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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): November 7, 1996
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NASH-FINCH COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 0-785 41-0431960
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(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
7600 France Avenue South, Minneapolis, Minnesota 55440
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(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code: (612) 832-0534
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 8, 1996, Super Food Services, Inc. (the "Company"), Nash-
Finch Company ("Parent") and NFC Acquisition Corporation (the "Purchaser")
entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant
to which the Purchaser agreed to commence a cash tender offer (the "Offer") to
purchase all outstanding shares of the Common Shares, par value $1.00 per share,
including the associated preferred share purchase rights (collectively, the
"Shares"), of the Company at a price of $15.50 per Share, net to the seller in
cash, upon and subject to terms and conditions of the Merger Agreement and
thereafter to proceed with a merger of the Company with and into the Purchaser
(the "Merger").
The Offer expired according to its terms at 12:00 midnight, New York
City time, on Wednesday, November 6, 1996. On November 7, 1996, pursuant to the
Offer, the Purchaser accepted for payment the 10,566,682 Shares (including
157,997 Shares tendered by notice of guaranteed delivery) that had been validly
tendered in the Offer. On November 15, 1996, the Purchaser paid for the
10,557,183 Shares as to which certificates had been physically delivered to the
Depositary, at a price of $15.50 per Share, for a total purchase price of
$163,636,336.50. Accordingly, the Purchaser acquired a total of 10,557,183
Shares pursuant to the Offer. Certificates for 10,899 Shares tendered by notice
of guaranteed delivery were not delivered and, accordingly, were not purchased.
The funds to purchase the Shares were provided by Parent to the
Purchaser from available cash on hand and pursuant to a $500 million credit
facility (the "Credit Facility") provided by a syndicate of banks for whom
Harris Trust and Savings Bank acts as administrative agent and Bank of Montreal
and PNC Bank, National Association, act as co-syndication agents. The Credit
Facility is a $500 million senior unsecured revolving facility maturing five (5)
years from the date of the closing thereof, with a mandatory commitment
reduction, through subsequent debt issues or otherwise, to $400 million by
December 31, 1998.
On November 22, 1996 (the "Effective Time"), the Merger was consummated
through a merger of the Purchaser with and into the Company, with the Company
continuing as the surviving corporation in the Merger (the "Surviving
Corporation"). As a result, Parent is the sole stockholder of the Surviving
Corporation. Pursuant to the Merger Agreement, at the Effective Time (a) each
Share then issued and outstanding (other than (i) Shares held, directly or
indirectly, by Parent, the Purchaser or any of their subsidiaries or in the
treasury of the Company or held by any subsidiary of the Company, all of which
were canceled and (ii) Shares held by stockholders who properly exercised and
perfected appraisal rights under the General Corporation Law of the State of
Delaware) was converted into the right to receive $15.50 in cash, and (b) each
of the 100 shares of Common Stock, par value $.01 per share, of the Purchaser
then issued and outstanding was converted into one share of Common Stock of the
Surviving Corporation. As a result, Parent owns all of the 100 issued and
outstanding shares of common stock of the Surviving Corporation.
Additional information concerning the Merger and the Offer is contained
in the Merger Agreement, which document is an exhibit hereto and is incorporated
herein by reference.
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
a. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The registrant has determined that it is impracticable to provide the
required historical financial information regarding the acquisition of
Super Food Services, Inc. at this time. The registrant will file the
required historical financial information under a Form 8-K/A as soon a
practicable, but in any event within 60 days after the date hereof.
b. PRO FORMA FINANCIAL INFORMATION
The registrant has determined that it is impracticable to provide the
required pro forma financial information regarding the acquisition of
Super Food Services, Inc. at this time. The registrant will file the
required pro forma financial information under a Form 8-K/A as soon a
practicable, but in any event within 60 days after the date hereof.
c. EXHIBITS.
2.1 Agreement and Plan of Merger, dated as of October 8, 1996, by and
among the Company, Parent and the Purchaser. Omitted from such
Exhibit are the remaining exhibits referenced in such agreement.
The registrant will furnish supplementally a copy of any such
exhibits to the Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NASH-FINCH COMPANY
(Registrant)
Dated: November 22, 1996 By /s/ Norman R. Soland
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Norman R. Soland,
Vice President, Secretary and
General Counsel
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INDEX TO EXHIBITS
Item Method of Filing
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2.1 Agreement and Plan of Merger, dated as of Filed electronically
October 8, 1996, by and among the Company, herewith.
Parent and the Purchaser.....................
5
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AGREEMENT AND PLAN OF MERGER
AMONG
NASH-FINCH COMPANY
NFC ACQUISITION CORPORATION
AND
SUPER FOOD SERVICES,
INC.
Dated as of OCTOBER 8, 1996
ARTICLE 1. THE OFFER
1.1. The Offer.
1.2. Company Actions.
ARTICLE 2. THE MERGER
2.1. The Merger
2.2. Effective Time
2.3. Effects of the Merger
2.4. Certificate of Incorporation and By-Laws
2.5. Directors and Officers
2.6. Conversion of Shares
2.7. Company Stock Plans. . . . . . . . . . . . . . . . . . . . . . . 5
2.8. Closing
ARTICLE 3. DISSENTING SHARES; EXCHANGE OF SHARES
3.1. Dissenting Shares
3.2. Exchange of Shares.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PARENT AND
ACQUISITION SUB
4.1. Organization and Qualification
4.2. Authority Relative to this Agreement
4.3. Proxy Statement
4.4. Consents and Approvals; No Violation
4.5 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1. Disclosure Schedule
5.2. Organization and Qualification.
5.3. Capitalization
5.4. Authority Relative to this Agreement
5.5. Absence of Certain Changes
5.6. Reports
5.7. Proxy Statement
5.8. Consents and Approvals; No Violation
5.9. Absence of Undisclosed Liabilities
5.10. Litigation
5.11. Liens and Encumbrances
5.12. Contracts
5.13. Taxes
5.14. Employee Benefit Plans
5.15. Compliance with Applicable Law
5.16. Inventories
5.17. Accounts and Notes Receivable
5.18. Intellectual Property Rights
5.19. Insurance
5.20. Labor Matters
5.21. Environmental Matters
5.22. Brokerage Fees and Commissions
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ARTICLE 6. COVENANTS
6.1. Conduct of Business of the Company
6.2. No Solicitation
6.3. Access to Information
6.4. Reasonable Efforts
6.5. Indemnification and Insurance.
6.6. Employee Plans and Benefits and Employment Contracts.
6.7. Board Representation
6.8. Meeting of the Company's Stockholders.
6.9. Proxy Statement
6.10. Public Announcements
6.11. Merger Without Meeting of Stockholders
6.12. Current Information
6.13. Supplement to Disclosure Schedule
6.14. Section 203
6.15. Preferred Stock Purchase Rights
ARTICLE 7. CONDITIONS TO CONSUMMATION OF THE MERGER
7.1. Conditions to Each Party's Obligation to Effect the Merger
7.2. Conditions to Obligations of Parent and Acquisition Sub
Effect the Merger
ARTICLE 8. TERMINATION; AMENDMENT; WAIVER
8.1. Termination
8.2. Effect of Termination
8.3. Termination Fee; Reimbursement of Parent's Expenses.
8.4. Amendment
8.5. Extension; Waiver
ARTICLE 9. MISCELLANEOUS
9.1. Non-Survival of Representations and Warranties
9.2. Entire Agreement; Assignment
9.3. Enforcement of the Agreement
9.4. Validity
9.5. Notices
9.6. Governing Law
9.7. Descriptive Headings
9.8. Parties in Interest
9.9. Counterparts
9.10. Expenses.
9.11. Performance by Acquisition Sub
9.12. Submission to Jurisdiction.
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AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER (the "Agreement"),
dated as of October 8, 1996, among Nash-Finch Company, a Delaware corporation
("Parent"), NFC Acquisition Corporation, a Delaware corporation and a wholly
owned subsidiary of Parent ("Acquisition Sub"), and Super Food Services,
Inc., a Delaware corporation (the "Company").
Background
The respective Boards of Directors of Parent, Acquisition Sub and the Company
have each determined that it is advisable and in the best interests of the
stockholders of the respective corporations, on the terms and subject to the
conditions of this Agreement, (i) for a wholly owned subsidiary of Parent to
commence a cash tender offer to purchase any and all outstanding shares of
Common Stock, par value $1.00 per share, of the Company (the "Common Stock" and
such shares, the "Shares") and (ii) following the cash tender offer, to merge
Acquisition Sub with and into the Company.
Terms
In consideration of the premises and the mutual covenants herein contained and
intending to be legally bound, Parent, Acquisition Sub and the Company hereby
agree as follows:
ARTICLE 1
THE OFFER
The Offer.
Provided that this Agreement shall not have been terminated in accordance with
Section 8.1 and none of the events set forth in Annex I hereto shall have
occurred and be continuing, as promptly as practicable (but in no event later
than the fifth (5th) business day after the initial public announcement of
Acquisition Sub's intention to commence the Offer (as hereinafter defined),
Parent will cause Acquisition Sub to commence (within the meaning of Rule 14d-2
under the Securities Exchange Act
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of 1934, as amended (the "Exchange Act")), and Acquisition Sub will commence, an
offer to purchase for cash any and all issued and outstanding Shares at a price
of $15.50 per Share net to the seller in cash (as amended or supplemented in
accordance with this Agreement, the "Offer"). The obligation of Parent and
Acquisition Sub to consummate the Offer, to accept for payment and to pay for
any Shares tendered is subject to the conditions set forth in Annex I,
including, without limitation, that there be validly tendered and not withdrawn
by the expiration date of the Offer a number of Shares which, together with
Shares already beneficially owned by Parent and any of its wholly owned
subsidiaries, would represent at least a majority of the outstanding Shares,
calculated by taking into account the number of outstanding shares of Common
Stock on the date of consummation of the Offer plus the number of shares subject
to options to purchase shares of Common Stock outstanding as of consummation of
the Offer, whether or not such options are exercisable or fully vested (the
"Minimum Condition").
As soon as practicable on the date of commencement of the Offer, Parent and
Acquisition Sub will file with the Securities and Exchange Commission (the
"SEC"), with respect to the Offer, a Tender Offer Statement on Schedule 14D-l
(which, together with all amendments and supplements thereto and including the
exhibits thereto, is referred to herein as the "Schedule 14D-1") in accordance
with applicable federal securities laws containing the terms of the Offer and
forms of related letters of transmittal and summary advertisement (which
documents, together with any supplements or amendments thereto, are referred to
herein collectively as the "Offer Documents"). Parent will deliver copies of
the proposed forms of the Schedule 14D-l and the Offer Documents to the Company
within a reasonable time prior to the commencement of the Offer for review and
comment by the Company and its counsel. Parent agrees to provide the Company
and its counsel with any written comments that Parent, Acquisition Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt thereof. The information provided and to
be provided by Parent, Acquisition Sub and the Company for use in the Schedule
14D-l, and the Offer Documents and any amendments or supplements thereto will
not, in the case of the Schedule 14D-l at the time filed with the SEC and in the
case of the Offer Documents when first published, sent or given to the
stockholders of the Company, 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 light of the circumstances under which
they were made, not misleading; provided, however, that Parent and Acquisition
Sub make no representation or warranty as to any of the information relating to
and supplied in writing by the Company specifically for inclusion in the
Schedule 14D-l or the Offer Documents and any amendments or supplements thereto
and the Company makes no representation or warranty as to any information except
that information relating to and supplied in writing by the Company specifically
for inclusion in the Schedule 14D-1 or the Offer Documents and any amendments or
supplements thereto. Parent, Acquisition Sub and the Company agree to promptly
correct any such information in the Schedule 14D-1 or the Offer Documents that
shall have become false or misleading in any material respect and each of Parent
and Acquisition Sub will take all steps necessary to cause such Schedule 14D-1
or Offer Documents as so corrected to be filed with the SEC and disseminated to
the stockholders of the Company, as and to the extent required by applicable
federal securities laws. The Company agrees that, subject to Section 6.2
hereof, the Offer Documents shall contain the unanimous recommendation of the
Board of Directors of the Company that the holders of the Shares accept the
Offer.
The Offer will initially expire twenty (20) business days after its
commencement. Neither Parent nor Acquisition Sub will, without the prior
written consent of the Company, decrease the price per Share payable in the
Offer, change the form of consideration payable in the Offer, decrease the
number of Shares sought pursuant to the Offer, change the conditions to the
Offer, impose additional conditions to the Offer, waive the Minimum Condition,
change the expiration date of the Offer, or amend any term of the Offer in any
manner adverse to holders of Shares; provided, however, that if any of the
conditions described in Annex I exists at the time of the scheduled expiration
date of the Offer, then
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Acquisition Sub may, in its sole discretion, giving prior notice to the Company,
extend and reextend the Offer for periods of time (not to exceed ten (10) days
in any particular instance) so that the expiration date of the Offer (as so
extended) is as soon as reasonably practicable or advisable after the date on
which the particular condition described in Annex I no longer exists (it being
understood that a period of two (2) business days is reasonable for such
purposes); provided further, that the Offer may not be so extended and
reextended beyond the earlier of: (i) five (5) business days before the date the
meeting of the stockholders of the Company to approve the Merger and this
Agreement (as provided in Section 6.8); or (ii) ninety (90) days after the date
of this Agreement. Notwithstanding the foregoing, Acquisition Sub may extend
the Offer for up to ten (10) business days in connection with any and each
increase in the consideration to be paid pursuant to the Offer. In addition,
Acquisition Sub may extend the Offer, in its sole discretion, giving prior
notice to the Company, on one or more occasions for a period or periods not to
exceed in the aggregate ten (10) business days if on the date of any such
extension less than 90% of the Shares have been validly tendered and not
properly withdrawn pursuant to the Offer. Subject to the foregoing, assuming
the prior satisfaction or waiver of the conditions to the Offer, Acquisition Sub
will accept for payment, in accordance with the terms of the Offer, Shares
tendered pursuant to the Offer as soon as permitted after the commencement
thereof.
Company Actions.
The Company hereby consents to the Offer and represents that: (i) its Board of
Directors (at a meeting duly called and held) has unanimously (A) determined
that each of the Offer and the Merger (as hereinafter defined) is fair to and in
the best interests of the stockholders of the Company, (B) approved the Offer,
the Merger and this Agreement and the transactions contemplated hereby and
thereby, (C) acknowledged that such approval constitutes approval for purposes
of Section 203(a)(l) and Section 251(b) of the General Corporation Law of the
State of Delaware (the "DGCL"), (D) resolved to recommend acceptance of the
Offer and approval of the Merger and this Agreement by the stockholders of the
Company, (E) pursuant to the terms of the Rights Agreement between the Company
and Chase Manhattan Bank, N.A. dated as of January 27, 1989, a copy of which has
been previously provided to Parent together with all amendments thereto through
the date hereof (the "Rights Agreement"), approved this Agreement, the
acquisition of Shares by Parent and Acquisition Sub pursuant to the Offer and
the Merger and determined that, after receiving advice from Lazard Frres & Co.
LLC ("Lazard Frres"), a nationally recognized investment banking firm selected
by its Board of Directors, the acquisition of Shares by Parent and Acquisition
Sub is at a price and on terms that are fair to the Company's stockholders
(taking into account all factors which the Board of Directors deems relevant
including, without limitation, prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize maximum
value) and otherwise are in the best interests of the Company and its
stockholders, so that the Preferred Stock purchase rights issued pursuant to the
Rights Agreement will not become exercisable as a result of the execution of
this Agreement or the consummation of the Merger or the other transactions
provided for in this Agreement; (ii) under the Rights Agreement as amended,
neither Parent nor Acquisition Sub will be deemed to be an Acquiring Person or a
"Beneficial Owner" (as such terms are defined in the Rights Agreement ) as a
result of the execution of this Agreement or the consummation of the Offer or
the Merger or the other transactions provided for in this Agreement; and (iii)
Lazard Frres has delivered to the Company's Board of Directors its written
opinion that, as of the date of such opinion and based upon the assumptions set
forth therein and such other matters as Lazard Frres deems relevant, the $15.50
per Share in cash to be received by the Company's stockholders in the Offer and
Merger is fair to such stockholders from a financial point of view. The Company
will file with the SEC as soon as practicable after the commencement of the
Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (which, together
with all amendments and supplements thereto and including the exhibits thereto,
is referred to herein as the "Schedule 14D-9") reflecting, subject to Section
6.2 hereof, the unanimous recommendation of the Board of Directors of the
Company as
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stated in the first sentence of this Section 1.2(a) and will disseminate the
Schedule 14D-9 as required by Rule l4d-9 promulgated under the Exchange Act.
The Schedule 14D-9 will comply in all material respects with the provisions of
all applicable federal securities laws and will not, on the date filed with the
SEC and on the date first published, sent or given to the stockholders of the
Company, 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. The Company will promptly correct any information in the
Schedule l4D-9 that shall have become false or misleading in any material
respect and will take all steps necessary to cause such Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to the stockholders of the
Company, as and to the extent required by applicable federal securities laws.
In connection with the Offer, the Company will furnish Parent with mailing
labels, security position listings and any available listing or computer file
containing the names and addresses of the record holders of the Shares as of a
recent date and will furnish Parent with such information and assistance as
Parent or its agents may reasonably request in communicating the Offer to the
record and beneficial stockholders of the Company. Subject to the requirements
of law, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Merger, Parent and
Acquisition Sub will, and will cause each of their affiliates to, hold the
information contained in any of such labels and lists in confidence, use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, promptly deliver to the Company all copies of such
information or extracts therefrom them in their possession or under their
control.
ARTICLE 2
THE MERGER
The Merger. Upon the terms and subject to the conditions hereof, and in
accordance with the relevant provisions of the DGCL, Acquisition Sub shall be
merged with and into the Company (the "Merger") as soon as practicable following
the satisfaction or waiver, if permissible, of the conditions set forth in
Article VII. Following the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") under the name "Super Food Services,
Inc." and will continue its existence under the laws of the State of Delaware,
and the separate corporate existence of Acquisition Sub will cease. At the
election of Parent, any wholly owned subsidiary of Parent may be substituted for
Acquisition Sub as a constituent corporation in the Merger. Notwithstanding
this Section 2.1, Parent may elect at any time prior to the fifth (5th) business
day preceding the date on which the notice of the meeting of stockholders of the
Company to consider approval of the Merger and this Agreement (the "Meeting") is
first given to the Company's stockholders (or at any time in the event a Meeting
does not occur) that instead of merging Acquisition Sub into the Company as
hereinabove provided, to merge the Company into Acquisition Sub or another
wholly owned subsidiary of Parent; provided, however, that the Company will not
be deemed to have breached any of its representations, warranties or covenants
herein solely by reason of such election. In such event the parties will
execute an appropriate amendment to this Agreement in order to reflect the
foregoing and to provide that Acquisition Sub or such other subsidiary of Parent
will be the Surviving Corporation and will continue under the name "Super Food
Services, Inc."
Effective Time. The Merger shall be consummated by filing with the Secretary of
State of the State of Delaware a certificate of merger or a certificate of
ownership and merger if permitted by the DGCL (the "Certificate of Merger") in
accordance with the DGCL (the time of such filing being the "Effective Time").
Such filing shall be made by Parent or Acquisition Sub as soon as practicable
following the satisfaction or waiver, if permissible, of the conditions set
forth in Article VII.
Effects of the Merger. The Merger shall have the effects set forth in Section
259 of the DGCL. As of the Effective Time, the Company shall be a wholly owned
subsidiary of Parent.
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Certificate of Incorporation and By-Laws. The Certificate of Incorporation and
the By-Laws of Acquisition Sub in effect at the Effective Time shall be the
Certificate of Incorporation and By-Laws of the Surviving Corporation until
amended in accordance with applicable law; provided that Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended as of
the Effective Time to read "The name of this corporation is Super Food Services,
Inc."
Directors and Officers. The directors and officers of Acquisition Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation until their respective successors are duly elected and
qualified.
Conversion of Shares. At the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Acquisition Sub, the Company or the
holders of any of the following securities: each Share then held by the
Company as treasury stock (or held by any subsidiary of the Company) and each
issued and outstanding Share owned by Parent, Acquisition Sub or any other
subsidiary of Parent shall be canceled and retired and no payment made with
respect thereto; each then issued and outstanding Share, other than: (i)
those Shares referred to in Section 2.6(a); and (ii) Dissenting Shares (as
defined in Section 3.1), shall be converted into the right to receive an
amount of cash equal to $15.50 (or any higher price per Share paid pursuant
to the Offer) (the "Merger Consideration") payable to the holder thereof,
without interest thereon, upon the surrender of the certificate formerly
representing such Share; and each common share, par value $0.01, of
Acquisition Sub issued and outstanding immediately prior to the Effective
Time shall be converted into one fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation.
Company Stock Plans.
Option Plans. The Company shall have the right, at any time and during the
period prior to the consummation of the Merger, to pay to each holder of
outstanding options to purchase shares of Common Stock ("Stock Options"),
heretofore granted under the Company's 1978 Stock Option Plan or the Company's
1986 Stock Option Plan (the "Option Plans") an amount equal to the difference
between the Merger Consideration and the per Share exercise price of such Stock
Options held by such holder multiplied by the number of Shares then exercisable
pursuant to such Stock Options in exchange for the surrender and cancellation of
such Stock Options. Prior to the Effective Time, the Company may also elect to
accelerate the exercisability or vesting of such Stock Options and adopt any
amendments to its Option Plans (to the extent permitted by the Option Plans) as
shall be necessary to effectuate the foregoing. At the Effective Time, any
Stock Options which the holder thereof has not exercised in full or surrendered
for cancellation shall terminate. If any employee's employment with the Company
or any of its subsidiaries is terminated after the acceptance of Shares for
payment and payment for Shares pursuant to the Offer and prior to the Effective
Time, and if as a consequence thereof, any Stock Options granted to such
employee expire or terminate prior to the Effective Time without having been
exercised, such employee shall be entitled to the payments hereunder in respect
of such Stock Options, at the same time such amounts are paid to other holders
of Stock Options, as if such employee had continued as an employee of the
Company or its subsidiary through the Effective Time and as if such Stock
Options had been surrendered for cancellation.
Purchase Plan. Prior to the consummation of the Merger, the Company shall amend
the Company's Employee Stock Purchase Plan, as amended to the date hereof (the
"Purchase Plan"), to provide that each participant that has elected to
participate in the Purchase Plan for the current Purchase Period (as defined in
the Purchase Plan) shall be entitled to receive, in exchange for the amount in
such participant's Stock Purchase Account (as defined in the Purchase Plan) as
of the Effective Time, an amount equal to the product of (i) the amount in the
Stock Purchase Account divided by $11.10, multiplied by (ii) $15.50.
Closing. Upon the terms and subject to the conditions hereof, as soon as
practicable after consummation of the Offer, and after the vote of the
stockholders of the Company in favor of the approval of the Merger and this
Agreement has been obtained (if such approval is required under
<PAGE>
applicable law), the Company (or Parent or Acquisition Sub, if appropriate)
shall execute in the manner required by the DGCL and deliver to the Secretary of
State of the State of Delaware a duly executed Certificate of Merger, as
required by the DGCL, and the parties shall take all such other and further
actions as may be required by law to make the Merger effective. Prior to the
filing referred to in this Section 2.8, a closing (the "Closing") will be held
at the offices of Oppenheimer Wolff & Donnelly, Plaza VII, Suite 3400, 45 South
Seventh Street, Minneapolis, Minnesota 55402 (or such other place as the parties
may agree) for the purpose of confirming all of the foregoing.
ARTICLE 3
DISSENTING SHARES; EXCHANGE OF SHARES
Dissenting Shares. Notwithstanding anything in this Agreement to the contrary,
Shares that are issued and outstanding immediately prior to the Effective Time
and which are held by any holder of Common Stock who has not voted in favor of
the Merger and has properly exercised and perfected appraisal rights in
accordance with Section 262 of the DGCL (the "Dissenting Shares") shall not be
converted into the right to receive Merger Consideration but shall become the
right to receive such consideration as may be determined to be due such
Dissenting Shares pursuant to the DGCL; provided, however, that any holder of
Dissenting Shares who shall have failed to perfect or who effectively shall have
withdrawn or lost his or its rights of appraisal of such Shares under the DGCL
shall forfeit the right to appraisal of such Shares, such Shares shall no longer
be Dissenting Shares and such Shares shall thereupon be deemed to have been
converted into the right to receive, as of the Effective Time, the respective
amounts and rights set forth in Section 2.6, without interest. The Company
shall give Parent and Acquisition Sub prompt notice of any written demands for
appraisal, withdrawals of demands for appraisal and any other related
instruments received by the Company and, prior to the Effective Time, Parent
shall have the right to participate in all negotiations and proceedings with
respect to such demands. Prior to the Effective Time, the Company shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands. Notwithstanding anything to
the contrary contained in this Section, if (i) the Merger is rescinded or
abandoned or (ii) if the stockholders of the Company revoke the authority to
effect the Merger, then the right of any stockholder to be paid the fair value
of such a stockholder's Shares shall cease. The Surviving Corporation shall
comply with all of the obligations of the DGCL with respect to dissenting
stockholders.
Exchange of Shares.
Prior to the Effective Time, Parent will appoint a disbursing agent for the
Merger (the "Disbursing Agent") and enter into a disbursing agent agreement with
the Disbursing Agent, in form and substance reasonably acceptable to the
Company, and shall deposit or cause to be deposited with the Disbursing Agent in
trust for the benefit of the Company's stockholders, cash in an aggregate amount
necessary to make the payments pursuant to Section 2.6 to holders of Shares and
to make the appropriate cash payments, if any, to holders of Dissenting Shares,
assuming Dissenting Shares are entitled to the same price per Share as in effect
under the Offer (such amounts being hereinafter referred to as the "Exchange
Fund"). The Disbursing Agent shall, pursuant to irrevocable instructions, make
the payments provided for in the preceding sentence out of the Exchange Fund.
The Disbursing Agent shall invest portions of the Exchange Fund as Parent
directs, provided that such investments shall be in obligations of or guaranteed
by the United States of America, in commercial paper obligations receiving the
highest rating from either Moody's Investors Services, Inc. or Standard & Poor's
Corporation, or in certificates of deposit, bank repurchase agreements or
banker's acceptances of commercial banks with capital exceeding $100 million.
Any net profit resulting from, or interest or income produced by, such
investment shall be payable to the Surviving Corporation. The Exchange Fund
shall not be used for any other purpose, except as provided in this Agreement.
Promptly after the Effective Time, the Surviving Corporation shall cause the
Disbursing Agent to
<PAGE>
mail to each record holder, as of the Effective Time, of an outstanding
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented Shares (other than those owned beneficially by Parent
or any subsidiary thereof), a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Disbursing
Agent) and instructions for use in effecting the surrender of the Certificate or
payment therefor. Upon surrender to the Disbursing Agent of a Certificate,
together with such letter of transmittal duly executed, the holder of such
certificate shall be paid in exchange therefor cash in an amount equal to the
product of the number of Shares represented by such Certificate multiplied by
the Merger Consideration, and such Certificate shall forthwith be canceled. No
interest will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a person other than the person in
whose name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered be properly endorsed or otherwise in
proper form for transfer and that the person requesting such payment pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
3.2, each Certificate (other than Certificates representing Shares owned by
Parent, Acquisition Sub or any other subsidiary of Parent, and Dissenting
Shares) shall represent for all purposes only the right to receive the Merger
Consideration in cash multiplied by the number of Shares evidenced by such
Certificate, without any interest thereon.
At and after the Effective Time, there shall be no transfers of Shares which
were outstanding immediately prior to the Effective Time on the stock transfer
books of either the Company or the Surviving Corporation. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
will be canceled and exchanged for cash as provided in this Article III. At the
close of business on the day of the Effective Time the stock ledger of the
Company will be closed.
Any portion of the Exchange Fund that remains unclaimed by the stockholders of
the Company for six (6) months after the Effective Time, together with any
proceeds of any investments of the Exchange Fund, shall be repaid to the
Surviving Corporation. Any stockholders of the Company who have not theretofore
complied with Section 3.1 shall thereafter look only to Parent or the Surviving
Corporation (subject only to abandoned property, escheat and other laws) for
payment of their claim for the Merger Consideration per Share, without any
interest thereon.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION SUB
Parent and Acquisition Sub represent and warrant to the Company as follows:
Organization and Qualification. Each of Parent and Acquisition Sub 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
to carry on its business as it is now being conducted and to own, lease and
operate its property and assets. Each of Parent and Acquisition Sub is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where the
failure (as hereinafter defined) to be so qualified would not result in a
material adverse effect on the Parent or Acquisition Sub. The copies of the
Certificate of Incorporation and By-Laws of Parent and the Certificate of
Incorporation and By-Laws of Acquisition Sub previously delivered to the Company
are true, complete and correct as of the date hereof.
Authority Relative to this Agreement. Each of Parent and Acquisition Sub has
all requisite corporate power and authority to execute and deliver this
Agreement, to carry out their respective obligations
<PAGE>
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery by Parent and Acquisition Sub of this Agreement and the
consummation by Parent and Acquisition Sub of the transactions contemplated
hereby have been duly and validly authorized by the respective Boards of
Directors of Parent and Acquisition Sub, and the stockholder of Acquisition Sub,
and no other corporate proceedings on the part of Parent or Acquisition Sub are
necessary to authorize this Agreement, to commence the Offer and to consummate
the transactions so contemplated by this Agreement. This Agreement has been
duly and validly executed and delivered by each of Parent and Acquisition Sub
and, assuming this Agreement constitutes a valid and binding obligation of the
Company, this Agreement constitutes a valid and binding agreement of each of
Parent and Acquisition Sub, enforceable against each of Parent and Acquisition
Sub in accordance with its terms.
Proxy Statement. None of the information supplied or to be supplied by Parent,
Acquisition Sub and their respective affiliates specifically for inclusion in
the Proxy Statement (as hereinafter defined) shall, at the time the Proxy
Statement is mailed, at the time of the 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. Any letter to stockholders, notice of meeting, proxy statement and
form of proxy, or the information statement, as the case may be, distributed to
stockholders in connection with the Merger, or any schedule required under
applicable law to be filed with the SEC in connection therewith are collectively
referred to herein as the "Proxy Statement." If, at any time prior to the
Effective Time, any event relating to Parent or any of its affiliates, officers
or directors is discovered by Parent that should be set forth in a supplement to
the Proxy Statement, Parent will promptly inform the Company.
Consents and Approvals; No Violation. Neither the execution and delivery of
this Agreement by Parent and Acquisition Sub, nor the performance by Parent and
Acquisition Sub of their obligations hereunder, nor the consummation of the
transactions contemplated hereby will: (i) conflict with or result in any breach
of any provision of the Certificate of Incorporation or By-Laws of Parent or the
Certificate of Incorporation or By-Laws of Acquisition Sub or any other similar
governing documents of any other subsidiary of Parent; (ii) require any consent,
approval, authorization or permit of, or filing with or notification to, any
third party or any public governmental body or regulatory authority, except (A)
in connection with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "H-S-R Act"), (B) pursuant to the Exchange Act, (C) the filing of
the Certificate of Merger pursuant to the DGCL, (D) such filings and approvals
as may be required under the "blue sky", takeover or securities laws of various
states, or (E) where the failure to obtain such consent, approval, authorization
or permit, or to make such filing or notification, would not prevent or delay
consummation of the Offer or the Merger and would not otherwise prevent Parent
from performing its obligations under this Agreement; (iii) except as disclosed
in writing by Parent to the Company prior to the execution of this Agreement,
result in a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
lease, mortgage, license, agreement or other instrument or obligation to which
Parent or any of its subsidiaries is a party or by which any of its subsidiaries
or any of their respective assets may be bound, except for such defaults (or
rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been obtained or which, in the aggregate, would not
result in a material adverse effect on Parent; or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
subsidiaries or any of their respective assets, except for violations which
would not result in a material adverse effect on Parent.
Financing. Parent has entered into an agreement for the borrowing of funds
necessary to consummate the Offer and the Merger and the transactions
contemplated hereby, and to pay the related fees and expenses, and will make
such funds available to Acquisition Sub on or before (i) the time of acceptance
for purchase by Acquisition Sub of shares pursuant to the Offer and (ii) the
Effective Time.
<PAGE>
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to Parent and Acquisition Sub as
follows:
Disclosure Schedule. Simultaneously with the execution and delivery of this
Agreement, the Company has executed and delivered to Parent a Disclosure
Schedule (the "Disclosure Schedule"), which is divided into sections which
correspond to the subsections of this Article 5. Disclosures in any subsection
thereof shall not (in the absence of appropriate cross-references) constitute
disclosure for purposes of any other subsection thereof or any other section or
subsection of this Agreement. The Disclosure Schedule is accurate and complete
in all material respects in accordance with the requirements of this Article 5.
Organization and Qualification.
The Company and each subsidiary of the Company 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 to carry on its business as
it is now being conducted and to own, lease and operate its property and assets.
The Company and each subsidiary of the Company is duly qualified as a foreign
corporation to do business, and, except as is set forth in the Disclosure
Schedule, is in good standing in each jurisdiction where the character of its
properties owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
result in a material adverse effect on the Company. The copies of the Company's
Certificate of Incorporation and By-Laws previously delivered to Parent are
true, complete and correct as of the date hereof.
The only subsidiaries of the Company are those named in the Disclosure Schedule.
Capitalization. The authorized capital stock of the Company consists of
35,000,000 common shares, par value $1.00 per share, and 1,000,000 preferred
shares without par value, of which 100,000 shares have been designated Series A
Junior Participating Preferred Stock (the "Series A Preferred Stock"). As of
the date hereof: (i) 10,997,448 shares of Common Stock (including shares of
restricted Common Stock) were issued and outstanding; (ii) no shares of
Preferred Stock were issued or outstanding; (iii) Stock Options to purchase an
aggregate of 197,277 shares of Common Stock were outstanding under the Company's
Option Plans; (iv) up to 47,099 shares of Common Stock were subscribed for
under the Purchase Plan; and (v) no shares of Common Stock were held in
treasury. The rights to purchase shares of Series A Preferred Stock outstanding
under the Rights Agreement are evidenced by the certificates representing shares
of Common Stock and not by separate certificates. Except for the First
Amendment of the Rights Agreement entered into effective as of the date hereof,
the Rights Agreement has not been amended on or prior to the date of this
Agreement. All of the issued and outstanding Shares have been, and all shares
of Common Stock which are to be issued pursuant to the exercise of stock options
will be, when issued in accordance with the respective terms thereof, duly
authorized and validly issued and fully paid and nonassessable with no liability
attaching to the ownership thereof and not subject to preemptive or similar
rights created by statute, the Certificate of Incorporation or By-Laws of the
Company or any agreement to which the Company or any of its subsidiaries is a
party or is bound. All outstanding shares of capital stock of the subsidiaries
of the Company have been validly issued and are fully paid and nonassessable and
owned by the Company or a wholly owned subsidiary of the Company, free and clear
of all liens, charges, encumbrances, equities, claims and options of any nature.
Except as set forth in this Section 5.3 and except for shares of Common Stock
that may be issued upon exercise of the Stock Options or pursuant to the
Purchase Plan, both as disclosed above, there are not now, and at the Effective
Time there will not be, any shares of capital stock of the Company issued or
outstanding or any subscriptions, options, warrants, calls, rights, commitments
or any other agreements of any character
<PAGE>
obligating the Company or any of its subsidiaries to issue any additional Shares
or any other shares of capital stock of the Company or any other securities
convertible into or evidencing the right to subscribe for any Shares or any
other shares of capital stock of the Company or any of its subsidiaries. There
are no voting trusts or other agreements or understandings to which the Company
is a party with respect to the voting of the capital stock of the Company or any
of its subsidiaries. There are no contracts, commitments, understandings or
arrangements by which the Company or any of its subsidiaries is obligated to
repurchase, redeem or otherwise acquire any Shares.
Authority Relative to this Agreement. The Company has all requisite corporate
power and authority to execute and deliver this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby
(subject with respect to the Merger, if required, to approval of the Merger and
this Agreement by the holders of a majority of the votes represented by the
Shares). The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated
(other than, with respect to the Merger, the approval of this Agreement by
stockholders, if required by the DGCL, holding a majority of the votes
represented by the Shares). This Agreement has been duly and validly executed
and delivered by the Company, and, assuming this Agreement constitutes a valid
and binding obligation of each of Parent and Acquisition Sub, this Agreement
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms.
Absence of Certain Changes. Except as disclosed in the Company SEC Filings (as
hereinafter defined) or as contemplated by this Agreement or disclosed to Parent
in the Disclosure Schedule, since August 26, 1995, neither the Company nor any
of its subsidiaries has suffered any material adverse effect, and no event has
occurred which may result in a material adverse effect on the Company. Without
limiting the generality of the foregoing, except as disclosed in the Company SEC
Filings or disclosed to Parent in the Disclosure Schedule, since August 26,
1995, there has not been: (i) any declaration, setting aside or payment of any
dividend or other distribution in respect of the Shares or any redemption or
other acquisition by the Company of any Shares; (ii) any entry into any
agreement, commitment or transaction by the Company which is material to the
Company and its subsidiaries taken as a whole, except agreements, commitments or
transactions in the ordinary course of business; or (iii) any significant change
by the Company in accounting methods, principles or practices.
Reports. Since December 31, 1991, the Company has filed all reports,
registration statements and other filings with the SEC required to be filed by
it pursuant to the Securities Act of 1933, as amended (the "Securities Act"),
and the Exchange Act and has heretofore delivered to Parent true and complete
copies of all such reports, registration statements and other filings as
requested by Parent. All such reports, registration statements and other
filings (including all notes, exhibits and schedules thereto, all documents
incorporated by reference therein, and any amendments thereto), whether filed
before or after the date hereof, are sometimes collectively referred to herein
as the "Company SEC Filings." As of their respective dates of filing with the
SEC, the Company SEC Filings complied in all material respects with all of the
rules and regulations of the SEC and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Company and its
subsidiaries will file with the SEC and make available to Parent all Company SEC
Filings filed with the SEC between the date of this Agreement and the Effective
Date. As of their respective dates, such filings will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The unaudited
consolidated financial statements and unaudited interim financial statements
included in the Company SEC Filings were and, with respect to filings to be made
with the
<PAGE>
SEC after the date hereof, will be, prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and fairly present the
consolidated financial position of the Company and its subsidiaries as of the
dates thereof and the results of its operations and changes in financial
position for the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments.
Proxy Statement. If a Proxy Statement is required for the consummation of the
Merger under applicable law, the Proxy Statement will comply in all material
respects with the Exchange Act, except that no representation is made by the
Company with respect to information supplied by Parent or any affiliate of
Parent specifically for inclusion in the Proxy Statement. None of the
information supplied by the Company specifically for inclusion in the Proxy
Statement will, at the time the Proxy Statement is mailed, at the time of the
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. None of the information supplied by
the Company specifically for inclusion in any other documents to be filed with
the SEC or any other regulatory agency in connection with the transactions
contemplated hereby will, at the respective time such documents are filed,
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.
Consents and Approvals; No Violation. Neither the execution and delivery of
this Agreement by the Company, nor the performance by the Company of the
obligations hereunder, nor the consummation of the transactions contemplated
hereby will: (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-Laws of the Company or any other similar
governing documents of any subsidiary of the Company; (ii) require any consent,
approval, authorization or permit of, or filing with or notification to, any
third party or any public governmental body or regulatory authority, except (A)
in connection with the H-S-R Act, (B) pursuant to the Exchange Act, (C) the
filing of the Certificate of Merger pursuant to the DGCL, (D) such consents,
approvals, orders, authorizations, registrations and declarations as may be
required under the law of any foreign country in which the Parent or any of its
subsidiaries conducts any business or owns any assets, (E) such filings and
approvals as may be required under the "blue sky", takeover or securities laws
of various states, or (F) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not
prevent or delay consummation of the Offer or the Merger and would not otherwise
prevent the Company from performing its obligations under this Agreement; (iii)
except as disclosed in the Disclosure Schedule, result in a default (or give
rise to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, lease, mortgage, license, agreement
or other instrument or obligation to which the Company or by which the Company
or any of its assets other than its subsidiaries may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or which, in the aggregate,
would not result in a material adverse effect on the Company; or (iv) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
the Company, any of its subsidiaries or any of their respective assets, except
for violations which would not in the aggregate result in a material adverse
effect on the Company.
Absence of Undisclosed Liabilities. There are no liabilities of the Company or
its subsidiaries of any kind whatsoever (whether absolute, accrued, contingent
or otherwise, and whether due or to become due), and the Company knows of no
valid basis for the assertion of any such liabilities, whether contingent or
absolute and whether determined or determinable, and no existing condition,
situation or set of circumstances which is reasonably likely to result in such a
liability, other than: (i) liabilities disclosed in the Company SEC Filings
filed with the SEC prior to the date hereof; (ii) liabilities disclosed in the
Disclosure Schedule; (iii) liabilities which would not, individually or in the
aggregate,
<PAGE>
have a material adverse effect on the Company; (iv) liabilities which were
incurred in the ordinary course of business and which were not required to be
disclosed in the Company's financial statements or the Company SEC Filings; and
(v) liabilities which were incurred in the ordinary course of business
subsequent to the date of the Company's financial statements.
Litigation. As of the date hereof, except as set forth in the Disclosure
Schedule, there is no action, suit, judicial or administrative proceeding,
arbitration or investigation pending or, to the knowledge of the Company,
threatened against or involving the Company or any of its subsidiaries, or any
of their properties or rights, before any court, arbitrator or administrative or
governmental body, nor is there any judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against the Company or any of its subsidiaries, which,
individually or in the aggregate, would have a material adverse effect on the
Company. The Company and its subsidiaries are not in violation of any term of
any judgments, decrees, injunctions or orders outstanding against them which,
individually or in the aggregate, would have a material adverse effect on the
Company.
Liens and Encumbrances. All properties and assets owned by the Company and its
subsidiaries are free and clear of all title defects, liens, pledges, claims,
security interests, restrictions, mortgages, options and encumbrances of any
kind (collectively, "Liens") except: (i) statutory Liens not yet delinquent or
the validity of which is being contested in good faith by appropriate actions;
(ii) Liens for taxes not yet delinquent or the validity of which is being
contested in good faith by appropriate actions; (iii) Liens described in the
Disclosure Schedule; and (iv) Liens which, in the aggregate, do not materially
detract from the value or impair the use of the property subject thereto, or
impair the operations of the Company or any of its subsidiaries. All of the
assets that are material to the operation of the business of the Company and its
subsidiaries are in good operating condition and repair in accordance with
industry practice (subject to normal wear and tear) and are adequate to conduct
the business of the Company and its subsidiaries as presently conducted.
Contracts. Except as set forth in the Disclosure Schedule, the Company has
heretofore furnished to Parent or made available for inspection true and correct
copies of: (i) every contract, plan, agreement or understanding to which the
Company is a party which would be required to be filed with the SEC in a filing
to which paragraph (b)(10) (but only with respect to contracts, plans,
agreements or understandings to be performed in whole or in part after the date
hereof) of Item 601 of Regulation S-K of the rules and regulations of the SEC
would be applicable, and which has not been filed with the SEC; (ii) every
employment or consulting agreement with or arrangement with or for the benefit
of any officer or employee of the Company; and (iii) every contract, agreement
or understanding to which the Company is a party which could reasonably be
expected to result in annual payments by or to the Company in excess of $100,000
or that extends for more than one year (except for the collective bargaining
agreement relating to the Company's Michigan division, which has not been
executed but which has been delivered to Parent in its current draft form, and
except for contracts entered into in the ordinary course of business consistent
with the Company's historical practices for the purchase of inventory or
supplies or for the purchase, leasing or maintenance of equipment entered into
with independent parties on an arm's-length basis). Except as set forth in the
Disclosure Schedule, neither the Company, nor, to the knowledge of the Company,
any other party thereto is in default under any material contract, plan,
agreement, understanding or arrangement made or obligation owed by or to the
Company and, to the Company's knowledge, there are no facts or circumstances
which make such a default likely to occur subsequent to the date hereof.
Taxes. Except as set forth in the Disclosure Schedule, the Company has filed or
has or will cause to be filed all federal, state, local and foreign tax returns
required to be filed by each of its subsidiaries and any member of its
consolidated, combined, unitary or similar group (each such member, a "Tax
Affiliate") the failure of which to be filed by the Company may result in a
material adverse effect on the Company, and has paid or has or will cause to be
paid, or has made or will make adequate provision or set up an adequate accrual
or reserve for the payment of, all taxes required to be paid in
<PAGE>
respect of the periods for which returns are due, has established or will
establish an adequate accrual or reserve for the payment of all taxes payable in
respect of the period subsequent to the last of said periods, required (pursuant
to generally accepted accounting principles) to be so accrued or reserved
(except in either case in an amount not material), and neither it nor any of its
Tax Affiliates has or will have any material liability for taxes in excess of
the amounts so paid or the accruals or reserves so established. Except as set
forth in the Disclosure Schedule, neither the Company nor any of its Tax
Affiliates is delinquent in the payment of any material tax in excess of the
amount reserved or provided therefor, and no material deficiencies for any tax,
assessment or governmental charge in excess of the amount reserved or provided
therefor have been threatened, claimed, proposed or assessed. Except as set
forth in the Disclosure Schedule, no waiver or extension of time to assess any
taxes has been given or requested since December 31, 1991. Except as set forth
in the Disclosure Schedule, the Company's federal and state income tax returns,
respectively, have not, since December 31, 1991, been audited or examined by the
Internal Revenue Service or comparable state agencies nor, except as set forth
in the Disclosure Schedule, has any such audit or examination been requested or
scheduled. None of the independent contractors hired by the Company should be
treated as "employees" for federal or state income or payroll tax purposes. For
the purposes of this Section 5.13, the term, "tax" or "taxes" shall include all
taxes, charges, withholdings, fees, levies, penalties, additions, interest or
other assessments imposed on the Company or any of its Tax Affiliates by any
federal, state, local, foreign or other taxing authority.
Employee Benefit Plans. Except as set forth in the Disclosure Schedule:
Neither the Company nor any other "person" within the meaning of Section
7701(a)(1) of the Code, that together with the Company is considered a single
employer pursuant to Sections 414(b), (c), (m) or (o) of the Code or Sections
3(5) or 4001(b)(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") (an "Affiliated Organization") sponsors, maintains,
contributes to, is required to contribute to or has or could have any material
liability of any nature, whether known or unknown, direct or indirect, absolute
or contingent, with respect to, any "employee pension benefit plan" ("Pension
Plan") as such term is defined in Section 3(2) of ERISA, including without
limitation, any such plan that is excluded from coverage by Section 4(b)(5) of
ERISA or is a "Multiemployer Plan" within the meaning of 4001(a)(3) of ERISA.
To the knowledge of the Company, each such Pension Plan that is a Multiemployer
Plan that is not administered by the Company has been operated in all material
respects in accordance with its terms and in compliance in all material respects
with the applicable provisions of ERISA, the Code and all other applicable law.
Each such other Pension Plan has been operated in all material respects in
accordance with its terms and in compliance in all material respects with the
applicable provisions of ERISA, the Code and all other applicable law. All
Pension Plans operated as plans that are qualified under the provisions of
Section 401(a) of the Code satisfy in form and operation all applicable
qualification requirements.
Neither the Company nor any Affiliated Organization has or could have any
liability of any nature, whether known or unknown, direct or indirect, absolute
or contingent, to any Pension Plan, the Pension Benefit Guaranty Corporation
("PBGC") or any other person, arising directly or indirectly under Title IV of
ERISA. No "reportable event," within the meaning of Section 4043 of ERISA, has
occurred with respect to any Pension Plan. Neither the Company nor any
Affiliated Organization has ceased operations at any facility or withdrawn from
any Pension Plan in a manner which could subject the Company or Affiliated
Organization to liability under Section 4062(e), 4063 or 4064 of ERISA. Neither
the Company nor any Affiliated Organization maintains, contributes to or has
participated in or agreed to participate in any Pension Plan that is a
Multiemployer Plan. Neither the Company nor any Affiliated Organization
currently has any obligation, known or unknown, direct or indirect, absolute or
contingent, to make any withdrawal liability payment to any Pension Plan which
is a Multiemployer Plan. Neither the Company nor any Affiliated Organization
has been a party to a sale of assets to which Section 4204 of ERISA applied with
respect to which it could incur any withdrawal liability (including any
contingent or secondary withdrawal liability) to any Multiemployer Plan.
<PAGE>
Neither the Company nor any Affiliated Organization has incurred, or has
experienced an event that will, within the ensuing twelve (12) months, result
in, a "complete withdrawal" or "partial withdrawal," as such terms are defined
respectively in Sections 4203 and 4205 of ERISA, with respect to a Pension Plan
which is a Multiemployer Plan, and nothing has occurred that could result in
such a complete or partial withdrawal. Neither the Company nor any Affiliated
Organization has incurred a decline in contributions to any Multiemployer Plan
such that, if the current rate of contributions continues, a 70% decline in
contributions (as defined in Section 4205 of ERISA) will occur within the next
three plan years.
Neither the Company nor any Affiliated Organization sponsors, maintains,
contributes to, is required to contribute to or has or could have any liability
of any nature, whether known or unknown, direct or indirect, absolute or
contingent, with respect to, any "employee welfare benefit plan" ("Welfare
Plan") as such term is defined in Section 3(1) of ERISA, whether insured or
otherwise, including, without limitation, any such plan that is a "Multiemployer
Plan" within the meaning of Section 3(37) of ERISA. Each such disclosed Welfare
Plan has been operated in all material respects in accordance with its terms and
in compliance in all material respects with the applicable provisions of ERISA,
the Code and all other applicable law. Benefits under each Welfare Benefit Plan
are fully insured by an insurance company unrelated to the Company. Neither the
Company nor any Affiliated Organization has established or contributed to, is
required to contribute to or has or could have any liability of any nature,
whether known or unknown, direct or indirect, absolute or contingent, with
respect to any "voluntary employees' beneficiary association" within the meaning
of Section 501(c)(9) of the Code, "welfare benefit fund" within the meaning of
Section 419 of the Code, "qualified asset account" within the meaning of Section
419 of the Code, "qualified asset account" within the meaning of Section 419A of
the Code or "multiple employer welfare arrangement" within the meaning of
Section 3(40) or ERISA. No Welfare Plan which is a Multiemployer Plan imposes
any post-withdrawal liability or contribution obligations upon the Company or
any Affiliated Organization. Neither the Company nor any Affiliated
Organization maintains, contributes to or has or could have any liability of any
nature, whether known or unknown, direct or indirect, absolute or contingent,
with respect to medical, health, life or other welfare benefits for present or
future terminated employees or their spouses or dependents other than as
required by Part 6 of Subtitle B of Title I of ERISA or any comparable state
law.
Neither the Company nor any Affiliated Organization is a party to, maintains,
contributes to, is required to contribute to or has or could have any liability
of any nature, whether known or unknown, direct or indirect, absolute or
contingent, with respect to, any bonus plan, incentive plan, stock plan or any
other current or deferred compensation (other than current salary or wages paid
in the form of cash), separation, retention, severance, paid time off or similar
agreement, arrangement or policy, or any individual employment, consulting or
personal service agreement other than a Pension or Welfare Plan ("Compensation
Plans"). Each such disclosed Compensation Plan has been operated in all
material respects in accordance with its terms and in compliance in all material
respects with the applicable provisions of all applicable law.
here are no facts or circumstances which could, directly or indirectly, subject
the Company or any Affiliated Organization to any (1) excise tax or other
liability under Chapters 43, 46 or 47 of Subtitle D of the Code, (2) penalty tax
or other liability under Chapter 68 of Subtitle F of the Code or (3) civil
penalty, damages or other liability under Section 502 of ERISA.
Full payment has been made of all amounts which the Company or any Affiliated
Organization is required, under applicable law, the terms of any Pension Plan,
Welfare Plan or Compensation Plan, or any agreement relating to any Pension Plan
or Welfare Plan or Compensation Plan, to have paid as a contribution, premium or
other remittance thereto or benefit thereunder. Each Pension Plan that is
subject to the minimum funding standards of Section 412 of the Code and Section
302 of ERISA meets those standards and has not incurred any accumulated funding
deficiency within the meaning of Section 412 or 418B of the Code and no waiver
of any minimum funding requirement under Section
<PAGE>
412 of the Code has been applied for or obtained with respect to any such
Pension Plan. The Company and each Affiliated Organization has made adequate
provisions for reserves or accruals in accordance with generally accepted
accounting principles to meet contribution, benefit or funding obligations
arising under applicable law or the terms of any Pension Plan or Welfare Plan or
Compensation Plan or related agreement. There will be no change on or before
Closing in the operation of any Pension Plan, Welfare Plan or Compensation Plan
or any documents with respect thereto which will result in an increase in the
benefit liabilities under such plans, except as may be required by law.
The Company and each Affiliated Organization has timely complied in all material
respects with all reporting and disclosure obligations with respect to the
Pension Plans, Welfare Plans and Compensation Plans imposed by the Code, ERISA
or other applicable law.
There are no pending or, to the Company's knowledge, threatened audits,
investigations, claims, suits, grievances or other proceedings, and there are no
facts that could give rise thereto, involving, directly or indirectly, any
Pension Plan, Welfare Plan, or Compensation Plan, or any rights or benefits
thereunder, other than the ordinary and usual claims for benefits by
participants, dependents or beneficiaries.
The transactions contemplated herein do not result in the acceleration of
accrual, vesting, funding or payment of any contribution or benefit under any
Pension Plan, Welfare Plan or Compensation Plan. No payments made or to be made
to any individual pursuant to any agreement with any of the Company or any
Affiliated Organization could individually or collectively (and assuming that
any contingencies or conditions occur in a manner that maximizes payment) give
rise to a "parachute payment" within the meaning of Section 280G of the Code.
No action or omission of the Company or any director, officer, employee, or
agent thereof in any way restricts, impairs or prohibits Parent or the Company
or any successor from amending, merging, or terminating any Pension Plan,
Welfare Plan or Compensation Plan in accordance with the express terms of any
such plan and applicable law.
The Disclosure Schedule lists and the Company has delivered to Parent true and
complete copies of: (i) all Pension, Welfare and Compensation Plans and related
trust agreements or other agreements or contracts evidencing any funding vehicle
with respect thereto; (ii) the three most recent annual reports on Treasury Form
5500, including all schedules and attachments thereto, with respect to any Plan
for which such a report is required; (iii) the three most recent actuarial
reports with respect to any Pension Plan that is a "defined benefit plan" within
the meaning of Section 414(j) of the Code; (iv) the form of summary plan
description, including any summary of material modifications thereto or other
modifications communicated to participants, currently in effect with respect to
each Pension Plan, Welfare Plan or Compensation Plan; and (v) the most recent
determination letter with respect to each Pension Plan intended to qualify under
Section 401(a) of the Code and the full and complete application therefor
submitted to the Internal Revenue Service.
Compliance with Applicable Law. Each of the Company and its subsidiaries holds,
and at all times has held, all licenses, franchises, permits and authorizations
necessary for the lawful conduct of its business under and pursuant to, and the
business of each of the Company and its subsidiaries is not being conducted, nor
has it ever been conducted, in violation of, any provision of any federal,
state, local or foreign statute, law, ordinance, rule, regulation, judgment,
decree, order, concession, grant, franchise, permit or license or other
governmental authorization or approval applicable to the Company or any of its
subsidiaries, except to the extent that the failure to hold any such licenses,
franchises, permits or authorization, or any such violation, did not or would
not, individually or in the aggregate have a material adverse effect on the
Company. No investigation or review, except as set forth in the Disclosure
Schedule, by any federal, state or local governmental authority with respect to
the Company or any of its subsidiaries is pending or, to the Company's knowledge
threatened, nor, to the Company's knowledge, has any federal, state or local
governmental authority indicated an intention to conduct the same.
<PAGE>
Inventories. Except as disclosed in the Disclosure Schedule, all inventories of
the Company, whether reflected in the latest balance sheet included in the
Company SEC filings (the "Latest Balance Sheet") or acquired since the date of
the Latest Balance Sheet, were purchased in the ordinary course of business,
consist of a quality and quantities useable and salable in the ordinary course
of business, subject to waste and spoilage not in excess of industry norms, and
the present quantities of all inventories of the Company are reasonable in the
present circumstances of the business of the Company as currently conducted and
as proposed to be conducted. All inventories have been carried on the books of
the Company for financial reporting purposes in accordance with the generally
accepted accounting principles applied on a consistent basis, including without
limitation, for purposes of the unaudited financial statements included in the
Company SEC filings.
Accounts and Notes Receivable. Except as disclosed in the Disclosure Schedule
or in the aging schedule dated as of September 4, 1996 (the "Aging Schedule")
provided to Parent as described below: (i) the Company has good right, title
and interest in and to all of its accounts receivable and notes receivable of
any kind or nature whatsoever, whether from trade accounts or affiliated parties
or otherwise, whether reflected in the Latest Balance Sheet or acquired or
generated since the date of the Latest Balance Sheet (except for those paid or
compromised since the date of the Latest Balance Sheet) (the "Receivables");
(ii) none of the Receivables is subject to any mortgage, pledge, lien or
security interest of any kind or nature (whether or not of record); (iii) each
of the Receivables constitutes a valid and enforceable claim arising from a bona
fide transaction in the ordinary course of business, and there are no claims,
refusals to pay or other rights of set-off against any Receivables outstanding
as of the date hereof; (iv) no account (as of the date of the Aging Schedule) or
note debtor (as of August 31, 1996) whose account or note balance exceeded
$10,000 was (as of the indicated date) delinquent in payment by more than ninety
(90) days, and there has been no material deterioration in Receivables between
the indicated dates and the date of this Agreement; (v) the Aging Schedule of
the Receivables previously furnished to Parent is complete and accurate; (vi)
the reserve for doubtful accounts set forth in the Latest Balance Sheet has been
established by the Company in accordance with generally accepted accounting
principles applied on a consistent basis; and (vii) all of the Receivables will
be collected by the Company in accordance with their respective terms, except to
the extent of the reserve for doubtful accounts set forth on the Latest Balance
Sheet.
Intellectual Property Rights. The Company owns the industrial and intellectual
property rights, including without limitation the trademarks, trade names and
service marks (collectively the "Intellectual Property Rights") described in the
Disclosure Schedule. Except as disclosed in the Disclosure Schedule, the use of
all Intellectual Property Rights necessary or required for the conduct of the
business of the Company as presently conducted and as proposed to be conducted
does not and will not infringe or violate or allegedly infringe or violate the
Intellectual Property Rights of any person or entity. Except as disclosed in
the Disclosure Schedule, the Company does not own or use any Intellectual
Property Rights pursuant to any written license agreement and has not granted
any person or entity any rights pursuant to a written license agreement or
otherwise, to use the Intellectual Property Rights or any part thereof.
Insurance. The Disclosure Schedule contains an accurate and complete list of
all policies of fire and other casualty, general liability, theft, life,
workers' compensation, health, directors and officers business interruption, and
other forms of insurance owned or held by the Company, specifying the insurer,
the policy number, the term of the coverage and, in the case of any "claims
made" coverage, the same information as to predecessor policies for the previous
five (5) years. All such policies are in full force and effect and no premiums
with respect thereto are past due. The Company has not been denied any form of
insurance coverage and no policy of insurance has been revoked or rescinded
during the past five (5) years.
Labor Matters. Except as disclosed in the Disclosure Schedule: (i) the Company
is and has been in compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, including without limitation, any
<PAGE>
such laws respecting employment discrimination and occupational safety and
health requirements and has not and is not engaged in any unfair labor practice;
(ii) there is no unfair labor practice complaint against the Company pending or,
to the knowledge of the Company, threatened before the National Labor Relations
Board or any other comparable authority; (iii) there is no organized labor
strike, dispute, slowdown, or stoppage actually pending or, to the knowledge of
the Company, threatened against or directly affecting the Company; (iv) no labor
representation question exists respecting the employees of the Company and there
is not pending or, to the knowledge of the Company, threatened any activity
intended or likely to result in a labor representation vote respecting the
employees of the Company; (v) no material grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is pending and no
claims therefore exist or, to the knowledge of the Company, have been
threatened; (vi) no collective bargaining agreement is binding and in force
against the Company or currently being negotiated by the Company; (vii) the
Company has not, since December 31, 1991, experienced any significant work
stoppage or any other significant labor difficulty; (viii) the Company is not
delinquent in any material amount for payments to any persons for any wages,
salaries, commissions, bonuses or other direct or indirect compensation for any
services performed by them or amounts required to be reimbursed to such persons,
including without limitation, any amounts due under any pension plan, welfare
plan or compensation plan; (ix) upon termination of the employment of any
person, neither the Company nor the Surviving Corporation will, by reason of
anything done at or prior to or as of the Effective Time, be liable to any of
such persons for so-called "Severance Pay" or any other payments; and (x) within
the twelve (12) months prior to the date hereof, to the knowledge of the
Company, there has not been any expression of intention to the Company by any
officer or key employee to terminate his or her employment other than at normal
retirement age.
Environmental Matters. Except as set forth in the Disclosure Schedule:
Neither the Company, any subsidiary or former subsidiaries of any of the
Company, nor any previous owner, tenant, occupant or user of any property owned
or leased by or to any of the Company or by or to any subsidiary or former
subsidiary of any of the Company (the "Properties") has (i) stored, used,
generated, released or disposed of any Environmentally Regulated Materials (as
hereinafter defined) in a manner that has or may reasonably result in a material
adverse condition that may require remedial action, or (ii) transported any
Environmentally Regulated Materials to, from or across the Properties in a
manner that has or may reasonably result in a material adverse condition that
may require remedial action, nor are any Environmentally Regulated Materials
presently, stored, used, generated or otherwise located on, under, in or about
the Properties, nor have any Environmentally Regulated Materials migrated from
the Properties upon or beneath other properties, nor have any Environmentally
Regulated Materials migrated or threatened to migrate from other properties
upon, about or beneath the Properties, in each such case described above in a
manner that has or may reasonably result in a material adverse condition that
may require remedial action.
No violation or noncompliance with Environmental and Occupational Safety and
Health Laws has occurred with respect to the Properties or operations
conducted thereon that has or may result in a material adverse effect on the
Company or that has or may result in a material adverse condition that may
require remedial action; no material enforcement, investigation, cleanup,
removal, remediation or response or other governmental or regulatory actions
have been asserted or threatened with respect to operations conducted on the
Properties or the Properties themselves or against the Company or any
subsidiary, or former subsidiary of the Company with respect to or in any way
regarding the Properties pursuant to any Environmental and Occupational
Safety and Health Laws; and no material claims or settlements with respect to
the Properties or the operations thereon, or against the Company or any
subsidiary or former subsidiary of the Company with respect to the Properties
or operations conducted thereon, relating to or arising out of Environmental
and Occupational Safety and
<PAGE>
Health Laws or Environmentally Regulated Materials have been made or threatened
by any third party, including any governmental entity, agency or representative,
nor, to the knowledge of the Company, does there exist any basis for any such
claim.
The term "Environmental and Occupational Safety and Health Law" as used in this
Agreement means any common law or duty, caselaw or ruling, statute, rule,
regulation, law, ordinance or code, whether local, state, federal, international
or otherwise in effect, that (i) regulates, creates standards for or imposes
liability or standards or conduct concerning any element, compound, pollutant,
contaminant, or toxic or hazardous substance, material or waste, or any mixture
thereof, or relates in any way to emissions or releases into the environment or
ambient environmental conditions, or conduct affecting such matters or (ii) is
designed to provide safe and healthful working conditions or reduce occupational
safety and health hazards. Such laws include, but are not limited to, the
National Environmental Policy Act, 42 U.S.C. Sections 4321 et seq., the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
Sections 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C.
Sections 1251 et seq., the Federal Clean Air Act, 42 U.S.C. Sections 7401 et
seq., the Toxic Substances Control Act), 15 U.S.C. Sections 2601 et seq., the
Emergency Planning and Community Right to Know Act, 42 U.S.C. Section 11001, the
Hazard Communication Act 29 U.S.C. Sections 651 et seq., the Occupational Safety
and Health Act, 29 U.S.C. Sections 651 et seq., the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. Section 136, and any caselaw
interpretations, amendments or restatements thereof or similar enactment
thereof, as is now or at any time hereafter may be in effect, as well as their
intentional, state and local counterparts.
The term "Environmentally Regulated Materials" as used in this Agreement means
any element, compound, pollutant, contaminant, substance, material or waste, or
any mixture thereof, designated, listed, referenced, regulated or identified
pursuant to any Environmental and Occupational Safety and Health Law.
Brokerage Fees and Commissions. Except for those fees and expenses payable to
Lazard Frres, a true and complete copy of whose engagement agreement has been
provided to Parent, no person is entitled to receive from the Company or any of
its affiliates any investment banking, brokerage or finder's fee in connection
with this Agreement or the transactions contemplated hereby.
ARTICLE 6
COVENANTS
Conduct of Business of the Company. Except as contemplated by this Agreement or
to the extent that Parent shall otherwise consent in writing, during the period
from the date of this Agreement to the Effective Time, the Company and its
subsidiaries will each conduct its operations according to its ordinary and
usual course of business and consistent with past practice and the Company shall
use reasonable efforts to preserve intact in all material respects the business
organization of the Company, use reasonable efforts to keep available the
services of its current officers and key employees, and use reasonable efforts
to preserve in all material respects the good will of those having advantageous
business relationships with it and its subsidiaries. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement or to the extent that Parent shall otherwise consent in writing,
neither the Company nor any of its subsidiaries, as the case may be, shall,
without the prior written consent of Parent: (i) issue, sell or pledge, or
authorize or propose the issuance, sale or pledge of: (A) additional shares of
capital stock of any class (including the Shares), or securities convertible
into any such shares, or any rights, warrants or options to acquire any such
shares or other convertible securities, or grant or accelerate any right to
convert or exchange any securities of the Company for Shares, other than (1)
Shares issuable pursuant to the terms of outstanding options and commitments
disclosed pursuant to Section 5.3, or (2) the issuance of shares of capital
stock to the Company by a wholly owned subsidiary of the Company; or (B) any
other securities in respect of, in lieu of or in substitution for the Shares
outstanding on the date thereof; (ii)
<PAGE>
purchase or otherwise acquire, or propose to purchase or otherwise acquire, any
of its outstanding securities (including the Shares); (iii) split, combine or
reclassify any shares of its capital stock, declare, set aside or pay any
dividend or distribution on any shares of capital stock of the Company; (iv)
make any acquisition of a material amount of assets (by merger, consolidation or
acquisition of stock or assets) or securities, any disposition of a material
amount of assets or securities or any material change in its capitalization, or
enter into a material contract or release or relinquish any material contract
rights not in the ordinary course of business (except as permitted pursuant to
Section 6.2 of this Agreement); (v) intentionally incur any liability or
obligation (absolute, accrued, contingent or otherwise) other than in the
ordinary and usual course of business and either consistent with past practice
or in the reasonable business judgment of the officers of the Company (including
borrowing in the ordinary course pursuant to existing loan agreements or debt
instruments) or issue any debt securities or assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other individual or entity in any case in an amount material to the Company and
its subsidiaries, taken as a whole; (vi) propose or adopt any amendments to the
Certificate of Incorporation or By-Laws of the Company; (vii) make any change in
accounting methods, principles or practices; (viii) other than as contemplated
or permitted by this Agreement: (A) enter into any new employment agreements
with any officers, directors or key employees or grant any material increases in
the compensation or benefits to officers, directors and key employees other than
increases in the ordinary course of business and consistent with past practice;
(B) pay or agree to pay any pension, retirement allowance or other employee
benefit not required or permitted by any existing plan, agreement or arrangement
to any such director, officer or key employee in amounts material to the Company
and its subsidiaries, taken as a whole; (C) commit itself (other than pursuant
to any collective bargaining agreement) to any additional pension,
profit-sharing bonus, extra compensation, incentive, defined 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 director,
officer or key employee, whether past or present, in amounts material to the
Company and its subsidiaries, taken as a whole; or (D) except as required by
applicable law, amend in any material respect any such plan, agreement or
arrangement; or (ix) agree in writing or otherwise to take any of the foregoing
actions or any action which would make any representation or warranty in this
Agreement untrue or incorrect.
No Solicitation. Unless this Agreement is terminated in accordance with Article
8, neither the Company, its subsidiaries, nor any of their respective officers,
directors, employees, financial advisors, counsel, representatives, agents and
affiliates will, directly or indirectly, encourage, solicit, initiate, or,
subject to the fiduciary duties of the Company's Board of Directors, officers or
stockholders as advised by outside counsel to the Company, enter into any
agreement with respect to, or participate in any way in discussions or
negotiations with, provide any confidential information to, any Third Party (as
hereinafter defined) concerning any tender offer (including a self-tender
offer), exchange offer, merger, sale of substantial assets, sale of securities
or similar transactions involving the Company or any material subsidiary or
division of the Company (each, an "Acquisition Proposal"); except that, nothing
contained in this Section 6.2 or in any other provision of this Agreement shall
prohibit the Company or its Board of Directors from: (i) taking and disclosing
to the Company's stockholders a position with respect to a tender or exchange
offer by a Third Party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act; (ii) making such disclosure to the Company's stockholders as, in
the judgment of its Board of Directors with the advice of outside counsel, is
required under applicable law; or (iii) considering and negotiating an
unsolicited Acquisition Proposal if the Board of Directors determines in good
faith, after consultation with its outside counsel, that such consideration and
negotiation would be necessary to fulfill the fiduciary duties of the Board of
Directors. For purposes of this Agreement, "Third Party" shall mean any
corporation, partnership, person, or other entity or "group" (as defined in
Section 13(d)(3) of the
<PAGE>
Exchange Act) other than Parent, Acquisition Sub or any affiliate of Parent or
Acquisition Sub and their respective directors, officers, employees,
representatives, and agents. As long as this Agreement remains in effect, the
Company may furnish confidential information regarding the Company to any Third
Party if and only if: (i) the Company's Board of Directors determines in good
faith, with the advice of outside counsel, that its fiduciary duties require
disclosure of the information; and (ii) the Company and such Third Party enter
into a confidentiality agreement with terms and provisions (including standstill
provisions) no less onerous or restrictive on the Third Party than the terms and
provisions of the Confidentiality Agreement dated February 29, 1996 between
Parent and the Company with respect to Parent. Subject to the provisions of
Section 8.1, the Company may approve, accept and recommend an Acquisition
Proposal if and only if: (i) the Board of Directors determines in good faith, in
the exercise of its fiduciary duties and after consultation with its outside
counsel and financial advisors, that the Acquisition Proposal would result in a
transaction more favorable to the Company's stockholders from a financial point
of view than the transaction contemplated by this Agreement (such Acquisition
Proposal is referred to hereinafter as an "Approved Offer"); and (ii) Parent
does not make within five (5) business days of Parent's receiving notice of such
third-party offer, an offer which the Board of Directors, after consultation
with its financial advisers, determines is superior to such third-party offer.
As used in this Section 6.2, "third-party offer" shall mean any bona fide Third
Party offer, other than an offer by Parent, Acquisition Sub or any of their
respective affiliates for a merger or other business combination involving the
Company resulting in the acquisition of more than 50% of the outstanding Shares
or to acquire in any manner more than 50% of the outstanding Shares or all or
substantially all of the assets of the Company. The Company shall promptly
notify Parent of the receipt and the terms of any offer which it may receive in
respect of an Acquisition Proposal, including the identity of the offeror. The
Company and its Board of Directors acknowledge that the agreements contained in
this Section 6.2 are derived from and based upon their opinions that the Offer
and the Merger are fair and in the best interests of the Company and its
stockholders. The Company has advised the Parent that no negotiations are
currently pending with any other party for the acquisition of the Company.
Access to Information. Between the date of this Agreement and the Effective
Time, the Company will upon reasonable notice: (i) give Parent and its
authorized representatives access during regular business hours to all of the
Company's offices, warehouses and other facilities and to all of its books and
records; (ii) permit Parent to make such inspections as it may require; and
(iii) cause its officers and those of its subsidiaries to furnish Parent with
such financial and operating data and other information with respect to the
business and properties of the Company and its subsidiaries as Parent may from
time to time request.
Reasonable Efforts. Subject to the terms and conditions herein provided, and to
the fiduciary duties of the Board of Directors of the Company under applicable
laws, each of the parties hereto agrees to use its reasonable efforts to take,
or cause to be taken, all appropriate action, and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this
Agreement. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take all such
necessary action. Such efforts shall include, without limitation: (i) obtaining
all necessary consents, approvals or waivers from third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement; and (ii) opposing vigorously any litigation or administrative
proceeding relating to this Agreement or the transactions contemplated hereby,
including, without limitation, promptly appealing any adverse court or agency
order.
Indemnification and Insurance.
The Company and Parent will indemnify and hold harmless, and after the Effective
Time, the Surviving Corporation and Parent will indemnify and hold harmless,
each present and former employee, agent, director or officer of the Company and
the Company's subsidiaries (the
<PAGE>
"Indemnified Parties") as provided in their respective charters or by-laws or
otherwise in effect at the date hereof (to the extent consistent with applicable
law), which provisions shall survive the Merger and shall continue in full force
and effect for a period of six (6) years from the Effective Time. In the event
any claim or claims (a "Claim or Claims") are asserted or made pursuant to the
preceding sentence within such six-year period, all rights to indemnification in
respect of any such Claim or Claims shall continue until final disposition of
any and all such Claims. Without limiting the foregoing, the Company and Parent,
and after the Effective Time the Surviving Corporation and Parent, to the extent
provided in their respective charters or by-laws and to the extent permitted by
applicable law, will periodically advance expenses as incurred with respect to
the foregoing, provided that the person to whom the expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined
that such person is not entitled to indemnification. Parent and the Surviving
Corporation shall cause to be maintained in effect for not less than five (5)
years from the Effective Time the current policies of the directors' and
officers' liability insurance maintained by the Company and the Company's
subsidiaries (provided that Parent and the Surviving Corporation may substitute
therefor policies of at least the same coverage containing terms and conditions
which are no less advantageous to the Indemnified Parties so long as no lapse in
coverage occurs as a result of such substitution) with respect to all matters,
including the transactions contemplated hereby, occurring prior to, and
including, the Effective Time, provided that, in the event that any Claim or
Claims are asserted or made within such five-year period, such insurance shall
be continued in respect of any such Claim or Claims until final disposition of
any and all such Claims; provided, however, that during the first year after the
Effective Time Parent and the Surviving Corporation shall purchase such coverage
in the amount of not less than $15,000,000, and during the second through the
fifth year after the Effective Time shall purchase such coverage in the amount
of not less than $10,000,000, and provided further that, in no event shall
Parent or the Surviving Corporation be required to pay annual premiums in excess
of $160,000, and if Parent and the Surviving Corporation are unable to obtain
the insurance required by this Section 6.5(a) they shall obtain as much
comparable insurance as can be obtained for an annual premium equal to such
maximum amount.
In the event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative (including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any of the current or former officers, directors, employees, fiduciaries or
agents (the "Indemnitees") of the Company or any of its subsidiaries is, or is
threatened to be, made a party by reason of the fact that he is or was a
director, officer, employee, fiduciary or agent of the Company or any of its
subsidiaries, or is or was serving at the request of the Company or any of its
subsidiaries as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust or other enterprise) arising with
respect to events occurring before or as of the Effective Time or arising out of
the transactions contemplated by this Agreement, the parties hereto agree to
cooperate and use all reasonable efforts to defend against and respond thereto.
It is understood and agreed that the Company will indemnify and hold harmless,
and after the Effective Time each of the Surviving Corporation and Parent will
indemnify and hold harmless, as and to the fullest extent provided in their
respective charters or by-laws and to the extent permitted by applicable law,
each Indemnitee against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorneys' fees), judgments, fines and amounts
paid in settlement in connection with any such claim, action, suit, proceeding
or investigation. In the event of any such claim, action, suit, proceeding or
investigation whether arising with respect to events occurring before or as of
the Effective Time or arising out of the transactions contemplated by this
Agreement: (i) the Indemnitees may retain counsel satisfactory to them, and the
Company, or the Surviving Corporation and Parent after the Effective Time, shall
pay all reasonable fees and expenses of such counsel for the Indemnitees
promptly as statements therefor are received; and (ii) the Company, or the
Surviving Corporation and Parent after the Effective Time, will use their
respective best efforts to assist in the vigorous defense of any such matter;
provided that neither the Company nor the Surviving
<PAGE>
Corporation or Parent shall be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld); and
provided further that the Surviving Corporation and Parent shall have no
obligation hereunder to any Indemnitee when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that indemnification of such Indemnitee in the
manner contemplated hereby is prohibited by applicable law. The Indemnitees as
a group may retain only one law firm to represent them with respect to any such
matter unless there is, under applicable standards of professional conduct, a
conflict of any significant issue between the positions of any two or more
Indemnitees as determined in good faith by such Indemnitees.
Parent and the Surviving Corporation agree to take no action which would have
the effect of impairing the rights of indemnity, limitation of liability and
other rights currently afforded to the current or former directors, officers,
employees, fiduciaries or agents of the Company and its subsidiaries and the
Indemnitees (whether through reincorporation of the Surviving Corporation or any
of its subsidiaries in another jurisdiction providing or permitting less
favorable indemnification or limitation of liability provisions, or otherwise).
Parent agrees to guarantee all of the obligations of the Surviving Corporation
under this Section 6.5. In the event that the Surviving Corporation or Parent
or their respective successors or assigns: (i) consolidates with or merges into
another person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger; or (ii) transfers all or substantially
all of its properties or assets to any person, then and in each such case,
proper provisions shall be made so that the successors and assigns of the
Surviving Corporation or Parent, as the case may be, shall assume the
obligations set forth in this Section 6.5.
Employee Plans and Benefits and Employment Contracts.
Parent and the Surviving Corporation agree that, following the Effective Time
and until the later of forty-five (45) days after the purchase of Shares
pursuant to the Offer or December 31, 1996, they will maintain for the benefit
of the officers and employees of the Company the employee benefits, including,
without limitation, cash compensation, incentive opportunities, non-cash
non-incentive benefits, retirement plans and programs and severance plans and
policies, which are in each category at least comparable in the aggregate to
those provided under the Company's plans, programs and arrangements in existence
at the Effective Time and, to the extent practicable and appropriate, the
existing Company benefit plans, programs, and arrangements will be continued for
such period. In furtherance of the foregoing, during such period, Parent and
the Surviving Corporation agree not to reduce benefits to existing retirees (or
persons who become retirees during such period) under the Company's early
retirement health care plan as disclosed to Parent. Thereafter, such officers
and employees will be entitled to participate in the employee benefit plans,
programs and arrangements maintained by Parent for its similarly situated
employees, upon the same terms and conditions that apply to such employees of
Parent (which provision is not intended to guarantee participation in any such
plan, program or arrangement in which participation is determined in the
discretion of a person or committee pursuant to such plan, program or
arrangement).
From and after the Effective Time, Parent and the Surviving Corporation agree to
honor in accordance with their lawful terms all existing employment, severance,
consulting or other compensation agreements or arrangements or benefit contracts
between the Company or any of its subsidiaries and any officer, director or
employee of the Company or any of its subsidiaries and all benefits or other
amounts earned or accrued through the Effective Time and thereafter under all
employee benefit plans of the Company and any of its subsidiaries while such
plans are maintained.
Each individual who is an employee of the Company or any of its subsidiaries at
the Effective Time will, for purposes of determining eligibility and vesting
under any employee benefit plan, practice or policy of Parent or the Surviving
Corporation, be given credit for all service prior to the Effective Time with
the Company and its subsidiaries or any predecessor employer (but only to the
extent such credit was given for purposes of the similar or corresponding plan,
practice or policy of the Company).
<PAGE>
Board Representation. Promptly upon the purchase of Shares pursuant to the
Offer and from time to time thereafter, Parent shall be entitled to designate
such number of directors, rounded up to the next whole number on the Board of
Directors of the Company as will give Parent, subject to compliance with Section
14(f) of the Exchange Act and the rules and regulations promulgated thereunder,
representation on the Board of Directors of the Company equal to the product of:
(i) the number of directors on the Board of Directors of the Company; and (ii)
the percentage that such number of votes represented by the Shares so purchased
bears to the number of votes represented by Shares outstanding. The Company
shall, upon request by Parent, promptly increase the size of the Board of
Directors of the Company or exercise its best efforts to secure the resignations
of such number of directors as is necessary to enable Parent's designees to be
elected to the Board of Directors of the Company and shall cause Parent's
designees to be so elected. At such time, the Company shall also cause persons
designated by Parent to constitute the same percentage (rounded up to the next
whole number) as is on the Company's Board of Directors of (A) each committee of
the Company's Board of Directors, (B) each board of directors (or similar body)
of each subsidiary of the Company and (C) each committee (or similar body) of
each such board. The Company shall promptly take, at its expense, all action
required pursuant to Section 14(f) and Rule l4f-l in order to fulfill its
obligations under this Section 6.7 and shall include in the Schedule l4D-9 or
otherwise timely mail to its stockholders such information with respect to the
Company and its officers and directors as is required by Section 14(f) and Rule
l4f-l in order to fulfill its obligations under this Section 6.7. Parent will
supply to the Company in writing 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 l4f-l. In the event that Parent's designees
are elected to the Board of Directors of the Company, until the Effective Time,
the Board of Directors of the Company shall have at least three (3) directors
who are directors on the date hereof (the "Independent Directors"), provided
that, in such event, if the number of Independent Directors shall be reduced
below three (3) for any reason whatsoever, any remaining Independent Directors
(or Independent Director, if there be only one remaining) shall be entitled to
designate persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of this Agreement or, if no Independent Director then
remain, the other directors shall designate three (3) persons to fill such
vacancies who shall not be designees, stockholders or affiliates of Parent or
Acquisition Sub and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees are elected to the Board of
Directors, after the acceptance for payment of Shares pursuant to the Offer and
prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (a) amend or terminate this Agreement
by the Company, (b) exercise or waive any of the Company's rights, benefits or
remedies hereunder, (c) extend the time for performance of Parent's and the
Acquisition Sub's respective obligations hereunder, (d) take any other action by
the Company's Board of Directors under or in connection with this Agreement, or
(e) approve any other action by the Company which could adversely affect the
interests of the stockholders of the Company (other than Parent, Acquisition Sub
and their affiliates) with respect to the transactions contemplated hereby.
Meeting of the Company's Stockholders.
If required by applicable law, the Company shall promptly after the consummation
of the Offer, take all action necessary in accordance with the DGCL and its
Certificate of Incorporation and By-Laws to convene the Meeting to consider and
vote on the Merger and this Agreement. At the Meeting, all of the Shares then
owned by Parent, Acquisition Sub or any other subsidiary of Parent shall be
voted to approve the Merger and this Agreement. Subject to applicable fiduciary
obligations to stockholders of the Company as advised by counsel, the Board of
Directors of the Company shall recommend that the Company's stockholders vote to
approve the Merger and this Agreement if such vote is sought (which
recommendation shall be included in the Proxy Statement), shall use all
reasonable efforts to solicit from stockholders of the Company proxies in favor
of the Merger and shall take all other
<PAGE>
action in its judgment necessary and appropriate to secure the vote of
stockholders required by the DGCL to effect the Merger.
Parent and Acquisition Sub shall not, and they shall cause their subsidiaries
not to, sell, transfer, assign, encumber or otherwise dispose of the Shares
acquired pursuant to the Offer or otherwise prior to the Meeting; provided,
however, that this Section 6.8(b) shall not apply to the sale, transfer,
assignment, encumbrance or other disposition of any or all of such Shares in
transactions involving solely Parent, Acquisition Sub and/or one or more of
their wholly owned subsidiaries.
Proxy Statement. If required under applicable law, the Company and Parent shall
prepare the Proxy Statement, file it with the SEC under the Exchange Act as
promptly as practicable after Acquisition Sub purchases Shares pursuant to the
Offer, and use all reasonable efforts to have it cleared by the SEC. As
promptly as practicable after the Proxy Statement has been cleared by the SEC,
the Company shall mail the Proxy Statement to the stockholders of the Company as
of the record date for the Meeting. The Company will use all reasonable efforts
to obtain and furnish the information required to be included by it in the Proxy
Statement and, after consultation with Parent, respond promptly to any comments
of the SEC relating to the preliminary proxy or information statement relating
to the transactions contemplated by this Agreement and to cause the definitive
proxy statement relating to the transactions contemplated by this Agreement to
be mailed to its stockholders, all at the earliest practical time. Whenever any
event occurs which should be set forth in an amendment or supplement to the
Proxy Statement or any other filing required to be made with the SEC, each party
will promptly inform the other and cooperate in filing with the SEC and/or
mailing to stockholders such amendment or supplement. The Proxy Statement, and
all amendments and supplements thereto, shall comply with applicable law and be
in form and substance satisfactory to Parent.
Public Announcements. Parent and the Company shall to the fullest extent
practicable consult with each other before issuing any press release or
otherwise making any public statement with respect to the Offer and the Merger
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by law or any governmental
agency if required by such agency or the rules of the National Association of
Securities Dealers, Inc. or the rules of the New York Stock Exchange.
Merger Without Meeting of Stockholders. Notwithstanding the foregoing, in the
event that Parent or Acquisition Sub shall acquire at least 90% of the
outstanding Shares, the parties hereto agree, at the request of Parent, to take
all appropriate and necessary action to cause the Merger to become effective, as
soon as practicable after the consummation of the Offer and the completion of
all activities necessary to finance the consummation of the Merger and the
transactions contemplated hereby, without a meeting of stockholders of the
Company, in accordance with Section 253 of the DGCL.
Current Information. From the date of this Agreement to the Effective Time, the
Company will cause one or more of its designated representatives to confer on a
regular and frequent basis (not less often than semi-monthly) with
representatives of Parent and to report the general status of its ongoing
operations and to deliver to Parent (not less often than monthly) unaudited
consolidated balance sheets and related consolidated statements of operations,
statements of cash flows and statements of stockholders' equity for the period
since the last such report. The Company will promptly notify Parent of any
material change in the normal course of business or in the operation of the
properties of the Company or its subsidiaries.
Supplement to Disclosure Schedule. At least five (5) business days prior to the
scheduled expiration date of the Offer, the Company shall deliver to Parent and
Acquisition Sub a supplement to the Disclosure Schedule which sets forth any
matter hereafter arising which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in such
Disclosure Schedule or which is necessary to correct any information in such
Disclosure Schedule which has been rendered inaccurate. In the event that the
Offer is extended beyond the initial
<PAGE>
expiration date for the Offer, the Company shall be required to deliver an
additional supplement to the Disclosure Schedule five (5) days prior to the
extended expiration date only if such prior supplement shall be more than
fifteen (15) business days old. No supplement shall have any effect for the
purpose of determining the satisfaction of the conditions set forth on Annex I
or the compliance by the Company with the covenant set forth in Section 6.1
hereof.
Section 203. From and after the date hereof, the Company will not, except
pursuant to an Approved Offer or as otherwise provided in this Agreement,
approve any acquisition of shares of Common Stock by any person which would
result in such person becoming an interested stockholder (as such term is
defined in Section 203 of the DGCL) or otherwise be subject to Section 203 of
the DGCL.
Preferred Stock Purchase Rights. Immediately prior to the consummation of the
purchase of the Shares pursuant to the Offer, if so requested by Parent (as long
as Parent or Acquisition Sub is not in breach of any material provision of this
Agreement), the Company agrees to redeem all of the outstanding Series A
Preferred Stock purchase rights issued pursuant to the Rights Agreement in
accordance with Section 23 of the Rights Agreement. From and after the date
hereof, the Company will not: (i) take or fail to take any action which would
permit the Series A Preferred Stock purchase rights to become nonredeemable by
the Company; (ii) except as otherwise provided in this Section 6.15, redeem the
Series A Preferred Stock purchase rights; (iii) except as otherwise required to
permit the commencement or consummation of the Offer or the consummation of the
Merger, amend the Rights Agreement; or (iv) approve any transaction, offer or
agreement (other than an Approved Offer) with any party other than Parent and
Acquisition Sub pursuant to Section 11(a)(ii) of the Rights Agreement.
ARTICLE 7
CONDITIONS TO CONSUMMATION OF THE MERGER
Conditions to Each Party's Obligation to Effect the Merger. The respective
obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of
the following conditions: this Agreement, the Merger and the transactions
contemplated hereby shall have been approved and adopted by the requisite
vote of the stockholders of the Company, if required by applicable law in
order to consummate the Merger; provided, however, that Parent and its
subsidiaries shall vote all of its Shares in favor of the Merger; no statute,
rule, regulation, executive order, decree, injunction or other order shall
have been enacted, entered, promulgate or enforced by any court or
governmental authority which is in effect and has the effect of prohibiting,
restraining, enjoining or restricting the consummation of the Merger; and the
waiting period (and any extension thereof) applicable to the consummation of
the Merger under the H-S-R Act, if any, shall have expired or been terminated.
Conditions to Obligations of Parent and Acquisition Sub to Effect the Merger.
The obligations of Parent and Acquisition Sub to effect the Merger are further
subject to the satisfaction, on or prior to the Effective Time, of the
conditions that Parent shall have accepted for payment and paid for Shares
tendered pursuant to the Offer, provided that this condition will be deemed
satisfied if Parent fails to accept for payment and pay for Shares pursuant to
the Offer in violation of the terms thereof or of this Agreement.
ARTICLE 8
TERMINATION; AMENDMENT; WAIVER
Termination. This Agreement may be terminated and the Merger contemplated
hereby may be abandoned at any time notwithstanding approval thereof by the
stockholders of the Company, but prior to the Effective Time:
by mutual written consent duly authorized by the Boards of Directors of the
Company, Parent and Acquisition Sub;
<PAGE>
by either the Company or Parent: if (1) the Offer terminates or expires in
accordance with its terms or if Parent terminates the Offer as the result of
the occurrence of any of the conditions set forth in Annex I hereto without
Acquisition Sub having purchased any Shares pursuant to the Offer, provided,
however, that the right to terminate this Agreement pursuant to this Section
8.l(b)(i)(1) shall not be available to Parent if the failure by Parent or
Acquisition Sub to fulfill any of their respective obligations under this
Agreement or a misrepresentation or breach of warranty by Parent or
Acquisition Sub results in the occurrence of any such condition, and shall
not be available to the Company if the failure by the Company to fulfill any
of its obligations under this Agreement or a misrepresentation or breach of
warranty by Company results in the occurrence of any such condition; or (2)
Acquisition Sub shall not have purchased any Shares pursuant to the Offer on
or before December 31, 1996, provided however, that the right to terminate
this Agreement pursuant to this Section 8.1(b)(i)(2) shall not be available
to Parent if such failure to purchase any Shares is the result of a failure
by Parent or Acquisition Sub to fulfill any of their respective obligations
under this Agreement or a misrepresentation or breach of warranty by Parent
or Acquisition Sub, and shall not be available to the Company if such failure
to purchase any Shares is the result of a failure by the Company to fulfill
any of its obligations under this Agreement or a misrepresentation or breach
of warranty by Company; if the Merger shall not have been consummated on or
before six (6) months after the date hereof, unless the failure to consummate
the Merger is the result of a material breach of this Agreement by the party
seeking to terminate this Agreement; or if any court of competent
jurisdiction or any other governmental body shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining
or otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable;
by the Company if (i) the Offer has not been timely commenced in accordance
with Section 1.1; or (ii) Parent or Acquisition Sub fails to perform in any
material respect any of their respective obligations under this Agreement and
such failure to perform has not been cured within five (5) business days
after notice thereof is given to Parent by the Company (except that no cure
period shall be provided for any failure which, by its nature, cannot be
cured); by Parent or Acquisition Sub if the Company fails to perform in any
material respect any of its obligations under this Agreement and such failure
to perform has not been cured within five (5) business days after notice
thereof is given to the Company by Parent (except that no cure period shall
be provided for any failure which, by its nature, cannot be cured); or by the
Company if the Board of Directors of the Company has approved, accepted or
recommended an Approved Offer in accordance with Section 6.2.
Effect of Termination. In the event of the termination and abandonment of this
Agreement pursuant to Section 8.1, this Agreement, except for the provisions of
Sections 8.3 and 9.10, shall forthwith become void and have no effect, without
any liability on the part of any party or its directors, officers or
stockholders. Nothing in this Section 8.2 shall relieve any party to this
Agreement of liability for willful breach of this Agreement.
Termination Fee; Reimbursement of Parent's Expenses.
If neither Acquisition Sub nor Parent is in material breach of any of its
obligations under this Agreement and, prior to acceptance of Shares for
payment pursuant to the Offer or the payment therefor, this Agreement is
terminated: by Company or Parent pursuant to Section 8.1(b)(i) if the Offer
terminates or expires in accordance with its terms as a result of the
occurrence of any of the conditions set forth in paragraph (d) or (e) or in
clause (ii) or (iii) of paragraph (g) of Annex I; or by Parent or Acquisition
Sub pursuant to Section 8.1(d); or by the Company pursuant to Section 8.1(e);
then the Company shall, whether or not any payment is made pursuant to
Section 8.3(b) below, reimburse each of Acquisition Sub and Parent (not later
than two (2) business days after submission
<PAGE>
of statements therefor) for all reasonable out-of-pocket expenses and fees,
including, without limitation, fees payable to all banks, investment banking
firms and other financial institutions, and their respective agents, for
arranging or providing the financing, and all fees of counsel, accountants,
experts, agents and consultants to Acquisition Sub or Parent incurred by Parent
or Acquisition Sub in good faith in connection with the negotiation,
preparation, execution and performance of this Agreement and the financing (all
of the foregoing being referred to collectively as the "Expenses"), subject to a
maximum reimbursement of $5,000,000.
If neither Acquisition Sub nor Parent is in material breach of any of its
obligations under this Agreement and, prior to acceptance of Shares for
payment pursuant to the Offer or the payment therefor, this Agreement is
terminated: by Company or Parent pursuant to Section 8.1(b)(i) if the Offer
terminates as a result of the occurrence of any of the conditions set forth
in paragraphs (d), (e) or (g) of Annex I; or by Parent or Acquisition Sub
pursuant to Section 8.1(d); or by the Company pursuant to Section 8.1(e);
and either prior to such termination or within twelve (12) months thereafter,
(x) any "person" (as such term is defined in Section 13(d)(3) of the Exchange
Act) (A) acquires the Company by merger or otherwise; (B) acquires more than 50%
in value of the total assets of the Company and its subsidiaries taken as a
whole; or (C) acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act) of Securities representing, or the right to
acquire beneficial ownership of or to vote securities (or which could result in
the acquisition of beneficial ownership of or the right to vote securities)
representing, more than 50% of the outstanding voting securities of the Company
(each of the foregoing transactions being referred to as a "Third Party
Acquisition"); or (y) the Board of Directors of the Company accepts, approves or
recommends any Third Party Acquisition; or (z) the Board of Directors of the
Company shall have withdrawn or modified in any material respect its
recommendation of the Offer; then the Company shall pay Parent, in no event
later than two (2) business days after the obligation arises to make such
payment pursuant to the terms set forth above in this Section 8.3(b), a
termination fee of $6,500,000 in addition to the payment of Expenses in
accordance with paragraph (a) above, which amount shall be payable in same day
funds. If Parent becomes entitled to the termination fee without having
previously become entitled to reimbursement of Expenses in accordance with
paragraph (a) above, Parent shall thereupon become entitled to reimbursement of
Expenses in accordance with, and subject to the limitations set forth in,
paragraph (a) above.
Amendment. To the extent permitted by applicable law, this Agreement may be
amended by action taken by or on behalf of the Boards of the Company, Parent and
Acquisition Sub at any time before or after approval of this Agreement by the
stockholders of the Company but, after any such stockholder approval, no
amendment shall be made which decreases or changes the form of the Merger
Consideration or which adversely affects the rights of the Company's
stockholders hereunder without the approval of all such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of all the parties.
Extension; Waiver. At any time prior to the Effective Time, the parties hereto,
by action taken by or on behalf of the respective Boards of Directors of the
Company, Parent or Acquisition Sub, may: (i) extend the time for the performance
of any of the obligations or other acts of the other parties hereto; (ii) waive
any inaccuracies in the representations and warranties contained herein by any
other applicable party or in any document, certificate or writing delivered
pursuant hereto by any other applicable party; or (iii) waive compliance with
any of the agreements or conditions contained herein. Any agreement on the part
of any party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE 9
<PAGE>
MISCELLANEOUS
Non-Survival of Representations and Warranties. None of the representations and
warranties made in this Agreement shall survive after the Effective Time. This
Section 9.1 shall not limit any covenant or agreement of the parties hereto
which by its terms contemplates performance after the Effective Time.
Entire Agreement; Assignment. This Agreement (a) constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
among the parties or any of them with respect to the subject matter hereof and
(b) shall not be assigned by operation of law or otherwise, provided that Parent
or Acquisition Sub may assign any of their rights and obligations to any wholly
owned subsidiary of Parent, but no such assignment shall relieve Parent or
Acquisition Sub of its obligations hereunder. Either Parent or any wholly owned
subsidiary of Parent may purchase Shares under the Offer.
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 the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any federal or state court located in the
State of Delaware (as to which the parties agree to submit to jurisdiction for
the purposes of such action), this being in addition to any other remedy to
which they are entitled at law or in equity.
Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.
Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered in person, by cable, telegram, facsimile transmission with
confirmation of receipt, or telex, or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties as follows:
if to Parent or Acquisition Sub:
Nash-Finch Company
7600 France Avenue South
Edina, Minnesota 55435
Attention: Norman R. Soland
Fax: 612-844-1235
with a copy to:
Oppenheimer Wolff & Donnelly
Plaza VII, Suite 3400
45 South Seventh Street
Minneapolis, Minnesota 55402
Attention: Mark A. Kimball, Esq.
Fax: (612) 344-9376
if to the Company:
Super Food Services, Inc.
3233 Newmark Drive
Dayton, Ohio 45342
Attention: John Demos
Fax: (937) 439-7514
<PAGE>
with a copy to:
Thompson Hine & Flory P.L.L.
2000 Courthouse Plaza, N.E.
P.O. Box 8801
Dayton, Ohio 45401-8801
Attention: J. Michael Herr, Esq.
Fax: (513) 443-6637
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
Governing Law. This Agreement shall be governed by and construed in accordance
with the substantive laws of the State of Delaware regardless of the laws that
might otherwise govern under principles of conflicts of laws applicable thereto.
Descriptive Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
Parties in Interest. This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement except for Section
6.5 and 6.6 (which are intended to be for the benefit of the persons entitled to
therein, and may be enforced by such persons).
Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
Expenses.
Subject to Section 8.3, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses, except that Parent and the Company will share equally all
documented out-of-pocket fees and expenses incurred in connection with the
printing and filing of the Proxy Statement.
Parent acknowledges and agrees that the Company has disclosed it is indebted for
fees and expenses (including fees and expenses of its counsel and financial
advisors) incurred by it in connection with the transactions contemplated by
this Agreement. It is understood that certain of such fees and expenses may be
paid by the Company prior to or after the execution of this Agreement, and
Parent agrees to refrain from taking any action which would interfere with the
payment of the foregoing fees and expenses by the Company.
Performance by Acquisition Sub. Parent hereby agrees to cause Acquisition Sub
to comply with its obligations hereunder and under the Offer and to cause
Acquisition Sub to consummate the Merger as contemplated herein.
Submission to Jurisdiction. The parties to this Agreement, acting for
themselves and for their respective successors and assigns, hereby irrevocably
and unconditionally consent to submit to the jurisdiction of the federal or
state courts located in the State of Delaware for any actions, suits or
proceedings arising out of or relating to this Agreement (and none of such
persons shall commence any action, suit or proceeding relating thereto except in
such courts). Such person hereby irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement, in the federal or state courts located in the State of
Delaware.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its officers thereunto duly authorized, all at or on the day
and year first above written.
<PAGE>
NASH-FINCH COMPANY
ATTEST:
By:
Secretary President
NFC ACQUISITION CORPORATION
ATTEST:
By:
Secretary President
SUPER FOOD SERVICES, INC.
ATTEST:
By:
Secretary Chairman and
Chief Executive Officer
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer and in addition to (and not in
limitation of) Parent's right to extend and amend the Offer (subject to the
terms of the Merger Agreement), Parent shall not be required to accept for
payment or pay for, subject to Rule 14e-l(c) of the Exchange Act, any Shares not
theretofore accepted for payment or paid for and may terminate or amend the
Offer as to such Shares if (i) the Minimum Condition shall not have been
satisfied or (ii) at any time on or after the date of commencement of the Offer
and before the acceptance of such Shares for payment or the payment therefor,
any of the following conditions exist or shall occur and remain in effect
(provided that the right to terminate or amend the Offer pursuant thereto shall
not be available to Parent if the failure by Parent or Acquisition Sub to
fulfill any of their respective obligations under the Merger Agreement results
in the occurrence of any such condition):
(a) there shall have occurred (i) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States (whether or not
mandatory), (ii) a formal declaration of war or national or international
calamity directly or indirectly involving the United States, (iii) any
limitation (whether or not mandatory) by any United States governmental
authority on the extension of credit by banks or other financial institutions
that materially affects the extension of credit by banks or other lending
institutions or (iv) in the case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration or worsening thereof;
(b) there shall have been any action taken, or any statute, rule, regulation,
judgment, order or injunction promulgated, entered, enforced, enacted issued or
deemed applicable to the Offer or the Merger by any court, government or
governmental authority or agency, domestic or foreign which (i) prohibits
Parent's ownership or operation of all or a material portion of its or the
Company's (or any of their respective subsidiaries') business or
<PAGE>
assets, or compels Parent to dispose of or hold separate all or a material
portion of its or the Company's (or any of their respective subsidiaries')
business or assets as a result of the Offer or the Merger, (ii) prohibits, or
makes illegal the acceptance for payment or payment for Shares or the
consummation of the Offer or the Merger, or (iii) imposes material limitations
on the ability of Parent or Acquisition Sub effectively to exercise full rights
of ownership of the Shares, including, without limitation, the right to vote the
Shares purchased by Acquisition Sub on all matters properly presented to the
Company's stockholders; provided, however, that with respect to any action,
ruling or order taken or made by any court, government or governmental authority
or agency that is preliminary, until such action, ruling or order becomes final,
Parent may not terminate the Offer, but shall extend the expiration of the Offer
and shall postpone acceptance for payment or purchase of, or payment for, any
Shares pursuant to this paragraph (b); further provided, however, that in no
event shall Parent be obligated to attempt to cause any such decree, order or
injunction to be vacated or reversed or to extend the Offer beyond December 31,
1996; or
(c) the Merger Agreement shall have been terminated in accordance with its
terms; or
(d) any of the representations and warranties of the Company set forth in the
Merger Agreement were inaccurate when made or became inaccurate at any time
thereafter (other than (i) any misrepresentations that, in the aggregate, do not
have a material adverse effect on the Company or (ii) any misrepresentations
that the Company cures within five (5) business days after notice thereof is
given by Parent (except that no cure period shall be provided for a breach by
the Company which, by its nature, cannot be cured)) or the Company shall have
failed in any material respect to perform any material obligation or covenant
required by the Merger Agreement to be performed or complied with by it which
failure would have a material adverse effect on the Company; or
(e) the Board of Directors of the Company shall have withdrawn or modified in
any material respect its recommendation of the Offer; provided, however, that
this condition shall not be deemed to exist, and Acquisition Sub shall have no
right to terminate the Offer or not accept for payment or pay for Shares, if as
a result of the Company's receipt of a proposal for the acquisition of all or a
material portion of the business or assets of the Company or the Shares, the
Company withdraws, modifies or amends its approval or recommendation of the
Offer, the Merger or the Merger Agreement by reason of taking and disclosing to
the Company's shareholders a position contemplated by Rule 14e-2(a)(2) or (3)
promulgated under the Exchange Act with respect to such proposal, the Offer, the
Merger or the Merger Agreement and if within five (5) business days of taking
and disclosing to its shareholders the aforementioned position, the Company
publicly reconfirms its recommendation of the Offer, the Merger and the Merger
Agreement; or
(f) the waiting period (and any extension thereof) applicable to the
consummation of the Offer under the H-S-R Act shall not have expired or been
terminated; provided, however, that (i) until such H-S-R Act waiting periods
expire or terminate, Parent may not terminate the Offer (but shall extend the
expiration of the Offer and shall postpone acceptance for payment or purchase
of, or payment for, any Shares pursuant to this paragraph (f)); further
provided, however, that in no event shall Parent be obligated to extend the
Offer beyond December 31, 1996 and (ii) unless Parent theretofore shall have
terminated the Offer in accordance with the terms of the Merger Agreement,
Parent shall continue to seek to resolve any action or proceeding in accordance
with the provisions of the Merger Agreement; or
(g) (i) a tender or exchange offer for 20% or more of the Shares shall have
been publicly proposed to be made by another person or shall have been
publicly disclosed, (ii) a tender or exchange offer for 20% or more of the
Shares shall have been made by another person or (iii) the Parent shall have
learned that any person, entity or "group" (as that term is used in Section
13(d)(3) of the Exchange Act), shall beneficially own (as that term is used
in Section 13(d)(3) of the Exchange Act) or shall have acquired 20% or more
of the Shares, or shall have been granted any option or right, conditional or
otherwise, to acquire 20% or more of the Shares; which, in the reasonable
judgment of Parent, in any case, and regardless of the circumstances giving
rise to any such condition, makes it inadvisable to proceed with the Offer or
with such acceptance for
<PAGE>
payment, purchase of, or payment for Shares.
The foregoing condition are for the sole benefit of Parent and may be asserted
by Parent regardless of the circumstances giving rise to any such condition and
may be waived by Parent, in whole or in part, at any time and from time to time,
in the sole discretion of Parent. The failure by Parent at any time to exercise
any of the foregoing rights will not be deemed a waiver of any right and each
right will be deemed an ongoing right which may be asserted at any time and from
time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for payment shall forthwith be returned
by the Disbursing Agent to the tendering stockholders.
