least BBB BBB- or below
by Standard & by Standard & by Standard & by Standard &
Poor's and Poor's and Poor's and Poor's and
Duff & Phelps Duff & Phelps Duff & Phelps Duff & Phelps
and A3 by and Baal by and Baa2 by and Baa3 by
Moody's. Moody's. Moody's. Moody's.
Applicable
Commitment
Fee Rate
12.5 bp 15.0 bp 17.5 bp 25.0 bp
Applicable Margin
-----------------
ABR + O bp 0 bp 0 bp 0 bp
LIB0R + 35 bp 42.5 bp 50 bp 60 bp
CD + 47.5 bp 55.0 bp 62.5 bp 72.5 bp
NOTE: For purposes of the Pricing Grid, an implied senior unsecured and
unenhanced debt rating is equivalent to a long-term senior unsecured and
unenhanced debt rating. If the Company is split-rated, then pricing will
be determined by reference to any rating category described on the Pricing
Grid into which the ratings in effect from at least two of the three
rating agencies fall or if the ratings of the three rating agencies are
spread across three rating categories, by reference to the middle of the
three ratings. If only two ratings are available, then pricing will be
determined by reference to such two ratings, or in the case of a split
rating, the lower of such two ratings, and if only one rating is
available, then pricing will be determined by that rating. If the Company
has no long-term senior unsecured and unenhanced debt rating or implied
senior unsecured and unenhanced debt racing from Standard & Poor's,
Moody's or Duff & Phelps, it shall be deemed to be in the lowest rating
category described on the Pricing Grid.
<PAGE>
EXHIBIT 99(c)(1)
EXECUTION COPY
--------------------------------------------------------------------------------
MHI GROUP, INC.,
LOEWEN GROUP INTERNATIONAL, INC.
and
SPRT CORP.
==============================
AGREEMENT AND PLAN OF MERGER
==============================
==============================
Dated as of August 9, 1995
==============================
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C>
ARTICLE I
THE TENDER OFFER.......................................................... 2
1.1. The Offer...................................................... 2
---------
1.2. Company Action................................................. 3
--------------
1.3. Directors...................................................... 5
---------
ARTICLE II
THE MERGER................................................................ 7
2.1. The Merger..................................................... 7
----------
2.2. Effective Time................................................. 7
--------------
2.3. Effect of the Merger........................................... 7
--------------------
2.4. Subsequent Actions............................................. 7
------------------
2.5. Articles of Incorporation; By-Laws; Directors and
-------------------------------------------------
Officers....................................................... 8
--------
2.6. Conversion of Securities....................................... 8
------------------------
2.7. Surrender of Shares; Stock Transfer Books...................... 9
-----------------------------------------
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND THE PURCHASER......................................................... 10
3.1. Corporate Organization......................................... 10
----------------------
3.2. Authority Relative to this Agreement........................... 10
------------------------------------
3.3. No Conflict; Required Filings and Consents..................... 11
------------------------------------------
3.4. Financing Arrangements......................................... 12
----------------------
3.5. Brokers........................................................ 12
-------
3.6. Offer Documents; Proxy Statements.............................. 12
---------------------------------
3.7. Litigation..................................................... 13
----------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................. 13
4.1. Organization and Qualification; Subsidiaries................... 13
--------------------------------------------
4.2. Articles of Incorporation and By-Laws.......................... 14
-------------------------------------
4.3. Capitalization................................................. 14
--------------
4.4. Authority...................................................... 15
---------
4.5. No Conflict; Required Filings and Consents..................... 15
------------------------------------------
4.6. SEC Filings; Financial Statements.............................. 16
---------------------------------
4.7. Absence of Certain Changes or Events........................... 17
------------------------------------
4.8. Title to Property.............................................. 19
-----------------
4.9. Litigation..................................................... 20
----------
4.10. Compliance with Applicable Law................................. 20
------------------------------
4.11. Employee Benefit Plans......................................... 20
----------------------
4.12. Offer Documents; Proxy Statement............................... 21
--------------------------------
4.13. Brokers........................................................ 22
-------
4.14. Control Share Acquisition...................................... 22
-------------------------
4.15. Taxes.......................................................... 22
-----
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C>
4.16. Environment................................................... 23
-----------
4.17. Contracts..................................................... 24
---------
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER................................... 24
5.1. Acquisition Proposals......................................... 24
---------------------
5.2. Conduct of Business by the Company Pending the
----------------------------------------------
Merger........................................................ 24
------
5.3. No Shopping................................................... 27
-----------
ARTICLE VI
ADDITIONAL AGREEMENTS.................................................... 27
6.1. Proxy Statement............................................... 27
---------------
6.2. Meeting of Shareholders of the Company........................ 28
--------------------------------------
6.3. Additional Agreements......................................... 28
---------------------
6.4. Notification of Certain Matters............................... 28
-------------------------------
6.5. Access to Information......................................... 29
---------------------
6.6. Public Announcements.......................................... 29
--------------------
6.7. Best Efforts; Cooperation..................................... 29
-------------------------
6.8. Agreement to Defend and Indemnify............................. 29
---------------------------------
6.9. Warrants; Stock Options....................................... 32
-----------------------
ARTICLE VII
CONDITIONS OF MERGER..................................................... 33
7.1. Conditions to Obligation of Each Party to Effect
------------------------------------------------
the Merger.................................................... 33
----------
7.2. Parent and Purchaser Obligations.............................. 34
--------------------------------
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER........................................ 34
8.1. Termination................................................... 34
-----------
8.2. Effect of Termination......................................... 36
---------------------
8.3. Termination Fees and Expenses................................. 36
-----------------------------
8.4. Amendment..................................................... 36
---------
8.5. Waiver........................................................ 36
------
ARTICLE IX
GENERAL PROVISIONS....................................................... 37
9.1. Non-Survival of Representations, Warranties and
-----------------------------------------------
Agreements.................................................... 37
----------
9.2. Notices....................................................... 37
-------
9.3. Expenses...................................................... 38
--------
9.4. Certain Definitions........................................... 38
-------------------
9.5. Headings...................................................... 38
--------
9.6. Severability.................................................. 39
------------
9.7. Entire Agreement; No Third-Party Beneficiaries................ 39
----------------------------------------------
9.8. Assignment.................................................... 39
----------
9.9. Governing Law................................................. 39
-------------
9.10. Counterparts.................................................. 39
------------
</TABLE>
Annex I - Conditions to the Offer
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 9, 1995 (the
"Agreement") among MHI GROUP, INC., a Florida corporation (the "Company"),
---------- -------
LOEWEN GROUP INTERNATIONAL, INC., a corporation organized under the laws of
Delaware (the "Parent"), and SPRT CORP., a Florida corporation and a wholly
------
owned subsidiary of the Parent (the "Purchaser").
---------
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of the Company and the
Parent have each determined that it is in the best interests of their respective
shareholders for the Parent to acquire the Company upon the terms and subject to
the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that the Purchaser
will make a cash tender offer (the "Offer") to acquire all shares of the issued
-----
and outstanding common stock, $.40 par value, of the Company (the "Company
-------
Common Stock"; all issued and outstanding shares of Company Common Stock being
------------
hereinafter collectively referred to as the "Shares") for $10.25 per Share (the
------
"Per Share Amount"), net to the seller in cash, subject to, among other things,
----------------
there being validly tendered and not withdrawn before the expiration of the
Offer a number of Shares which, together with Shares owned by the Purchaser or
the Parent, represent at least a majority of the total number of Shares
outstanding on a fully-diluted basis (the "Minimum Condition"); and
-----------------
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of the Company and the Parent have each approved the merger (the
"Merger") of the Purchaser with the Company following the Offer in accordance
-------
with the Florida Business Corporation Act (the "FBCA") and upon the terms and
----
subject to the conditions set forth herein and approved the Parent Stock Option
(as defined in Section 4.3 hereof); and
WHEREAS, absent the applicability of FBCA (S)607.1104, the
effectiveness of the Merger will be conditioned, among other things, upon the
affirmative vote of the holders of a majority of the outstanding Shares; and
WHEREAS, the Board of Directors of the Company (the "Board of
--------
Directors") has unanimously resolved to recommend acceptance of the Offer and
---------
the Merger to the holders of Shares and has determined that the consideration to
be paid for each Share in the Offer and the Merger is fair to the holders of
such Shares and to recommend that the holders of such Shares accept the Offer
and adopt this Agreement and the transactions contemplated hereby;
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, the Parent and the Purchaser hereby agree as follows:
ARTICLE I
THE TENDER OFFER
SECTION 1.1. The Offer. (a) Provided that this Agreement shall not
---------
have been terminated in accordance with Section 8.1 hereof and none of the
events set forth in Annex I hereto shall have occurred or be existing, the
-------
Parent or a direct or indirect subsidiary thereof shall commence (within the
meaning of Rule 14d-2(a) of the Securities Exchange Act of 1934 (the "Exchange
--------
Act")) the Offer as promptly as practicable, but in no event later than five
---
business days following the execution of this Agreement. The obligation of the
Purchaser to accept for payment any Shares tendered shall be subject to the
satisfaction of the conditions set forth in Annex I, including the Minimum
-------
Condition. The Purchaser expressly reserves the right to waive any such
condition in its sole discretion, to increase the price per Share payable in the
Offer, or to make any other changes in the terms and conditions of the Offer
(provided that, without the prior, written consent of the Company, no change may
be made which decreases the price per Share payable in the Offer or which
reduces the maximum number of Shares to be purchased in the Offer or which
imposes conditions to the Offer in addition to those set forth in Annex I
-------
hereto). The Per Share Amount shall be net to the seller in cash, subject to
reduction only for any applicable Federal back-up withholding or stock transfer
taxes payable by the seller. The Company agrees that no Shares held by the
Company or any of its subsidiaries (as hereinafter defined) will be tendered
pursuant to the Offer. The Purchaser may, at any time, transfer or assign to
one or more corporations directly or indirectly wholly owned by Parent the right
to purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer or prejudice the rights of tendering holders of
Shares to receive payment for Shares validly tendered and accepted for payment.
(b) The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") having the conditions and provisions set forth in Annex I
------------------ -------
hereto. As soon as practicable on the date the Offer is commenced, the Parent
and the Purchaser shall file with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments
----
and supplements thereto, the "Schedule 14D-1") with
--------------
-2-
<PAGE>
respect to the Offer, will comply in all material respects with the provisions
of, and satisfy in all material respects the requirements of, such Schedule 14D-
1 and all applicable Federal securities laws, and such Schedule 14D-1 will
contain (including as an exhibit) or incorporate by reference the Offer to
Purchase (or portions thereof) and forms of the related letter of transmittal
and summary advertisement (which documents, together with any supplements or
amendments thereto, and any other SEC schedule or form which is filed in
connection with the Offer and related transactions, are referred to collectively
herein as the "Offer Documents"). Each of the Parent, the Purchaser and the
---------------
Company represents and warrants that the information provided and to be provided
by it and/or by its auditors, attorneys, financial advisors or other consultants
or advisors specifically for use in the Schedule 14D-1 and the Offer Documents
on the date filed with the SEC and on the date first published, sent or given to
the Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Parent or the Purchaser with respect to written information supplied
by the Company specifically for inclusion in the Schedule 14D-1. Each of the
Parent, the Purchaser and the Company agrees promptly to correct any information
provided by it for use in the Schedule 14D-1 or the Offer Documents if and to
the extent that it shall have become false or misleading in any material respect
and to supplement the information provided by it specifically for use in the
Schedule 14D-1 or the Offer Documents to include any information that shall
become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Parent and the
Purchaser further agree to take all steps necessary to cause the Schedule 14D-1,
as so corrected or supplemented, to be filed with the SEC and the Offer
Documents, as so corrected or supplemented, to be disseminated to holders of
Shares, in each case as and to the extent required by applicable Federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-1 before it is filed with
the SEC.
SECTION 1.2. Company Action. (a) The Company hereby approves of and
--------------
consents to the Offer and the Merger. The Company hereby represents and
warrants that the Board of Directors, at a meeting duly called and held on
August 9, 1995, at which a quorum was present and acting throughout, by the
unanimous vote of all directors present, (i) duly approved and adopted this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger and the Parent Stock Option, (ii) recommended that the shareholders of
the Company accept the Offer, tender their Shares
-3-
<PAGE>
pursuant to the Offer and adopt this Agreement and the transactions contemplated
hereby, including the Merger, (iii) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are fair
to and in the best interests of the holders of Shares, and (iv) took all other
action necessary to render Section 607.0901 and Section 607.0902 of the FBCA
inapplicable to the Offer and the Merger and the Parent Stock Option and the
transactions contemplated hereby and thereby ((i), (ii), (iii) and (iv),
collectively, the "Recommendation"). The Company further represents that
--------------
Commonwealth Associates (the "Financial Advisor") has rendered to the Board of
-----------------
Directors of the Company a written opinion dated as of August 9, 1995, to the
effect that the consideration to be received by the holders of Shares pursuant
to the Offer and the Merger is fair to such shareholders (other than the Parent
and its affiliates) from a financial point of view. The Company hereby
covenants and agrees that the Recommendation will not be withdrawn, modified or
amended, except to the extent that the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), determines in
good faith that the failure to take such action would constitute a breach of the
Board of Directors' fiduciary duties under applicable law. The Company will
furnish to the Parent and the Purchaser, upon request, a copy of the resolutions
adopting the Recommendation certified by an appropriate officer of the Company.
(b) The Company hereby agrees to file with the SEC, as promptly as
practicable on the date of commencement of the Offer after the filing by the
Parent and the Purchaser of the Schedule 14D-1 with respect to the Offer, a
Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, the "Schedule 14D-9") that (i) will
--------------
comply in all material respects with the provisions of all applicable Federal
securities laws and (ii) will include the opinion of the Financial Advisor
referred to in Section 1.2(a) hereof. The Company agrees to mail such Schedule
14D-9 to the shareholders of the Company along with the Offer Documents promptly
after the commencement of the Offer. The Schedule 14D-9 and the Offer Documents
shall contain the Recommendation of the Board of Directors. The Schedule 14D-9
will also contain as an exhibit thereto the written opinion of the Financial
Advisor described in Section 1.2(a) hereof. The Schedule 14D-9, on the date
filed with the SEC and on the date first published, sent or given to the
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to written
-4-
<PAGE>
information supplied by the Parent or the Purchaser specifically for inclusion
in the Schedule 14D-9. The Company agrees promptly to correct the Schedule 14D-
9 if and to the extent that it shall become false or misleading in any material
respect (and each of the Parent and the Purchaser, with respect to written
information supplied by it specifically for use in the Schedule 14D-9, shall
promptly notify the Company of any required corrections of such information and
cooperate with the Company with respect to correcting such information) and to
supplement the information contained in the Schedule 14D-9 to include any
information that shall become necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
the Company shall take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to the Company's
shareholders to the extent required by applicable Federal securities laws. The
Parent and the Purchaser, and their respective counsel, shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 before it is
filed with the SEC.
(c) In connection with the Offer, the Company shall promptly upon
execution of this Agreement furnish the Parent and the Purchaser with mailing
labels containing the names and addresses of all record holders of Shares and
security position listings of Shares held in stock depositories, each as of a
recent date, and shall promptly furnish the Parent and the Purchaser with such
additional information, including updated lists of shareholders, mailing labels
and security position listings, and such other information and assistance as the
Parent and the Purchaser or their agents may reasonably request for the purpose
of communicating the Offer to the record and beneficial holders of Shares.
SECTION 1.3. Directors. Promptly upon the purchase by the Purchaser
---------
of any Shares pursuant to the Offer, and from time to time thereafter as Shares
are acquired by the Purchaser, so long as the Purchaser shall not have waived
the Minimum Condition, the Purchaser shall be entitled to designate such number
of directors, rounded up to the next whole number, on the Board of Directors as
will give the Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors equal to at least that
number of directors which equals the product of the total number of directors on
the Board of Directors (giving effect to the directors appointed or elected
pursuant to this sentence and including current directors serving as officers of
the Company) multiplied by the percentage that the aggregate number of Shares
beneficially owned by the Purchaser or any affiliate of the Purchaser (including
for purposes of this Section 1.3 such Shares as are accepted for payment
pursuant to the Offer, but excluding
-5-
<PAGE>
Shares held by the Company or any of its Subsidiaries) bears to the number of
Shares outstanding. At such times, the Company will also cause (i) each
committee of the Board of Directors, (ii) if requested by the Purchaser, the
board of directors of each of the Company's Subsidiaries and (iii) if requested
by the Purchaser, each committee of such board to include persons designated by
the Purchaser constituting the same percentage of each such committee or board
as the Purchaser's designees are of the Board of Directors. The Company shall,
upon request by the Purchaser, promptly increase the size of the Board of
Directors or exercise its best efforts to secure the resignations of such number
of directors as is necessary to enable the Purchaser's designees to be elected
to the Board of Directors and shall cause the Purchaser's designees to be so
elected; provided, however, that, in the event that the Purchaser's designees
-------- -------
are appointed or elected to the Board of Directors, until the Effective Time (as
defined in Section 2.2 hereof) the Board of Directors shall have at least one
director who is a director on the date hereof and who is neither an officer of
the Company nor a designee, shareholder, affiliate or associate (within the
meaning of the Federal securities laws) of the Purchaser (one or more of such
directors, the "Independent Directors"); provided further, that if no
--------------------- -------- -------
Independent Directors remain, the other directors shall designate one person to
fill one of the vacancies who shall not be either an officer of the Company or a
designee, shareholder, affiliate or associate of the Purchaser or the Parent,
and such person shall be deemed to be an Independent Director for purposes of
this Agreement. Subject to applicable law, the Company shall promptly take all
action necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.3 and shall include in the Schedule 14D-9 mailed to shareholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if the Purchaser has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.3. The Parent and the Purchaser will
supply the Company and be solely responsible for any information with respect to
itself and its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to the
contrary, prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (i) amend or terminate this Agreement
by the Company, (ii) exercise or waive any of the Company's rights or remedies
hereunder, or (iii) extend the time for performance of the Purchaser's
obligations hereunder.
-6-
<PAGE>
ARTICLE II
THE MERGER
SECTION 2.1. The Merger. At the Effective Time (as defined in
----------
Section 2.2) and subject to and upon the terms and conditions of this Agreement
and the FBCA, the Purchaser shall be merged with and into the Company, the
separate corporate existence of the Purchaser shall cease, and the Company shall
continue as the surviving corporation. The Company as the surviving corporation
after the Merger hereinafter sometimes is referred to as the "Surviving
---------
Corporation".
-----------
SECTION 2.2. Effective Time. As promptly as practicable after the
--------------
satisfaction or waiver of the conditions set forth in Article VII, the parties
-----------
hereto shall cause the Merger to be consummated by filing Articles of Merger
with the Secretary of State of the State of Florida, in such form as required
by, and executed in accordance with the relevant provisions of, the FBCA (the
time of such filing being the "Effective Time").
--------------
SECTION 2.3. Effect of the Merger. At the Effective Time, the effect
--------------------
of the Merger shall be as provided in the applicable provisions of the FBCA.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and the Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and the Purchaser shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 2.4. Subsequent Actions. If, at any time after the Effective
------------------
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or the Purchaser acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or the Purchaser, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of such corporations or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this Agreement.
-7-
<PAGE>
SECTION 2.5. Articles of Incorporation; By-Laws; Directors and
-------------------------------------------------
Officers. (a) Unless otherwise determined by the Parent before the Effective
--------
Time, at the Effective Time the Articles of Incorporation of the Company, as in
effect immediately before the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Articles of Incorporation.
(b) The By-Laws of the Purchaser, as in effect immediately before the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by law, the Articles of Incorporation of the
Surviving Corporation and such By-Laws.
(c) The directors of the Purchaser immediately before the Effective
Time will be the initial directors of the Surviving Corporation, and the
officers of the Company immediately before the Effective Time will be the
initial officers of the Surviving Corporation, in each case until their
successors are elected or appointed and qualified. If, at the Effective Time, a
vacancy shall exist on the Board of Directors or in any office of the Surviving
Corporation, such vacancy may thereafter be filled in the manner provided by
law.
SECTION 2.6. Conversion of Securities. At the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of the Purchaser, the
Company or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately before the
Effective Time (other than any Shares to be canceled pursuant to Section 2.6(b))
shall be canceled and extinguished and be converted into the right to receive
the Per Share Amount in cash payable to the holder thereof, without interest,
upon surrender of the certificate representing such Share (such amount of cash
in the aggregate being referred to herein as the "Merger Consideration").
--------------------
(b) Each share of Company Common Stock held in the treasury of the
Company and each Share owned by the Parent or any direct or indirect wholly
owned subsidiary of the Parent or of the Company immediately before the
Effective Time shall be canceled and extinguished and no payment or other
consideration shall be made with respect thereto.
(c) Each share of common stock, par value $.01 per share, of the
Purchaser issued and outstanding immediately before the Effective Time shall
thereafter represent one validly issued, fully paid and nonassessable share of
common stock, par value $.01 per share, of the Surviving Corporation.
-8-
<PAGE>
SECTION 2.7. Surrender of Shares; Stock Transfer Books. (a) Before
-----------------------------------------
the Effective Time, the Company shall designate a bank or trust company to act
as agent for the holders of Shares (the "Exchange Agent") to receive the funds
--------------
necessary to make the payments contemplated by Section 2.6.
(b) Each holder of a certificate or certificates representing any
Shares canceled upon the Merger pursuant to Section 2.6(a) may thereafter
surrender such certificate or certificates to the Exchange Agent, as agent for
such holder, to effect the surrender of such certificate or certificates on such
holder's behalf for a period ending six months after the Effective Time. Any
cash delivered or made available to the Exchange Agent pursuant to this Section
2.8 and not exchanged for certificates representing Shares within six months
after the Effective Time will be returned by the Exchange Agent to the Surviving
Corporation, which thereafter will act as Exchange Agent, subject to the rights
of holders of non-surrendered certificates representing Shares under this
Article II and any former holders of Shares who have not theretofore complied
with the instructions for exchanging their certificates representing Shares, who
will thereafter look only to the Surviving Corporation for payment of their
claim for the consideration set forth in Section 2.6, without any interest
thereon, but will have no greater rights against the Surviving Corporation (or
either constituent corporation in the Merger) than may be accorded to general
unsecured creditors thereof under applicable law. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto will be liable to a
holder of Shares for any cash or interest thereon delivered to a public official
pursuant to applicable abandoned property laws. The Parent agrees that promptly
after the Effective Time it shall cause the distribution to holders of record of
Shares as of the Effective Time of appropriate materials to facilitate such
surrender.
(c) If payment of cash in respect of canceled Shares is to be made to
a person other than the person in whose name a surrendered certificate or
instrument is registered, it shall be a condition to such payment that the
certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the certificate or
instrument surrendered or shall have established to the satisfaction of the
Parent or the Exchange Agent that such tax either has been paid or is not
payable.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall not be any further registration of transfers of
shares of Company Common Stock
-9-
<PAGE>
thereafter on the records of the Company. If, after the Effective Time,
certificates for Company Common Stock are presented to the Surviving
Corporation, they shall be canceled and exchanged for cash as provided in
Section 2.6(a). No interest shall accrue or be paid on any cash payable upon
the surrender of a certificate or certificates which immediately before the
Effective Time represented outstanding Shares.
(e) In the event any certificate representing Shares shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such certificate to be lost, stolen or destroyed and, if
required by the Parent, the posting by such person of a bond in customary form
and amount as indemnity against any claim that may be made against it with
respect to such certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed certificate the consideration set forth in Section
2.6, without any interest thereon, upon due surrender of and deliverable in
respect of such certificate pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND THE PURCHASER
The Parent and the Purchaser represent and warrant to the Company as
follows:
SECTION 3.1. Corporate Organization. Each of the Parent and the
----------------------
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the requisite
corporate power and authority and any necessary governmental authority to own,
operate or lease the properties that it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power and
authority would not reasonably be expected to have, individually or in the
aggregate, the effect of preventing or materially delaying the Parent and the
Purchaser from performing their respective obligations under this Agreement.
SECTION 3.2. Authority Relative to this Agreement. The execution and
------------------------------------
delivery of this Agreement by the Parent and the Purchaser and the consummation
by the Parent and the Purchaser of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the Parent
and the Purchaser and no other corporate proceeding is necessary for the
execution and delivery of this Agreement by the Parent or the
-10-
<PAGE>
Purchaser, the performance by the Parent or the Purchaser of their obligations
hereunder and the consummation by the Parent or the Purchaser of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Parent and the Purchaser and constitutes a legal, valid and
binding obligation of each such corporation, enforceable against each of them in
accordance with its terms.
SECTION 3.3. No Conflict; Required Filings and Consents. (a) The
------------------------------------------
execution and delivery of this Agreement by the Parent and the Purchaser do not,
and the performance of this Agreement by the Parent and the Purchaser will not,
(i) conflict with or violate any law, regulation, court order, judgment or
decree applicable to the Parent or the Purchaser or by which any of their
property is bound or affected, (ii) violate or conflict with either the Articles
of Incorporation or By-Laws of either the Parent or the Purchaser, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination or cancellation of, or result in the creation of a lien or
encumbrance on any of the property or assets of the Parent or the Purchaser
pursuant to, any contract, instrument, permit, license or franchise to which the
Parent or the Purchaser is a party or by which the Parent or the Purchaser or
any of their property is bound or affected, except for such violations,
conflicts, breaches or defaults which would not reasonably be expected to have,
individually or in the aggregate, the effect of preventing or materially
delaying the Parent and the Purchaser from performing their respective
obligations under this Agreement.
(b) Except for applicable requirements, if any, of the Exchange Act,
the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), filing and recordation of
-------
appropriate merger documents as required by the FBCA, neither the Parent nor the
Purchaser is required to submit any notice, report or other filing with any
governmental authority, domestic or foreign, in connection with the execution,
delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby, except for the failure to submit such notices,
reports or other filings which would not reasonably be expected to have,
individually or in the aggregate, the effect of preventing or materially
delaying the Parent and the Purchaser from performing their respective
obligations under this Agreement. No waiver, consent, approval or authorization
of any governmental or regulatory authority, domestic or foreign, is required to
be obtained or made by either the Parent or the Purchaser in connection with its
execution, delivery or performance of this Agreement, except for such waivers,
consents, approvals or authorizations the failure of which to have obtained
-11-
<PAGE>
or made would not reasonably be expected to have, individually or in the
aggregate, the effect of preventing or materially delaying the Parent and the
Purchaser from performing their respective obligations under this Agreement.
SECTION 3.4. Financing Arrangements. The Purchaser has funds
----------------------
available to it sufficient to purchase the Shares in accordance with the terms
of this Agreement. After consummation of the Offer and immediately prior to
consummation of the Merger, the Parent or the Purchaser will have deposited in
trust with the Exchange Agent funds in a sufficient amount to pay the Merger
Consideration in respect of those Shares to be converted pursuant to Section
2.6(a).
SECTION 3.5. Brokers. No broker, finder or investment banker, other
-------
than Smith Barney Inc. and Mr. Peter Grunebaum, is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
the Parent or the Purchaser.
SECTION 3.6. Offer Documents; Proxy Statements. None of the
---------------------------------
information supplied by the Parent or the Purchaser, or their respective
officers, directors, representatives, agents or employees, for inclusion in the
Proxy Statement (as defined in Section 4.12), or in any amendments thereof or
supplements thereto, will, on the date the Proxy Statement is first mailed to
shareholders, at the time of the Company Shareholders' Meeting (as defined in
Section 4.12) or at the Effective Time, contain any statement which, at such
time and in light of the circumstances under which it will be made, will be
false or misleading with respect to any material fact, or will omit to state any
material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Shareholders'
Meeting which has become false or misleading. Neither the Offer Documents nor
any amendments thereof or supplements thereto will, at any time the Offer
Documents or any such amendments or supplements are filed with the SEC, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing, the
Parent and the Purchaser do not make any representation or warranty with respect
to any information that has been supplied by the Company or its accountants,
counsel or other authorized representatives for use in any of the foregoing
documents. The Offer Documents and any amendments or supplements thereto will
comply as to form in all material respects with the
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<PAGE>
provisions of the Exchange Act and the rules and regulations thereunder.
SECTION 3.7. Litigation. There are no claims, actions, suits,
----------
proceedings, or investigations pending or, to the best knowledge of the Parent
or the Purchaser, threatened, against the Parent or the Purchaser before any
court, administrative, governmental or regulatory authority or body, domestic or
foreign, which are reasonably likely to prevent or delay the performance by the
Parent or the Purchaser of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent and the
Purchaser as follows:
SECTION 4.1. Organization and Qualification; Subsidiaries. Each of
--------------------------------------------
the Company and its Subsidiaries (defined below in this Section 4.1) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority and any necessary governmental authority to own, operate or lease
the properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, operated or leased or the nature of its
activities makes such qualification necessary, except for such failure which,
when taken together with all other such failures, would not have a Material
Adverse Effect (as defined below in this Section 4.1). The term "Subsidiary"
----------
means any corporation or other legal entity of which the Company or, if the
context requires, the Surviving Corporation (either alone or through or together
with any other Subsidiary) owns, directly or indirectly, more than 50% of the
stock or other equity interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity. The term "Material Adverse Effect" means any
-----------------------
change in or effect on the business of the Company or any of the Subsidiaries
that is reasonably likely to be materially adverse to the business, operations,
properties (including intangible properties), condition (financial or
otherwise), assets, liabilities or regulatory status of the Company and the
Subsidiaries taken as a whole. A true and complete list of all the
Subsidiaries, together with the jurisdiction of incorporation of each Subsidiary
and the percentage of each Subsidiary's outstanding
-13-
<PAGE>
capital stock owned by the Company or another Subsidiary, is set forth in
Section 4.1 of the disclosure memorandum separately delivered by the Company to
the Parent in connection herewith (the "Company Disclosure Schedule").
---------------------------
SECTION 4.2. Articles of Incorporation and By-Laws. The Company has
-------------------------------------
heretofore furnished to the Parent a complete and correct copy of the Amended
and Restated Articles of Incorporation and the By-Laws or equivalent
organizational documents, each as amended to the date hereof, of the Company and
made available to the Parent such documents with respect to all Subsidiaries.
Such Amended and Restated Articles of Incorporation, By-Laws and equivalent
organizational documents are in full force and effect. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
Articles of Incorporation or By-Laws or equivalent organizational documents.
SECTION 4.3. Capitalization. The authorized capital stock of the
--------------
Company consists of 10,000,000 shares of Company Common Stock, 100,000 shares of
Series B Convertible Preferred Stock (the "Series B Preferred") and 200,000
------------------
shares of Series C Convertible Preferred Stock (the "Series C Preferred"). As
------------------
of the date hereof, (i) 6,272,251 shares of Company Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable,
(ii) 57,129 shares of Company Common Stock were held in the treasury of the
Company or by Subsidiaries of the Company, (iii) 722,961 shares of Company
Common Stock were reserved for issuance upon exercise of outstanding options
under the Company's 1989 Stock Option Plan, (iv) 24,757 shares of Series B
Preferred were issued and outstanding and (v) 13,938 shares of Series C
Preferred where issued and outstanding. Except as set forth in this Section
4.3, in Section 4.3(a) of the Company Disclosure Schedule, and except for the
Stock Option Agreement (the "Parent Stock Option") between the Company and the
-------------------
Parent dated as of the date hereof, there are no shares of capital stock of the
Company authorized, issued or outstanding and there are no outstanding
subscriptions, options, warrants, rights, convertible securities or any other
agreements or commitments of any character relating to the issued or unissued
capital stock or other securities of the Company obligating the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of the Company or obligating the Company to grant,
extend or enter into any subscription, option, warrant, right, convertible
security or other similar agreement or commitment. Except as set forth in
Section 4.3(a) of the Company Disclosure Schedule, there are no voting trusts or
other agreements or understandings to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary is bound with respect to the
voting of the capital stock of the Company or the repurchase,
-14-
<PAGE>
redemption or other acquisition of or payment in respect of any shares of
capital stock of the Company or any Subsidiary.
All the outstanding capital stock of each of the Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and, except as set
forth in Section 4.1 of the Company Disclosure Schedule, is owned by the Company
or a Subsidiary free and clear of any liens, security interests, pledges,
agreements, claims, charges or encumbrances of any nature whatsoever. There are
no existing subscriptions, options, warrants, rights, convertible securities or
any other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of any Subsidiary obligating the
Company or any Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of any Subsidiary or
obligating the Company or any Subsidiary to grant, extend or enter into any
subscription, option, warrant, right, convertible security or other similar
agreement or commitment. Except for the Subsidiaries and except as set forth in
Section 4.3(b) of the Company Disclosure Schedule and in the SEC Reports (as
defined in Section 4.6), the Company does not directly or indirectly own a
greater than 5% equity interest in any other corporation, partnership, joint
venture or other business association or entity.
SECTION 4.4. Authority. The Company has the necessary corporate
---------
power and authority to enter into this Agreement and the Parent Stock Option
and, subject to obtaining any necessary shareholder approval of the Merger, to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Parent Stock Option by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of the
Company and no further corporate proceedings on the part of the Company are
required in connection therewith, subject to the approval of the Merger by the
Company's shareholders in accordance with the FBCA. This Agreement and the
Parent Stock Option have been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms.
SECTION 4.5. No Conflict; Required Filings and Consents. (a) Except
------------------------------------------
as set forth in Section 4.5 of the Company Disclosure Schedule, the execution
and delivery of this Agreement and the Parent Stock Option by the Company do
not, and the performance of this Agreement by the Company will not, (i) conflict
with or violate any law, regulation, court order, judgment or decree applicable
to the Company or any of the Subsidiaries or by which its or any of their
property is bound or affected, (ii) violate or
-15-
<PAGE>
conflict with the Articles of Incorporation or By-Laws of the Company or any
Subsidiary, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time of both would become a default) under,
or give to others any rights of termination or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of the Subsidiaries pursuant to, any contract, instrument,
permit, license or franchise to which the Company or any of the Subsidiaries is
a party or by which the Company or any of the Subsidiaries or its or any of
their property is bound or affected, except for conflicts, violations, breaches
or defaults which, in the aggregate, would not have a Material Adverse Effect.
(b) Except for applicable requirements, if any, of the Exchange Act,
the pre-merger notification requirements of the HSR Act, and filing and
recordation of appropriate merger or other documents as required by the FBCA,
and except as set forth in Section 4.5(b) of the Company Disclosure Schedule,
the Company is not required to submit any notice, report or other filing with,
or obtain any waiver, consent, approval or authorization of, any governmental
authority, domestic or foreign, in connection with the execution, delivery or
performance of this Agreement.
SECTION 4.6. SEC Filings; Financial Statements. (a) The Company has
---------------------------------
filed all forms, reports and documents required to be filed with the SEC since
January 1, 1994, and has heretofore delivered to the Parent, in the form filed
with the SEC, its (i) Annual Reports on Form 10-K for the fiscal years ended
April 30, 1995 and April 30, 1994, respectively, (ii) all proxy statements
relating to the Company's meetings of shareholders (whether annual or special)
held since January 1, 1993 or to be held thereafter and (iii) all other reports
or registration statements (other than Reports on Form 10-Q) filed by the
Company with the SEC since January 1, 1994 (collectively, the "SEC Reports").
-----------
The SEC Reports (i) were prepared in accordance with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
--------------
as the case may be, and (ii) did not at the time they were filed, or in the case
of registration statements, at the time they became effective contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
the Subsidiaries is required to file any statements or reports with SEC pursuant
to Sections 13(a) or 15(d) of the Exchange Act.
(b) The consolidated financial statements contained in the SEC
Reports have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis
-16-
<PAGE>
throughout the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of the Company
and its Subsidiaries as at the respective dates thereof and the consolidated
results of operations and changes in financial position of the Company and its
Subsidiaries for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
(c) Except as reflected or reserved against in the consolidated
financial statements contained in the SEC Reports, the Company and its
Subsidiaries have no liabilities of any nature (whether accrued, absolute,
contingent or otherwise) and there is no existing condition, situation or set of
circumstances which would result in such a liability which in either case in the
aggregate could have a Material Adverse Effect. Since April 30, 1995, neither
the Company nor any of the Subsidiaries has incurred any liabilities material to
the Company and the Subsidiaries taken as a whole except (i) liabilities
incurred in the ordinary course of business and consistent with past practice
and (ii) liabilities incurred in connection with or as a result of the Offer or
the Merger.
SECTION 4.7. Absence of Certain Changes or Events. Since April 30,
------------------------------------
1995, except as contemplated in this Agreement or as set forth in Section 4.7 of
the Company Disclosure Schedule, there has not been:
(a) any Material Adverse Effect or any event, occurrence or
development of a state of circumstances or facts which is reasonably likely
to have a Material Adverse Effect;
(b) any strike, picketing, work slowdown or other labor disturbance
having a Material Adverse Effect;
(c) any damage, destruction or loss (whether or not covered by
insurance) with respect to any of the assets of the Company or any of its
Subsidiaries having a Material Adverse Effect;
(d) any repurchase, redemption or other acquisition of capital stock
of the Company or any Subsidiary by the Company or any of the Subsidiaries
or any declaration or payment of any dividend or other distribution in
cash, stock or property with respect to the capital stock of the Company,
except for purchases heretofore made pursuant to the terms of the Company's
employee benefit plans and regular cash dividends paid before the date
hereof;
-17-
<PAGE>
(e) any entry into any material commitment or transaction (including,
without limitation, any borrowing, assumption of indebtedness, guaranty of
indebtedness, or capital expenditure) other than in the ordinary course of
business and on terms consistent with past practice or as contemplated by
this Agreement;
(f) any transfer of, or rights granted under, any material leases,
licenses, agreements, patents, trademarks, trade names or copyrights other
than those transferred or granted in the ordinary course of business and
consistent with past practice;
(g) any mortgage, pledge, security interest or imposition of a lien
or other encumbrance on any material asset of the Company or any of the
Subsidiaries;
(h) any change by the Company in accounting principles or methods
except insofar as may have been required by a change in generally accepted
accounting principles and disclosed in the SEC Reports;
(i) any amendment of any material term of any outstanding security of
the Company or any Subsidiary;
(j) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries or made in the
ordinary course of business consistent with past practices; or
(k) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other
right, in either case, material to the Company and the Subsidiaries taken
as a whole, other than transactions and commitments in the ordinary course
of business consistent with past practice and those contemplated by this
Agreement.
Since April 30, 1995, except as contemplated in this Agreement, the
Company and its Subsidiaries have conducted their business only in the ordinary
course and in a manner consistent with past practice and have not made any
material change in the conduct of the business or operations of the Company and
its Subsidiaries taken as a whole. Except as set forth in Section 4.7 of the
Company Disclosure Schedule, without limiting the generality
-18-
<PAGE>
of the foregoing, the Company has not, since such date, except as set forth in
the SEC Reports, made any changes in executive compensation levels or in the
manner in which other employees of the Company or the Subsidiaries are
compensated, paid or agreed to pay any pension, retirement allowance or other
employee benefit not required or permitted by any plan, agreement or arrangement
existing on such date to any director, officer or employee, whether past or
present, increased any benefits payable under existing severance or termination
pay policies or employment agreements, increased any compensation, bonus, or
other benefits payable to directors, officers or employees of the Company or any
Subsidiary or committed itself to any collective bargaining agreement (except
for renewals of existing collective bargaining agreements) or to any pension,
profit-sharing, bonus, incentive, deferred compensation, stock purchase, stock
option, stock appreciation right, group insurance, severance pay, retirement or
other employee benefit plan, agreement or arrangement, or to any employment or
consulting agreement with or for the benefit of any person, or to amend any of
such plans or any of such agreements in existence on such date.
SECTION 4.8. Title to Property. (a) Except as set forth in Section
-----------------
4.8 of the Company Disclosure Schedule, the Company and the Subsidiaries have
good and marketable title, or valid leasehold rights in the case of leased
property, to all real property (the "Real Property") and all personal property
-------------
purported to be owned or leased by them, free and clear of all material liens,
security interests, claims, encumbrances and charges, excluding (i) liens for
fees, taxes, levies, imposts, duties or governmental charges of any kind which
are not yet delinquent or are being contested in good faith by appropriate
proceedings which suspend the collection thereof, (ii) liens for mechanics,
materialmen, laborers, employees, suppliers or other liens arising by operation
of law for sums which are not yet delinquent or are being contested in good
faith by appropriate proceedings, (iii) liens created in the ordinary course of
business in connection with the leasing or financing of office, computer and
related equipment and supplies, (iv) easements and similar encumbrances
ordinarily created for fuller utilization and enjoyment of property, and (v)
liens or defects in title or leasehold rights that, in the aggregate, do not and
will not have a Material Adverse Effect.
(b) Consummation of the Offer and the Merger will not result in any
breach of or constitute a default (or an event with which notice or lapse of
time or both would constitute a default) under, or give to others any rights of
termination or cancellation of, or require the consent of others under, any
lease in which the Company is a lessee, except for breaches or defaults which,
in the aggregate, would not have a Material Adverse Effect.
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<PAGE>
SECTION 4.9. Litigation. Except as previously disclosed in the SEC
----------
Reports or to the Parent in writing, there are no claims, actions, suits,
proceedings or investigations pending or, to the best knowledge of the Company,
threatened against the Company or any of its Subsidiaries, or any properties or
rights of the Company or any of its Subsidiaries, before any court,
administrative, governmental or regulatory authority or body, domestic or
foreign, which, in the aggregate, have or will have a Material Adverse Effect or
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the Offer or the Merger or any of the other transactions contemplated
hereby. As of the date hereof, neither the Company nor any of its Subsidiaries
nor any of their property is subject to any order, judgment, injunction or
decree, having a Material Adverse Effect.
SECTION 4.10. Compliance with Applicable Law. Except as previously
------------------------------
disclosed in the SEC Reports, the Company and its Subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals of all governmental
entities necessary for the lawful conduct of their respective businesses (the
"Company Permits"), except for failures to hold such permits, licenses,
----------------
variances, exemptions, orders and approvals which would not, individually or in
the aggregate, have a Material Adverse Effect. Except as previously disclosed
in the SEC Reports or Section 4.10 of the Company Disclosure Schedule, the
Company and its Subsidiaries are in compliance with, and no condition exists
that with notice or lapse of time or both would constitute a breach or default
with respect to, the terms of the Company Permits, except where the failure to
so comply, such breach or such default, would not have a Material Adverse
Effect. Except as previously disclosed in the SEC Reports, the businesses of
the Company and its Subsidiaries are not being conducted in violation of any
law, ordinance, regulation, judgment, order or decree of any governmental entity
(including, without limitation, the Occupational Safety and Health Act, the
Americans with Disabilities Act and the Federal Trade Commissions Funeral
Industry Practices Regulation) except for violations or possible violations
which individually or in the aggregate do not, and, insofar as reasonably can be
foreseen, in the future will not, have a Material Adverse Effect. Except as
previously disclosed in the SEC Reports, no investigation or review by any
governmental entity with respect to the Company or any of its Subsidiaries is
pending or, to the best knowledge of the Company, threatened nor, to the best
knowledge of the Company, has any governmental entity indicated an intention to
conduct the same, other than, in each case, those which the Company reasonably
believes will not have a Material Adverse Effect.
SECTION 4.11. Employee Benefit Plans. Except for the obligation to
----------------------
make contributions or to satisfy benefit obligations
-20-
<PAGE>
in accordance with the terms thereof, neither the Company nor any Subsidiary has
any liability to or with respect to any "employee benefit plan", as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained or contributed to, currently or in the past, by the
-----
Company or any of its Subsidiaries (the "Plans") that will have a Material
-----
Adverse Effect. None of the Plans is or was a defined benefit Plan or a
multiemployer plan, as such terms are defined in ERISA. To the best of the
Company's knowledge, each Plan intended to qualify under Section 401(a) of the
Internal Revenue Code (the "Code") is and at all times has been so qualified.
Copies of all of the Plans covering United States employees of the Company or
any Subsidiary and any related trusts, summary plan descriptions or other
related materials reasonably requested by the Parent have been made available to
the Parent. Except as set forth in Section 4.11 of the Company Disclosure
Schedule, and except as provided in Section 6.9(a) hereof, neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated by this Agreement (a) will result in, cause the accelerated vesting
or delivery of, or increase the amount or value of, any payment or benefit to
any employee or former employee of the Company or any of its Subsidiaries, or
(b) will result in the Company, the Parent or the Purchaser being obligated to
make a payment to an individual that would be a "parachute payment" to a
"disqualified individual" as these terms are defined in Section 280G of the
Code. The stock options described in Section 4.11 of the Company Disclosure
Schedule have been duly rescinded and are not exercisable into Shares.
SECTION 4.12. Offer Documents; Proxy Statement. The proxy statement
--------------------------------
to be sent to the shareholders of the Company in connection with the meeting of
the Company's shareholders to consider the Merger (the "Company Shareholders'
---------------------
Meeting") or the information statement to be sent to such shareholders, as
-------
appropriate (such proxy statement or information statement, as amended or
supplemented, is herein referred to as the "Proxy Statement"), will comply in
---------------
all material respects with the applicable requirements of the Exchange Act and
the rules and regulations thereunder except that no representation or warranty
is being made by the Company with respect to any information supplied to the
Company by the Parent or the Purchaser specifically for inclusion in the Proxy
Statement. The Proxy Statement will not, at the time the Proxy Statement (or
any amendment or supplement thereto) is filed with the SEC or first sent to
shareholders, at the time of the Company Shareholders' Meeting or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
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<PAGE>
SECTION 4.13. Brokers. No broker, finder or investment banker (other
-------
than the Financial Advisor) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company. The Company has
heretofore furnished to the Parent true and complete information concerning the
financial arrangements between the Company and the Financial Advisor pursuant to
which such firm would be entitled to any payment as a result of the transactions
contemplated hereunder.
SECTION 4.14. Control Share Acquisition. None of the transactions
-------------------------
contemplated by this Agreement and the Parent Stock Option, including the
purchase of Shares in the Offer and in the Merger and the Merger, individually
or in the aggregate, (a) result in, constitute or be deemed to be a "control
share acquisition" as such term is defined in (S) 607.0902 of the FBCA or (b)
are subject to the provisions of Section 607.0901 of the FBCA, in each case with
respect to either the Parent or the Purchaser, or any other party to either of
such Agreements.
SECTION 4.15. Taxes. Each of the Company and its Subsidiaries has
-----
filed, or caused to be filed, all federal, state, local and foreign income and
other material tax returns required to be filed by it, has paid or withheld, or
caused to be paid or withheld, all taxes of any nature whatsoever, with any
related penalties, interest and liabilities (any of the foregoing being referred
to herein as a "Tax"), that are shown on such tax returns as due and payable, or
---
otherwise required to be paid, other than such Taxes as are being contested in
good faith and for which adequate reserves have been established and other than
where the failure to so file, pay or withhold would not have a Material Adverse
Effect. There are no material claims or assessments pending against the Company
or its Subsidiaries for any alleged deficiency in any Tax, and the Company does
not know of any threatened Tax claims or assessments against the Company or any
of its Subsidiaries which if upheld would have a Material Adverse Effect. None
of the Company or any of its Subsidiaries has made an election to be treated as
a "consenting corporation" under Section 341(f) of the Code. There are no
waivers or extensions of any applicable statute of limitations to assess any
material Taxes. The affiliated group of corporations (as defined in section
1504(a) of the Code) of which the Company is the parent is the only affiliated,
consolidated, combined or unitary group of which the Company and its
Subsidiaries have been a member. Neither the Company nor any of its
Subsidiaries has agreed or is required to make adjustments under section 481(a)
of the Code by reason of a change in method of accounting or otherwise. The
stock of the Company does not constitute an interest in real property subject to
the New York Real Property Transfer Gains Tax.
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<PAGE>
SECTION 4.16. Environment. (a) As used herein, the term
-----------
"Environmental Laws" means all Federal, state, local or foreign laws relating to
-------------------
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or
industrial, toxic or hazardous substances or wastes into the environment or work
place, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of chemicals, pollutants,
contaminants, or industrial, toxic or hazardous substances or wastes, as well as
all authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
(b) Except as disclosed in Section 4.16 of the Company Disclosure
Schedule, there are, with respect to the Company or any of its Subsidiaries, no
past or present violations of Environmental Laws, releases of any material into
the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any common law or
other legal liability, or any responsibility to undertake or incur costs for any
cleanup, remedial response or corrective action, including, without limitation,
liability under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 ("CERCLA") or similar state or local laws, which
------
liabilities, either individually or in the aggregate, would have a Material
Adverse Effect.
(c) Except as disclosed in Section 4.16 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has (i) entered into
or been subject to any consent decree, compliance order or administrative order
pursuant to any Environmental Law, (ii) received any written communication
indicating potential responsibility for response costs or remediation with
respect to a release or threatened release of hazardous substances, (iii) been
subject to any release reporting, cleanup, remediation or corrective action
requirements under any Environmental Law, or (iv) had a lien imposed on any of
its property under any Environmental Law.
(d) The Company and its Subsidiaries have (i) made available to the
Parent all environmental or worker health and safety audits, reports, studies
and investigations within the Company's possession which were performed by third
party consultants engaged by the Company or by governmental agencies relating to
the Company or any of its Subsidiaries or any property
-23-
<PAGE>
currently or formerly owned, leased or operated by the Company or any of its
Subsidiaries.
SECTION 4.17. Contracts. Each of the material contracts listed as
---------
such in the Company's 1995 Annual Report on Form 10-K is in full force and
effect, is a legal, binding and enforceable obligation of the Company or any
Subsidiary and, to the best of knowledge of the Company, each other party
thereto, and no event has occurred that constitutes or, with the giving of
notice or passage of time, or both, would constitute a material default
thereunder or a material breach thereof by any party thereto or that could
result in the acceleration of the performance of any obligation thereunder
having a Material Adverse Effect.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. Acquisition Proposals. The Company will notify the
---------------------
Parent immediately if any inquiries or proposals are received by, any
information is requested from, or any negotiations or discussions are sought to
be initiated or continued with the Company, its subsidiaries, or any of their
respective officers, directors, employees, agents or advisors, in each case in
connection with any acquisition, business combination or purchase of all or any
significant portion of the assets of, or any equity interest in, the Company or
any Subsidiary which would require the acquiring entity or group to file a
Schedule 13D with respect thereto under the Exchange Act and will keep the
Parent reasonably informed of the status and substance of any such inquiries,
proposals, requests, negotiations or discussions.
SECTION 5.2. Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
The Company covenants and agrees that, between the date of this Agreement and
the Effective Time, unless the Parent shall otherwise consent in writing, the
businesses of the Company and its Subsidiaries shall be conducted only in the
ordinary course of business and in a manner consistent with past practice; and
the Company will use its best efforts to preserve substantially intact the
business organization of the Company and its Subsidiaries, to keep available the
services of the present officers, employees and consultants of the Company and
its Subsidiaries and to preserve the present relationships of the Company and
its Subsidiaries with customers, suppliers and other persons with which the
Company or any of its Subsidiaries has significant business relations. By way
of amplification and not limitation, except as contemplated by this Agreement,
neither the Company nor any of its Subsidiaries shall, between the date of this
Agreement and the Effective Time, directly
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<PAGE>
or indirectly do any of the following without the prior written consent of the
Parent:
(a) (i) issue, sell, pledge, dispose of, encumber, authorize, agree to
or publicly propose the issuance, sale, pledge, disposition, encumbrance or
authorization of any shares of capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of capital stock, or any other ownership interest, of the Company or
any of its Subsidiaries; (ii) amend or publicly propose to amend the
Articles of Incorporation or By-Laws or equivalent organizational documents
of the Company or any of its Subsidiaries or of any term of any outstanding
security of the Company or any Subsidiary; (iii) split, combine or
reclassify any outstanding shares of capital stock of the Company or its
Subsidiaries or declare, set aside or pay any dividend or distribution
payable in cash, stock, property or otherwise with respect to the Shares;
(iv) redeem, purchase or otherwise acquire or offer to redeem, purchase or
otherwise acquire any shares of or any options, warrants, convertible
securities or rights of any kind to acquire shares of, its capital stock or
any other ownership interest of the Company, except in the performance of
its obligations under existing Plans or as specifically contemplated by
this Agreement; or (v) authorize or propose or enter into any contract,
agreement, commitment or arrangement with respect to any of the matters set
forth in this Section 5.2(a);
(b) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any material corporation, partnership or other business
organization, business line or division thereof; (ii) except in the
ordinary course of business and in a manner consistent with past practices,
sell, lease, transfer, assign, license, pledge, dispose of, or encumber or
authorize or propose the sale, lease, transfer, assignment, license,
pledge, disposition, mortgage, security interest in or encumbrance of any
assets of the Company or any of its Subsidiaries; (iii) incur, assume or
prepay any indebtedness for borrowed money, or enter into any transaction,
contract or agreement, except in the ordinary course of business, provided
that borrowings will not in any event exceed $200,000 in the aggregate;
(iv) guaranty any indebtedness for borrowed money, (v) authorize any
capital expenditures outside the Company's previously approved capital
budget and other planned expenditures heretofore disclosed to the Purchaser
which are in the aggregate in excess of $50,000; (vi) enter into or amend
any contract, agreement, commitment or arrangement or relinquish any right
with respect to any of the matters set
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forth in this Section 5.2(b); (vii) amend or modify any of the terms of any
stock option or grant any stock option, stock appreciation right or stock
bonus; or (viii) make any loans, advances or capital contributions to, or
investments in, any other person or entity, other than to any wholly-owned
Subsidiary;
(c) take any action with respect to the modification or grant of any
severance or termination pay or agreement, deferred compensation
arrangement or employment agreement or grant any increase in benefits
payable under its severance or termination pay or deferred compensation
agreements and policies or any employment agreements in effect on the date
hereof;
(d) (i) make any payments (except in the ordinary course of business
and in amounts and in a manner consistent with past practice) under any
Plan to any employee of, or independent contractor or consultant to, the
Company or any Subsidiary; (ii) adopt any new, or amend any existing,
incentive, retirement or welfare benefit arrangements, plans or programs
for the benefit of current, former or retired employees of the Company and
its Subsidiaries; or (iii) grant any increases in employee compensation or
make any bonus or other special payments to employees, or award any stock
options (except for automatic grants to directors as required by the terms
of any Plan as in effect on the date hereof);
(e) take any action except in the ordinary course of business and in
a manner consistent with past practice (none of which actions shall be
unreasonable or unusual) with respect to accounting policies or procedures
(including without limitation its procedures with respect to the payment of
accounts payable);
(f) before the purchase of Shares pursuant to the Offer and other
than pursuant to this Agreement, take any action to cause the shares of
Company Common Stock to cease to be listed on the New York Stock Exchange,
Inc.;
(g) (i) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), except for the payment, discharge or satisfaction of its
liabilities or its obligations in the ordinary course of business or in
accordance with their terms as in effect on the date hereof; (ii) adopt a
plan of complete or partial liquidation or resolutions providing for or
authorizing such a liquidation or a dissolution, restructuring,
recapitalization or
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reorganization; or (iii) settle or compromise any litigation brought
against it other than settlements or compromises of any litigation where
the amount paid in settlement or compromise does not exceed $15,000,
exclusive of amounts covered by insurance; or
(h) authorize or enter into any agreement to do any of the foregoing.
SECTION 5.3. No Shopping. The Company and its Subsidiaries will not,
-----------
directly or indirectly, through any officer, director, agent, financial adviser
or otherwise, solicit, initiate or encourage submission of proposals or offers
from any person relating to any acquisition or purchase of all or a portion of
the assets of (other than immaterial or insubstantial assets or inventory in the
ordinary course of business), or any equity interest in, the Company or any of
its Subsidiaries or any business combination with the Company or any of its
Subsidiaries, or participate in any negotiations regarding, or furnish to any
other person any information (except for information which has been previously
publicly disseminated by the Company in the ordinary course of business), except
in respect of proposals received other than as a result of a failure to comply
with this Section 5.3 for which the failure so to act would, in the good faith
judgment of the Board of Directors, after consultation with and based upon the
advice of independent legal counsel (who may be the Company's regularly engaged
independent counsel), constitute a breach of the Board of Directors' fiduciary
duties under applicable law. In accordance with Section 5.1 hereof, the Company
shall promptly notify the Parent if any such proposal or offer, or any inquiry
or contact with any person with respect thereto, is made or received and, in
detail, the terms thereof no less than two business days prior to responding to
any such proposal or offer. If any such proposal or offer is in writing, the
Company will promptly deliver to the Purchaser and the Parent a copy of such
proposal.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. Proxy Statement. As promptly as practicable after the
---------------
consummation of the Offer and if required by the Exchange Act and the FBCA, the
Company shall prepare and file with the SEC, and shall use all reasonable
efforts to have cleared by the SEC, and promptly thereafter shall mail to
shareholders, the Proxy Statement. The Proxy Statement shall contain the
recommendation of the Board of Directors of the Company in favor of the Merger
unless, in the good faith judgment of the Board of
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Directors and in the written opinion of its legal counsel, such recommendation
would constitute a breach of the Directors' fiduciary duty to the Company's
shareholders.
SECTION 6.2. Meeting of Shareholders of the Company. Following the
--------------------------------------
consummation of the Offer, the Company shall promptly take all action necessary
in accordance with the FBCA and its Amended and Restated Articles of
Incorporation and By-Laws to convene the Company Shareholders' Meeting, if such
meeting is required. The shareholder vote or consent required for approval of
the Merger will be no greater than that set forth in the FBCA. The Company
shall use its best efforts to solicit from shareholders of the Company proxies
in favor of the Merger and shall take all other action necessary or, in the
reasonable opinion of the Parent, advisable to secure any vote or consent of
shareholders required by the FBCA to effect the Merger. The Parent agrees that
it shall vote, or cause to be voted, in favor of the Merger all Shares directly
or indirectly beneficially owned by it.
SECTION 6.3. Additional Agreements. The Company, the Parent and the
---------------------
Purchaser will each comply in all material respects with all applicable laws and
with all applicable rules and regulations of any governmental authority in
connection with its execution, delivery and performance of this Agreement and
the transactions contemplated hereby. Each of the parties hereto agrees to use
all reasonable efforts to satisfy the conditions to the obligations of the
parties hereto, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and to use all
reasonable efforts to take, or cause to be taken, all other actions and to do,
or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, subject, however, to the requisite vote of the
Company's shareholders.
SECTION 6.4. Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to the Parent and the Parent shall give prompt notice to the
Company, of (i) the occurrence, or non-occurrence of any event whose occurrence,
or non-occurrence would be likely to cause either (A) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time or (B) any
condition set forth in Annex I to be unsatisfied at any time from the date
-------
hereof to the date the Parent purchases Shares pursuant to the Offer and (ii)
any material failure of the Company, the Parent, or the Purchaser, as the case
may be, or any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or
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satisfied by it hereunder; provided, however, that the delivery of any notice
-------- -------
pursuant to this Section 6.4 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 6.5. Access to Information. From the date hereof to the
---------------------
Effective Time, the Company shall, and shall cause its Subsidiaries, officers,
directors, employees, auditors and agents to, afford the officers, employees and
agents of the Parent and the Purchaser complete access during normal business
hours to its officers, employees, agents, properties, offices and other
facilities and to all books and records as may be reasonably requested, and
shall furnish the Parent and the Purchaser with all financial, operating and
other data and information as the Parent or the Purchaser, through its officers,
employees or agents, may reasonably request. Any such information provided
pursuant to this Agreement shall be deemed "confidential information" as defined
in that certain Confidentiality Agreement, dated March 9, 1995 (as modified, the
"Confidentiality Agreement"), between the Company and the Parent, as modified by
-------------------------
that certain letter agreement dated July 24, 1995 and that certain letter
agreement dated July 25, 1995, each between the Company and The Loewen Group
Inc. (the "Letter Agreements"), and shall be subject to the provisions thereof.
-----------------
SECTION 6.6. Public Announcements. The Parent and the Company shall
--------------------
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Offer or the Merger and shall not issue
any such press release or make any such public statement before such
consultation, except as may be required by law or any listing agreement with any
securities exchange.
SECTION 6.7. Best Efforts; Cooperation. Upon the terms and subject
-------------------------
to the conditions hereof, each of the parties hereto agrees to use its 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 the transactions
contemplated by this Agreement and shall use its best efforts to obtain all
necessary waivers, consents and approvals, and to effect all necessary filings
under the Exchange Act and the HSR Act; provided, however, that in no event
-------- -------
shall the Parent or the Purchaser be required to divest any of its assets in
connection therewith. The parties shall cooperate in responding to inquiries
from, and making presentations to, regulatory authorities.
SECTION 6.8. Agreement to Defend and Indemnify. (a) If any action,
---------------------------------
suit, proceeding or investigation relating hereto or to the transactions
contemplated hereby is commenced, whether before or after the Effective Time,
the parties hereto agree to cooperate
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and use their best efforts to defend against and respond thereto. It is
understood and agreed that, to the extent provided in the FBCA and in the
Company's Articles of Incorporation and By-laws in effect on the date hereof,
the Company shall indemnify and hold harmless, and after the Effective Time, the
Parent and the Surviving Corporation shall indemnify and hold harmless, each
director and officer of the Company or any Subsidiary including, without
limitation, officers and directors serving as such on the date hereof
(collectively, the "Indemnified Parties") against any costs or expenses
-------------------
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation arising out of or pertaining to any of the
transactions contemplated hereby, including without limitation liabilities
arising under the Securities Act or the Exchange Act in connection with the
Offer, the Merger or any financing. Any Indemnified Party wishing to claim
indemnification hereunder, upon learning of any such claim, action, suit,
proceeding or investigation, will promptly notify the Parent thereof. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Company, the Parent or the
Surviving Corporation shall pay the reasonable fees and expenses of counsel
selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, promptly as statements
therefor are received, and (ii) the Company, the Parent and the Surviving
Corporation will cooperate in the defense of any such matter; provided, however,
-------- -------
that neither the Company, the Parent nor the Surviving Corporation shall be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld); and further, provided, that neither the
------- --------
Company, the Parent nor the Surviving Corporation shall be obliged pursuant to
this Section to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any single action except to the extent that, in the
opinion of counsel for the Indemnified Parties, two or more of such Indemnified
Parties have conflicting interests in the outcome of such action.
Notwithstanding anything contained herein to the contrary, in the event of any
such claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (x) the Parent or the Surviving Corporation will have
the right, from and after the purchase of Shares pursuant to the Offer, to
assume the defense thereof and neither the Parent nor the Surviving Corporation
will be liable to such Indemnified Party for any legal expenses of separate
counsel or any other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, except that such Indemnified Party will
have the right to employ and be reimbursed by the Parent or the Surviving
Corporation for the legal expenses of separate counsel if, under applicable
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<PAGE>
standards of professional conduct (as advised by counsel to such Indemnified
Party), a conflict of interest exists in respect of any issue between such
Indemnified Party and the Parent or the Surviving Corporation, (y) the
Indemnified Parties will cooperate in the defense of any such matter and (z)
neither the Parent nor the Surviving Corporation will be liable for any
settlement effected without the Parent's prior written consent; provided,
--------
however, that, except with respect to the advancement to an Indemnified Party of
-------
expenses incurred in the defense of any action or suit in accordance with the
terms hereof (subject to reimbursement by such Indemnified Party in the event of
a final determination by a court of competent jurisdiction that such advances
were unlawful and must be reimbursed to the Parent or the Surviving
Corporation), neither the Parent nor the Surviving Corporation will have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction ultimately determines, and such determination becomes final, that
the indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law. The Surviving Corporation shall, for a period
of four years following the Effective Time, use its reasonable efforts either
(A) to maintain the Company's existing officers' and directors' liability
insurance ("D&O Insurance") covering those persons who are currently covered
-------------
thereby
on the date of this Agreement in full force and effect without reduction of
coverage; provided, however, that the Surviving Corporation will not be required
-------- -------
to pay an annual premium therefor in excess of 200% of the last annual premium
paid prior to the date hereof, as disclosed in Section 6.8 of the Company
Disclosure Schedule (the "Current Premium"); provided further that if the annual
--------------- -------- -------
premium of the D&O Insurance exceeds 200% of the Current Premium, the Surviving
Corporation will use its reasonable efforts to obtain a policy with the greatest
coverage available for a cost not exceeding such amount; provided further that
-------- -------
if the existing D&O Insurance expires or is terminated or cancelled during such
four-year period, the Surviving Corporation will use its reasonable efforts to
obtain as much coverage as can be obtained for the remainder of such period for
a premium on an annualized basis not in excess of 200% of the Current Premium;
and, provided further that the Surviving Corporation may substitute for the D&O
-------- -------
Insurance policies with the same coverage containing terms and conditions which
are no less advantageous and provided that such substitution does not result in
any gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time or (B) to cause the Parent's officers' and directors' liability
insurance policy then in effect to cover those persons who are covered on the
date of this Agreement by the D&O Insurance. The Parent shall cause the
Surviving Corporation to continue in effect the indemnification provisions
currently provided by the Amended and Restated Articles of Incorporation and By-
Laws of the Company for
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<PAGE>
a period of not less than four years following the Effective Time. This Section
shall survive the consummation of the Merger. Notwithstanding anything in this
Section to the contrary, neither the Company nor the Surviving Corporation shall
have any obligation under this Section to indemnify any Indemnified Party
against any cost, expense, judgment, fine, loss, claim, damage, liability or
settlement amount found to have resulted solely from such Indemnified Person's
own gross negligence or willful misconduct. This covenant shall survive any
termination of this Agreement pursuant to Section 8.1 hereof. Notwithstanding
Section 9.7 hereof, this Section is intended to be for the benefit of and to
grant third party rights to Indemnified Parties whether or not parties to this
Agreement, and each of the Indemnified Parties shall be entitled to enforce the
covenants contained herein.
(b) If the Parent or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all of their
properties and assets to any person, then and in each such case, proper
provision shall be made so that the successors and assigns of the Parent or the
Surviving Corporation, as the case may be, assume the obligations set forth in
this Section 6.9.
SECTION 6.9. Warrants; Stock Options. (a) Prior to the Effective
-----------------------
Time, the Company shall (i) offer to each holder of an outstanding warrant
granted before the date hereof (other than options outstanding under the
Company's stock option plans) an amount in cash in cancellation of such warrant
equal to the excess, if any, of the Per Share Amount over the per Share exercise
price of such option or warrant, multiplied by the number of Shares subject to
such warrant, less applicable Federal, state and local tax withholdings and (ii)
use its best efforts to secure the agreement, if required, of each such holder
to accept such cash payment in cancellation of such warrants.
(b) Prior to the Effective Time, the Board of Directors of the Company
(or, if appropriate, a Committee thereof) will (i) adopt such resolutions and
approve such amendments, if any, as are necessary to provide for the
cancellation of all stock options (the "Options") to purchase Shares granted
-------
pursuant to the Company's 1989 Stock Option Plan, as amended (the "1989 Stock
----------
Option Plan"), effective as of immediately prior to the Effective Time and (ii)
-----------
promptly furnish Parent and Purchaser a copy of such resolutions certified by an
appropriate officer of the Company. If necessary or appropriate, the Company
will, upon the request of Purchaser, (x) use its best efforts to obtain the
written acknowledgment of each holder of an Option that the payment of the
amount of cash
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referred to below will satisfy the Company's obligation to such holder pursuant
to such Option and (y) take such other action as is necessary or appropriate to
effect the provisions of this Section 6.9(b). Pursuant to the 1989 Stock Option
Plan and in accordance with such resolutions and amendments, immediately prior
to the Effective Time, each Option which is not then exercisable or vested will
become fully exercisable and vested, and each such Option and all other Options
will be cancelled, effective as of immediately prior to the Effective Time, in
exchange for a payment by the Company or the Surviving Corporation of an amount,
payable within ten business days after the Effective Time, equal to the product
of (A) the total number of Shares subject to such Option and (B) the excess, if
any, of the price per Share to be paid in the Merger over the exercise price per
Share subject to such Option, subject to any required withholding of taxes.
Payments made pursuant to this Section 6.9(b) represent and will be
characterized and reported by the Surviving Corporation as additional
compensation expense.
As of the Effective Time, the Company shall terminate the 1989 Stock
Option Plan.
(b) The Company shall take all actions as are necessary to ensure
that neither the Company nor any Subsidiary is, or will be at the Effective
Time, bound by any options, stock appreciation rights, warrants or other rights
or agreements which would entitle any person, other than the Parent or its
affiliates, to own any capital stock of the Surviving Corporation or any
Subsidiary or to receive any payment in respect thereof, and all Plans referred
to in Section 4.11 of the Company Disclosure Schedule conferring any rights with
respect to Shares or other capital stock of the Company or any Subsidiary shall
be deemed hereby to be amended to be in conformity with this Section 6.9.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1. Conditions to Obligation of Each Party to Effect the
----------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall be
------
subject to the fulfillment at or before the Effective Time of the following
conditions:
(a) Offer. The Parent or the Purchaser shall have made, or caused to
-----
be made, the Offer and shall have accepted for payment and paid for, all
Shares validly tendered and not withdrawn pursuant to the Offer;
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(b) Shareholder Approval. The Merger and this Agreement shall have
--------------------
been approved and adopted by the requisite vote of the shareholders of the
Company, if required;
(c) HSR Act. The waiting period (and any extension thereof), if any,
-------
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated;
(d) No Challenge. No statute, rule, regulation, judgment, writ,
------------
decree, order or injunction shall have been promulgated, enacted, entered
or enforced, and no other action shall have been taken, by any domestic or
foreign government or governmental, administrative or regulatory authority
or agency of competent jurisdiction or by any court or tribunal of
competent jurisdiction, domestic or foreign, that in any of the foregoing
cases has the effect of making illegal or directly or indirectly
restraining, prohibiting or restricting the consummation of the Merger; and
(e) Other Filings. All actions by or in respect of or filings with
-------------
any governmental body, agency, official or authority required to permit the
consummation of the Merger shall have been taken or made.
SECTION 7.2. Parent and Purchaser Obligations. The obligations of the
--------------------------------
Parent and the Purchaser to consummate the Merger will be subject to the
satisfaction at or prior to the Effective Time of the additional condition that
the Company will have satisfied and complied with in all material respects each
of the covenants of the Company contained herein from the time the Purchaser
accepts Shares for payment pursuant to the Offer up to and including such time
as designees of the Parent or the Purchaser have been elected to, and constitute
a majority of, the Board of Directors of the Company pursuant to Section 1.3
hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. Termination. This Agreement may be terminated at any
-----------
time before the Effective Time:
(a) By mutual consent of the Boards of Directors of the Parent and
the Company; or
(b) By the Parent (i) if the Parent or the Purchaser shall have
failed to commence the Offer as provided in Section 1.1 due to the
occurrence of any events set forth in Annex I,
-------
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<PAGE>
or (ii) if the Offer shall have expired or been terminated without any
Shares being purchased thereunder by the Parent or the Purchaser as a
result of the occurrence of any of the events set forth in Annex I; or
-------
(c) By either the Parent or the Company if the Merger shall not have
been consummated by December 31, 1995; provided, however, that the right to
-------- -------
terminate this Agreement pursuant to this Section 8.1(b) will not be
available to any party who is (or, by virtue of such termination, would be)
in breach of this Agreement; or
(d) By either the Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a final, nonappealable order, decree or ruling
or taken any other action (which order, decree or ruling the parties hereto
shall use their best efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement; or
(e) By the Parent if the Board of Directors of the Company (i)
withdraws, modifies or changes the Recommendation in a manner adverse to
the Parent and Purchaser, (ii) recommends to the holders of Shares any
proposal with respect to a tender offer, merger, consolidation, share
exchange or similar transaction involving the Company or any of its
Subsidiaries, other than the transactions contemplated by this Agreement,
or (iii) resolves to do any of the foregoing; or
(f) By the Company or the Parent if prior to the Effective Time, a
corporation, partnership, person or other entity or group shall have made a
bona fide offer with respect to which the Board of Directors of the
Company, after consultation with and based upon the advice of independent
legal counsel (who may be the Company's regularly engaged independent legal
counsel), determines in good faith that the failure of the Board of
Directors to recommend such offer to the holders of Shares would constitute
a breach of the Board of Directors' fiduciary duties under applicable law,
provided that any such termination by the Company shall not be effective
until payment to the Parent of the fees required by Section 8.3(a) and
Section 8.3(b); or
(g) By either the Parent or the Company if the other party shall have
breached this Agreement hereunder in any material respect and such breach
continues for a period of ten days after the receipt of notice of the
breach from the non-breaching party.
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SECTION 8.2. Effect of Termination. In the event of termination of
---------------------
this Agreement as provided in Section 8.1 hereof, this Agreement shall forthwith
become void and there shall be no liability on the part of the Parent, the
Purchaser or the Company, except (i) as set forth in Section 8.3 and Section 9.1
hereof, (ii) nothing herein shall relieve any party from liability for any
willful breach hereof and (iii) termination of this Agreement shall be without
prejudice to any rights any party may have hereunder, at law or in equity,
against the other party for breach of this Agreement.
SECTION 8.3. Termination Fees and Expenses. After this Agreement is
-----------------------------
terminated by the Company pursuant to Section 8.1(f) hereof or by the Parent
pursuant to Section 8.1(e), (f) or (g) hereof, the Company shall pay to the
Parent by wire transfer to an account designated by the Parent, within one
business day after receipt of a request therefor, an amount equal to the sum of
(a) $2,250,000 and (b) the lesser of (i) $2,000,000 and (ii) all actual out-of-
pocket costs and expenses of the Parent and Purchaser incurred in connection
with this Agreement and the transactions contemplated hereby, including, without
limitation, legal, professional and service fees and expenses and any such costs
and expenses of the Parent and the Purchaser incurred in connection with the
enforcement of their respective rights hereunder and under the Parent Stock
Option.
SECTION 8.4. Amendment. This Agreement may be amended by the parties
---------
hereto by action taken by the Parent and the Purchaser, and by action taken by
or on behalf of the Company's Board of Directors at any time before the
Effective Time; provided, however, that, after approval of the Merger by the
-------- -------
shareholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each Share will be
converted upon consummation of the Merger. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.5. Waiver. At any time before the Effective Time, any
------
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only as against such party
and only if set forth in an instrument in writing signed by such party.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Non-Survival of Representations, Warranties and
-----------------------------------------------
Agreements. The representations, warranties and agreements in this Agreement
----------
shall terminate at the Effective Time or the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II and Section 9.3 shall survive the Effective Time
indefinitely and those set forth in Sections 6.5(b), 6.5(c), 8.3 and 9.3 shall
survive termination indefinitely.
SECTION 9.2. 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 mailed if delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice, except that notices of changes
of address shall be effective upon receipt):
(a) if to the Parent or the Purchaser:
Loewen Group International, Inc.
50 East River Center Boulevard
Suite #800
Covington, Kentucky 41011
Attention: Robert Wienke, Esq.
Telephone: (606) 655-7192
Fax: (606) 655-7144
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Christopher Kelly, Esq.
Telephone: (212) 326-3939
Fax: (212) 755-7306
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(b) if to the Company:
MHI Group, Inc.
3100 Capital Circle, NE
Tallahassee, Florida 32308
Attention: Clifford R. Hinkle
Telephone: (904) 385-8883
Fax: (904) 385-0338
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Bruce R. Kraus, Esq.
Telephone: (212) 821-8000
Fax: (212) 821-8111
SECTION 9.3. Expenses. Except as provided in Section 8.3 hereof, all
--------
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
SECTION 9.4. Certain Definitions. For purposes of this Agreement,
-------------------
the term:
(a) "affiliate" of a person means a person that directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned person;
(b) "control" (including the terms "controlled by" and "under common
------- ------------- ------------
control with") means the possession, direct or indirect, of the power to
------------
direct or cause the direction of the management and policies of a person,
whether through the ownership of stock, as trustee or executor, by contract
or credit arrangement or otherwise; and
(c) "person" means an individual, corporation, partnership,
------
association, trust or any unincorporated organization.
SECTION 9.5. Headings. 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.
-38-
<PAGE>
SECTION 9.6. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the maximum extent
possible.
SECTION 9.7. Entire Agreement; No Third-Party Beneficiaries. Except
----------------------------------------------
for the Confidentiality Agreement and the Letter Agreements, this Agreement,
together with the Parent Stock Option, constitutes the entire agreement and
supersedes any and all other prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof and, except as otherwise expressly provided herein, is not intended to
confer upon any other person any rights or remedies hereunder.
SECTION 9.8. Assignment. This Agreement shall not be assigned by
----------
operation of law or otherwise, except that the Parent and the Purchaser may
assign all or any of their rights hereunder to any affiliate of the Parent
provided that no such assignment shall relieve the assigning party of its
obligations hereunder.
SECTION 9.9. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Florida, without regard
to the principles of conflicts of law thereof.
SECTION 9.10. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
shall constitute one and the same agreement.
-39-
<PAGE>
IN WITNESS WHEREOF, the Parent, the Purchaser and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
MHI GROUP, INC.
By: /s/ Clifford R. Hinkle
-------------------------------------
Name: Clifford R. Hinkle
Title: President and Chief Executive
Officer
LOEWEN GROUP INTERNATIONAL, INC.
By: /s/ Raymond L. Loewen
------------------------------------
Name: Raymond L. Loewen
Title: Chairman of the
Board, Chief Executive
Officer and Director
SPRT CORP.
By: /s/ A.M. Bruce Watson
----------------------------------
Name: A.M. Bruce Watson
Title: Secretary and
Treasurer
<PAGE>
ANNEX I
Conditions to the Offer
-----------------------
Notwithstanding any other provision of the Offer, the Parent or the
Purchaser shall not be required to accept for payment or pay for, or may delay
the acceptance for payment of or payment for, tendered Shares, or may terminate
or amend the Offer as to any Shares not then paid for if (i) at or before the
Expiration Date, the Minimum Condition shall not have been satisfied, (ii) the
waiting period (and any extension thereof), if any, applicable to the
consummation of the Offer and the Merger under the HSR Act shall not have
expired or been terminated or (iii) on or after August 9, 1995, and at or before
the time of acceptance for payment for any of such Shares, any of the following
events shall occur:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of
competent jurisdiction or a statute, rule, regulation, executive order or
other action shall have been promulgated, enacted, taken or threatened by a
governmental authority or governmental, regulatory or administrative agency
or commission of competent jurisdiction which in any such case (i)
restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger or the acquisition by the Purchaser of any
Shares, or seeks to obtain any material damages with respect to the
transactions contemplated by the Merger Agreement, (ii) seeks to prohibit
or materially limit the ownership or operation by the Parent or the
Purchaser (or any of their respective affiliates or subsidiaries) of any
portion of its or the Company's business or assets which is material to the
business of all such entities taken as a whole, or to compel the Parent or
the Purchaser (or any of their respective affiliates or subsidiaries) to
dispose of or hold separate any portion of its or the Company's and the
Subsidiaries' business or assets which is material to the business of all
such entities taken as a whole, (iii) seeks to impose material limitations
on the ability of the Parent or the Purchaser (or any of their affiliates)
effectively to acquire or to hold or to exercise full rights of ownership
of the Shares, including, without limitation, the right to vote any Shares
purchased by them on all matters properly presented to the holders of
Shares, (iv) seeks to impose any material limitations on the ability of the
Parent or the Purchaser or any of their respective affiliates or
subsidiaries effectively to control in any material respect the business
and operations of the Company and its
<PAGE>
Subsidiaries, (v) seeks to prevent the Parent, the Purchaser or any of
their affiliates from acquiring, or require divestiture by the Parent, the
Purchaser or any of their affiliates of, any Shares or (vi) which otherwise
would materially affect the Company and its Subsidiaries taken as a whole;
(b) there shall have been instituted or be pending any action or
proceeding by a governmental authority or governmental, regulatory or
administrative agency or commission of competent jurisdiction, which (i)
challenges or seeks to make illegal, materially delay or otherwise directly
or indirectly restrain or prohibit the making or consummation of the Offer
or the consummation of the Merger or the acquisition by the Purchaser of
any Shares, or seeks to obtain any material damages with respect to the
transactions contemplated by the Merger Agreement, (ii) seeks to prohibit
or materially limit the ownership or operation by the Parent or the
Purchaser (or any of their respective affiliates or subsidiaries) of any
portion of its or the Company's business or assets which is material to the
business of all such entities taken as a whole, or to compel the Parent or
the Purchaser (or any of their respective affiliates or subsidiaries) to
dispose of or hold separate any portion of its or the Company's and the
Subsidiaries' business or assets which is material to the business of all
such entities taken as a whole, (iii) seeks to impose material limitations
on the ability of the Parent or the Purchaser (or any of their affiliates)
effectively to acquire or to hold or to exercise full rights of ownership
of the Shares, including, without limitation, the right to vote any Shares
purchased by them on all matters properly presented to the holders of
Shares, (iv) seeks to impose any material limitations on the ability of the
Parent or the Purchaser or any of their respective affiliates or
subsidiaries effectively to control in any material respect the business
and operations of the Company and its Subsidiaries, (v) seeks to prevent
the Parent, the Purchaser or any of their affiliates from acquiring, or
require divestiture by the Parent, the Purchaser or any of their affiliates
of, any Shares or (vi) which otherwise would materially affect the Company
and its Subsidiaries taken as a whole;
(c) there shall have been any action taken, or any statute, rule,
regulation, judgment, administrative interpretation, order or injunction,
including a temporary restraining order, enacted, promulgated, entered,
enforced or deemed applicable to the Company or any affiliate of the
Company, or to the Offer or the Merger, which results in any
A-2
<PAGE>
of the consequences referred to in clauses (i) through (vi) of paragraph
(b) above;
(d) this Agreement shall have been terminated by the Company, the
Parent or the Purchaser in accordance with its terms;
(e) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States or in
Canada, (ii) a declaration of a banking moratorium or any limitation or
suspension of payments in respect of banks by United States Federal or
state or Canadian authorities, (iii) from the date of this Agreement
through the date of termination or expiration of the Offer, a decline of at
least 30% in the Standard & Poor's 500 Index, (iv) a commencement or
escalation of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States or Canada
having a significant adverse effect on the functioning of the financial
markets in the United States or Canada, or (v) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(f) (i) any of the representations and warranties made by the Company
in the Merger Agreement shall not have been true and correct in all
material respects when made, or shall have ceased to be true and correct in
all material respects (whether because of circumstances or events occurring
in whole or in part prior to, on or after the date of the Merger
Agreement), or (ii) as of the Expiration Date the Company shall not have
performed its obligations and agreements and complied with its covenants to
be performed and complied with by it under the Merger Agreement, except
where any failures to perform any covenant or agreement (i) would, in the
aggregate, not materially impair or delay the ability of the Purchaser to
consummate the Offer or the ability of the Parent, the Purchaser and the
Company to effect the Merger, (ii) has been caused by or results from a
breach by the Parent or the Purchaser of any covenant in the Merger
Agreement, or (iii) is not reasonably likely to have a Material Adverse
Effect;
(g) the Company's Board of Directors shall have withdrawn, modified
or amended in any manner adverse to the Parent or the Purchaser its
recommendation, consent to or approval of the Offer, the Merger or the
Merger Agreement or shall have entered into an agreement with a third party
with respect to any acquisition or purchase of all or (except in the
ordinary course of business) a portion of the assets of,
A-3
<PAGE>
or in any equity interest in, the Company or any of its Subsidiaries or any
business combination with the Company or any of its Subsidiaries by such
third party or shall have furnished to any third party any information with
respect to, or otherwise shall have cooperated in any way with, or shall
have assisted or participated in, facilitated or encouraged, any effort or
attempt by such third party to do or seek any of the foregoing, or shall
have resolved to do any of the foregoing; or
(h) the Parent, the Purchaser and the Company shall have agreed that
the Parent or the Purchaser shall amend the Offer to terminate the Offer or
postpone the payment for Shares pursuant thereto;
which, in the reasonable judgment of the Parent and the Purchaser with respect
to each and every matter referred to above and regardless of the circumstances
(including any action or inaction by the Parent or the Purchaser) giving rise to
any such condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Parent and
the Purchaser and may be asserted by the Parent or the Purchaser or may be
waived by the Parent or the Purchaser in whole or in part at any time and from
time to time, in each case, in the sole judgment of the Parent and the Purchaser
and subject to the terms of this Agreement. The conditions may be considered to
be material to the Offer. If the Purchaser waives any material condition of the
Offer, it will, if required by applicable law, extend the period of time during
which the Offer is open in accordance with applicable law for a period
sufficient to allow the holders of shares of Common Stock to consider the Offer
by giving oral or written notice of such extension to the depositary for the
Offer and by making a public announcement thereof. The failure by the Purchaser
at any time to exercise any of the foregoing rights will not be deemed a waiver
of any other rights and each such right will be deemed an ongoing right which
may be asserted at any time and from time to time. Any determination by the
Purchaser concerning the events described in this Annex I will be final and
binding upon all parties.
A-4
<PAGE>
EXHIBIT 99.(c)(2)
STOCK OPTION AGREEMENT
----------------------
STOCK OPTION AGREEMENT (this "Agreement"), dated as of August 9, 1995, by
and between LOEWEN GROUP INTERNATIONAL, INC., a corporation organized under the
laws of the State of Delaware ("Parent"), and MHI GROUP, Inc., a Florida
corporation (the "Company").
RECITALS
--------
Concurrently herewith, Parent, SPRT Corp. a Florida corporation and a
wholly-owned subsidiary of Parent ("Purchaser"), and the Company are entering
into an Agreement and Plan of Merger (the "Merger Agreement"; terms capitalized
herein but not defined herein shall have the meanings set forth in the Merger
Agreement), pursuant to which Purchaser agrees to make a tender offer (the
"Offer") for all outstanding shares of Common Stock, $0.40 par value (the
"Common Stock"), of the Company, at a price of $10.25 per share, net to the
seller in cash, to be followed by a merger (the "Merger") of Purchaser with and
into the Company.
As a condition to their willingness to enter into the Merger Agreement and
make the Offer, Parent and Purchaser have required that the Company agree, and
believing it to be in the best interest of the Company, the Company has agreed,
among other things, to grant to Parent the Option (as hereinafter defined).
AGREEMENT
---------
To implement the foregoing and in consideration of the respective
representations, warranties, covenants and agreements contained herein, the
parties agree as follows:
1. Grant of Option. The Company hereby grants to Parent an irrevocable
---------------
option (the "Option") to purchase up to 1,253,823 shares of Common Stock, par
value $.40 per share, of the Company ("Common Stock"), at a purchase price of
$10.25 per share (the "Purchase Price"). The shares of Common Stock that are
subject to the Option are referred to herein as the "Option Shares".
The Option shall, subject to Section 9 hereof, terminate upon the earliest
to occur of (a) the date which is 12 months after any event described in Section
3 below shall have occurred, (b) the Effective Time (as defined in the Merger
Agreement), and (c) termination of the Merger Agreement pursuant to Section
8.1(a), (b) (other than a termination resulting from a willful breach by the
Company of any representation, warranty or covenant contained therein), (c) or
(d) thereof, unless prior to that time an event described in Section 3 below
shall have occurred. If the Option cannot be exercised by reason of any
applicable judgment, decree or order, the expiration date of the Option shall be
extended until five business days after such
<PAGE>
impediment to exercise shall have been removed. The rights set forth in Section
9 shall not terminate when the right to exercise the Option terminates but shall
extend to such time as provided in Section 9. Notwithstanding the termination of
the Option, Parent shall be entitled to purchase those Option Shares with
respect to which it has exercised the Option in accordance with the terms hereof
prior to the termination of the Option.
2. Exercise of the Option. Subject to the terms and conditions hereof,
----------------------
Parent may exercise the Option in whole at any time or in part from time to
time, from the date of the occurrence of any event described in Section 3 below
until its termination in accordance with the provisions of Section 1 above.
Notwithstanding the foregoing, the Company shall not be obligated to issue
the Option Shares upon exercise of the Option (i) in the absence of any required
governmental or regulatory waiver, consent or approval necessary for the Company
to issue the Option Shares or Parent to exercise the Option or prior to the
expiration or termination of any waiting period required by law, or (ii) so long
as any injunction or other order, decree or ruling issued by any federal or
state court of competent jurisdiction is in effect which prohibits the sale or
delivery of the Option Shares to Parent.
In the event Parent wishes to exercise the Option, Parent shall provide a
written notice to the Company specifying the total number of Option Shares it
will purchase pursuant to such exercise and a place and date for the closing of
such purchase, which date shall be no later than 60 business days from the date
such notice is mailed unless additional time is required to obtain regulatory
approval required by Parent or the Company and, if so required, the period of
time that would otherwise run pursuant to this Section 2 shall run instead from
the date on which the required notification period has expired or been
terminated or such approval has been obtained and any requisite waiting period
with respect thereto shall have passed.
In connection with the filing of any required regulatory notice or request
for approval, the Company shall furnish Parent with such information as may be
required for such notices or approvals and shall use its best efforts to
cooperate with and assist Parent in obtaining any such approvals as promptly as
practicable. In the event that the Company or Parent receives official notice
that any required regulatory approval will not be granted, Parent shall
nevertheless be entitled to exercise its rights as set forth in Section 9 or to
exercise the Option in connection with the resale of Option Shares pursuant to a
registration statement as provided in Section 10.
3. Pre-Conditions to Exercise of the Option. Parent may exercise the
----------------------------------------
Option only if one or more of the following events has occurred:
2
<PAGE>
(a) the Company or any of its subsidiaries shall have entered into any
agreement (including without limitation any non-binding letter of intent)
with any person (other than Parent or any of its affiliates), or shall have
authorized, recommended, proposed or publicly announced its or their
intention to authorize, recommend, or propose to enter into any agreement
with any such person, with respect to (i) a merger, consolidation or any
similar transaction with such person or involving the Company or any
subsidiary, (ii) the sale, lease or other disposition of 15% or more of the
consolidated assets of the Company and its consolidated subsidiaries, or
(iii) the issuance, sale or other disposition (including by way of merger,
consolidation, tender or exchange offer, share exchange or similar
transaction) of securities (or an option or right to acquire such
securities) representing 10% or more of the voting power of the Company or
any of its subsidiaries; or
(b) (i) the making by any person (other than Parent or any of its
affiliates), by public announcement or communication to the Company or
otherwise, of a proposal to acquire the Company or any of its subsidiaries
by merger, consolidation, purchase of all or a substantial portion of the
Company's assets or other similar transaction, or (ii) any person (other
than Parent or its affiliates, shall have commenced (as such term is
defined in Rule 14d-2 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or shall have filed a registration statement under
the Securities Act of 1933, as amended (the "Act"), with respect to a
tender or exchange offer for 10% or more of the outstanding shares of
Common Stock; or
(c) the acquisition, by any person or group (as defined in Section
13(d) of the Exchange Act), other than Parent or any of its affiliates, of
beneficial ownership of (as defined in Rule 13d-3 under the Exchange Act),
or the right to acquire beneficial ownership of, securities representing
10% or more of the voting power of the Company or any of its subsidiaries;
or
(d) the shareholders of the Company shall have failed to approve the
Merger at the meeting called for that purpose or at any adjournment or
postponement thereof, such meeting shall not have been held or shall have
been cancelled prior to the termination of the Merger Agreement or the
Board of Directors of the Company shall have withdrawn or modified in a
manner adverse to Parent its recommendation that the shareholders of the
Company approve the Merger;
provided that no event set forth in this Section 3 shall be deemed to occur
--------
solely by reason of any agreement, or any action that is taken, or of any event
that occurs, for which Parent has given its prior written consent. As used in
this Agreement, "person" shall have the meaning specified in Section 13(d)(3) of
the Exchange Act.
3
<PAGE>
4. Payment and Delivery of the Option Shares. Except as otherwise
-----------------------------------------
provided in this Agreement, at any closing hereunder (a) Parent shall make
payment to the Company of the aggregate Purchase Price for the Option Shares to
be purchased on such closing by delivery to the Company of immediately available
funds and (b) the Company shall deliver to Parent a certificate or certificates
representing the Option Shares so purchased, registered in the name of Parent or
its designee which Option Shares shall be free of any lien, claim, charge or
encumbrance. In the event that Parent acquires any Option Shares and disposes
of such shares (other than to an affiliate of Parent) through a sale, exchange,
transfer, merger or otherwise, for an amount per share which exceeds the
Purchase Price by more than $1.00 (the "Option Cap"), Parent will promptly
return to the Company the amount of such excess. The amount of $1,253,823 is
hereafter referred to as the "Aggregate Option Cap". For tax purposes, any such
amount in respect of Options or Option Shares returned to the Company pursuant
to this Agreeement shall be treated as adjustment to the purchase price.
Certificates for Option Shares delivered at any closing hereunder may
be endorsed with a legend which shall read as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN PROVISIONS OF AN
AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND YORICK, A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL OFFICE OF YORICK. A COPY OF SUCH AGREEMENT
SHALL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY
YORICK OF A REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of a substitute certificate without such legend if Parent shall have delivered
to the Company an opinion of counsel, in form and substance satisfactory to the
Company, that such legend is not required for purposes of this Agreement or the
Act.
5. Representations and Warranties of the Company. The Company
---------------------------------------------
hereby represents and warrants to Parent as follows:
(a) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(b) The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The Company has taken all necessary corporate action to authorize
this Agreement and the consummation of the transactions contemplated
hereby, and to authorize and reserve and to permit it to issue, and at all
times from the date hereof until such time as the
4
<PAGE>
obligation to deliver the Option Shares upon the exercise of the Option
terminates, will have reserved for issuance, upon any exercise of the
Option, the number of Option Shares subject to the Option and as the
Company will take all necessary corporate action to authorize and reserve
for issuance all additional shares of Common Stock or other securities
which may be issued pursuant to Section 7 upon the exercise of the Option.
All of the Option Shares to be issued pursuant to the Option are duly
authorized and, upon issuance and delivery thereof pursuant to this
Agreement including Option Shares or other securities issuable pursuant to
Section 7, shall be duly and validly issued, fully paid and nonassessable,
free and clear of all claims, liens, charges, encumbrances and security
interests, and will not have been issued in violation of, and will not be
subject to, any preemptive rights of shareholders of the Company.
(c) Neither the execution, delivery and performance by the Company of
this Agreement, nor the consummation of the transactions contemplated
hereby, nor compliance by the Company with any of the provisions hereof,
will (i) violate, conflict with, or result in a breach of any provisions
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 of, or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the creation of, any
lien, security interest, charge or encumbrance upon any of the properties
or assets of the Company or any of its subsidiaries under any of the terms,
conditions or provisions of, (x) its Articles of Incorporation or Bylaws or
(y) any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries may be bound, or to which the Company or any of its
subsidiaries or any of the properties or assets of the Company or any of
its subsidiaries may be subject, except for such violations, conflicts,
breaches, defaults, terminations, accelerations, rights of termination or
acceleration, liens, security interests, charges or encumbrances as would
not reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the condition of the Company and its
subsidiaries taken as a whole or on the ability of the Company to perform
its obligations hereunder, or (ii) subject to obtaining any approvals
contemplated hereby, violate any judgment, ruling, order, write,
injunction, decree, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of their respective properties or assets
except such violations which, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the condition
of the Company and its subsidiaries taken as a
5
<PAGE>
whole or the ability of the Company to perform its obligations hereunder.
(d) The Company's Board of Directors, at a meeting duly called and
held, has by unanimous vote of all directors approved the execution of this
Agreement and the transactions contemplated hereby, including the exercise
of the Option, prior to the execution of this Agreement, and such approval
is sufficient to exempt this Agreement and the transactions contemplated
hereby from any applicable state takeover law, including, without
limitation, Section 607.0901 and Section 607.0902 of the Florida Business
Corporation Act.
(e) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida and has all
requisite corporate power and authority to execute and deliver this
Agreement.
6. Representations and Warranties of Parent. Parent hereby
----------------------------------------
represents and warrants to the Company as follows:
(a) This Agreement has been duly authorized, executed and delivered by
Parent and constitutes a valid and binding agreement of Parent, enforceable
against Parent in accordance with its terms.
(b) The execution, delivery and performance by Parent of this
Agreement and the consummation of the transactions contemplated hereby do
not contravene, or constitute a default or violation under (i) the
certificate of incorporation or by-laws of Parent or (ii) any agreement,
instrument, judgment, decree, order, injunction, law, statute, rule or
governmental regulation binding upon Parent or any of its subsidiaries,
subject to the obtaining by Parent of applicable regulatory approvals and
consents, and the expiration of any applicable waiting periods, necessary
for the purchase of Option Shares by Parent or its assignee.
(c) The Option is being, and any Option Shares issued upon exercise of
the Option will be, acquired by Parent for its own account and not with a
view to any distribution thereof, and Parent will not sell any Option
Shares purchased pursuant to the Option except in compliance with the
Securities Act of 1933, as amended (the "Securities Act").
(d) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to execute and deliver this Agreement.
7. Adjustments Upon Changes in Capitalization or Merger. (a) In the
----------------------------------------------------
event of any change in Common Stock by reason
6
<PAGE>
of a stock dividend, split-up, recapitalization, combination, exchange of shares
or similar transaction, the type and number of shares or securities subject to
the Option, the Option Cap (but not the Aggregate Option Cap) and the Purchase
Price therefor, shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Parent shall receive
upon exercise of the Option the number and class of shares or other securities
or property that Parent would have received in respect of Common Stock if the
Option had been exercised immediately prior to such event, or the record date
therefor, as applicable. If any additional shares of Common Stock are issued
after the date of this Agreement (other than pursuant to an event described in
the first sentence of this Section 7(a)), the number of shares of Common Stock
subject to the Option shall be adjusted so that, after such issuance, it equals
19.9% of the number of shares of Common Stock then issued and outstanding,
without giving effect to any shares subject to or issued pursuant to the Option;
provided that the Company shall not enter into any transaction described in the
--------
first sentence of this Section 7(a) if, immediately following such transaction,
it does not have available and capable of being reserved for purposes of this
Agreement authorized but unissued and unreserved shares of Common Stock in the
quantity required by this Agreement to be subject to the Option.
(b) In the event that the Company shall enter into an agreement (i) to
consolidate with or merge into any person, other than Parent or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Parent or one of
its subsidiaries, to merge into the Company and the Company shall be the
continuing or surviving corporation, but, in connection with such merger, the
then outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of the Company or any other person or cash or any
property or then outstanding shares of Common Stock shall after such merger
represent less than 50% of the outstanding shares and share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or substantially all
of its assets to any person, other than Parent or one of its subsidiaries, then,
and in each such case, the agreement governing such transaction shall make
proper provisions so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option, at the election of Parent, of either (I) the
Acquiring Corporation (as defined below), (II) any person that controls the
Acquiring Corporation, or (III) in the case of a merger described in clause
(ii), the Company.
(c) For purposes hereof, "Acquiring Corporation" means (i) the
continuing or surviving corporation of a consolidation or merger with the
Company (if other than the Company), (ii) the Company in a merger in which the
Company is the continuing or surviving corporation and (iii) the transferee of
all or substantially all of the Company's assets. The provisions of
7
<PAGE>
Sections 9 and 10 shall apply with appropriate adjustments to any securities for
which the Option becomes exercisable pursuant to this Section 7.
8. Further Assurances; Remedies. (a) The Company agrees to execute
----------------------------
and deliver such other documents and instruments and take such further actions
as may be necessary or appropriate or as Parent may reasonably request in order
to ensure that Parent receives the full benefits of this Agreement, The Company
will refrain from taking any action which would have the effect of preventing or
interfering with the delivery by the Company of the Option Shares (or other
securities deliverable in accordance with Section 7 hereof) to Parent upon any
exercise of the Option or from otherwise performing its obligations under this
Agreement.
(b) The parties agree that Parent would be irreparably damaged if for
any reason the Company or an Acquiring Corporation failed to issue any of the
Option Shares (or other securities deliverable in accordance with Section 7
hereof) upon exercise of the Option or to perform any of its other obligations
under this Agreement, and that Parent would not have an adequate remedy at law
in such event. The parties agree that the Company would be irreparably damaged
if for any reason Parent failed to perform any of its obligations under this
Agreement. Accordingly, each party shall be entitled to specific performance
and injunctive and other equitable relief to enforce the performance of this
Agreement by the other party. This provision is without prejudice to any other
rights that a party hereto may have against the other party for any failure to
perform its obligations under this Agreement or the Merger Agreement.
9. Put Right and Right of First Refusal. (a) At any time or from
------------------------------------
time to time during the period commencing with the occurrence of an event
referred to in Section 3 hereof and ending 12 months thereafter (or, if later,
the date which is 30 days after the date on which the Company or Parent receives
official notice that any regulatory approval required for the exercise of any
portion of the Option or the purchase of Option Shares by Parent will not be
granted (but solely with respect to the portion of the Option relating to such
Option Shares)), whether or not any portion of the Option has been exercised, in
the event the Merger Agreement has been terminated and, within twelve months of
the date of this Agreement, (x) any person shall have acquired a majority of the
shares of Common Stock outstanding, (y) the Company shall have consummated a
merger, consolidation or similar transaction with any person or (z) the Company
shall have sold, leased or otherwise disposed of all or substantially all of the
consolidated assets of the Company and its subsidiaries to any person, Parent
may, at its election, upon five business days' notice to the Company or any
successor entity (including any person specified in the preceding clause (z)),
surrender to the Company all or a part of the Option as well as all or a part of
the Option Shares purchased pursuant to exercise of the Option, in which event
the Company or any successor entity shall pay to
8
<PAGE>
Parent, on the day of each such surrender and in consideration thereof, against
tender by Parent of an instrument evidencing such surrender, an amount in cash
equal to the sum of:
(i) the aggregate Purchase Price (determined without giving effect to
any adjustment made pursuant to Section 4(b)) for all Option Shares
acquired pursuant to exercise of the Option which Parent has elected to
cause the Company to repurchase;
(ii) the product of (x) the difference (but in no event more than the
Option Cap) between the Market Price (as defined below) for shares of
Common Stock and the Purchase Price (as each may be adjusted), multiplied
by (y) the number of Option Shares purchasable on exercise of that portion
of the Option which has not previously been exercised by the Parent and
which portion Parent has elected to cause the Company to repurchase, but
only if the Market Price is greater than the Purchase Price;
(iii) the product of (x) the difference (but in no event more than the
Option Cap) between the Market Price (as defined below) and the Purchase
Price (as may be adjusted) for the Option Shares acquired by Parent
pursuant to the exercise of the Option (or in the case of Option Shares
with respect to which the Option has been exercised but the closing date
has not occurred, to be acquired) and which Parent has elected to cause the
Company to repurchase, multiplied by (y) the number of shares so
repurchased, but only if the Market Price is greater than the Purchase
Price; and
(iv) the aggregate amount of out-of-pocket expenses incurred by Parent
in connection with the transactions contemplated hereby and thereby,
including accounting, investment banking and legal fees (to the extent not
reimbursed or paid by the Company).
"Market Price" means the higher of (x) the highest price per share of Common
Stock paid for any shares of Common Stock on the principal trading market on
which such shares are traded during the period from the date hereof to the date
Parent gives notice pursuant to this Section 9(a) and (y) the highest price paid
or offered to be paid or the consideration per shares to be received by holders
of Common Stock by any person referred to in Section 3 hereof upon the
occurrence of any event described in Section 3 hereof (in each case, as adjusted
for any stock split, stock dividend or similar event referred to in Section 7
hereof).
Such payment shall be made by delivery of immediately available funds
at a closing to be held not later than 15 days from Parent's notice to the
Company unless additional time is needed to obtain necessary regulatory
approvals, in which case the closing shall be held not later than 15 days after
the date on which such approvals have been obtained and any requisite
9
<PAGE>
waiting periods with respect thereto shall have passed. If Parent or the
Company is notified that any necessary regulatory approvals for such repurchase
will not be granted, Parent shall have the right to exercise the Option to
purchase up to the number of Option Shares for which the Option was exercisable
at the date of the request for surrender delivered by Parent pursuant to this
Section 9 (a) less the number of Option Shares in respect of which payment has
----
been made pursuant to Section 9(a)(ii), whether or not the termination date of
the Option has since occurred pursuant to Section 1. The Company and Parent
shall file promptly any required notices or applications for approval and shall
use their respective best efforts to obtain such approvals as promptly as
practicable. Upon exercise of Parent's right to surrender the Option (or any
portion thereof) and receipt by Parent of cash pursuant to this Section 9(a),
any and all rights of Parent to purchase the Option Shares with respect to the
portion of the Option so surrendered shall terminate.
(b) If at any time or from time to time during the period commencing
with the occurrence of an event set forth in Section 3 hereof and ending on the
first to occur of 24 months following the first purchase of Option Shares and
the termination of the Option, whether or not any portion of the Option has been
theretofore exercised, Parent shall desire to sell, transfer, assign or
otherwise dispose of all or a part of the Option Shares or other securities
purchased pursuant to exercise of the Option to a person (the "Proposed
Transferee") other than an affiliate of Parent or the Company, Parent shall give
the Company written notice of the proposed transaction (an "Offeror's Notice"),
identifying the Proposed Transferee and setting forth the terms of the proposed
transaction. An Offeror's Notice shall be deemed an offer by Parent to the
Company, which may be accepted in writing within 10 days of the receipt of such
Offeror's Notice, with payment by the Company to be made on the same terms and
conditions and at the same per share or per option sale price (not to exceed
the sum of the then applicable per share Purchase Price and the Option Cap)
(payable in cash, whether or not the consideration to be paid by the Proposed
Transferee includes non-cash consideration) at which Parent is proposing to
transfer the Option Shares to the Proposed Transferee.
Such payment shall be made by delivery of immediately available funds
at a closing to be held not later than 15 days after the Company's acceptance
notice is sent to Parent unless additional time is needed to obtain regulatory
approval in which case the closing shall be held 15 days after the date on which
such approval has been obtained and any requisite waiting period with respect
thereto shall have passed. If all or a portion of the price per share to be
paid by the Proposed Transferee consists of non-cash consideration, the value of
such non-cash consideration shall be as set forth in such Proposed Transferee's
offer or, if not so set forth, as determined by a nationally recognized
investment banking firm selected by Parent and reasonably acceptable to the
Company.
10
<PAGE>
In the event of the failure or refusal of the Company to purchase all
of the Option Shares covered by the Offeror's Notice (including any such failure
as a result of any regulatory authority disapproving the Company's proposed
repurchase of such Option Shares), Parent may, within 60 days from the date of
the Offeror's Notice, unless additional time is needed to obtain necessary
regulatory approvals in which case the closing shall be held 15 days after the
date on which such approvals have been obtained and any requisite waiting period
with respect thereto shall have passed, sell all, but not less than all, of such
Option Shares covered by the Offeror's Notice to the Proposed Transferee for not
less than the price specified in the Offeror's Notice. Parent will return to
the Company the amount by which such price exceeds the product of (x) the number
of such Option Shares and (y) the amount per share which exceeds the then
applicable Purchase Price by more than the Option Cap.
The requirements of this Section 9(b) shall not apply to (i) any
disposition of the Option Shares as a result of which the Proposed Transferee
would own beneficially no more than 2% of the outstanding shares of Common Stock
determined immediately after such sale or transfer; (ii) any disposition of the
Option Shares by means of a public offering or through dealers in which
reasonable steps are taken to assure that no purchaser will acquire securities
representing more than 2% of the outstanding voting power of the Company, (iii)
any disposition of the Option Shares or other securities by a person to whom
Parent has assigned its rights under the Option pursuant to the terms hereof,
and (iv) any transfer to an affiliate of Parent which agrees in writing to be
bound by the terms of this Agreement.
10. Registration of the Option Shares. (a) If Parent requests the
---------------------------------
Company in writing to register under the Securities Act any of the Options or
Option Shares purchased or to be purchased by Parent hereunder, the Company will
use its best efforts to cause the offering of the Options or Option Shares (or
other securities that have been acquired by or are issuable to Parent upon
exercise of the Option) specified in such request to be registered as soon as
practicable so as to permit the sale or other distribution by Parent of the
Options or Option Shares or other securities specified in its request (and to
keep such registration effective for a period of at least 270 days), and in
connection therewith shall prepare and file as promptly as reasonably possible
(but in no event later than 30 days from receipt of Parent's request) a
registration statement under the Act to effect such registration on an
appropriate form, which would permit the sale of the Option or Option Shares by
Parent in the manner specified by Parent in its request (which may include a
"shelf" registration statement under Rule 415 under the Securities Act or any
successor provision), provided, however, that the Company shall not be required
to prepare and file any such registration statement in connection with any
proposed sale with respect to which the Company's counsel has rendered an
opinion to Parent, which counsel and opinion shall be reasonably satisfactory to
Parent, to the effect that no such registration
11
<PAGE>
is required under applicable laws and regulations in order to effect such sale
or other distribution in the manner intended by Parent. In connection with such
registration, the Company shall provide Parent, as well as any underwriter for
an offering covered by such registration statement, with such representations,
warranties, covenants and indemnities, and with such certificates, opinions,
accountants' letters and other documents, as Parent shall reasonably request and
as are customarily rendered in connection with the registration of securities
under the Act. Parent shall provide all information reasonably requested by the
Company for inclusion in any registration statement under this Section 10. All
expenses incurred by the Company in complying with the provisions of this
Section 10, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company and blue
sky fees and expenses, shall be paid by the Company, except underwriting
discounts and commissions to brokers and dealers and fees and disbursements of
counsel to Parent, which Parent shall pay. The Company's obligation to register
securities upon the request of Parent shall be limited to two occasions pursuant
to this Section 10(a).
(b) The Company shall notify Parent in writing not less than 15 days
prior to filing a registration statement under the Securities Act with respect
to any Common Stock (other than a filing on Form S-4 or any successor form, or
in connection with any dividend reinvestment, employee stock purchase, stock
option or similar plan, whether or not on Form S-8 or any successor form) of the
Company's intention so to file. If Parent wishes to have any portion of the
Option or the Option Shares it owns included in such registration statement, it
shall advise the Company in writing to that effect within 10 days following
receipt of such notice from the Company pursuant to the preceding sentence, and
the Company will thereupon include the number of the Options or Option Shares
indicated by Parent under such registration statement, provided, however, that
if the managing underwriter of shares of Common Stock to be so registered by the
Company determines and advises in writing that the inclusion in the registration
statement of the number of the Options or Option Shares indicated by Parent
would interfere with the successful marketing of the Common Stock proposed to be
registered and sold by the Company, then the number of the Options or Option
Shares indicated by Parent to be included in the underwriting shall be reduced
or eliminated pro rata among all holders of shares of Common Stock requesting
such registration, including the Company.
(c) In connection with any registration under the provisions of this
Section 10, the Company shall indemnify and hold harmless Parent against any
losses, claims, damages or liabilities, joint or several, of which Parent may
become subject, insofar as such losses, claims, damages or liabilities (or any
action in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any registration
statement or preliminary or final prospectus, or any amendment or supplement
thereto, or
12
<PAGE>
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse Parent for any
legal or other expenses reasonably incurred by Parent in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any case to the extent
that any such loss, claim, damage, or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or preliminary or final prospectus or such
amendment or supplement thereto in reliance upon written information furnished
by Parent specifically for use in the preparation thereof. Parent shall
indemnify and hold harmless the Company to the same extent as set forth in the
immediately preceding sentence but only with reference to written information
furnished by Parent for use in the preparation of such registration statement or
preliminary or final prospectus or such amendment or supplement thereto; and
will reimburse the Company for any legal or other expenses reasonably incurred
by the Company in connection with investigating or defending any such loss,
claim, damage, liability or action. The foregoing indemnities shall also extend
on the same terms to each officer and director of Parent and the Company,
respectively and to each person, if any, who controls Parent or the Company.
(d) The registration rights granted to Parent under this Section 10
shall (i) be effective only after an event set forth in Section 3 hereof shall
have occurred and (ii) expire three years after the last acquisition of any
Option Shares upon the exercise of the Option by Parent.
(e) Parent will return to the Company all amounts received in any sale
made pursuant to this Section 10 which exceed the product of (i) the number of
such Options or Option Shares sold and (ii), (A) in the case of a sale of
Options, the Option Cap, and (B) in the case of a of a sale of Option Shares,
the amount per share received which exceeds the then applicable Purchase Price
by more than the Option Cap.
11. Listing. If the Option Shares or other securities to be acquired
-------
upon exercise of the Option are then listed on any stock exchange, the Company,
upon the request of Parent, will promptly file an application to list such
Option Shares or securities on such stock exchange and will use its best efforts
to obtain approval of such listing as soon as practicable.
12. Division of Option. This Agreement and the Option granted hereby
------------------
are exchangeable, without expense, at the option of Parent, upon presentation
and surrender of this Agreement at the principal office of the Company for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of Option Shares
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related
13
<PAGE>
Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this Agreement, and (in the
case of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Agreement, if mutilated, the Company
will execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable by anyone.
13. Amounts in Excess of Aggregate Option Cap. In the event that the
-----------------------------------------
difference between (x) the aggregate proceeds received by Parent and its
affiliates from third parties in respect of the sale or disposition of all or
any portion of the Option and all or any part of the Option Shares and (y) the
aggregate purchase price (if any) paid therefor and proceeds theretofore
returned to the Company exceeds the Aggregate Option Cap, Purchaser will
promptly return such excess and any remaining Option Shares to the Company and
any remaining portion of the Option shall be cancelled.
14. Miscellaneous. (a) Expenses. Except as otherwise provided
------------- --------
herein, each of the parties hereto shall pay all the expenses incurred by or on
its behalf in connection with the transaction contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) Notices. All notices, requests, claims, and other communication
-------
hereunder shall be in writing (including facsimile transmission or similar
writing) and shall be given as follows:
To Parent: LOEWEN GROUP INTERNATIONAL, INC.
50 East River Center Boulevard
Covington, Kentucky 41011
Attn: Robert Wienke, Esq.
Telephone: (606) 655-7192
Fax: (606) 655-7144
With a copy to: JONES, DAY, REAVIS & POGUE
599 Lexington Avenue
New York, New York 10022
Attn: Christopher M. Kelly, Esq.
Telephone: (212) 326-3436
Fax: (212) 755-7306
To the Company: MHI GROUP, INC.
3100 Capital Circle, NE
Tallahassee, Florida 32308
Attn: Clifford R. Hinkle
Telephone: (904) 385-8883
14
<PAGE>
Fax: (904) 385-0338
With a copy to: WILLKIE FARR & GALLAGHER
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attn: Bruce R. Kraus, Esq.
Telephone: (212) 821-8000
Fax: (212) 821-8111
or to such other address or telecopy number as such party may hereafter specify
by notice to the other parties hereto. Each such notice, request or other
communication shall be effective (i) if given by facsimile transmission, when
such is transmitted to the number specified in this Section 14(b) and the
appropriate confirmation is received, or (ii) if given by any other means when
delivered at the address specified in this Section 14(b).
(c) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
If for any reason any court or regulatory agency determines that the
Option will not permit the holder to acquire, or the Company to repurchase
pursuant to Section 9, the full number of Option Shares, it is the express
intention of the Company to allow the holder to acquire, or to require the
Company to repurchase, such lesser number of Option Shares as may be
permissible, without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Florida.
(e) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(f) Headings. The section headings herein are for convenience only
--------
and shall not affect the construction hereof.
(g) Assignment. Parent may assign this Agreement in whole or in part
----------
to any affiliate of Parent at any time or from time to time. Except as provided
in the next sentence, Parent may not, without the prior written consent of the
Company (which shall not be unreasonably withheld), assign this Agreement to any
other person. Upon the occurrence of an event described in Section 3, Parent
may sell, transfer, assign or otherwise dispose of (in whole at any time or in
part from time to time) its rights and obligations hereunder, subject to the
provisions of Section 9(b). In the case of any sale, transfer, assignment or
15
<PAGE>
disposition in part of this Option, the Company shall do all things reasonably
necessary to facilitate such transaction. This Agreement shall not be
assignable by the Company except by operation of law.
(h) Survival. All representations, warranties and covenants contained
--------
herein shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, except as otherwise
provided herein.
(i) Parties in Interest. This Agreement shall be binding upon and
-------------------
inure solely to the benefit of each party hereto and their successors in
interest and permitted assigns, and nothing in this Agreement, express or
implied, is intended to confer upon any other person (other than an assignee or
transferee of Parent pursuant to Section 14(g) hereof) any rights or remedies of
any nature whatsoever under or by any reason of this Agreement.
(j) Amendments. This Agreement may not be modified, amended, altered
----------
or supplemented, except upon the execution and delivery of a written agreement
by the parties hereto.
16
<PAGE>
IN WITNESS WHEREOF, the Company and Parent have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
MHI GROUP, INC.
By: /s/ Clifford R. Hinkle
---------------------------------
Name: Clifford R. Hinkle
Title: President and Chief Executive
Officer
LOEWEN GROUP INTERNATIONAL, INC.
By: /s/ Raymond L. Loewen
---------------------------------
Name: Raymond L. Loewen
Title: Chairman of the Board,
Chief Executive Officer
and Director
<PAGE>
EXHIBIT 99(c)(3)
WARRANT OPTION AGREEMENT
WARRANT OPTION AGREEMENT, dated as of August 9, 1995 (the
"Agreement"), among LOEWEN GROUP INTERNATIONAL, INC., a Delaware corporation
(the "Parent"), and MH ASSOCIATES, a New York general partnership (the
"Investor").
WHEREAS, the Parent, SPRT Corp., a Florida corporation and a wholly
owned subsidiary of the Parent (the "Purchaser"), and MHI Group, Inc., a Florida
corporation (the "Company"), propose to enter into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement") providing for the making
of a cash tender offer (the "Offer") by the Parent and the Purchaser for shares
of Common Stock, par value $.40 per share, of the Company (the "Common Stock")
and the merger of the Company and the Purchaser (the "Merger"); and
WHEREAS, the Investor is a party to the option agreement dated April
22, 1986, as amended (the "KD Warrant") to purchase 486,352 shares of Common
Stock (the "Optioned Shares");
NOW, THEREFORE, in consideration of the promises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
1. Grant of Options.
----------------
(a) Initial Option. The Investor grants to the Parent an irrevocable
--------------
option (the "Initial Option"), exercisable, as provided in Sections 2 and 3
(subject to Section 1(d)), at any time after the expiration or termination of
the Offer or the acceptance for purchase by the Purchaser (or any other person
who is authorized by the Parent) of any shares of Common Stock pursuant to the
Offer, until October 31, 1995 (the "Initial Option Period"), to purchase the KD
Warrant for the Option Purchase Price (as defined in Section 1(c) hereof).
(b) Extended Option. If, prior to the last day of the Initial Option
---------------
Period, the Parent notifies the Investor of its intent to extend the exercise
period of the option described in this Section 1(b) and pays the Investor
$607,940 in cash (the "Extended Option Payment") by wire transfer of immediately
available funds to an account designated by the Investor within two business
days after delivery of such notice) the Investor shall grant to the Parent an
irrevocable option (the "Extended Option," and together with the Initial Option,
the "Options"), exercisable, as provided in Sections 2 and 3 (subject to Section
1(d)), at any time during the 60-day period commencing on the first day
following the Initial Option Period (the "Extended Option Period"), to purchase
the KD Warrant for the Option Purchase Price.
<PAGE>
(c) Option Purchase Price. Except as provided in the last sentence
---------------------
of this Section 1(c), the Option Purchase Price shall be payable in cash by wire
transfer of immediately available funds to an account designated by the Investor
at least one business day prior to payment, and shall be an amount equal to (i)
486,352 times the greater of the per share price offered or to be offered for
Common Stock by the Parent or the Purchaser in the Offer (as such amount may be
increased in the Offer) and the highest price per share of Common Stock paid at
any time by the Parent or the Purchaser (or any of its affiliates) in any
transaction other than the Offer (including, but not limited to, open market
purchases or consideration paid pursuant to a merger or similar transaction, but
not including any amounts paid in respect of appraisal proceedings under Florida
law), in each case as of the date of exercise, subject to the following sentence
minus (ii) the sum of the aggregate exercise price of the KD Warrant and the
amount of the Extended Option Payment paid by the Parent. If, within one year
following the exercise of any of the Options, the per share prices described in
clause (i) are increased, within five business days thereafter the Parent shall
pay to the Investor an amount in cash, by wire transfer of immediately available
funds to an account designated by the Investor equal to the difference between
the amount or amounts previously paid to the Investor and the Option Purchase
Price as recomputed based upon such increased price or prices. In the event
that noncash consideration is included in the Option Purchase Price, the Option
Purchase Price shall be payable in both such noncash consideration and cash in
the respective percentages thereof paid by the Parent or the Purchaser for
shares of Common Stock.
(d) Limits on Exercise. Notwithstanding the provisions of Sections 1
------------------
and 2 of this Agreement, the Options shall not be exercisable, shall expire and
shall be null and void after August 15, 1995 if the Offer is not commenced on or
prior to August 15, 1995.
2. Exercise of Options.
-------------------
(a) Elective Exercise. If the Parent wishes to exercise either of
-----------------
the Options, the Parent shall do so by delivering written notice during the
Initial Option Period or the Extended Option Period, as the case may be (the
date of such notice being herein called the "Notice Date"), to the Investor
specifying the place, time and date not earlier than two business days, nor
later than ten business days, from the Notice Date for the closing of the
purchase by the Parent pursuant to such exercise. The delivery of such notice
shall be deemed for all purposes to be the exercise of the Options and shall
constitute an irrevocable and binding commitment on the part of the Parent to
purchase the KD Warrant upon the terms set forth in this Agreement.
(b) Mandatory Exercise. If any share of Common Stock is accepted for
------------------
payment by the Parent or the Purchaser (or any other person who is authorized by
the Parent) pursuant to the Offer, the Parent shall without the requirement of
any notice or other action
2
<PAGE>
by the Parent or the Investor, be deemed to have exercised the Options on the
business day immediately following such date and shall pay the Option Purchase
Price at a closing no later than three business days following the date of such
acceptance for payment. Such acceptance for payment pursuant to the Offer shall
constitute an irrevocable and binding commitment on the part of the Parent to
purchase the KD Warrant upon the terms set forth in this Agreement.
3. Payment of Option Purchase Price and Delivery of Assignment of the
------------------------------------------------------------------
KD Option. At any closing of the exercise of the Options hereunder, (a) the
---------
Parent shall deliver to the Investor the Option Purchase Price and (b) the
Investor shall deliver to the Parent an instrument of assignment of the KD
Option in form and substance reasonably satisfactory to the Parent.
4. Sale or Transfer of the KD Warrant by the Parent. If, prior to the
-------------------------------------------------
first anniversary of the date of the exercise of either of the Options, the
Parent or any of its affiliates sells or otherwise transfers (including but not
limited to, by merger of the Company) or assigns either the KD Warrant, in whole
or in part, or any shares of Common Stock acquired upon exercise thereof, it
will promptly pay over to the Investor 50% of the Profits (defined below)
realized therefrom. "Profits" shall mean, (a) in the case of shares of Common
Stock, (i) the excess of (A) the price per share received by the Parent over (B)
the sum of the Option Purchase Price, the aggregate exercise price of the KD
Warrant and the amount of any Extended Option Payment paid by the Parent,
divided by 486,352, multiplied by (ii) the number of shares in question, and (b)
in the case of the KD Warrant, the excess of (A) the consideration received by
the Parent over (B) the sum of the Option Purchase Price and the amount of any
Extended Option Payment paid by the Parent (or the appropriate pro rata portion
thereof, in the case of partial sales). In the event that noncash consideration
is included in consideration received by the Parent, the Profits shall be
payable in such noncash consideration in the same percentage as such noncash
consideration bears to the total consideration received by the Parent.
5. Representations and Warranties of the Investor. The Investor
---------------------------------------------
hereby represents and warrants to the Parent as follows:
(a) Authority; Noncontravention. The Investor has all requisite power
---------------------------
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Investor and the consummation by the Investor of the transactions contemplated
hereby have been duly authorized by all necessary partnership action on the part
of the Investor. This Agreement has been duly executed and delivered by the
Investor and constitutes a valid and binding obligation of the Investor,
enforceable against the Investor in accordance with its terms. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not, conflict
with, or result in any violation of, or default (with or without notice
3
<PAGE>
or lapse of time or both) under (i) organizational documents of the Investor or
(ii) any provision of any trust agreement, loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Investor or to the Investor's property or assets,
other than, in the case of clause (ii), any such conflicts, violations,
defaults, rights or liens that individually or in the aggregate would not
prevent the consummation of any of the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or registration,
declaration or filing with, any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), is required
by or with respect to the Investor in connection with the execution and delivery
of this Agreement or the consummation by the Investor of the transactions
contemplated by this Agreement, except for (1) the filing with the Securities
and Exchange Commission of such reports under Sections 13(d) and 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement and (2) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as would not individually or in the
aggregate prevent the consummation of any of the transactions contemplated by
this Agreement.
(b) The KD Warrant. The KD Warrant is in full force and effect, has
--------------
not heretofore been exercised in whole or in part, and is assignable by the
Investor free and clear of any claims, liens, encumbrances or security
interests.
6. Representations and Warranties of the Parent. The Parent
--------------------------------------------
hereby represents and warrants to the Investor as follows:
(a) Authority; Noncontravention. The Parent has all requisite
---------------------------
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of the Parent. This Agreement has been duly executed and delivered by the
Parent and constitutes a valid and binding obligation of the Parent, enforceable
against the Parent in accordance with its terms. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated by
this Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, (i) the certificate of incorporation or by-
laws of the Parent or the comparable charter or organizational documents of any
other subsidiary of the Parent, (ii) any loan or credit agreement, note, bond,
4
<PAGE>
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Parent or any of its subsidiaries or
their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Parent or any of its subsidiaries or their respective properties or assets,
other than, in the case of clause (ii) or (iii), any such conflicts, violations,
defaults, rights or liens that individually or in the aggregate would not (x)
have a material adverse effect (as such term is defined in the Merger Agreement)
on the Parent, (y) impair the ability of the Parent to perform its respective
obligations under this Agreement or (z) prevent the consummation of any of the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Parent or any of its subsidiaries
in connection with the execution and delivery of this Agreement or the
consummation by the Parent of any of the transactions contemplated by this
Agreement, except for (1) the filing with the Securities and Exchange Commission
of such reports under Sections 13(a), 13(d), 14(d) and 16(a) of the Exchange Act
as may be required in connection with this Agreement and the transactions
contemplated by this Agreement, (2) filings and reports under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, in connection with the
Offer, and (3) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as would not individually or in the
aggregate (A) have a material adverse effect on the Parent or (B) prevent the
consummation of any of the transactions contemplated by this Agreement.
(b) Securities Act. The KD Warrant and any shares of Common Stock
--------------
acquired upon exercise thereof will be acquired for investment only and not with
a view to any public distribution thereof, and the Parent will not offer to sell
or otherwise dispose of the KD Warrant or any shares so acquired by it in
violation of any of the registration requirements of the Securities Act of 1933,
as amended.
7. Covenants of the Investor. The Investor agrees, until the Options
-------------------------
have expired, not to exercise the KD Warrant in whole or in part or to sell,
transfer, pledge, assign or otherwise dispose of, or enter into any contract,
option or other arrangement with respect to the sale, transfer, pledge,
assignment or other disposition of, the KD Warrant to any person other than
pursuant to this Agreement.
8. No Brokers. Except for Smith Barney Inc. and Mr. Peter Gruenbaum
----------
(the financial advisors retained by the Parent), each of the Investor and the
Parent represents, as to itself and its affiliates, that no agent, broker,
investment banker or other firm or person is or will be entitled to any broker's
or finder's fees or
5
<PAGE>
any other commission or similar fee in connection with any transaction
undertaken pursuant to this Agreement and respectively agrees to indemnify and
hold the others harmless from and against any and all claims, liabilities or
obligations with respect to any such fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have occurred or been
made by such party or its affiliates.
9. Survival of Representations. All representations, warranties and
---------------------------
agreements made by the parties to this Agreement shall not survive beyond the
first anniversary of the date of the exercise of any of the Options, except that
the representations of the Investor with respect to the Parent's title to the KD
Warrant shall survive indefinitely.
10. Further Assurances. If the Parent shall exercise either of the
------------------
Options in accordance with the terms of this Agreement, from time to time and
without additional consideration the Investor will execute and deliver, or cause
to be executed and delivered, such additional or further transfers, assignments,
endorsements, consents and other instruments as the Parent may reasonably
request for the purpose of effectively carrying out the transactions
contemplated by this Agreement, including the transfer of the KD Warrant to the
Parent and the release of any and all liens, claims and encumbrances with
respect thereto.
11. Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other party, except that the Parent may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to any direct or indirect wholly owned subsidiary of the
Parent in which case such subsidiary and the Parent shall remain jointly and
severally liable for all of the Parent's obligations hereunder. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
12. General Provisions.
------------------
(a) Expenses. Whether or not the Option is exercised, all costs and
--------
expenses incurred in connection with the Option, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense.
(b) Amendments. This Agreement may not be amended except by an
----------
instrument in writing signed by each of the parties hereto.
(c) Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed delivered if delivered personally or sent by
overnight courier (providing proof of delivery) or by electronically confirmed
facsimile to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
6
<PAGE>
(i) if to the Parent, to
Loewen Group International, Inc.
50 East RiverCenter Boulevard
Suite #800
Covington, Kentucky 41011
Facsimile: (606) 655-7144
Attention: Robert Wienke, Esq.
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Facsimile: (212) 755-7306
Attention: Christopher Kelly, Esq., and
(ii) if to the Investor, to
George Kellner
Kellner Dileo & Co.
900 Third Avenue, 10th Floor
New York, New York 10022
Facsimile: (212) 350-0340
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Facsimile: (212) 909-6836
Attention: Meredith M. Brown, Esq.
(d) Enforcement of the Agreement. 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, in the event of a breach
hereof, the parties hereto will be entitled to and injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
7
<PAGE>
(e) Interpretation. When a reference is made in this Agreement to
--------------
Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. 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. Wherever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
(f) Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement.
(g) Entire Agreement; No Third Party Beneficiaries. This Agreement
----------------------------------------------
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(h) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York.
8
<PAGE>
IN WITNESS WHEREOF, the Parent and the Investor have caused this Agreement to
be signed by their respective duly authorized representatives, all as of the
date first written above.
LOEWEN GROUP INTERNATIONAL, INC.
By: /s/ A.M. Bruce Watson
________________________________
Name: A.M. Bruce Watson
Title: Executive Vice President
MH ASSOCIATES
By: /s/ George Kellner
________________________________
Name: George Kellner
Title: Managing Partner
9
<PAGE>
EXHIBIT 99(c)(4)
CONFIDENTIALITY AGREEMENT
-------------------------
THIS CONFIDENTIALITY AGREEMENT is made and entered into this 9th day of
March, 1995 by and between MHI GROUP, INC., a Florida corporation ("MHI") and
LOEWEN GROUP INTERNATIONAL, INC., a Delaware corporation ("PURCHASER") and
provides as follows:
WITNESSETH:
WHEREAS, Purchaser is investigating and considering the purchase of the
shares or the assets of MHI or a combination of both; and
WHEREAS, MHI has certain financial and other information related to the
business and affairs of MHI; and
WHEREAS, the parties mutually acknowledge that, in the process of
Purchaser's investigation of MHI and any negotiations which may develop as a
result thereof, certain confidential information relating to MHI will be
revealed by MHI to Purchaser; and
WHEREAS, MHI desires, and Purchaser is willing to agree, that Purchaser
keep and maintain such information confidential;
NOW THEREFORE, in consideration of the foregoing premises and the mutual
promises, terms and conditions hereinafter set forth, the parties agree as
follows:
1. Confidential Information. As used herein the term "confidential
------------------------
information" shall mean any and all information relating to the business
matters of MHI obtained from MHI including, but not limited to,
information encompassed in the listing files, sales files, personnel
files, lease agreements, sales associates files and marketing plans of
MHI; financial information relating to the assets, liabilities, income,
expenses, cash flow and any and all other financial matters of MHI and
its agents and employees; and the names, identities and details relating
to the creditors and debtors of MHI; but excludes any information
relating to MHI made available to Purchaser as a matter of public record
or obtained by Purchaser lawfully through third parties.
2. Confidentiality. Purchaser herby agrees to retain the confidentiality of
---------------
the confidential information obtained from MHI relating to MHI (except if
such information is a matter of public record or if it is lawfully
obtained from third parties) including, but not limited to, confidential
information obtained through conversations with MHI personnel or agents
of MHI or the review of documents, files, operations or statements of MHI
provided by MHI, and, except as provided in this Agreement, Purchaser
further agrees to not disclose or disseminate to or discuss with any
other person on entity any such confidential information. Purchaser
hereby agrees to use such information only for its own benefit in
reaching a decision regarding the purchase of the shares of MHI or its
assets, or both.
3. Disclosure. Notwithstanding the foregoing, Purchaser shall be entitled to
----------
disclose and disseminate to and discuss with its employees and agents the
confidential information of MHI provided by MHI so long as Purchaser has
obtained the assurance of each such employee and agent to observe this
confidentiality, Purchaser will indemnify MHI for any breach of this
provision.
4. Return of Confidential Information. In the event that at any time MHI
----------------------------------
makes written request for the return of the confidential information
Purchaser will promptly return the confidential information to MHI;
provided, however, that if Purchaser acquires control of MHI or its
assets or both, Purchaser will be under no obligation to return the
confidential information.
<PAGE>
March 7, 1995 -2-
5. Breach. The parties hereby mutually acknowledge that a breach of this
------
Confidentiality Agreement by Purchaser would cause irreparable damage to
MHI for which no remedy at law would be adequate and, accordingly, in
addition to any other remedy (which in no way is hereby limited) MHI
shall be entitled to injunctive relief in a court of competent
jurisdiction to enforce the terms of this Agreement.
6. Successors. This Agreement shall be binding upon all parties, their
----------
heirs, legal representatives, successors and assigns.
7. Enforceability. If any provision of this Agreement is adjudged to be void
--------------
or unenforceable, in whole or part, such determination shall not affect
the validity of the remainder of the provisions which shall remain in
full force and effect and be enforceable according to their terms. Each
provision of this Agreement is declared to be severable from every other
provision and constitutes a separate and distinct covenant.
8. Governing Law. This Agreement shall be construed under and governed by
-------------
the laws of the State of Florida in all respects.
9. No Waiver. In in one or more instances either party fails to insist that
---------
the other party perform any of the terms of this Agreement, such failure
shall not be construed as a waiver by such party or any past, present or
future right granted under this Agreement; the obligations of both
parties under this Agreement shall continue in full force and effect.
10. Entire Agreement. This Agreement constitutes the complete understanding
----------------
between the parties, all prior representations or agreements having been
merged into this Agreement.
11. Modification. No alteration or modification of any of the provisions of
------------
this Agreement shall be valid unless made in writing and signed by both
parties.
12. For two years following the date hereof, neither you nor any person
controlled by you nor any of your officers or directors having access to
the confidential information will purchase any securities of MHI, except;
(i) pursuant to a transaction approved by MHI's Board of Directors, of
(ii) if a third party or group acquires or makes a tender offer to
acquire 10% or more of MHI's common stock not approved in advance by the
Board of Directors of MHI.
EXECUTED as of the day and year first above written.
MHI GROUP, INC.
By: /s/ J.C. Ogier Mathewes
-----------------------
J.C. Ogier Mathewes
Title: Vice President and
Chief Financial Officer
LOEWEN GROUP INTERNATIONAL, INC.
By: /s/ Robert O. Wienke
-----------------------
Robert O. Wienke
Title: Executive Vice President
Corporate Development & Law
<PAGE>
MHI EXHIBIT 99(c)(5)
MHI GROUP, INC. Exclusivity Agreement
July 24, 1995
The Loewen Group, Inc.
4126 Norland Avenue
Burnaby, British Columbia
Canada V5G 3S8
Ladies and Gentlemen:
In order to induce your consideration of a possible transaction with MHI
Group, Inc., a Florida corporation (the "Company"), involving the purchase of
the capital stock of the Company, the Company hereby agrees with The Loewen
Group, Inc. and all of its subsidiaries (the "Loewen Group") as follows:
1. The Company hereby agrees to work exclusively with the Loewen Group from
the date hereof through the close of business, eastern daylight time, on
Tuesday, August 15, 1995 (the "Exclusivity Period") with respect to such
possible transaction, subject to the terms and conditions set forth herein.
During the Exclusivity Period, the Company and its subsidiaries will not,
directly or indirectly, through any officer, director, agent, financial advisor
or otherwise, solicit, initiate or encourage submission of proposals or offers
from any person relating to any acquisition or purchase of all or a portion of
the assets (other than immaterial or insubstantial assets or inventory in the
ordinary course of business), or any equity interest in, the Company or any of
its subsidiaries or any business combination with the Company or any of its
subsidiaries, or participate in any negotiations regarding, or furnish to any
other person any information (except for information which has been previously
publicly disseminated by the Company in the ordinary course of business),
subject to the fiduciary obligations of the Company's Board of Directors as
advised by counsel in respect of proposals received other than as a result of a
failure to comply with this paragraph. The Company shall promptly notify the
Loewen Group if any such proposal or offer is made.
2. While the Company has had discussions in the past with, and has received
expressions of interest from, third parties with respect to a possible
transaction, and has not taken affirmative steps to halt such discussions or
expressions of interest, the Company represents and warrants that it is not
currently in negotiations or discussions with any third party with respect to
any such transaction.
3100 Capital Circle, N.E., Tallahassee, Florida 32308-3760
Telephone 904/365-8883 FAX 904/385-0338
<PAGE>
The Loewen Group, Inc.
July 24, 1995
Page 2
3. The Company and the Loewen Group acknowledge that no agreement exists
between the Company and the Loewen Group regarding the sale of the capital stock
of the Company, and the Company shall have no obligations to the Loewen Group
unless and until a definitive agreement shall have been executed and delivered,
and that following such execution and delivery, the Company's only obligation
shall be those set forth in said agreement. In the event such agreement has not
been executed and delivered by both parties on or before the close of business,
eastern daylight time, on Tuesday, August 15, 1996, unless extended with the
consent of both parties, then any obligations of the Company pursuant to
paragraph no. 1 of this letter shall cease and such paragraph shall no longer
have any force or effect as of such date.
4. The Loewen Group hereby agrees to become party to, and shall cause each
of its subsidiaries to become a party to, that certain Confidentiality Agreement
dated as of March 9, 1995 (the "Confidentiality Agreement") between the Company
and Loewen Group International, Inc., and hereby agrees that it shall be fully
bound by the terms and provisions thereof. The Company and the Loewen Group
hereby ratify and confirm the Confidentiality Agreement and acknowledge that all
provisions thereof remain in full force and effect. The Company further agrees
that, to the extent that the Company is furnished with confidential information
with respect to the Loewen Group, the Company shall afford such confidential
information the same treatment as is afforded confidential information of the
Company by the Loewen Group pursuant to the Confidentiality Agreement.
5. For two years following the date hereof, neither the Loewen Group nor
any person controlled by the Loewen Group nor any officers or directors of the
Loewen Group having access to the "confidential information" (as such term is
defined in the Confidentiality Agreement) will purchase any securities of the
Company, except (i) pursuant to a transaction approved by the Company's Board of
Directors, or (ii) if a third party or group acquires, in a transaction required
to be reported on Form 13D, or makes a tender offer to acquire, 10% or more of
the Company's common stock not approved in advance by the Board of Directors of
the Company.
6. This letter is non-assignable, and shall be governed and construed in
accordance with the laws of the state of New York, without reference to its
conflicts of laws principles.
<PAGE>
The Loewen Group, Inc.
July 24, 1995
Page 3
7. This letter may be executed in one or more counterparts, each of which
when executed and delivered shall be deemed to be an original but all which
shall constitute one and the same instrument.
If you are in agreement with the foregoing, please sign and return one copy
of this letter, which will constitute our agreement with respect to the subject
matter hereof.
Very truly yours,
MHI GROUP, INC.
By: /s/ W. Fred Lindsey
---------------------------
W. Fred Lindsey
Chairman of the Board
ACCEPTED AND AGREED:
THE LOEWEN GROUP, INC.
By: /s/ Raymond L. Loewen
--------------------------
Name:
Title:
<PAGE>
THE LOEWEN GROUP INC.
July 25, 1995
MHI Group, Inc.
3100 Capital Circle, N.E.
Tallahassee, Florida 32808-3760
Ladies and Gentlemen:
Reference is made to that certain letter agreement dated July 24, 1995 (the
"Letter Agreement") entered into by you and us. Terms capitalized herein and not
otherwise defined herein shall have the meanings ascribed to them in the Letter
Agreement.
The Letter Agreement is hereby amended as follows:
1. Without the prior written consent of the other party, neither the
Company nor The Loewen Group will and each will direct its officers, directors,
agents, financial advisors and any other representatives not to, disclose to any
person (other than its own representatives) either the fact that the Company is
considering a business combination transaction with The Loewen Group, or that
any investigations, discussions or negotiations are taking place concerning a
possible transaction between the Company and The Loewen Group, or that The
Loewen Group has requested or received confidential information relating to the
Company, or any of the terms, conditions or other facts with respect to any such
possible transaction, including the status thereof, other than as required under
applicable law or at anytime seven (7) months after the date hereof if deemed
appropriate by either party.
2. The Company shall promptly notify The Loewen Group of the terms of any
offer or proposal (as described in paragraph 1 of the Letter Agreement) which
is made during the Exclusivity Period (as may be extended in accordance with
the provisions of Paragraph 3 of the Letter Agreement).
The Letter Agreement shall otherwise remain in full force and effect.
4126 Norland Avenue
Burnaby, B.C., Canada V5G 3S8
Telephone: (604) 299-9321 . Main Fax: (604) 473-7333
Departmental Faxes: Corporate Finance / Executive Operations: 473-7330
Human Resources: 293-6459 . Corporate Development: 473-7335
Payroll: 473-7345 . Controllers / Finance: 473-7337 . Legal 473-7344
Accounts Payable: 473-7343 . Statistics / Operations: 293-6460
<PAGE>
MHI Group, Inc.
July 25, 1995
Page 2
If you are in agreement with the foregoing, please sign and return one copy
of this letter, which will constitute our agreement with respect to the subject
matter thereof.
Sincerely,
THE LOEWEN GROUP INC.
/s/ Raymond L. Loewen
Raymond L. Loewen
Chairman & Chief Executive Officer
ACCEPTED AND AGREED:
MHI GROUP, INC.
W. Fred Lindsey
Chairman of the Board
