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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
March 26, 1999
-----------------------------------------------
Date of Report (Date of earliest event reported)
Juno Lighting, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-11631 36-2852993
- ---------------------------- ----------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1300 S. Wolf Road, P.O. Box 5065, Des Plaines, Illinois 60017-5065
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(Address of principal executive offices) (Zip Code)
(847) 827-9880
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(Registrant's telephone number)
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Exhibit Index on Page 5
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ITEM 5. OTHER EVENTS.
On March 26, 1999, Juno Lighting, Inc. ("Juno") entered into a merger
and recapitalization agreement with an entity controlled by Fremont Partners,
L.P., Fremont Investors I, LLC ("Fremont"), providing for the merger of Juno
with Jupiter Acquisition Corp., a Delaware corporation formed by Fremont.
The merger and recapitalization agreement provides that the owner of
each outstanding share of Juno common stock can elect either to receive $25.00
in cash for that share or to retain that share, subject to proration as
described below; provided that an aggregate of 2,400,000 shares (approximately
12.9% of the presently outstanding shares) must be retained by existing public
shareholders. If existing public shareholders elect to retain more than
2,400,000 of the outstanding shares, then the shares available will be prorated
among those electing to retain shares and cash will be paid for all other
shares. If holders elect to retain fewer than 2,400,000 of the outstanding
shares, the remaining available shares will be prorated among those electing
cash. Immediately following the merger, existing shareholders will hold an
approximate 39.5% fully diluted interest in Juno, not taking into account the
subsequent increase in the stated amount of the preferred stock referred to
below and the corresponding increase in the number of shares of common stock
issuable upon conversion of the preferred stock.
The merger and recapitalization agreement also provides for a
simultaneous purchase by Fremont of 1,060,000 newly issued convertible preferred
shares of Juno at a price of $100.00 per share or an aggregate initial stated
amount of $106,000,000. The preferred stock will generally have the right to
receive cumulative 2% quarterly dividends. These quarterly dividends will cause
an increase in the stated amount of the preferred stock for the first five years
following issuance; the dividends will become payable in cash thereafter. The
preferred stock will be convertible into a number of shares of common stock
derived by dividing the stated amount by the conversion price of $26.25 per
share, which is subject to adjustment in certain events. At any time beginning
on the ninth anniversary of the effective time of the merger, Juno may elect to
redeem the preferred stock at a price equal to the then stated amount plus any
accrued but unpaid dividends.
Juno's Board of Directors has unanimously recommended that
shareholders vote in favor of the transactions and has received a fairness
opinion from Juno's financial advisor, William Blair & Company, L.L.C. Upon
completion of the transaction, Juno expects to continue to operate as an
independent public company under its current name, and its headquarters are
expected to remain in Des Plaines, Illinois.
Juno's Board of Directors also adopted the Third Amendment to its
Stockholder Rights Agreement which amendment, among other things, provides that
none of Fremont, Jupiter Acquisition Corp., or any of their respective
Affiliates or Associates shall be become an Acquiring Person (as such terms are
defined in the Rights Agreement) as the result an acquisition of Juno securities
pursuant to and in accordance with the merger and recapitalization agreement.
The merger and recapitalization is subject to customary terms and
conditions, including the approval of Juno's shareholders and funding of
financing arrangements. It is currently contemplated that the transaction would
be submitted to shareholders for approval at Juno's annual meeting to be held as
soon as practicable. A commitment has been obtained from Bank of America for up
to $125 million in senior debt financing and an investment bank has been engaged
to arrange approximately $125 million of senior subordinated debt to finance the
transaction.
The merger and recapitalization agreement includes provisions
prohibiting Juno from soliciting another purchaser and provides for the payment
of certain fees and the reimbursement of expenses to Fremont in the event of a
termination of the merger agreement under certain circumstances.
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The merger and recapitalization agreement, which includes (i) as
Exhibit A thereto the form of 1999 Stock Award and Incentive Plan, (ii) as
Exhibit B thereto the form of Amended and Restated Certificate of Incorporation
of Juno and (iii) as Exhibit C thereto the form of Management Services Agreement
between Fremont Partners, L.L.C. and Juno, the Third Amendment to Juno's
Stockholder Rights Agreement, and Juno's press release dated March 26, 1999 are
filed as exhibits hereto and are incorporated herein by reference. The foregoing
summary is qualified in its entirety by reference to such exhibits.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit
Number Description
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2 Agreement and Plan of Recapitalization and Merger dated as
of March 26, 1999 among Fremont Investors I, LLC, Jupiter
Acquisition Corp., and Juno Lighting, Inc., which includes
(i) as Exhibit A thereto the form of 1999 Stock Award and
Incentive Plan, (ii) as Exhibit B thereto the form of
Amended and Restated Certificate of Incorporation of Juno
Lighting, Inc. and (iii) as Exhibit C thereto the form of
Management Services Agreement between Fremont Partners,
L.L.C. and Juno Lighting, Inc.
10.7(c) Third Amendment to Juno Lighting, Inc. Rights Agreement
dated as of March 26, 1999 between Juno Lighting, Inc. and
The First Chicago Trust Company, as successor Rights
Agent.
99 Press Release dated March 26, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Juno Lighting, Inc.
By /s/ Robert S. Fremont
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Name: Robert S. Fremont
Title: Chairman and Chief Executive Officer
Date: March 29, 1999
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EXHIBIT INDEX
Exhibit
Number Description
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2 Agreement and Plan of Recapitalization and Merger dated as
of March 26, 1999 among Fremont Investors I, LLC, Jupiter
Acquisition Corp., and Juno Lighting, Inc., which includes
(i) as Exhibit A thereto the form of 1999 Stock Award and
Incentive Plan, (ii) as Exhibit B thereto the form of
Amended and Restated Certificate of Incorporation of Juno
Lighting, Inc. and (iii) as Exhibit C thereto the form of
Management Services Agreement between Fremont Partners,
L.L.C. and Juno Lighting, Inc.
10.7(c) Third Amendment to Juno Lighting, Inc. Rights Agreement
dated as of March 26, 1999 between Juno Lighting, Inc. and
The First Chicago Trust Company, as successor Rights
Agent.
99 Press Release dated March 26, 1999.
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EXHIBIT 2
AGREEMENT AND PLAN OF
RECAPITALIZATION AND MERGER
by and among
FREMONT INVESTORS I, LLC
JUPITER ACQUISITION CORP.
and
JUNO LIGHTING, INC.
dated as of
MARCH 26, 1999
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Table of Contents
ARTICLE I
THE MERGER
Section 1.1 The Merger ..................................... Page 2
Section 1.2 Effective Time ................................. Page 2
Section 1.3 Closing ........................................ Page 3
Section 1.4 Directors and Officers of the Surviving
Corporation .................................... Page 3
Section 1.5 Subsequent Actions ............................. Page 3
Section 1.6 Stockholders' Meeting .......................... Page 4
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS
Section 2.1 Effect on Capital Stock ........................ Page 5
Section 2.2 Dissenting Shares .............................. Page 6
Section 2.3 Share Elections ................................ Page 7
Section 2.4 Proration ...................................... Page 8
Section 2.5 Stock Options .................................. Page 10
Section 2.6 Surrender of Shares; Transfer Books ............ Page 10
ARTICLE III
STOCK PURCHASE AND SALE
Section 3.1 Amendment of Certificate of Incorporation ...... Page 13
Section 3.2 Purchase and Sale of Preferred Shares .......... Page 14
Section 3.3 Purchase Price ................................. Page 14
Section 3.4 Closing ........................................ Page 14
Section 3.5 Closing Deliveries by the Company .............. Page 14
Section 3.6 Closing Deliveries by Fremont .................. Page 14
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ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Section 4.1 Organization; Qualification ...................... Page 15
Section 4.2 Subsidiaries and Affiliates ...................... Page 15
Section 4.3 Capitalization ................................... Page 16
Section 4.4 Authorization; Validity of Agreement;
Company Action ................................... Page 17
Section 4.5 Board Approvals Regarding Transactions ........... Page 17
Section 4.6 Consents and Approvals; No Violations ............ Page 18
Section 4.7 SEC Reports and Financial Statements ............. Page 18
Section 4.8 No Undisclosed Liabilities ....................... Page 19
Section 4.9 Inventory ........................................ Page 19
Section 4.10 Absence of Certain Changes ....................... Page 20
Section 4.11 Litigation ....................................... Page 20
Section 4.12 Employee Benefit Plans ........................... Page 20
Section 4.13 Taxes ............................................ Page 23
Section 4.14 Title to Properties; Encumbrances ................ Page 24
Section 4.15 Plant and Equipment .............................. Page 25
Section 4.16 Environmental Laws ............................... Page 25
Section 4.17 Intellectual Property ............................ Page 26
Section 4.18 Labor Matters .................................... Page 27
Section 4.19 Employment Matters ............................... Page 28
Section 4.20 Compliance with Laws ............................. Page 28
Section 4.21 Contracts ........................................ Page 29
Section 4.22 Insurance ........................................ Page 29
Section 4.23 Opinion of Financial Advisor ..................... Page 29
Section 4.24 Rights Agreement ................................. Page 29
Section 4.25 Brokers or Finders ............................... Page 30
Section 4.26 Transactions with Affiliates ..................... Page 30
Section 4.27 Full Disclosure .................................. Page 30
Section 4.28 Legal and Accounting Fees ........................ Page 30
Section 4.29 Cash and Marketable Securities ................... Page 30
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Section 5.1 Organization ..................................... Page 31
Section 5.2 Authorization; Validity of Agreement;
Necessary Action ................................. Page 31
Section 5.3 Consents and Approvals; No Violations ............ Page 31
Section 5.4 Sufficient Funds ................................. Page 32
Section 5.5 Share Ownership .................................. Page 33
Section 5.6 Sub's Capitalization and Operations .............. Page 33
Section 5.7 Brokers or Finders ............................... Page 33
ARTICLE VI
COVENANTS
Section 6.1 Interim Operations of the Company ................ Page 34
Section 6.2 Access; Confidentiality .......................... Page 37
Section 6.3 Reasonable Best Efforts .......................... Page 38
Section 6.4 Proxy Statement; Form S-4 ........................ Page 40
Section 6.5 No Solicitation of Competing Transaction ......... Page 41
Section 6.6 Publicity ........................................ Page 43
Section 6.7 Notification of Certain Matters .................. Page 43
Section 6.8 Directors' and Officers' Insurance and
Indemnification .................................. Page 44
Section 6.9 State Takeover Laws .............................. Page 45
Section 6.10 Actions Regarding the Rights ..................... Page 45
Section 6.11 Recapitalization ................................. Page 46
Section 6.12 Financial Statements ............................. Page 46
Section 6.13 Employee Plan and Benefit Arrangements ........... Page 46
Section 6.14 NASDAQ Listing ................................... Page 46
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ARTICLE VII
CONDITIONS
Section 7.1 Conditions to the Stock Purchase ................. Page 47
Section 7.2 Conditions to Each Party's Obligation to
Effect the Merger ................................ Page 47
Section 7.3 Conditions to the Obligations of Fremont and Sub . Page 48
Section 7.4 Conditions to the Obligations of the Company ..... Page 49
ARTICLE VIII
TERMINATION
Section 8.1 Termination ...................................... Page 50
Section 8.2 Effect of Termination ............................ Page 52
ARTICLE IX
DEFINITIONS AND INTERPRETATION
Section 9.1 Definitions ...................................... Page 52
Section 9.2 Interpretation ................................... Page 61
ARTICLE X
MISCELLANEOUS
Section 10.1 Fees and Expenses ................................ Page 62
Section 10.2 Amendment and Modification ....................... Page 63
Section 10.3 Nonsurvival of Representations and Warranties .... Page 63
Section 10.4 Notices .......................................... Page 64
Section 10.5 Counterparts ..................................... Page 65
Section 10.6 Entire Agreement; No Third Party Beneficiaries ... Page 65
Section 10.7 Severability ..................................... Page 65
Section 10.8 Governing Law .................................... Page 65
Section 10.9 Enforcement ...................................... Page 66
Section 10.10 Time of Essence .................................. Page 66
Section 10.11 Extension; Waiver ................................ Page 66
Section 10.12 Assignment ....................................... Page 66
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AGREEMENT AND PLAN OF RECAPITALIZATION AND MERGER
AGREEMENT AND PLAN OF RECAPITALIZATION AND MERGER, dated as of
March 26, 1999, by and among Fremont Investors I, LLC, a Delaware limited
liability company ("Fremont"), Jupiter Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Fremont ("Sub") and Juno Lighting, Inc., a
Delaware corporation (the "Company"). Certain capitalized terms used in this
Agreement have the meanings ascribed to them in Article IX hereof.
WHEREAS, the Board of Managers of Fremont and the respective
Boards of Directors of the Company and Sub have determined that the merger of
Sub with and into the Company (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, would be advisable and in the best
interests of their respective members or stockholders, and have approved the
Merger, pursuant to which each Share issued and outstanding immediately prior to
the Effective Time, will, except as otherwise provided herein, be converted into
either (i) the right to retain such Shares at the election of the holder thereof
and subject to the terms hereof or (ii) the right to receive $25.00 per Share in
cash; and
WHEREAS, the Company Board of Directors has resolved to
recommend that the holders of such Shares approve the Merger and this Agreement
and the consummation of the transactions contemplated hereby upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, the Board of Managers of
Fremont and the Board of Directors of each of Sub and the Company have approved
this Agreement and the Merger in accordance with the DGCL and upon the terms and
subject to the conditions set forth herein; and
WHEREAS, also in furtherance thereof, the Board of Managers of
Fremont and the Board of Directors of the Company have approved the purchase by
Fremont concurrently with the consummation of the Merger, of an aggregate of
1,060,000 shares of newly-authorized and issued Preferred Stock of the Company
at a purchase price of $100 per share (the "Stock Purchase"); and
WHEREAS, the parties hereto intend that the transactions
contemplated hereby be treated as a recapitalization for financial accounting
purposes; and
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WHEREAS, Fremont, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and the Stock Purchase.
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions of
this Agreement, and in accordance with the provisions of the DGCL, at the
Effective Time, the Company and Sub shall consummate the Merger, pursuant to
which (a) Sub shall be merged with and into the Company and the separate
corporate existence of Sub shall thereupon cease, (b) the Company shall be the
successor or surviving corporation in the Merger and shall continue to be
governed by the laws of the State of Delaware, and (c) the separate corporate
existence of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger, except as set forth in this
Section. Pursuant to the Merger, (x) the certificate of incorporation of the
Company in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until thereafter
amended as provided by law and such certificate of incorporation, and (y) the
by-laws of the Company, as in effect immediately prior to the Effective Time,
shall be the by-laws of the Surviving Corporation until thereafter amended as
provided by law, by such certificate of incorporation or by such by-laws. The
Merger shall have the effects specified in the DGCL.
Section 1.2 Effective Time. Fremont and the Company shall
cause a certificate of merger to be executed and filed on the Closing Date (or
on such other date as Fremont and the Company may agree) with the Secretary of
State of Delaware as provided in the DGCL. The Merger shall become effective at
such time as such certificate of merger is duly filed with the Secretary of
State of the State of Delaware or such other time as is agreed upon by the
parties and specified in the certificate of merger.
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Section 1.3 Closing. The closing of the Merger shall take
place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 333 West
Wacker Drive, Chicago, IL at 10:00 a.m. on a date to be specified by the parties
which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VII hereof (the "Closing Date"),
unless another date, time or place is agreed to in writing by the parties
hereto.
Section 1.4 Directors and Officers of the Surviving
Corporation. The directors of Sub at the Effective Time shall, from and after
the Effective Time, be the directors of the Surviving Corporation until their
successors shall have been duly elected or appointed or qualified or until their
earlier death, resignation or removal in accordance with the certificate of
incorporation and the by-laws of the Surviving Corporation. The officers of the
Company at the Effective Time shall, from and after the Effective Time, be the
officers of the Surviving Corporation until their successors shall have been
duly elected or appointed or qualified or until their earlier death, resignation
or removal in accordance with the certificate of incorporation and the by-laws
of the Surviving Corporation. If, at the Effective Time, a vacancy shall exist
on the Company Board of Directors or in any office of the Surviving Corporation,
such vacancy may thereafter be filled in the manner provided by law.
Section 1.5 Subsequent Actions. If at any time after the
Effective Time the Surviving Corporation will consider or be advised that any
deeds, bills of sale, instruments of conveyance, assignments, assurances or any
other actions or things are necessary or desirable to vest, perfect or confirm
of record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of the Company
or Sub acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either the Company or Sub, all
such deeds, bills of sale, instruments of conveyance, assignments and assurances
and to take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
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Section 1.6 Stockholders' Meeting.
(a) In order to consummate the Merger, the Company, acting
through its Board of Directors, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special or annual meeting of its stockholders (the "Special
Meeting") as promptly as practicable for the purpose of
considering and taking action upon the approval of the Merger, the
approval and adoption of this Agreement, the approval of the
Amendment of the Certificate of Incorporation of the Company (the
"Amendment") as described in Section 3.1 hereof, the approval of
the Stock Purchase and the approval of the creation of a new stock
option plan of the Company having a share reserve of 940,000
shares of Common Stock (the "New Option Plan") in the form
attached hereto as Exhibit A;
(ii) prepare and file with the SEC a preliminary
Proxy Statement relating to the Merger, this Agreement, the
Amendment, the Stock Purchase and the New Option Plan and use its
reasonable best efforts to obtain and furnish the information
required to be included by the SEC in the Proxy Statement and in
the Registration Statement on Form S-4 in which the Proxy
Statement shall be included (the "Form S-4") and, after
consultation with Fremont, to respond promptly to any comments
made by the SEC with respect to the Form S-4 and cause a
definitive Proxy Statement, including any amendment or supplement
thereto, to be mailed to its stockholders, provided that no
amendment or supplement to such Proxy Statement will be made by
the Company without consultation with Fremont and its counsel;
(iii) subject to Section 6.5 hereof, include in the
Proxy Statement the recommendation of the Company Board of
Directors that stockholders of the Company vote in favor of the
approval of the Merger, the approval and adoption of this
Agreement, the approval of the Amendment, the approval of the
Stock Purchase and the approval of the New Option Plan;
(iv) subject to Section 6.5 hereof, use its
reasonable best efforts to solicit from holders of Shares proxies
in favor of the Merger, the Agreement, the Amendment, the Stock
Purchase and the New Option Plan.
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(b) Fremont will provide the Company with the information
concerning Fremont and Sub required to be included in the Proxy Statement.
Fremont shall vote, or cause to be voted, all of the Shares then owned by it,
Sub or any of its other Subsidiaries or Affiliates in favor of the approval of
the Merger, the approval and adoption of this Agreement, and the approval of the
Amendment, the Stock Purchase and the New Option Plan.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS
Section 2.1 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the Company, Sub or
any holder of any Shares or any shares of capital stock of Sub:
(a) Each share of capital stock of Sub issued and outstanding
immediately prior to the Effective Time shall automatically be cancelled and
retired and shall cease to exist.
(b) Each Share that is owned by Sub, Fremont or any Subsidiary or
Affiliate of Sub or Fremont shall automatically be cancelled and retired and
shall cease to exist, and no cash, Shares or other consideration shall be
delivered or deliverable in exchange therefor.
(c) Except as otherwise provided herein and subject to Section
2.4, each issued and outstanding Share (other than any such Shares to be
cancelled pursuant to Section 2.1(b) and any Dissenting Shares) shall be
converted into the following (the "Merger Consideration"):
(i) for each Share with respect to which an election
to retain a Share has been effectively made and not revoked or
lost, pursuant to Sections 2.3(c), (d) and (e) (such Shares,
"Electing Shares"), the right to retain one fully paid and
nonassessable Share (a "Non-Cash Election Share"); and
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(ii) for each Share (other than Electing Shares),
the right to receive in cash from the Company following the Merger
an amount equal to $25.00 (the "Cash Election Price").
(d) As of the Effective Time, all Shares (other than Shares
referred to in Section 2.1(c)(i) (but subject to Section 2.4) and Section 2.2)
issued and outstanding immediately prior to the Effective Time shall no longer
be outstanding and shall automatically be cancelled and retired and shall cease
to exist, and each holder of a certificate representing any such Shares shall,
to the extent such certificate represents such Shares, cease to have any rights
with respect thereto, except the right to receive cash, including cash in lieu
of fractional shares to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.6.
Section 2.2 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary,
Dissenting Shares shall not be converted into the right to receive the Merger
Consideration, but, instead, the holders thereof shall be entitled only to such
rights as are granted by the DGCL; provided, however, that if any holder of
Shares who demands appraisal of his Shares under the DGCL effectively withdraws
or loses (through failure to perfect or otherwise) his right to appraisal, then
as of the Effective Time or the occurrence of such event, whichever later
occurs, such holder's Shares shall automatically be converted and represent only
the right to receive the Merger Consideration set forth in Section 2.1(c) of
this Agreement, but subject to Section 2.4 of this Agreement, without any
interest thereon, upon surrender of the certificate or certificates representing
such Shares pursuant to Section 2.6 hereof.
(b) The Company shall give Fremont (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands and any other instruments served pursuant to the
DGCL and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company shall not, except with the prior written consent of Fremont,
make any payment with respect to any such demands for appraisal or settle or
offer to settle any such demands.
Section 2.3 Share Elections.
(a) Each person who, on or prior to the Election Date referred to
in Section 2.3(c) below, is a record holder of Shares will be entitled, with
respect to all or any portion of his Shares, to make an unconditional election
(a "Non-Cash
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Election") on or prior to such Election Date to retain Non-Cash Election Shares,
on the basis hereinafter set forth.
(b) Not later than five (5) business days prior to the mailing of
the definitive Proxy Statement, Fremont shall appoint a nationally recognized
bank or trust company (or another entity reasonably satisfactory to the Company)
to act as exchange agent (the "Exchange Agent") for the payment of the Merger
Consideration.
(c) Fremont shall prepare a form of election, which form shall be
subject to the reasonable approval of the Company (the "Form of Election"), and
such Form of Election shall be mailed with the Proxy Statement to the record
holders of Shares as of the record date for the Stockholders Meeting, which Form
of Election shall be used by each record holder of Shares who wishes to elect to
retain Non-Cash Election Shares for any or all Shares held, subject to the
provisions of Section 2.4 hereof, by such holder. The Company will use its
reasonable best efforts to make the Form of Election and the Proxy Statement
available to all persons who become holders of Shares during the period between
such record date and the date of the Stockholders Meeting (the "Election Date").
Any such holder's election to retain Non-Cash Election Shares shall have been
properly made only if the Exchange Agent shall have received at its designated
office, by 5:00 p.m., New York City time on the Election Date, a Form of
Election properly completed and signed and accompanied by certificates for the
Shares to which such Form of Election relates, duly endorsed in blank or
otherwise in form acceptable for transfer on the books of the Company (or by an
appropriate guarantee of delivery of such certificates as set forth in such Form
of Election from a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States, provided such certificates are in fact delivered to the Exchange Agent
within five NASDAQ trading days after the date of execution of such guarantee of
delivery).
(d) Any Form of Election may be revoked by the stockholder
submitting it to the Exchange Agent only by written notice received by the
Exchange Agent prior to 5:00 p.m., New York City time, on the Election Date. In
addition, all Forms of Election shall automatically be revoked if the Exchange
Agent is notified in writing by Fremont and the Company that the Merger has been
abandoned. If a Form of Election is revoked, the certificate or certificates (or
guarantees of delivery, as appropriate) for the Shares to which such Form of
Election relates shall be promptly returned by the Exchange Agent to the
stockholder submitting the same to the Exchange Agent.
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(e) The determination of the Exchange Agent shall be binding as to
(i) whether or not elections to retain Non-Cash Election Shares have been
properly made or revoked pursuant to this Section 2.3 with respect to Shares and
(ii) when elections and revocations were received by the Exchange Agent. If the
Exchange Agent determines that any election to retain Non-Cash Election Shares
was not properly made with respect to Shares, such Shares shall be treated by
the Exchange Agent as Shares which were not Electing Shares at the Effective
Time, and, subject to Section 2.4, such Shares shall be exchanged in the Merger
for cash pursuant to Section 2.1(c)(ii). The Exchange Agent shall also make all
computations as to the allocation and the proration contemplated by Section 2.4,
and any such computation shall be conclusive and binding on the holders of
Shares. The Exchange Agent may, with the mutual agreement of Fremont and the
Company, make such rules as are consistent with this Section 2.3 for the
implementation of the elections provided for herein as shall be necessary or
desirable to effect fully such elections.
Section 2.4 Proration.
(a) Notwithstanding anything in this Agreement to the contrary,
the aggregate number of Shares to be converted into the right to retain Shares
at the Effective Time shall be equal to 2,400,000 shares (the "Non-Cash Election
Number") (excluding for this purpose any Shares to be cancelled pursuant to
Section 2.1(b)).
(b) If the number of Electing Shares exceeds the Non-Cash Election
Number, then each Electing Share shall be converted into the right to retain
Non-Cash Election Shares and receive cash in accordance with the terms of
Section 2.1(c) in the following manner:
(i) A proration factor (the "Non-Cash Proration
Factor") shall be determined by dividing the Non-Cash Election
Number by the total number of Electing Shares;
(ii) The number of Electing Shares covered by each
Non-Cash Election to be converted into the right to retain
Non-Cash Election Shares shall be determined by multiplying the
Non-Cash Proration Factor by the total number of Electing Shares
covered by such Non-Cash Election;
(iii) All Electing Shares, other than those shares
converted into the right to receive Non-Cash Election Shares in
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accordance with Section 2.4(b)(ii), shall be converted into cash
(on a consistent basis among stockholders who made the election
referred to in Section 2.1(c)(i), pro rata in accordance with the
number of shares as to which they made such election) as if such
shares were not Electing Shares in accordance with terms of
Section 2.1(c)(ii).
(c) If the number of Electing Shares is less than the Non-Cash
Election Number, then:
(i) all Electing Shares shall be converted into the
right to retain Non-Cash Election Shares in accordance with the
terms of Section 2.1(c)(i);
(ii) additional Shares other than Electing Shares
and Dissenting Shares shall be converted into the right to retain
Non-Cash Election Shares in accordance with the terms of 2.1(c)(i)
in the following manner:
(A) a proration factor (the "Cash Proration
Factor") shall be determined by dividing (x)
the Non-Cash Election Number less the number
of Electing Shares, by (y) the total number
of Shares issued and outstanding immediately
prior to the Effective Time other than
Electing Shares and Dissenting Shares; and
(B) the number of Shares in addition to
Electing Shares to be converted into the
right to retain Non-Cash Election Shares
shall be determined by multiplying the Cash
Proration Factor by the total number of
Shares issued and outstanding immediately
prior to the Effective Time other than
Electing Shares and Dissenting Shares.
(iii) subject to Section 2.2, Shares subject to
clause (ii) of this paragraph (c) shall be converted into the
right to retain Non-Cash Election Shares in accordance with
Section 2.1(c)(i) (on a consistent basis among stockholders who
held Shares as to which they did not make the election referred to
in Section 2.1(c)(i), pro rata in
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accordance with the number of shares as to which they did not make
such election).
(d) If the number of Electing Shares equals the Non-Cash Election
Number, then there shall be no proration pursuant to this Section 2.4.
Section 2.5 Stock Options.
Stock Options outstanding as of the Effective Time shall remain
outstanding subject to the terms of such Stock Option and the applicable Company
Stock Plan. The Company will take all actions reasonably necessary to provide
that, after June 30, 1999, no new offering period will be commenced under the
Company's 1996 Employee Stock Purchase Plan.
Section 2.6 Surrender of Shares; Transfer Books.
(a) As soon as reasonably practicable as of or after the Effective
Time, the Company shall deposit with the Exchange Agent, for the benefit of the
holders of Shares, the cash portion of the Merger Consideration for exchange in
accordance with this Article 2. Such funds shall be invested by the Exchange
Agent as directed by the Company. Any net profit resulting from, or interest or
income produced by, such investments will be payable to the Company.
(b) Promptly after the Effective Time, the Exchange Agent shall
mail to each holder of Shares of record at the Effective Time who did not submit
a valid Form of Election in accordance with Section 2.3 hereof a letter of
transmittal and instruction for use in surrendering the certificates for such
shares in return for the Merger Consideration. Each holder of an outstanding
certificate or certificates which prior thereto represented Shares shall, upon
surrender to the Exchange Agent of such certificate or certificates and
acceptance thereof by the Exchange Agent, be entitled to a certificate or
certificates representing the number of full Non-Cash Election Shares, if any,
to be retained by the holder thereof pursuant to this Agreement and the amount
of cash, if any, into which the number of Shares previously represented by such
certificate or certificates surrendered shall have been converted pursuant to
this Agreement. The Exchange Agent shall accept such certificates upon
compliance with such reasonable terms and conditions as the Exchange Agent may
impose to effect an orderly exchange thereof in accordance with normal exchange
practices. After the Effective Time, there shall be no further transfer on the
records of the Company or its transfer agent of certificates representing Shares
which have been converted, in whole or in part, pursuant to this Agreement into
the right to receive cash, and if such
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certificates are presented to the Company for transfer, they shall be against
delivery of cash and, if appropriate, certificates for Non-Cash Election Shares.
If any certificate of such Non-Cash Election Shares is to be issued in, or if
cash is to be remitted to, a name other than that in which the certificate for
Shares surrendered for exchange is registered, it shall be a condition of such
exchange that the certificate so surrendered shall be properly endorsed, with
signature guaranteed, or otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Company or its transfer agent
any transfer or other taxes required by reason of the issuance of certificates
for such Non-Cash Election Shares in a name other than that of the registered
holder of the certificate surrendered, or establish to the satisfaction of the
Company or its transfer agent that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.6(b), each certificate for
Shares shall be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender the Merger Consideration as
contemplated by Section 2.1. No interest will be paid or will accrue on any cash
payable as Merger Consideration or in lieu of any fractional shares of Non-Cash
Election Shares.
(c) No dividends or other distributions with respect to Non-Cash
Election Shares with a record date after the Effective Time shall be paid to the
holder of any unsurrendered certificate for Shares with respect to the Non-Cash
Election Shares represented thereby and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 2.6(e) until the
surrender of such certificate in accordance with this Article 2. Subject to the
effect of applicable laws, following surrender of any such certificate, there
shall be paid to the holder of the certificate representing whole Non-Cash
Election Shares issued in connection therewith, without interest, (i) at the
time of such surrender the amount of any cash payable in lieu of a fractional
share of Non-Cash Election Shares to which such holder is entitled pursuant to
Section 2.6(e) and the proportionate amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole Non-Cash Election Shares, and (ii) at the appropriate payment date,
the proportionate amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and a payment date
subsequent to such surrender payable with respect to such whole Non-Cash
Election Shares.
(d) All cash paid upon the surrender for exchange of certificates
representing Shares in accordance with the terms of this Article 2 (including
any cash paid pursuant to Section 2.6(e)) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the Shares (and the
associated Rights) exchanged for cash theretofore represented by such
certificates.
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(e) With respect to fractional shares:
(i) No certificates or scrip representing fractional
shares of Non-Cash Election Shares shall be issued in connection
with the Merger, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a
stockholder of the Company after the Merger; and
(ii) Notwithstanding any other provision of this
Agreement, each record holder of Shares exchanged pursuant to the
Merger who would otherwise have been entitled to receive a
fraction of a Non-Cash Election Share (after taking into account
all Shares delivered by such holder) shall receive, in lieu
thereof, a cash payment (without interest) in lieu of such
fractional shares in an amount equal to the Cash Election Price.
(f) In the event any certificate for Shares shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed certificate, upon the making of an affidavit of that fact by
the holder thereof, such Non-Cash Election Shares and cash (and cash in lieu of
fractional shares) as may be required pursuant to the foregoing provisions of
this Section 2.6; provided, however, that Fremont or the Surviving Corporation
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate to deliver a
bond in such sum as it may reasonably direct against any claim that may be made
against Fremont, the Surviving Corporation or the Exchange Agent with respect to
the certificate alleged to have been lost, stolen or destroyed.
(g) Any portion of the Merger Consideration deposited with the
Exchange Agent pursuant to this Section 2.6 (the "Exchange Fund") which remains
undistributed to the holders of the certificates representing Shares for six
months after the Effective Time shall be delivered to the Company upon demand,
and any holders of Shares prior to the Merger who have not theretofore complied
with this Article 2 shall thereafter look only to the Company and only as
general creditors thereof for payment of their claim for cash, if any, Non-Cash
Election Shares, if any, any cash in lieu of fractional shares of Non-Cash
Election Shares, or any dividends or distributions with respect to Non-Cash
Election Shares, as applicable, to which such holders my be entitled.
(h) None of Fremont, Sub, the Company nor the Exchange Agent shall
be liable to any person in respect of any shares of Non-Cash Election Shares
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(or dividends or distributions with respect thereto) or cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any certificates representing Shares shall
not have been surrendered prior to one year after the Effective Time (or
immediately prior to such earlier date on which any cash, if any, any cash in
lieu of fractional shares of Non-Cash Election Shares, or any dividends or
distributions with respect to Non-Cash Election Shares in respect of such
certificate would otherwise escheat to or become the property of any
Governmental Entity), any such cash, dividends or distributions in respect of
such certificate shall, to the extent permitted by applicable law, become the
property of the Company, free and clear of all claims or interest of any person
previously entitled thereto.
ARTICLE III
STOCK PURCHASE AND SALE
Section 3.1 Amendment of Certificate of Incorporation. The
Company shall take all actions necessary, subject to the required approval of
the stockholders of the Company, to file with the Secretary of State of the
State of Delaware, immediately prior to the Effective Time, the Amendment to the
Certificate of Incorporation of the Company, in the form attached hereto as
Exhibit B, creating a new class of stock of the Company, to be entitled
"Preferred Stock," authorizing for issuance 5,000,000 shares of such Preferred
Stock and designating 2,000,000 of such shares as "Series A Convertible
Preferred Stock" (the "Series A Preferred").
Section 3.2 Purchase and Sale of Preferred Shares.
(a) Upon the terms and subject to the conditions of this
Agreement, the Company shall sell to Fremont, and Fremont shall purchase from
the Company, an aggregate of 1,060,000 shares of Series A Preferred (the
"Preferred Shares").
(b) The Company represents and warrants that the Preferred Shares,
when issued in accordance with the terms hereof, will be validly issued, fully
paid and nonassessable and will be issued free of preemptive rights, options,
liens, encumbrances or security interests.
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Section 3.3 Purchase Price. The purchase price for the Preferred
Shares shall be $100 per share, or an aggregate of $106,000,000 (the "Purchase
Price").
Section 3.4 Closing. Upon the terms and subject to the conditions
of this Agreement, the sale and purchase of the Preferred Shares contemplated by
this Agreement shall take place on the Closing Date, as such date may be
determined in accordance with Section 1.3.
Section 3.5 Closing Deliveries by the Company. At the Closing, the
Company shall deliver or cause to be delivered to Fremont:
(a) stock certificates evidencing the Preferred Shares; and
(b) a receipt for the amounts paid to the Company pursuant to
Section 3.6 hereto.
Section 3.6 Closing Deliveries by Fremont. At the Closing, Fremont
shall deliver to the Company, in immediately available funds by check or by wire
transfer to an account at a United States bank designated in writing by the
Company, which designation shall be delivered to Fremont at least three (3)
business days prior to the Closing, an amount equal to the Purchase Price.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule prepared and signed
by the Company and delivered to Fremont simultaneously with the execution
hereof, the Company represents and warrants to Fremont and Sub that as of the
date hereof (or, if made as of a specified date, as of such date):
Section 4.1 Organization; Qualification. The Company (i) is a
corporation duly incorporated, validly existing and in good standing under the
laws of its state of incorporation; (ii) has full corporate power and authority
to carry on its business as it is now being conducted and to own the properties
and assets it now owns; and (iii) is duly qualified or licensed to do business
as a foreign corporation in good standing in every jurisdiction in which such
qualification is required or, if the Company is not so qualified in any such
jurisdiction, it can become so qualified in such jurisdiction without any
Company Material Adverse Effect. As used in this Agreement,
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"Company Material Adverse Effect" or "Company Material Adverse Change" means any
change(s) or effect(s) that, individually or in the aggregate, are materially
adverse to the financial condition, business or results of operations of the
Company and the Company Subsidiaries, taken as a whole, excluding in all cases:
(i) events or conditions generally affecting the industry in which the Company
and the Company Subsidiaries operate or arising from changes in general business
or economic conditions; (ii) any change or effect resulting from any change in
law or generally accepted accounting principles, which generally affects
entities such as the Company; and (iii) any change or effect resulting from
compliance by the Company with the terms of this Agreement or any agreement
contemplated hereby.
Section 4.2 Subsidiaries and Affiliates. Section 4.2 of the
Disclosure Schedule sets forth the name, jurisdiction of incorporation and
capitalization of each Company Subsidiary and the jurisdictions in which each
Company Subsidiary is qualified to do business and the Company does not own,
directly or indirectly, any capital stock or other equity securities of any
other corporation or have any direct or indirect equity or ownership interest in
any other business, other than publicly traded securities constituting less than
five percent of the outstanding equity of the issuing entity. All the
outstanding capital stock of each Company Subsidiary is owned directly or
indirectly by the Company free and clear of all Liens and is validly issued,
fully paid and nonassessable, and there are no outstanding options, rights or
agreements of any kind relating to the issuance, sale or transfer of any capital
stock or other equity securities of any such Company Subsidiary to any person
except the Company. Each Company Subsidiary (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of its state
of incorporation; (ii) has full corporate power and authority to carry on its
business as it is now being conducted and to own the properties and assets it
now owns; and (iii) is duly qualified or licensed to do business as a foreign
corporation in good standing in every jurisdiction in which such qualification
is required or, if a Company Subsidiary is not so qualified in any such
jurisdiction, it can become so qualified in such jurisdiction without a Company
Material Adverse Effect. The Company has heretofore delivered to Fremont
complete and correct copies of the certificate of incorporation and by-laws or
comparable charter documents of each Company Subsidiary, as presently in effect.
Section 4.3 Capitalization.
(a) The authorized capital stock of the Company consists of
50,000,000 Shares. As of March 26, 1999, (i) 18,597,027 Shares are issued and
outstanding, (ii) no Shares were issued and held in the treasury of the Company,
(iii) 600,000 Shares were reserved for issuance upon exercise of Company Options
under the
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Company's 1993 Stock Option Plan (the "1993 Plan") and (iv) 400,000
shares were reserved for issuance under the Company's 1996 Employee Stock
Purchase Plan (the "1996 Plan"). All the outstanding shares of the Company's
capital stock are, and all Shares which may be issued pursuant to the exercise
of outstanding Company Options will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
non-assessable. There is no Voting Debt of the Company or any Company Subsidiary
issued and outstanding. Except as set forth above and except for (i) the Rights,
(ii) the Transactions, and (iii) changes in the number of outstanding Shares
since March 26, 1999, resulting from the exercise of Stock Options outstanding
as of March 26, 1999, under the 1993 Plan, and the exercise of options to
purchase up to 11,064 shares under the 1993 Plan (x) there are no shares of
capital stock of the Company authorized, issued or outstanding; (y) there are no
existing options, warrants, calls, pre-emptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character, relating to
the issued or unissued capital stock of the Company or any Company Subsidiary,
obligating the Company or any Company Subsidiary to issue, transfer or sell or
cause to be issued, transferred or sold any shares of capital stock or Voting
Debt of, or other equity interest in, the Company or any Company Subsidiary or
securities convertible into or exchangeable for such shares or equity interests,
or obligating the Company or any Company Subsidiary to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment and (z) there are no outstanding contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any Shares, or the capital stock, of the Company, or any
Company Subsidiary or Affiliate of the Company or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Company Subsidiary or any other entity.
(b) There are no voting trusts or other agreements or
understandings to which the Company or any Company Subsidiary is a party with
respect to the voting of the capital stock of the Company or any of the Company
Subsidiaries.
(c) No material indebtedness of the Company or any Company
Subsidiary contains any restriction upon (i) the prepayment of any such
indebtedness of the Company or any Company Subsidiary, (ii) the incurrence of
indebtedness by the Company or any Company Subsidiary or (iii) the ability of
the Company or any Company Subsidiary to grant any lien on the properties or
assets of the Company or any Company Subsidiary.
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Section 4.4 Authorization; Validity of Agreement; Company Action.
The Company has full corporate power and authority to execute and deliver this
Agreement and assuming the required approval of the stockholders of the Company
as contemplated by Section 1.6 hereof) to consummate the Transactions. The
execution, delivery and performance by the Company of this Agreement and the
consummation by it of the Transactions have been duly authorized by the Company
Board of Directors and, except for obtaining the approval of its stockholders as
contemplated by Section 1.6, no other corporate action on the part of the
Company is necessary to authorize the execution and delivery by the Company of
this Agreement or the consummation by it of the Transactions. This Agreement has
been duly executed and delivered by the Company and, assuming due and valid
authorization, execution and delivery thereof by the other parties thereto, this
Agreement is a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.
Section 4.5 Board Approvals Regarding Transactions. The Company
Board of Directors, at a meeting duly called and held, has unanimously (i)
determined that each of the Agreement, the Merger, the Stock Purchase, the
Amendment and the New Stock Option Plan are fair to and in the best interests of
the stockholders of the Company, (ii) approved the Transactions, and (iii)
resolved to recommend (subject to Section 6.5 hereof) that the stockholders of
the Company approve and adopt this Agreement, the Merger, the Amendment, the
Stock Purchase and the New Stock Option Plan and none of the aforesaid actions
by the Company Board of Directors has been amended, rescinded or modified. The
action taken by the Company Board of Directors constitutes approval of the
Merger, the Amendment, the Stock Purchase and the other Transactions by the
Company Board of Directors under the provisions of Section 203 of the DGCL such
that Section 203 of the DGCL does not apply to this Agreement or the other
Transactions and, to the Company's knowledge, no other state takeover statute is
applicable to the Merger or the other Transactions.
Section 4.6 Consents and Approvals; No Violations. Except for such
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of the Securities Act, the Exchange
Act, the HSR Act, the DGCL and any applicable state securities or blue sky laws,
none of the execution, delivery or performance of this Agreement by the Company,
the consummation by the Company of the Transactions or compliance by the Company
with any of the provisions hereof will (i) conflict with or result in any breach
of any provision of the certificate of incorporation, the by-laws or similar
organizational documents of the Company or any Company Subsidiary, (ii) require
any filing with, or permit, authorization, consent or approval of, any
Governmental Entity or any private third party, (iii) result in a violation or
breach of, or constitute (with or without due notice or the passage of time or
both) a
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default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any Company
Agreement, or (iv) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company, any Company Subsidiary or any of their
properties or assets, excluding from the foregoing clauses (ii), (iii) and (iv)
such failures to make such filings, or obtain such permits, authorizations,
consents or approvals or such violations, breaches or defaults which would not
have a Company Material Adverse Effect.
Section 4.7 SEC Reports and Financial Statements. The Company has
filed with the SEC, and has heretofore made available to Fremont, true and
complete copies of, the Company SEC Documents. As of their respective dates or,
if amended, as of the date of the last such amendment filed prior to the date
hereof, the Company SEC Documents, including, without limitation, any financial
statements or schedules included therein (a) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading and (b)
complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder. None of the Company Subsidiaries is
required to file any forms, reports or other documents with the SEC. The
Financial Statements have been prepared from, and are in accordance with, in all
material respects, the books and records of the Company and the Company
Subsidiaries, on a consolidated basis, comply in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited financial statements, as permitted by Rule
10.01 of Regulation S-X promulgated under the Exchange Act) applied on a
consistent basis during the periods involved (except as may be stated in the
notes thereto) and fairly present, in all material respects, the consolidated
financial position and the consolidated results of operations and cash flows
(and changes in financial position, if any) of the Company and the Company
Subsidiaries, on a consolidated basis, as of the times and for the periods
referred to therein (subject, in the case of unaudited financial statements, to
customary year-end audit adjustments).
Section 4.8 No Undisclosed Liabilities. Except (a) as disclosed in
the Financial Statements or the Company SEC Documents filed prior to the date
hereof, (b) for liabilities and obligations incurred in the ordinary course of
business and consistent with past practice since the Balance Sheet Date and (c)
liabilities incurred in connection with the Transactions, neither the Company
nor any Company Subsidiary has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that have, or would be
reasonably likely to have, a Company Material Adverse Effect.
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To the knowledge of the Company, the reserves reflected in the Financial
Statements are adequate, appropriate and reasonable and have been calculated in
a consistent manner.
Section 4.9 Inventory. All of the inventories of the Company and
each Company Subsidiary, whether reflected in the Balance Sheet or otherwise,
consist, in all material respects, of a quality and quantity usable and salable
in the ordinary and usual course of business, except for items of obsolete
materials and materials of below-standard quality, all of which have been
written off or written down on the Balance Sheet to fair market value or for
which reserves believed by the Company to be adequate have been provided
therein. All material inventories not written off have been priced at the lower
of average cost or market. The quantities of each type of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive in any material
respect, but are reasonable and warranted in the present circumstances of the
Company and each Company Subsidiary. All work in process and finished goods
inventory is free of any material defect or other material deficiency.
Section 4.10 Absence of Certain Changes. Since the Balance Sheet
Date, except as disclosed in the Company SEC Documents filed prior to the date
hereof, (i) the Company and each Company Subsidiary has conducted its respective
business only in the ordinary and usual course, (ii) there has not occurred any
events or changes (including the incurrence of any liabilities of any nature,
whether or not accrued, contingent or otherwise or any changes in the Company's
relationships with its customers and suppliers) having or reasonably likely to
have a Company Material Adverse Effect, and (iii) the Company has not taken any
action which would have been prohibited under Section 6.1 if such section
applied to the period between the Balance Sheet Date and the date of execution
of this Agreement.
Section 4.11 Litigation. Except as disclosed in the Company SEC
Documents filed prior to the date hereof, there is no action, suit, inquiry,
proceeding or investigation by or before any court or governmental or other
regulatory or administrative agency or commission pending or, to the knowledge
of the Company, threatened against or involving the Company or any Company
Subsidiary which, if determined or resolved adversely to the Company or any
Company Subsidiary, would have a Company Material Adverse Effect. Neither the
Company nor any Company Subsidiary is subject to any judgment, order or decree
which may have a Company Material Adverse Effect.
Section 4.12 Employee Benefit Plans.
(a) The Disclosure Schedule contains a true and complete list of
each deferred compensation and each incentive compensation, stock purchase,
stock
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option and other equity compensation plan, program, agreement or
arrangement (the "Company Stock Plans"); each severance or termination pay,
medical, surgical, hospitalization, life insurance and other "welfare" plan,
fund or program (within the meaning of Section 3(1) of ERISA); each
profit-sharing, stock bonus or other "pension" plan, fund or program (within the
meaning of Section 3(2) of ERISA); each employment, termination or severance
agreement; and each other employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to or
required to be contributed to by the Company or by any ERISA Affiliate, or to
which the Company or an ERISA Affiliate is party, whether written or oral, for
the benefit of any employee or former employee of the Company or any Company
Subsidiary (each, a "Plan"). Neither the Company, any Company Subsidiary nor any
ERISA Affiliate has any commitment or formal plan to create any additional
employee benefit plan or modify or change any existing Plan that would affect
any employee or former employee of the Company or any Company Subsidiary, except
for modifications or changes contemplated herein or required by law as a
condition of obtaining or retaining the Company's intended ERISA, tax,
securities or accounting treatment with respect to such Plan.
(b) The Company has heretofore delivered to Fremont true and
complete copies of each Plan and any amendments thereto (or if a Plan is not a
written Plan, a description thereof), any related trust or other funding
vehicle, any reports or summaries required under ERISA or the Code and the most
recent determination letter received from the Internal Revenue Service with
respect to each Plan intended to qualify under Section 401 of the Code.
(c) No liability under Title IV or Section 302 of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to the Company or
any ERISA Affiliate of incurring any such liability, other than liability for
premiums due the PBGC (which premiums have been paid when due). Insofar as the
representation made in this Section 4.12(c) applies to Sections 4064, 4069 or
4204 of Title IV of ERISA, it is made with respect to any employee benefit plan,
program, agreement or arrangement subject to Title IV of ERISA to which the
Company or any ERISA Affiliate made, or was required to make, contributions
during the five year period ending on the last day of the most recent plan year
ended prior to the Closing Date.
(d) The PBGC has not instituted proceedings to terminate any Title
IV Plan and no condition exists that presents a material risk that such
proceedings will be instituted.
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(e) With respect to each Title IV Plan, the present value of
accrued benefits under such plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such plan's
actuary with respect to such plan, did not exceed, as of its latest valuation
date, the then current value of the assets of such plan allocable to such
accrued benefits.
(f) No Title IV Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each Title IV Plan ended prior to the Closing
Date. All contributions required to be made with respect to any Plan on or prior
to the Closing Date have been timely made.
(g) No Title IV Plan is a "multi-employer pension plan," as
defined in Section 3(37) of ERISA, nor is any Title IV Plan a plan described in
Section 4063(a) of ERISA. Neither the Company nor any ERISA Affiliate has made
or suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203 and 4205 of ERISA (or any liability
resulting therefrom has been satisfied in full).
(h) Neither the Company or any Company Subsidiary, any Plan, any
trust created thereunder, nor any trustee or administrator thereof has engaged
in a transaction in connection with which the Company or any Company Subsidiary,
any Plan, any such trust, or any trustee or administrator thereof, or any party
dealing with any Plan or any such trust could reasonably be expected to be
subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code.
(i) Each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including, but not
limited to, ERISA and the Code, except where the failure to so operate or
administer such Plan would have a Company Material Adverse Effect.
(j) Each Plan intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified, and the trusts maintained thereunder
are exempt from taxation under Section 501(a) of the Code. Each Plan intended to
satisfy the requirements of Section 501(c)(9) has satisfied such requirements.
(k) No Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees of
the
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Company or any Company Subsidiary for periods extending beyond their retirement
or other termination of service, other than (i) coverage mandated by applicable
law, (ii) death benefits under any "pension plan," or (iii) benefits the full
cost of which is borne by the current or former employee (or his beneficiary).
(l) No amounts payable under the Plans will fail to be deductible
for federal income tax purposes by virtue of Section 280G of the Code.
(m) The consummation of the Transactions will not, either alone or
in combination with another event, (i) entitle any current or former employee or
officer of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or officer.
(n) There are no pending or, to the knowledge of the Company,
threatened claims by or on behalf of any Plan, by any employee or beneficiary
covered under any such Plan, or otherwise involving any such Plan (other than
routine claims for benefits).
Section 4.13 Taxes.
(a) The Company and the Company Subsidiaries have timely filed (or
have had timely filed on their behalf) with the appropriate Tax Authorities (as
hereinafter defined) all material Tax Returns (as hereinafter defined) required
to be filed by Company and the Company Subsidiaries and such Tax Returns are
true, correct, and complete in all material respects;
(b) The Company and the Company Subsidiaries have paid, or where
payment is not yet due, have established (or have had established on their
behalf and for their sole benefit and recourse) an adequate accrual in
accordance with GAAP for the payment of, all Taxes (as hereinafter defined) for
all periods ending through the Closing Date;
(c) There are no material Liens for Taxes upon any property or
assets of the Company or the Company Subsidiaries, except for Liens for Taxes
not yet due or being contested in good faith and for which adequate reserves
have been established in accordance with GAAP;
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(d) No Federal, state, local or foreign audits, investigations,
claims or other administrative proceedings ("Audits") are presently pending with
regard to any material Taxes or material Tax Returns of the Company or the
Company Subsidiaries, and to the knowledge of Company and the Company
Subsidiaries, no Audit is threatened;
(e) The Tax Returns of the Company and the Company Subsidiaries
have been examined by the applicable Tax Authority, and for any year that a Tax
Return was examined, no material adjustments were asserted as a result of such
examination which have not been resolved and fully paid, and no issue has been
raised by any Tax Authority in any Audit of the Company or the Company
Subsidiaries that, if raised with respect to any other period not so audited,
could be expected to result in a proposed deficiency for any such period not so
audited which, if such deficiency were finally resolved against the Company or
the Company Subsidiaries, would have a Company Material Adverse Effect;
(f) There are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company or the Company
Subsidiaries, and no power of attorney granted by the Company or the Company
Subsidiaries with respect to any Taxes is currently in force;
(g) Neither the Company nor any Company Subsidiary is a party to
any agreement providing for the allocation, indemnification, or sharing of
Taxes; and
(h) Neither the Company nor any Company Subsidiary has been a
member of any "affiliated group" (as defined in section 1504(a) of the Code) and
is not subject to Treas. Reg. 1.1502-6 for any period.
Section 4.14 Title to Properties; Encumbrances. Each of the
Company and the Company Subsidiaries has good, valid and marketable title to all
the material properties and assets which it purports to own (real, personal and
mixed, tangible and intangible), including, without limitation, all the
properties and assets reflected in the Balance Sheet (except for property
disposed of since the Balance Sheet Date in the ordinary course of business and
consistent with past practice), and all the material properties and assets
purchased by the Company and the Company Subsidiaries since the Balance Sheet
Date, which subsequently acquired material properties and assets (other than
inventory and short term investments) are listed in the Disclosure Schedule. All
properties and assets reflected in the Balance Sheet are free and clear of all
Liens
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except, with respect to all such properties and assets, (a) Liens shown on the
Balance Sheet and Liens incurred in connection with the purchase of property
and/or assets, if such purchase was effected after the date of the Balance
Sheet, with respect to which no default exists; (b) Liens which do not
materially detract from the value or impair the use of the property subject
thereto, or materially impair the operations of the Company or any Company
Subsidiary; and (c) Liens for current taxes not yet due. The rights, properties
and other assets presently owned, leased or licensed by the Company and the
Company Subsidiaries and described elsewhere in this Agreement include all
rights, properties and other assets reasonably necessary to permit the Company
and the Company Subsidiaries to conduct their businesses in all material
respects in the same manner as their businesses have been conducted prior to the
date hereof.
Section 4.15 Plant and Equipment. The plants, structures and
equipment of the Company and each Company Subsidiary are in reasonably good
operating condition and repair, ordinary wear and tear excepted, and are
reasonably adequate for the uses to which they are being put. None of such
plants, structures or equipment are in need of maintenance or repairs except for
ordinary, routine maintenance and repairs which are not material in nature or
cost.
Section 4.16 Environmental Laws. Except as disclosed in the
Company SEC Documents filed prior to the date hereof, (a) the Company and each
Company Subsidiary are in compliance in all respects with all Environmental
Laws, including, but not limited to, compliance with any permits or other
governmental authorizations or the terms and conditions thereof except where the
failure to so comply would not have a Company Material Adverse Effect; (b)
neither the Company nor any Company Subsidiary has received any communication or
notice, whether from a Governmental Entity or otherwise, alleging any violation
of or noncompliance with any Environmental Laws by the Company any Company
Subsidiary or for which the any of them is responsible, and there is no pending
or, to the Company's knowledge, threatened Environmental Claim, except where
such Environmental Claim would not have a Company Material Adverse Effect or
otherwise require disclosure in the Company SEC Documents; and (c) to the
Company's knowledge, there are no past or present facts or circumstances that
could form the basis of any Environmental Claim against the Company or any
Company Subsidiary or against any person or entity whose liability for any
Environmental Claim the Company or any Company Subsidiary has retained or
assumed either contractually or by operation of law, except where such
Environmental Claim, if made, would not have a Company Material Adverse Effect
or otherwise require disclosure in the Company SEC Documents. All material
permits and other governmental authorizations currently held or required to be
held by the Company and the Company Subsidiaries pursuant to any Environmental
Laws are identified in the
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Disclosure Schedule. The Company has provided to Fremont all material
assessments, reports, data, results of investigations or audits, and other
information that is in the possession of the Company regarding environmental
matters pertaining to, or the environmental condition of the business of, the
Company and the Company Subsidiaries, or the compliance (or noncompliance) by
the Company or any Company Subsidiary with any Environmental Laws.
Section 4.17 Intellectual Property.
(a) The Company owns or has the right to use all the Company
Intellectual Property, free and clear of all Liens, except where the failure to
own or posses such Company Intellectual Property would not have a Company
Material Adverse Effect. The Company or one of the Company Subsidiaries is
listed in the records of the appropriate United States, state or foreign agency
as the sole owner of record for all material applications, registrations or
patents included in the Company Intellectual Property, and all of the foregoing
are listed on Section 4.17(a) of the Disclosure Schedule and are validly
subsisting.
(b) Section 4.17(b) of the Disclosure Schedule sets forth a list
of all license agreements under which the Company or any of the Company
Subsidiaries has granted the right to use the Company Intellectual Property or
received the right to use any Intellectual Property of any third party, and the
Company is not in default under any such license.
(c) No person has a right to receive a royalty or similar payment
in respect of any item of the Company Intellectual Property pursuant to any
contractual arrangements entered into by the Company or otherwise. To the
knowledge of the Company, no former or present employees, officers or directors
of the Company hold any right, title or interest, directly or indirectly, in
whole or in part, in or to any of the Company Intellectual Property.
(d) To the knowledge of the Company, the conduct of the business
of the Company does not violate or infringe upon any Intellectual Property right
of any third party, and there is no pending or, to the knowledge of the Company,
threatened opposition, interference, re-examination, cancellation, claim of
invalidity or other legal or governmental proceeding in any jurisdiction
involving any of the Company Intellectual Property. There are no claims or suits
pending or, to the knowledge of the Company, threatened, and the Company has
received no written notice of any claim or suit (i) alleging that the conduct of
the Company's business infringes upon or constitutes the unauthorized use of the
proprietary rights of any third party or
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(ii) challenging the ownership, use, validity or enforceability of the Company
Intellectual Property which, if adversely determined, would have a Company
Material Adverse Effect. To the knowledge of the Company, none of the Company
Intellectual Property of the Company is being violated or infringed upon by any
third party. There are no settlements, consents, judgments, orders or other
agreements which restrict the Company's rights to use any of the Company
Intellectual Property.
(e) The Company has taken reasonable steps to ensure that all Date
Data and Date-Sensitive Systems of the Company and the Company Subsidiaries will
be Year 2000 Compliant by December 31, 1999. As used herein: (i) "Date Data"
means any data of any type that includes date information or which is otherwise
derived from, dependent on or related to date information, (ii) "Date-Sensitive
System" means any software, microcode or hardware system or component, including
any electronic or electronically controlled system or component, that processes
any Date Data and that is installed, in development or on order by the Company
or any Company Subsidiary for its internal use, or which the Company or any
Company Subsidiary sells, leases, licenses, assigns or otherwise provides, or
the provision or operation of which the Company or any Company Subsidiary
provides the benefit, to its customers, vendors, suppliers, affiliates or any
other third party, and (iii) "Year 2000 Compliant" means (A) with respect to
Date Data, that such data is in proper format and accurate for all dates in the
twentieth and twenty-first centuries, and (B) with respect to Date-Sensitive
Systems, that each such system accurately processes all Date Data, including for
the twentieth and twenty-first centuries, without loss of any functionality,
including but not limited to calculating, comparing, sequencing, storing and
displaying such Date Data (including all leap year considerations), when used as
a stand-alone system or in combination with other software or hardware.
Section 4.18 Labor Matters. Neither the Company nor any Company
Subsidiary is a party to or bound by any collective bargaining or similar
agreement with any labor organization, or work rules or practices agreed to with
any labor organization or employee association applicable to employees of the
Company or any Company Subsidiary. None of the employees of the Company or any
Company Subsidiary are represented by any labor organization and neither the
Company or any Company Subsidiary has any knowledge of any current union
organizing activities among the employees of the Company or any Company
Subsidiary, nor does any question concerning representation exist concerning
such employees. Within the past twelve (12) months, neither the Company nor any
Company Subsidiary has received notice from any union of its desire to terminate
any collective bargaining agreements. There is no unfair labor practice charge
or complaint against the Company or any Company Subsidiary pending or, to the
knowledge of the Company or any Company Subsidiary, threatened
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before the National Labor Relations Board. There is no labor strike, dispute,
slowdown, stoppage or lockout actually pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Company Subsidiary
and during the past five (5) years there has not been any such action. There is
no grievance or arbitration proceeding which could reasonably have a Company
Material Adverse Effect. No collective bargaining agreement which is binding on
the Company or any Company Subsidiary restricts any of them from relocating or
closing any of their operations.
Section 4.19 Employment Matters.
(a) There are no employment contracts or severance agreements with
any employees of the Company or any Company Subsidiary and there are no written
personnel policies, rules or procedures applicable to employees of the Company
or any Company Subsidiary. To the Company's knowledge, no key employee or group
of employees has any plans to terminate their employment with the Company or any
Company Subsidiary as a result of the Transactions or otherwise.
(b) To the knowledge of the Company, since the enactment of the
Worker Adjustment and Retraining Notification Act of 1988 (the "WARN Act"), the
Company and the Company Subsidiaries have not effectuated (i) a "plant closing"
(as defined in the WARN Act) affecting any site of employment or one or more
facilities or operating units within any site of employment of facility of the
Company or any Company Subsidiary, or (ii) a "mass layoff" (as defined in the
WARN Act) affecting any site of employment or facility of the Company or any
Company Subsidiary; nor has the Company or any Company Subsidiary been affected
by any transaction or engaged in layoffs or employment terminations sufficient
in number to trigger application of any similar state or local law. To the
knowledge of the Company, none of the employees of the Company and the Company
Subsidiaries has suffered an "employment loss" (as defined in the WARN Act) in
the past five years.
Section 4.20 Compliance with Laws. The Company and the Company
Subsidiaries are in compliance with, and have not violated any applicable law,
rule or regulation of any United States federal, state, local, or foreign
government or agency thereof which materially affects the business, properties
or assets of the Company and the Company Subsidiaries except where such
non-compliance or violation would not have a Company Material Adverse Effect,
and no notice, charge, claim, action or assertion has been received by the
Company or any Company Subsidiary or has been filed, commenced or, to the
Company's knowledge, threatened against the Company or any Company Subsidiary
alleging any such violation, except for any matter which does not have a Company
Material Adverse Effect. All licenses, permits and approvals
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required under such laws, rules and regulations are in full force and effect
except where the failure to be in full force and effect would not have a Company
Material Adverse Effect.
Section 4.21 Contracts. Each Company Agreement is valid, binding
and enforceable and in full force and effect, except where failure to be valid,
binding and enforceable and in full force and effect would not have a Company
Material Adverse Effect, and there are no defaults thereunder, except those
defaults that would not have a Company Material Adverse Effect. Section 4.21 of
the Disclosure Schedule sets forth a true and complete list of (i) all material
Company Agreements entered into by the Company or any of the Company
Subsidiaries since November 30, 1998 and all amendments to any Company
Agreements included as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended November 30, 1998 and (ii) all non-competition
agreements imposing restrictions on the ability of the Company or any of the
Company Subsidiaries to conduct business in any jurisdiction or territory.
Section 4.22 Insurance. The Disclosure Schedule contains an
accurate and complete description of all material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by the Company
and each Company Subsidiary. All such policies are in full force and effect, all
premiums due and payable have been paid, and no notice of cancellation or
termination has been received with respect to any such policy.
Section 4.23 Opinion of Financial Advisor. The Company has
received the opinion of the Financial Advisor dated as of the date hereof, to
the effect that, as of such date and based upon and subject to the matters set
forth therein, the consideration to be received in the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point of
view. The Company has been authorized by to include such opinion in its entirety
in the Proxy Statement.
Section 4.24 Rights Agreement. The Company has taken all action
which may be necessary under the Rights Agreement, including entering into any
necessary amendments to the Rights Agreement and the approval of such amendments
by the Company Board of Directors, so that the execution of this Agreement and
any amendments thereto by the parties hereto and the consummation of the
Transactions shall not cause (i) Fremont and/or Sub to become an Acquiring
Person (as defined in the Rights Agreement), (ii) a Distribution Date or a
Shares Acquisition Date (as such terms are defined in the Rights Agreement) to
occur, or (iii) the provisions of Section 13 of the Rights Agreement to be
triggered.
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Section 4.25 Brokers or Finders. No agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee in connection
with any of the Transactions except for the Financial Advisor. True and correct
copies of all agreements between the Company and the Financial Advisor
including, without limitation, any fee arrangements have been provided to
Fremont prior to the date hereof.
Section 4.26 Transactions with Affiliates. Except to the extent
disclosed in the Company SEC Documents filed prior to the date of this Agreement
or as disclosed in Section 4.26 of the Disclosure Schedule, since November 30,
1998, there have been no transactions, agreements, arrangements or
understandings between the Company and its affiliates that would be required to
be disclosed under Item 404 of Regulation S-K under the Securities Act.
Section 4.27 Full Disclosure. The Company has not failed to
disclose to Fremont any facts material to the business, results of operations,
assets, liabilities, financial condition or prospects of the Company. No
representation or warranty by the Company in this Agreement and no statement
contained in any document (including, without limitation, financial statements
and the Disclosure Schedule), certificate, or other writing furnished or to be
furnished by the Company to Fremont or any of its representatives pursuant to
the provisions hereof or in connection with the Transactions, contains or will
contain any untrue statement of material fact or omits or will omit to state any
material fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not misleading. The
representations and warranties contained in this Section 4.27 shall not apply to
(i) financial projections or pro forma information, or (ii) any event or
condition generally affecting the industry in which the Company and the Company
Subsidiaries operate.
Section 4.28 Legal and Accounting Fees. As of February 28, 1999,
there were unpaid, incurred and accrued legal and accounting fees and
disbursements of the Company and the Company Subsidiaries aggregating
approximately $500,000.
Section 4.29 Cash and Marketable Securities. As of February 28,
1999, the Company possessed cash and marketable securities in an amount at least
equal to $103,650,000.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Fremont and Sub represent and warrant to the Company that:
Section 5.1 Organization. Fremont is a limited liability company
and Sub is a corporation and each is duly organized, validly existing and in
good standing under the laws of Delaware and has all requisite corporate or
other power and authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as now being conducted.
Each of Fremont and Sub is duly qualified or licensed to do business as a
foreign corporation in good standing in every jurisdiction in which such
qualification is required or, if Fremont or Sub is not so qualified in any such
jurisdiction, it can become so qualified in such jurisdiction without preventing
or materially delaying the consummation of the Transactions or impairing its
ability to perform its obligations hereunder.
Section 5.2 Authorization; Validity of Agreement; Necessary
Action. Each of Fremont and Sub has full corporate or other power and authority
to execute and deliver this Agreement and to consummate the Transactions. The
execution, delivery and performance by Fremont and Sub of this Agreement and the
consummation of the Merger, the Stock Purchase and the Transactions have been
duly authorized by the Board of Managers of Fremont, Board of Directors of Sub
and by Fremont as the sole stockholder of Sub, and no other corporate or other
action on the part of Fremont or Sub is necessary to authorize the execution and
delivery by Fremont and Sub of this Agreement or the consummation of the
Transactions. This Agreement has been duly executed and delivered by Fremont and
Sub, and, assuming due and valid authorization, execution and delivery hereof by
the Company, is a valid and binding obligation of each of Fremont and Sub,
enforceable against each of them in accordance with its terms.
Section 5.3 Consents and Approvals; No Violations. Except for the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of the Securities Act, the Exchange
Act, the HSR Act, the DGCL, and any applicable state securities or blue sky
laws, none of the execution, delivery or performance of this Agreement by
Fremont or Sub, the consummation by Fremont or Sub of the Transactions or
compliance by Fremont or Sub with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the respective certificate of
incorporation or formation, by-laws, operating agreement, or
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similar organizational documents of Fremont or Sub, (ii) require any filing
with, or permit, authorization, consent or approval of, any Governmental Entity
or any private third party, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Fremont, or any of its Subsidiaries or Sub is a party or by which any of them or
any of their respective properties or assets may be bound, or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Fremont, any of its Subsidiaries or any of their properties or assets, excluding
from the foregoing clauses (ii), (iii) and (iv) such violations, breaches or
defaults which would not, individually or in the aggregate, either prevent the
consummation of the Transactions or impair its ability to perform its
obligations hereunder.
Section 5.4 Sufficient Funds. Fremont has obtained, on behalf of
the Company, (i) an executed commitment letter dated March 26, 1999 from
NationsBank, N.A. and NationsBanc Montgomery Securities, LLC for a senior
secured credit facility in the aggregate amount of $125,000,000, and (ii) an
executed highly confident letter dated March 26, 1999 from NationsBanc
Montgomery Securities, LLC for a private placement offering of debt securities
which contemplates the Company receiving gross proceeds of not less than
$125,000,000 (such credit facility and private placement offering, collectively,
the "Debt Financing" and such commitment letter and highly confident letter,
collectively, the "Debt Financing Letters"). Fremont will have available to it
at the Closing the funds necessary to pay the Purchase Price for the Preferred
Shares. Assuming the accuracy of the representations and warranties of the
Company contained herein and that the Company has unrestricted cash of at least
$107,000,000 immediately prior to the Effective Time (the "Unrestricted Cash"),
the Debt Financing, the Unrestricted Cash and the proceeds received by the
Company from the issuance of the Preferred Shares to Fremont will provide
sufficient funds to (i) pay the aggregate Merger Consideration, (ii) prepay,
redeem, refinance or renegotiate the Company's existing indebtedness, if
required to consummate the Merger and the other transactions contemplated
hereby, (iii) pay the fees and expenses of the Financial Advisor and the
Company's legal counsel, (iv) consummate all of the other transactions
contemplated by this Agreement, and (v) provide sufficient working capital needs
of the Company following the Merger. True and complete copies of the Debt
Financing Letters have been furnished to the Company. Neither Fremont, Sub nor
any of their Affiliates will terminate, amend or modify in any respect the Debt
Financing Letters in a manner which will prevent the consummation of such
financing, or materially delay the timing thereof, without prior written consent
of the Company. Fremont has fully paid any and all commitment fees or other fees
required by the Debt Financing Letters to be paid as of
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the date hereof (and, subject to Section 10.1(b), will duly pay any such fees
after the date hereof). Fremont expects that it will cause the Surviving
Corporation to pay all outstanding trade payables and other liabilities of the
Company incurred prior to the Closing in the ordinary course of business
consistent with past practice. The Debt Financing Letters are valid and in full
force and effect and no event has occurred which (with or without notice, lapse
of time or both) would constitute a default on the part of Fremont or Sub
thereunder or would prevent the consummation of the Debt Financing. As of the
date hereof, Fremont does not know of any facts or circumstances that may
reasonably be expected to result in any of the conditions set forth in the Debt
Financing Letters not being satisfied. Fremont believes that the Debt Financing
will not create any liability to the directors and stockholders of the Company
under any federal or state fraudulent conveyance or transfer law. Fremont is
currently solvent and further believes that, upon the consummation of the
Transactions and any other transactions or operations involving the Surviving
Corporation hereafter, including, without limitation, the Debt Financing, the
Surviving Corporation (i) will not become insolvent, (ii) will not be left with
unreasonably small capital, (iii) will not have incurred debts beyond its
ability to pay such debts as they mature, and that the capital of the Company
will not become impaired.
Section 5.5 Share Ownership. None of Fremont, Sub or any of their
respective Affiliates or Associates beneficially owns any Shares.
Section 5.6 Sub's Capitalization and Operations. The authorized
capital stock of Sub consists of one thousand (1,000) shares of Common Stock,
one hundred (100) of which are outstanding and owned by Fremont. Sub was formed
solely for the purpose of engaging in the Transactions and has not engaged in
any business activities or conducted any operations other than in connection
with the Transactions. Except for (i) obligations or liabilities incurred in
connection with its incorporation and (ii) this Agreement, Sub has not incurred,
directly or indirectly, any obligation or liabilities of any type or kind
whatsoever, or entered into any agreements or arrangements with any Person.
Section 5.7 Brokers or Finders. Neither Fremont nor any of its
Subsidiaries or its Affiliates has entered into any agreement or arrangement
entitling any agent, broker, investment banker, financial advisor or other firm
or person to any brokers' or finders' fee or any other commission or similar fee
in connection with any of the Transactions, except for fees payable in
connection with the financing of the Transactions.
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ARTICLE VI
COVENANTS
Section 6.1 Interim Operations of the Company. The Company
covenants and agrees that prior to the Effective Time, except (i) as expressly
contemplated by this Agreement, (ii) as set forth in Section 6.1 of the
Disclosure Schedule, or (iii) as consented to in writing by Fremont (which
consent shall not be unreasonably withheld), after the date hereof:
(a) the business of the Company and the Company Subsidiaries shall
be conducted only in the usual, regular and ordinary course and substantially in
the same manner as heretofore conducted, and each of the Company and the Company
Subsidiaries shall use its reasonable best efforts to preserve its business
organization intact, keep available the services of its current officers and key
employees and maintain its existing relations with franchisees, customers,
suppliers, creditors, business partners and others having business dealings with
it;
(b) neither the Company nor any Company Subsidiary shall: (i)
amend its certificate of incorporation or by-laws or similar organizational
documents, (ii) issue, sell, transfer, pledge, dispose of or encumber any shares
of any class or series of its capital stock or Voting Debt, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of any class or series of its
capital stock or any Voting Debt, other than Shares (and associated Rights)
reserved for issuance on the date hereof pursuant to the exercise of Stock
Options outstanding on the date hereof, (iii) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with respect
to any shares of any class or series of its capital stock except (A) pursuant to
the Rights Agreement and (B) for a cash dividend in the amount of $0.10 per
share declared by the Board of Directors on March 15, 1999 and payable on April
15, 1999; (iv) split, combine or reclassify any shares of any class or series of
its stock; or (v) redeem, purchase or otherwise acquire directly or indirectly
any shares of any class or series of its capital stock, or any instrument or
security which consists of or includes a right to acquire such shares;
(c) neither the Company nor any of the Company Subsidiaries shall
(i) incur or modify any indebtedness or other liability, other than in the
ordinary and usual course of business and consistent with past practice; or (ii)
materially modify, amend or terminate any of its material contracts or waive,
release or assign any material rights or claims, except in the ordinary course
of business and consistent with past practice;
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(d) neither the Company nor any of the Company Subsidiaries shall:
(i) incur or assume any long-term debt, or except in the ordinary course of
business, incur or assume any short-term indebtedness in amounts not consistent
with past practice; (ii) materially modify the terms of any indebtedness or
other liability, other than modifications of short term debt in the ordinary and
usual course of business and consistent with past practice; (iii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except as
described in the Disclosure Schedule as being in the ordinary course of business
and consistent with past practice; (iv) make any loans, advances or capital
contributions to, or investments in, any other person (other than to or in
wholly owned Subsidiaries of the Company); or (v) enter into any material
commitment or transaction (including, but not limited to, any capital
expenditure or purchase, sale or lease of assets or real estate) except in the
ordinary course of business consistent with past practice;
(e) neither the Company nor any Company Subsidiary shall transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any material
assets other than in the ordinary and usual course of business and consistent
with past practice;
(f) except as otherwise specifically provided in this Agreement,
make any change in the compensation payable or to become payable to any of its
officers, directors, employees, agents or consultants (other than normal
recurring increases in wages to employees who are not officers or directors or
Affiliates in the ordinary course of business consistent with past practice) or
to Persons providing management services, except as required by any Plan, or
enter into or amend any employment, severance, consulting, termination or other
agreement or employee benefit plan or make any loans to any of its officers,
directors, employees, Affiliates, agents or consultants or make any change in
its existing borrowing or lending arrangements for or on behalf of any of such
Persons pursuant to an employee benefit plan or otherwise;
(g) except as otherwise specifically contemplated by this
Agreement or as specifically set forth in the Disclosure Schedule and except as
required by law, pay or make any accrual or arrangement for payment of any
pension, retirement allowance or other employee benefit not required by any Plan
to any officer, director, employee or Affiliate or pay or agree to pay or make
any accrual or arrangement for payment to any officers, directors, employees or
Affiliates of the Company of any amount relating to unused vacation days, except
payments and accruals made in the ordinary course of business consistent with
past practice; adopt or (except as required
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pursuant to any Plan) pay, grant, issue, accelerate or accrue salary or other
payments or benefits pursuant to any pension, profit-sharing, bonus, extra
compensation, incentive, deferred compensation, stock purchase, stock option,
stock appreciation right, group insurance, severance pay, retirement or other
employee benefit plan, agreement or arrangement, or any employment or consulting
agreement with or for the benefit of any director, officer, employee, agent or
consultant, whether past or present; or, except as required by law, amend in any
material respect any such existing plan, agreement or arrangement in a manner
inconsistent with the foregoing;
(h) except in the ordinary course of business consistent with past
practice, neither the Company nor any Company Subsidiary shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Fremont;
(i) neither the Company nor any of the Company Subsidiaries shall
enter into any contract or transaction relating to the purchase of material
assets other than in the ordinary course of business consistent with prior
practices;
(j) neither the Company nor any Company Subsidiary shall pay,
repurchase, discharge or satisfy any of its material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice, or as required by law;
(k) neither the Company nor any of the Company Subsidiaries will
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any Company Subsidiary (other than the Merger and the Transactions);
(l) neither the Company nor any Company Subsidiary will (i) change
any of the accounting methods used by it unless required by GAAP or (ii) make
any material election relating to Taxes, change any material election relating
to Taxes already made, adopt any material accounting method relating to Taxes,
change any material accounting method relating to Taxes, enter into any closing
agreement relating to Taxes, settle any claim or assessment relating to Taxes or
consent to any claim or assessment relating to Taxes or any waiver of the
statute of limitations for any such claim or assessment;
(m) neither the Company nor any of the Company Subsidiaries will
take, or agree to commit to take, any action that would or is reasonably likely
to
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result in any of the conditions to the Stock Purchase or the Merger set forth in
Article VII not being satisfied, or would make any representation or warranty of
the Company contained herein (other than representations and warranties which
address matters only at a certain date or dates) inaccurate in any respect at,
or as of any time prior to, the Effective Time, or that would materially impair
the ability of the Company, Fremont, Sub or the holders of Shares to consummate
the Merger or the Stock Purchase in accordance with the terms hereof or
materially delay such consummation; and
(n) neither the Company nor any of the Company Subsidiaries will
enter into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
Section 6.2 Access; Confidentiality. Upon prior notice by Fremont,
the Company shall (and shall cause each of the Company Subsidiaries to) afford
to the officers, employees, accountants, counsel, financing sources and other
representatives of Fremont, reasonable access during normal business hours prior
to the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, the Company shall (and shall cause each of the
Company Subsidiaries to) furnish promptly to the Fremont (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (b) all other information concerning its business, properties and personnel
as Fremont may reasonably request. Access shall include the right to conduct
such environmental studies as Fremont, in its discretion, shall deem
appropriate, subject to the limitations set forth in the preceding sentence.
Until the Effective Time, unless otherwise required by law or in order to comply
with disclosure requirements applicable to the Financing Documents (as defined
in Section 6.3 below) or the Proxy Statement, Fremont will hold, and will cause
its officers, employees, accountants, counsel, financing sources and other
representatives to hold, any such information which is nonpublic in confidence
in accordance with the provisions of the Confidentiality Agreement.
Section 6.3 Reasonable Best Efforts.
(a) Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, Fremont, Sub and the Company agree to use their
respective reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or advisable
(subject to any applicable laws) to consummate and make effective the Merger and
the other Transactions as promptly as practicable, including, but not limited
to, (i) the preparation and filing of all
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forms, registrations and notices required to be filed to consummate the Merger
and the other Transactions and the taking of such actions as are necessary to
obtain any requisite approvals, consents, orders, exemptions or waivers by any
third party or Governmental Entity, (ii) the preparation of any disclosure
documents requested by Fremont in order to facilitate financing of any of the
Transactions (the "Financing Documents"), (iii) the use of reasonable best
efforts to avoid the entry of, or to have vacated or terminated, any decree,
order or judgment that would constrain, prevent or delay the consummation of the
Merger and the Transactions, and (iv) the satisfaction of the other parties'
conditions to Closing. In addition, no party hereto shall take any action after
the date hereof that would reasonably be expected to materially delay the
obtaining of, or result in not obtaining, any permission, approval or consent
from any third party or Governmental Entity necessary to be obtained prior to
Closing. Notwithstanding the foregoing, or any other covenant herein contained,
in connection with the receipt of any necessary approvals under the HSR Act,
neither the Company nor any of the Company Subsidiaries shall be entitled to
divest or hold separate or otherwise take or commit to take any action that
limits Fremont's or Sub's freedom of action with respect of, or its ability to
retain, the Company or any of the Company Subsidiaries or any material portions
thereof or any of the businesses, product lines, properties or assets of the
Company or any of the Company Subsidiaries, without Fremont's prior written
consent.
(b) Prior to the Closing, and subject to the Confidentiality
Agreement, each party shall promptly consult with the other parties hereto with
respect to, provide any necessary information with respect to, and provide the
other parties (or their respective counsel) with copies of, all filings made by
such party with any Governmental Entity or any other information supplied by
such party to a Governmental Entity in connection with this Agreement, the
Merger, the Stock Purchase, and the other Transactions; provided, however, that
Fremont and/or Sub shall not be required to provide the Company with copies of
any filings made by Fremont and/or Sub pursuant to the HSR Act. Each party
hereto shall promptly inform the other of any communication from any
Governmental Entity regarding any of the Transactions. If any party hereto or
Affiliate thereof receives a request for additional information or documentary
material from any such Governmental Entity with respect to any of the
Transactions, then such party shall endeavor in good faith to make, or cause to
be made, as soon as reasonably practicable and after consultation with the other
parties, an appropriate response in compliance with such request. To the extent
that transfers, amendments or modifications of permits (including environmental
permits) are required as a result of the execution of this Agreement or
consummation of any of the Transactions, the Company shall use its reasonable
best efforts to effect such transfers, amendments or modifications.
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(c) The Company and Fremont shall file as soon as practicable
notifications under the HSR Act and respond as promptly as practicable to any
inquiries received from the Federal Trade Commission and the Antitrust Division
of the Department of Justice for additional information or documentation and
respond as promptly as practicable to all inquiries and requests received from
any State Attorney General or other Governmental Entity in connection with
antitrust matters. Concurrently with the filing of notifications under the HSR
Act or as soon thereafter as practicable, the Company and Fremont shall each
request early termination of the HSR Act waiting period.
(d) Notwithstanding the foregoing, nothing in this Agreement shall
be deemed to require Fremont or Sub to commence any litigation against any
entity in order to facilitate the consummation of any of the Transactions.
(e) Fremont shall use its reasonable best efforts to cause the
Debt Financing to be obtained substantially on the terms set forth in the Debt
Financing Letters and Schedule 7.2(f) or to obtain alternative financing on
terms no more onerous than the terms of the Debt Financing Letters and Schedule
7.2(f).
(f) The Company agrees to provide, and will cause the Company, the
Company Subsidiaries and its and their respective officers, employees and
advisers to provide, reasonable cooperation in connection with the arrangement
of the Debt Financing; provided that the terms and conditions of such financing
may not require, prior to the Effective Time, the payment of any commitment or
other similar fees by the Company, or the incurrence of any liabilities by the
Company. Subject to Section 10.1(b), the parties acknowledge that the payment of
any fees by the Company in connection with the Debt Financing shall be
conditioned upon the consummation of the Merger.
Section 6.4 Proxy Statement; Form S-4. Promptly following the date
of this Agreement, the Company shall prepare the preliminary Proxy Statement,
and the Company shall prepare and file with the SEC the Form S-4, in which the
Proxy Statement will be included. The Company will use its reasonable best
efforts to have the Form S-4 declared effective as promptly as practicable after
such filings. The Company will use its reasonable best efforts to cause the
definitive Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act. The Company shall also take any action required to be taken
under any applicable state securities laws in connection with the registration
and qualification of common stock of the Company following the Merger. The
information provided by the Company for use in the Form S-4 and the Proxy
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Statement, and to be supplied by Fremont and Sub in writing specifically for use
in the Form S-4 and the Proxy Statement shall, at the time the Form S-4 becomes
effective and at the time of the mailing of the Proxy Statement and on the date
of the Special Meeting referred to in Section 1.6, be true and correct in all
material respects and shall not omit to state any material fact required to be
stated therein or necessary in order to make such information not misleading.
The Company, Fremont and Sub each agree to correct any information provided by
it for use in the Form S-4 or the Proxy Statement which shall have become false
or misleading. Fremont, Sub and the Company will cooperate with each other in
the preparation of the Form S-4 and the Proxy Statement; without limiting the
generality of the foregoing, the Company will notify Fremont as promptly as
practicable of the receipt of any comments from the SEC with respect to the Form
S-4, of any request by the SEC for any amendment to the Form S-4 or for
additional information, and of the effectiveness of the Form S-4. All filings
with the SEC, including the Form S-4 and any amendment thereto, and all mailings
to the Company's stockholders in connection with the Merger, including the Proxy
Statement, shall be subject to the prior review, comment and approval of Fremont
(which consent or approval by Fremont shall not be unreasonably withheld or
delayed). Fremont and Sub will furnish to the Company the information relating
to it required by the Exchange Act and the rules and regulations promulgated
thereunder to be set forth in the Proxy Statement. The Company agrees to use its
reasonable best efforts, after consultation with the other parties hereto, to
respond promptly to any comments made by the SEC with respect to the Form S-4
and any preliminary version of the Proxy Statement filed by it and to cause the
definitive Proxy Statement to be mailed to the Company's stockholders at the
earliest practicable time.
Section 6.5 No Solicitation of Competing Transaction.
(a) The Company (and the Company Subsidiaries and Affiliates of
the Company) will not, and the Company (and the Company Subsidiaries and
Affiliates of the Company) will use their reasonable best efforts to ensure that
their respective officers, directors, employees, investment bankers, attorneys,
accountants and other agents do not, directly or indirectly: (i) initiate,
solicit or encourage, or take any action to knowingly facilitate the making of,
any offer or proposal which constitutes or is reasonably likely to lead to any
Takeover Proposal (as defined below) of the Company or any Company Subsidiary or
Affiliate or an inquiry with respect thereto or (ii) in the event of an
unsolicited written Takeover Proposal for the Company or any Company Subsidiary
or Affiliate of the Company, engage in negotiations or discussions with, or
provide any information or data to, any Person (other than Fremont or any of its
Affiliates or representatives) relating to any Takeover Proposal. The Company
shall notify Fremont as promptly as practicable of any inquiries, expressions of
interest,
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proposals or offers received by the Company or any of the Company's
representatives relating to any Takeover Proposal or the possibility or
consideration of making a Takeover Proposal (a "Takeover Proposal Interest")
indicating, in connection with such notice, the name of the Person indicating
such Takeover Proposal Interest and the terms and conditions of any proposals or
offers. At any time prior to adoption of this Agreement by the holders of
Shares, the Company Board of Directors may, and may direct its officers,
directors, employees, investment bankers, attorneys, accountants and other
agents to, in response to any such Takeover Proposal Interest that has been
determined by it to be a Superior Proposal (as defined in Section 6.5(d)), that
was not solicited by it and that did not otherwise result from a breach of this
Section 6.5(a), (x) furnish information with respect to the Company and the
Company Subsidiaries to any Person pursuant to a customary confidentiality
agreement containing terms no less restrictive than the terms of the
Confidentiality Agreement and (y) participate in negotiations regarding such
Takeover Proposal. The Company agrees that it shall keep Fremont informed, on a
current basis, of the status and terms of any Takeover Proposal Interest.
(b) As used in this Agreement, "Takeover Proposal" when used in
connection with the Company shall mean any tender or exchange offer involving
the Company, any proposal for a merger, consolidation or other business
combination involving the Company, any proposal or offer to acquire in any
manner 20% or more of the equity interest in, or 20% or more of the business or
assets of, the Company, any proposal or offer with respect to any
recapitalization or restructuring with respect to the Company or any proposal or
offer with respect to any other transaction similar to any of the foregoing with
respect to such Person or any Subsidiary of such Person other than pursuant to
the Transactions). Notwithstanding the foregoing, a "Takeover Proposal" shall
not include any repurchase of Shares by the Company which is consummated without
the issuance, directly or indirectly, to any third party of any equity
securities of the Company or any Company Subsidiary or of debt securities of the
Company or any Company Subsidiary convertible into equity securities, whether by
direct issuance, merger or other transaction or series of transactions.
(c) Nothing contained in this Agreement shall prevent the Company
or the Company Board of Directors from (i) taking and disclosing to its
stockholders a position contemplated by Rule 14e-9 or complying with Rule
14e-2(a) promulgated under the Exchange Act, (ii) making any disclosure to its
stockholders, if, in the good faith judgment of the Company Board of Directors,
with the advice of outside counsel, failure to disclose would constitute a
breach of its fiduciary duties to the Company's stockholders under applicable
law (including a duty of candor), (iii) issuing a press release or publicly
disclosing the terms of this Agreement in accordance
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with Section 6.6 hereof; (iv) proceeding with the Transactions or (v) taking any
action which in the opinion of outside counsel is required pursuant to a final,
non-appealable order entered by a court of competent jurisdiction.
(d) Neither the Company Board of Directors nor any committee
thereof shall (i) withdraw, qualify or modify, or propose publicly to withdraw,
qualify or modify, in a manner adverse to Fremont, the approval or
recommendation of the Company Board of Directors or such committee of the
Merger, this Agreement and the Transactions, (ii) approve or recommend, or
propose publicly to approve or recommend, any Takeover Proposal, or (iii) enter
into any agreement, letter of intent, or agreement in principle with respect to
any Takeover Proposal. Notwithstanding the foregoing, in the event that prior to
the adoption of this Agreement by the holders of Shares, the Company Board of
Directors determines in good faith, after it has received an unsolicited
Superior Proposal (as defined below) in writing that was not solicited in
violation of Section 6.5(a) hereof, that, based on the advice of the Company's
outside counsel, the failure to do so would be reasonably likely to constitute a
breach by the Company Board of Directors of its fiduciary duties to the
Company's stockholders, the Company Board of Directors may (subject to this
sentence and the following sentences) withdraw, qualify or modify its approval
or recommendation of this Agreement or the Merger, approve or recommend any
Superior Proposal or, immediately following termination of this Agreement and
concurrent payment of the Termination Fee, cause the Company to enter into an
agreement with respect to a Superior Proposal, in each case only at a time that
is after the third business day following Fremont's receipt of written notice
advising Fremont that the Company Board of Directors has received a Superior
Proposal specifying the material terms and conditions of such Superior Proposal
(and including a copy thereof with all accompanying documentation), identifying
the person making such Superior Proposal and stating that it intends to take one
of the foregoing actions. After providing such notice during such three business
day period, the Company shall provide a reasonable opportunity to Fremont to
make such adjustments in the terms and conditions of this Agreement as would
enable the Company to proceed with the transactions contemplated herein on such
adjusted terms without taking any of the foregoing actions; provided, however,
that any such adjustment shall be at the discretion of Fremont. For purposes of
this Agreement, a "Superior Proposal" means any proposal (on its most recently
amended or modified terms, if amended or modified) made by any Person other than
Fremont or its Affiliates (an "Offering Party") to enter into a Takeover
Proposal which the Company Board of Directors determines in its good faith
judgment (based on the opinion of the Financial Advisor or another financial
advisor of nationally recognized reputation) to be more favorable to the
Company's stockholders than the Merger, taking into account all relevant factors
(including whether, in the good faith judgment of the Company
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Board of Directors, after obtaining the opinion of a financial advisor of
nationally recognized reputation, the Offering Party is reasonably able to
finance the transaction, and changes to this Agreement that are proposed by
Fremont, if any, in response to such Takeover Proposal).
Section 6.6 Publicity. The initial press release with respect to
the execution of this Agreement shall be a joint press release acceptable to
Fremont and the Company. Thereafter, until the Effective Time, or the date the
Transactions are terminated or abandoned pursuant to Article VIII, neither the
Company, Fremont nor any of their respective Affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, the Stock Purchase, this Agreement or the other Transactions without
prior agreement with the other party, except as may be required by law or by any
listing agreement with a national securities exchange or trading market and, in
such event, only after prior consultation with the other party.
Section 6.7 Notification of Certain Matters. The Company and
Fremont shall give prompt notice to each other, of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time and (ii)
any material failure of the Company or Fremont, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.7 shall not limit or otherwise affect the remedies
available hereunder to any party.
Section 6.8 Directors' and Officers' Insurance and
Indemnification.
(a) For six years after the Effective Time, Fremont shall, and
shall cause the Surviving Corporation (or any successor to the Surviving
Corporation) to, indemnify, defend and hold harmless each Indemnified Party
against all losses, claims, damages, liabilities, costs, fees and expenses,
including reasonable fees and disbursements of counsel and judgments, fines,
losses, claims, liabilities and amounts paid in settlement (provided that any
such settlement is effected with the written consent of the Fremont or the
Surviving Corporation) arising out of actions or omissions occurring at or prior
to the Effective Time to the full extent permitted under applicable Delaware
law, and the terms of the Company's certificate of incorporation or the by-laws
or similar organizational documents, as in effect at the date hereof (which,
except as otherwise set forth herein, will survive the Merger and continue in
full force and effect after the Effective Time); provided that, in the event any
claim or claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such
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claim or claims shall continue until disposition of any and all such claims.
Without limiting the foregoing, (i) Fremont shall, and shall cause the Surviving
Corporation to, periodically advance expenses (including attorney's fees) as
incurred by an Indemnified Party with respect to the foregoing to the full
extent permitted under applicable law, and (ii) any determination required to be
made with respect to whether an Indemnified Party shall be entitled to
indemnification shall, if requested by such Indemnified Party, be made by
independent legal counsel selected by Fremont or the Surviving Corporation and
reasonably satisfactory to such Indemnified Party.
(b) The Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance for a period of not less
than six years after the Effective Time; provided, that there may be substituted
therefor policies of providing at least as favorable coverage and amounts
containing terms no less favorable to such former directors or officers so long
as such substitution does not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective Time; provided, further,
that in no event shall the Company be required to pay aggregate premiums for
insurance under this Section 6.8(b) in excess of 300% of the aggregate premiums
paid by the Company in 1998 on an annualized basis for such purpose; and
provided, further, that if the Surviving Corporation is unable to obtain the
amount of insurance required by this Section 6.8(b) for such aggregate premium,
the Surviving Corporation shall obtain as much insurance as can be obtained for
an annual premium not in excess of 300% of the aggregate premiums paid by the
Company in 1998 on an annualized basis for such purpose.
(c) This covenant is intended to be for the benefit of, and shall
be enforceable by, each of the Indemnified Parties and their respective heirs
and successors. The indemnification provided for herein shall not be deemed
exclusive of any other rights to which an Indemnified Party is entitled, whether
pursuant to law, contract or otherwise. The Surviving Corporation shall pay all
expenses, including reasonable attorneys' fees, that may be incurred by any
Indemnified Party which is the prevailing party in any action or proceeding to
enforce the indemnity and other obligations provided for in this Section 6.8.
(d) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, to the
extent necessary to effectuate the purpose of this Section 6.8, proper provision
shall be made so that the successors and assigns of the Surviving Corporation
shall succeed to the obligations set forth in this Section 6.8 and
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none of the actions described in clauses (i) or (ii) shall be taken until such
provision is made.
Section 6.9 State Takeover Laws. Notwithstanding any other
provision in this Agreement, in no event shall the Section 203 Approval be
withdrawn, revoked or modified by the Board of Directors of the Company. If any
state takeover statute other than Section 203 of the DGCL becomes or is deemed
to become applicable to the Agreement, the Merger, the Stock Purchase or the
other Transactions, the Company shall take reasonable steps to assist in any
effort by Fremont to render such statute inapplicable to all of the foregoing.
Section 6.10 Actions Regarding the Rights. The Company shall not,
except as specifically provided herein, (i) modify or waive the terms of its
Rights Agreement, or (ii) take any action to redeem the Rights; provided,
however, that the Company may take any action necessary to prevent or delay a
Distribution Date (as defined in the Rights Agreement) in the event any Person
other than Fremont or an Affiliate of Fremont acquires more than 15% of the
outstanding Shares.
Section 6.11 Recapitalization. The Company shall cooperate with
Fremont or the SEC as necessary or appropriate with respect to the reporting of
the Transactions as a recapitalization for financial reporting purposes,
including, without limitation, assisting Fremont and its Affiliates with any
presentation to the SEC with regard to such reporting, including appropriate
disclosure with regard to such reporting in all filings with the SEC and
mailings to the stockholders of the Company made in connection with the Merger.
In furtherance of the foregoing, the Company shall provide to Fremont for the
approval of Fremont's advisors (which approval shall not be unreasonably
withheld) any description of the Transactions which is meant to be disseminated.
The Company will use its reasonable best efforts not to take any action that
would adversely affect the ability of the Transactions to be accounted for as a
recapitalization for financial reporting purposes.
Section 6.12 Financial Statements. The Company shall promptly
prepare at the end of each month and promptly deliver to Fremont upon completion
the balance sheet, income statement and statement of cash flows prepared in
accordance with GAAP of the Company for each month ended between the date of
this Agreement and the Effective Time. The Company shall promptly prepare in
accordance with GAAP all financial statements required to be included in the
Financing Documents.
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Section 6.13 Employee Plan and Benefit Arrangements.
(a) From and after the Effective Time, subject to applicable law,
the Surviving Corporation will honor obligations incurred pursuant to the Change
of Control Benefits Agreements described on Section 4.10 of the Disclosure
Schedule.
(b) For at least one year from the Effective Time, subject to
applicable law, Fremont will cause the Surviving Corporation and its
Subsidiaries to, and the Surviving Corporation and its Subsidiaries will,
provide benefits to their employees which will, in the aggregate, be
substantially comparable to those currently provided by the Company and its
Subsidiaries to their employees. Notwithstanding the foregoing, nothing herein
shall obligate or require the Surviving Corporation or any of its Subsidiaries
to provide its employees with a plan or arrangement similar to the equity-based
compensation plans currently maintained by the Company.
Section 6.14 NASDAQ Listing. Neither the Company nor Fremont will
take any action, for at least three years after the Effective Time, to cause the
Shares to be delisted from The NASDAQ National Market System; provided, however,
that Fremont may cause or permit the Shares to be delisted in connection with a
transaction which results in the termination of registration of such securities
under Section 12 of the Exchange Act.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to the Stock Purchase. The respective
obligations of each party to effect the Stock Purchase shall be subject to the
satisfaction (or waiver by each party) at or prior to the Stock Purchase Closing
Date of the conditions to the Merger set forth in Sections 7.2, 7.3 and 7.4
hereof other than the condition set forth in Section 7.4(e).
Section 7.2 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Fremont or Sub, as the case may be, to the extent permitted by
applicable law:
(a) The vote of the stockholders necessary for the approval of the
Merger, the approval and adoption of this Agreement, the approval of the
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Amendment, the approval of the Stock Purchase and the approval of the New Option
Plan shall have been obtained;
(b) No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making any of the Transactions
illegal or otherwise restricting, preventing or prohibiting consummation of the
Transactions;
(c) The applicable waiting period under the HSR Act shall have
expired or been terminated;
(d) The Board of Directors of the Company shall have received a
solvency letter, in form and substance and from an independent evaluation firm
reasonably satisfactory to it, as to the solvency of the Company and its
Subsidiaries on a consolidated basis afer giving effect to the Transactions,
including the Debt Financings;
(e) The Form S-4 shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceedings seeking a stop
order; and
(f) The Company shall have received the Debt Financing
substantially on the terms contemplated by the Debt Financing Letters and
Schedule 7.2(f) or alternative financing on terms no less favorable than those
set forth in the Debt Financing Letters and Schedule 7.2(f).
Section 7.3 Conditions to the Obligations of Fremont and Sub. The
obligations of Fremont and Sub to consummate the Merger are subject to the
satisfaction (or waiver by Fremont) of the following further conditions:
(a) The representations and warranties made by the Company herein
shall be true and correct in all material respects (except for representations
qualified by materiality or Company Material Adverse Effect which shall be
correct in all respects) on the Closing Date, with the same force and effect as
though such representations and warranties had been made on and as of the
Closing Date, except for changes permitted or contemplated by this Agreement and
except for representations and warranties that are made as of a specified date
or time, which shall be true and correct in all material respects (except for
representations qualified by materiality or material adverse effect which shall
be correct in all respects) only as of such specific date or time,
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provided that, notwithstanding any other term or provision hereof, the entering
into or modification or amendment of any contract or agreement, in form and
substance mutually agreeable to the parties hereto, in contemplation of the
completion of the Merger (including, without limitation, employment agreements
(and the options granted pursuant thereto), any option plan, any management
services agreement and any indemnity agreements) shall not be deemed to cause
any breach of, or inaccuracy in, any of the representations and warranties or
covenants of the parties contained in this Agreement;
(b) The Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to the
Effective Time;
(c) Since the date of this Agreement, no Company Material Adverse
Effect shall have occurred and be continuing;
(d) The Amendment shall have been filed with the Secretary of
State of the State of Delaware;
(e) The Company shall have furnished Fremont with a certificate
dated the Closing Date signed on behalf of it by the President or any Vice
President to the effect that the conditions set forth in Sections 7.3(a), (b)
and (c) have been satisfied; and
(f) The Company and Fremont (or an Affiliate of Fremont) shall
have entered into a management services agreement, to be effective upon the
Effective Time, in the form attached hereto as Exhibit C.
Section 7.4 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction (or waiver by the Company) of the following further conditions:
(a) The representations and warranties made by Fremont and Sub
herein shall be true and correct in all material respects (except for
representations qualified by materiality or material adverse effect which shall
be correct in all respects) on the Closing Date, with the same force and effect
as though such representations and warranties had been made on and as of the
Closing Date, except for changes permitted or contemplated by this Agreement and
except for representations and warranties that are made as of a specified date
or time, which shall be true and correct in all material
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respects (except for representations qualified by materiality or material
adverse effect which shall be correct in all respects) only as of such specific
date or time;
(b) Each of Fremont and Sub shall have performed in all material
respects all of the respective obligations hereunder required to be performed by
Fremont or Sub, as the case may be, at or prior to the Effective Time;
(c) Since the date of this Agreement, there shall not have
occurred any event, change or effect having, or which would be reasonably likely
to have, individually or in the aggregate, a material adverse effect on Fremont
or Sub;
(d) Fremont shall have furnished the Company with a certificate
dated the Closing Date signed on behalf of it by any duly authorized officer to
the effect that the conditions set forth in Sections 7.4(a) through (c) have
been satisfied; and
(e) Fremont (and/or its assignee(s)) shall have purchased the
Preferred Shares.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the Merger, the
Stock Purchase and other transactions contemplated herein may be abandoned at
any time prior to the Effective Time, whether before or after stockholder
approval thereof (and regardless of any time that may have elapsed since the
event giving rise to the right to terminate hereunder) solely as follows:
(a) By the mutual consent of Fremont and the Board of Directors of
the Company.
(b) By either of the Company Board of Directors or Fremont, as
follows:
(i) if the Merger shall not have occurred on or
prior to September 30, 1999; provided, however, that the right to
terminate this Agreement under this Section 8.1(b)(i) shall not be
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available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of the Merger to occur on or prior to such date; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their
reasonable efforts to lift), in each case permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable.
(c) By the Company Board of Directors, as follows:
(i) if Fremont or Sub breaches or fails in any
material respect to perform or comply with any of its material
covenants and agreements contained herein or breaches its
representations and warranties in any material respect; or
(ii) if the approval of the stockholders of the
Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a
duly held meeting of stockholders or any adjournment thereof.
(iii) if the Company enters into a written agreement
with respect to a Superior Proposal.
(d) By Fremont, as follows:
(i) if the Company breaches or fails in any material
respect to perform or comply with any of its material covenants
and agreements contained herein or breaches its representations
and warranties in any material respect;
(ii) if the approval of the stockholders of the
Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a
duly held meeting of stockholders or any adjournment thereof;
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(iii) if any person, entity or "group" (as that term
is defined in Section 13(d)(3) of the Exchange Act) (an "Acquiring
Person"), other than Fremont or its affiliates or any group of
which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of more than 20% of any class or series of capital
stock of the Company, through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted an
option, right, or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 20% of any class or series of
capital stock of the Company; or
(iv) if the Company Board of Directors shall have
(i) failed to include in the Proxy Statement, its recommendation
without modification or qualification that such stockholders
approve this Agreement, the Merger and the Transactions, (ii)
withdrawn, modified or qualified such recommendation in a manner
adverse to the interests of Fremont or (iii) approved or
recommended any Superior Proposal.
Section 8.2 Effect of Termination. In the event of the termination
of this Agreement as provided in Section 8.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and except for the obligation of the
parties under the Confidentiality Agreement, as set forth in Section 6.2 hereof,
this Agreement shall forthwith become null and void, and there shall be no
liability on the part of the Fremont, Sub or the Company (or any of their
directors, officers, employees, agents, legal and financial advisors or other
representatives) except (A) for fraud or for material breach of this Agreement
and/or (B) as set forth in Section 10.1 hereof; provided, however, that (x) the
aggregate amount payable by the Company pursuant to this Agreement (including
Section 10.1 hereof) with respect to any damages incurred, if any, as a result
of any or all material breaches of this Agreement by the Company shall in no
event exceed the sum of the Termination Fee and the Termination Expenses and (y)
the aggregate amount payable by Fremont and Sub pursuant to this Agreement with
respect to any damages incurred, if any, as a result of any or all material
breaches of this Agreement by Fremont and/or Sub shall in no event exceed the
sum of $15,000,000.
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ARTICLE IX
DEFINITIONS AND INTERPRETATION
Section 9.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context clearly requires
otherwise:
"1993 Plan" shall have the meaning set forth in Section 4.3(a).
"1996 Plan" shall have the meaning set forth in Section 4.3(a).
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"Agreement" or "this Agreement" shall mean this Agreement and Plan
of Recapitalization and Merger, together with the Exhibits hereto and the
Disclosure Schedule.
"Amendment" shall have the meaning set forth in Section 1.6(a)(i).
"Associate" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"Audit" shall have the meaning set forth in Section 4.13.
"Balance Sheet" shall mean the most recent audited balance sheet
of the Company and its consolidated subsidiaries included in the Financial
Statements.
"Balance Sheet Date" shall mean the date of the Balance Sheet.
"Cash Election Price" shall have the meaning set forth in Section
2.1(c)(ii).
"Cash Proration Factor" shall have the meaning set forth in
Section 2.4(c)(ii)(A).
"Closing Date" shall have the meaning set forth in Section 1.3.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the preamble.
"Company Agreement" shall mean any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any Company Subsidiary is a party or by which any of
them or any of their properties or assets may be bound.
"Company Board of Directors" shall mean the board of directors of
the Company.
"Company Intellectual Property" shall mean all Intellectual
Property that is currently used in the business of the Company or any Company
Subsidiary or that is necessary to conduct the business of the Company and the
Company Subsidiaries as presently conducted or as currently proposed to be
conducted.
"Company Material Adverse Effect" shall have the meaning set forth
in Section 4.1.
"Company SEC Documents" shall mean each form, report, schedule,
statement and other document required to be filed by the Company since January
1, 1997 under the Exchange Act or the Securities Act, including any amendment to
such document, whether or not such amendment is required to be so filed.
"Company Stock Plans" shall have the meaning set forth in Section
4.12(a).
"Company Subsidiary" shall mean each Person which is a Subsidiary
of the Company.
"Company's knowledge" or "knowledge of the Company" shall mean the
knowledge that each of Robert S. Fremont, Glenn R. Bordfield, Joel W. Chemers,
Charles F. Huber, George J. Bilek, Thomas W. Tomsovic, Scott Roos and Jacques
LeFevre have or would possess after reasonable investigation and inquiry.
"Confidentiality Agreement" shall mean a letter agreement between
the Company or the Financial Advisor and Fremont.
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"Copyrights" shall mean U.S. and foreign registered and
unregistered copyrights (including, but not limited to, those in computer
software and databases), rights of publicity and all registrations and
applications to register the same.
"Date Data" shall have the meaning set forth in Section 4.17(e).
"Date-Sensitive System" shall have the meaning set forth in
Section 4.17(e).
"Debt Financing" shall have the meaning set forth in Section 5.4.
"DGCL" shall mean the General Corporation Law of the State of
Delaware, as now or hereafter amended.
"Disclosure Schedule" shall mean the disclosure schedule of even
date herewith prepared and signed by the Company and delivered to Fremont
simultaneously with the execution hereof.
"Dissenting Shares" shall mean any Shares as to which the holder
thereof has demanded appraisal with respect to the Merger in accordance with
Section 262 of the DGCL and as of the Effective Time has neither effectively
withdrawn nor lost the right to such appraisal.
"Effective Time" shall mean the date and time at which the
certificate of merger referred to in Section 1.1 is duly filed with the
Secretary of State of the State of Delaware or such other date and time as is
specified in such certificate of merger as the date and time the Merger becomes
effective.
"Electing Shares" shall have the meaning set forth in Section
2.1(c)(i).
"Election Date" shall have the meaning set forth in Section
2.3(c).
"Environmental Claim" shall mean any claim, action, investigation
or notice by any person or entity alleging potential liability for
investigatory, cleanup or governmental response costs, or natural resources or
property damages, or personal injuries, attorney's fees and expenses or
penalties relating to (i) the presence, or release into the environment, of any
Materials of Environmental Concern at any location owned or operated by the
Company or any Company Subsidiary, now or in the past, or (ii) any violation, or
alleged violation, of any Environmental Law.
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"Environmental Law" shall mean each federal, state, local and
foreign law and regulation relating to pollution, protection or preservation of
human health or the environment, including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata, and natural
resources, and including, without limitation, each law and regulation relating
to emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the generation, storage,
containment (whether above ground or underground), disposal, transport or
handling of Materials of Environmental Concern, or the preservation of the
environment or mitigation of adverse effects thereon and each law and regulation
with regard to record keeping, notification, disclosure and reporting
requirements respecting Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any trade or business, whether or not
incorporated, that together with the Company would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall have the meaning set forth in Section
2.3(b).
"Exchange Fund" shall have the meaning set forth in Section
2.6(g).
"Financial Advisor" shall mean William Blair & Company, LLC.
"Financial Statements" shall mean the financial statements and
related notes of the Company included in the Company SEC Documents.
"Financing Documents" shall have the meaning set forth in Section
6.3(a).
"Form of Election" shall have the meaning set forth in Section
2.3(c).
"Form S-4" shall have the meaning set forth in Section 1.6(a)(ii).
"Fremont" shall have the meaning set forth in the preamble.
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"GAAP" shall mean United States generally accepted accounting
principles, applied on a consistent basis.
"Governmental Entity" shall mean a court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Indemnified Party" shall mean each present and former officer and
director of the Company and the Company Subsidiaries.
"Intellectual Property" shall mean all of the following:
Trademarks, Patents, Copyrights, Trade Secrets and Licenses.
"Licenses" shall mean all licenses and agreements pursuant to
which the Company has acquired rights in or to any Trademarks, Patents, or
Copyrights, or licenses and agreements pursuant to which the Company has
licensed or transferred the right to use any of the foregoing.
"Liens" shall mean any and all liens, claims, charges, security
interests, mortgages, title defects or objections, or other encumbrances of any
nature whatsoever, including, without limitation, leases, chattel mortgages,
conditional sales contracts, collateral security arrangements and other title or
interest retention contracts.
"Materials of Environmental Concern" shall mean pollutants,
contaminants, toxic or hazardous substances, materials and wastes, petroleum and
petroleum products, asbestos and asbestos-containing materials, polychlorinated
biphenyls, radon and lead or lead-based paints and materials.
"Merger" shall mean the merger of Sub into the Company referred to
in the Recitals.
"Merger Consideration" shall have the meaning set forth in Section
2.1(c).
"Non-Cash Election" shall have the meaning set forth in Section
2.3(a).
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"Non-Cash Election Number" shall have the meaning set forth in
Section 2.4(a).
"Non-Cash Election Share" shall have the meaning set forth in
Section 2.1(c)(i).
"Non-Cash Proration Factor" shall have the meaning set forth in
Section 2.4(b)(i).
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
"Offering Party" shall have the meaning set forth in Section
6.5(d).
"Patents" shall mean issued U.S. and foreign patents and pending
patent applications, patent disclosures, and any and all divisions,
continuations, continuations-in-part, reissues, reexaminations, and extension
thereof, any counterparts claiming priority therefrom, utility models, patents
of importation/confirmation, certificates of invention and like statutory
rights.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Plan" shall mean a plan, program, agreement, arrangement or
program required to be included in the Disclosure Schedule pursuant to Section
4.12(a).
"Person" shall mean a natural person, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Entity or other entity
or organization.
"Preferred Shares" shall have the meaning set forth in Section
3.2(a).
"Preferred Stock" shall have the meaning set forth in Section 3.1.
"Proxy Statement" shall mean the proxy statement to be filed by
the Company with the SEC pursuant to Section 1.6(a)(ii), together with all
amendments and supplements thereto and including the exhibits thereto.
"Purchase Price" shall have the meaning set forth in Section 3.3.
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"Rights" shall mean the rights to purchase Shares granted pursuant
to the Rights Agreement.
"Rights Agreement" shall mean the Rights Agreement between the
Company and The First National Bank of Chicago, as Rights Agent, dated as of
August 3, 1989.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Section 203 Approval" shall mean the action taken by the Company
Board of Directors referred to in Section 4.5 causing Section 203 of the DGCL
not to apply to this Agreement or the other Transactions.
"Series A Preferred" shall have the meaning set forth in Section
3.1.
"Shares" shall mean the shares of common stock, par value $0.01,
of the Company, including, for all purposes of this Agreement, the associated
Rights.
"Special Meeting" shall mean the special meeting of stockholders
of the Company referred to in Section 1.6(a)(i).
"Stock Option" shall mean an option to purchase Shares granted
pursuant to the Company's 1993 Stock Option Plan or pursuant to the Company's
1996 Employee Stock Purchase Plan.
"Stock Purchase" shall have the meaning set forth in the Recitals.
"Sub" shall have the meaning set forth in the preamble.
"Subsidiary" shall mean, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (a) at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries or (b) such party or any other Subsidiary of such party
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general partner (excluding any such partnership where such party or any
Subsidiary of such party does not have a majority of the voting interest in such
partnership).
"Superior Proposal" shall have the meaning set forth in Section
6.5(d).
"Surviving Corporation" shall mean the successor or surviving
corporation in the Merger.
"Takeover Proposal" shall have the meaning set forth in Section
6.5(b).
"Takeover Proposal Interest" shall have the meaning set forth in
Section 6.5(a).
"Tax" or "Taxes" shall mean all taxes, charges, fees, duties,
levies, penalties or other assessments imposed by any federal, state, local or
foreign Tax Authority.
"Tax Authority" shall mean any Governmental Authority responsible
for the imposition of Taxes.
"Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or other statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Termination Fee" shall mean the sum of $12,000,000 in U.S.
currency.
"Title IV Plan" shall mean a Plan that is subject to Section 302
or Title IV of ERISA or Section 412 of the Code.
"Trademarks" shall mean U.S. and foreign registered and
unregistered trademarks, trade dress, service marks, logos, trade names,
corporate names and all registrations and applications to register the same.
"Trade Secrets" shall mean all categories of trade secrets as
defined in the Uniform Trade Secrets Act, including, but not limited to,
business information.
"Transactions" shall mean the transactions provided for or
contemplated by this Agreement, including, but not limited to, the Merger, the
Stock Purchase and the creation of the New Option Plan.
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"Trigger Event" shall have the meaning set forth in Section
10.1(a).
"Voting Debt" shall mean indebtedness having general voting rights
and debt convertible into securities having such rights.
"WARN Act" shall have the meaning set forth in Section 4.19(b).
"Year 2000 Compliant" shall have the meaning set forth in Section
4.17(e).
Section 9.2 Interpretation.
(a) When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this Agreement
unless otherwise clearly indicated to the contrary.
(b) Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation."
(c) The words "hereof", "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified.
(d) The plural of any defined term shall have a meaning
correlative to such defined term, and words denoting any gender shall include
all genders. Where a word or phrase is defined herein, each of its other
grammatical forms shall have a corresponding meaning.
(e) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(f) A reference to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislative provision substituted therefor and all regulations and statutory
instruments issued thereunder or pursuant thereto.
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(g) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Fees and Expenses.
(a) If (x) Fremont shall terminate this Agreement pursuant to
Section 8.1(d)(iii) or 8.1(d)(iv) hereof or the Company Board of Directors shall
terminate this Agreement pursuant to Section 8.1(c)(iii), or (y) Fremont shall
terminate this Agreement pursuant to Section 8.1(d)(i) or 8.1(d)(ii) hereof, or
the Company Board of Directors shall terminate this Agreement pursuant to
Section 8.1(c)(ii) hereof, and, in any event, either (i) (A) prior to the time
of the Special Meeting there had been a publicly disclosed Takeover Proposal
Interest and (B) within one year of any such termination under this clause
(y)(i), a definitive agreement is entered into with the Company or is
consummated with respect to a Takeover Proposal or similar business combination
or (ii) (A) prior to the time of the Special Meeting there had been a Takeover
Proposal Interest (whether or not publicly disclosed) and (B) within one year of
any such termination under this clause (y)(ii), a definitive agreement is
entered into between the Company and a Person who made any such Takeover
Proposal Interest or is consummated by a Person who made any such Takeover
Proposal Interest, in either case described in this clause (B) with respect to a
transaction that is superior in value to the Transactions, then, in any such
case as described in clause (x) or (y) (each such case of termination being
referred to as a "Trigger Event"), the Company shall (i) pay to Fremont (not
later than simultaneously with any such Trigger Event) the Termination Fee and
(ii) promptly after being furnished documentation in respect thereto by Fremont,
pay, or reimburse Fremont for, all reasonable out-of-pocket fees and expenses
actually paid or incurred by Fremont, Sub and their Affiliates (including the
fees and expenses of legal counsel, accountants, financial advisors, other
consultants, financial printers and financing sources but excluding any fees
payable to Fremont, Sub or any of their respective affiliates) in connection
with the Merger and the consummation of the Transactions contemplated by this
Agreement (the "Termination Expenses") up to a maximum amount of $3,000,000;
provided, however, that in the event that Fremont or the Company Board of
Directors shall terminate this Agreement pursuant to Section
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8.1(d)(ii) or Section 8.1(c)(ii) hereof, respectively, and either (X) prior to
the time of the Special Meeting there had been a publicly disclosed Takeover
Proposal Interest notwithstanding that none of the events described in clause
(y)(i)(B) has yet occurred, or (Y) prior to the time of the Special Meeting
there had been a Takeover Proposal Interest (whether publicly disclosed or not)
and within one year of such termination, a definitive agreement is entered into
with the Company or is consummated with respect to a Takeover Proposal or
similar business combination, the Company shall promptly, after being furnished
documentation in respect thereto by Fremont, pay the Termination Expenses, up to
a maximum of $3,000,000.
(b) Upon the Effective Time, all reasonable out-of-pocket costs
and expenses incurred by each party hereto in connection with this Agreement and
the Transactions (including, without limitation, fees and disbursements of
counsel, financial advisors and accountants) shall be paid by the Company, or
the Company shall promptly reimburse such party, as the case may be, and a
transaction fee equal to $4,540,000 shall be paid to Fremont by the Company.
(c) Except as otherwise specifically provided in this Section 10.1
each party shall bear its own expenses in connection with this Agreement and the
Transactions.
(d) Notwithstanding anything to the contrary in this Agreement, in
no event shall there be more than one payment each of the Termination Fee and
the Termination Expenses.
Section 10.2 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action taken
by their respective Board of Managers or Boards of Directors, as applicable, at
any time prior to the Closing Date with respect to any of the terms contained
herein; provided, however, that after the approval of this Agreement by the
stockholders of the Company, no such amendment, modification or supplement shall
reduce the amount or change the form of the Merger Consideration.
Section 10.3 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time. The foregoing sentence shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
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Section 10.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Fremont or Sub, to:
Fremont Investors I, LLC
50 Fremont Street; Ste. 3700
San Francisco, CA 94105
Attention: Mark Williamson and Kevin Baker
Telephone No.: (415) 284-8701
Telecopy No.: (415) 512-7121
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Embarcadero Center, Suite 3800
San Francisco, California 94111
Attention: Kenton J. King, Esq.
Telephone No.: (415) 984-6400
Telecopy No.: (415) 984-2698
(b) if to the Company, to:
Juno Lighting, Inc.
1300 S. Wolf Road
P.O. Box 5065
Des Plaines, Illinois 60017
Attention: Robert S. Fremont
Telephone No.: (847) 827-9880
Telecopy No.: (847) 813-8201
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with a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, IL 60606-6404
Attention: Julius Lewis
Telephone No.: (312) 876-8000
Telecopy No.: (312) 876-7934
Section 10.5 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 10.6 Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and thereof, and (b)
except with respect to Section 6.8 and 6.13(a) hereof, are not intended to
confer upon any person other than the parties hereto and thereto any rights or
remedies hereunder.
Section 10.7 Severability. Any term or provision of this Agreement
that is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 10.8 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
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Section 10.9 Enforcement. The parties 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 of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the Transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the Transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the State of Delaware.
Section 10.10 Time of Essence. Each of the parties hereto hereby
agrees that, with regard to all dates and time periods set forth or referred to
in this Agreement, time is of the essence.
Section 10.11 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) waive compliance by the other parties with any of the
agreements or conditions contained in this Agreement. Any agreement on the part
of a 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. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
Section 10.12 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Fremont may assign, in part,
its right to purchase Preferred Shares and Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Fremont or to any direct or indirect wholly owned Subsidiary of Fremont provided
that any such assignment by Fremont or Sub shall not relieve it of its
obligations hereunder. Subject to the preceding sentence, this Agreement will be
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binding upon, inure to the benefit of and be enforeceable by the parites and
their respective successors and assigns
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IN WITNESS WHEREOF, Fremont, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
FREMONT INVESTORS I, LLC
By: /s/ M. N. Williamson
-----------------------------------------
Name: M. N. Williamson
Title: Vice President, CFO
JUNO LIGHTING, INC.
By: /s/ Robert S. Fremont
-----------------------------------------
Name: Robert S. Fremont
Title: Chief Executive Officer and Chairman
JUPITER ACQUISITION CORP.
By: /s/ Kevin Baker
-----------------------------------------
Name: Kevin Baker
Title: Vice President & Secretary
<PAGE> 72
The undersigned, Fremont Partners, L.P., a Delaware limited
partnership, hereby undertakes and agrees to cause each of Fremont and Sub to
perform its obligations and agreements under this Agreement and the undersigned
expressly agrees to be liable for such obligations and agreements in the event
Fremont or Sub fails to perform any of its obligations or agreements under this
Agreement; provided, however, that this undertaking and agreement shall
terminate at the Effective Time. The undersigned hereby represents and warrants
to the Company that (i) it has full power and authority to execute and deliver
this Agreement and perform its obligations hereunder, (ii) it has taken all
actions necessary to authorize the execution, delivery and performance of this
Agreement by it, (iii) such execution, delivery and performance do not conflict
with, violate or otherwise result in a default under its organizational
documents, and (iv) this Agreement is the legal, valid and binding obligation of
Fremont Partners, L.P., enforceable in accordance with its terms.
FREMONT PARTNERS, L.P.
By: FP Advisors, L.L.C.
Its General Partner
By: Fremont Group, L.L.C.
Its: Managing Member
By: Fremont Investors, Inc.
Its: Manager
By: /s/ R.S. Kopf
----------------------------
Name: R.S. Kopf
Title: Managing Director
<PAGE> 73
EXHIBIT A
JUNO LIGHTING, INC.
1999 STOCK AWARD AND INCENTIVE PLAN
<PAGE> 74
JUNO LIGHTING, INC.
1999 STOCK AWARD AND INCENTIVE PLAN
1. Purpose; Types of Awards; Construction.
The purpose of the Juno Lighting, Inc. 1999 Stock Award and
Incentive Plan (the "Plan") is to afford an incentive to directors (including
non-employee directors), selected employees and independent contractors of Juno
Lighting, Inc. (the "Company"), or any Subsidiary or Affiliate which now exists
or hereafter is organized or acquired, to acquire a proprietary interest in the
Company, to continue as directors, employees or independent contractors, as the
case may be, to increase their efforts on behalf of the Company and to promote
the success of the Company's business in the interest of its stockholders.
Pursuant to Section 6 of the Plan, there may be granted Stock Options (including
"incentive stock options" and "nonqualified stock options"), stock appreciation
rights and limited stock appreciation rights (either in connection with options
granted under the Plan or independently of options), restricted stock,
restricted stock units, dividend equivalents, performance shares and other
stock- or cash-based awards. The Plan also provides the authority to make loans
to purchase shares of common stock of the Company. The Plan is designed to
comply with the requirements of Regulation T (12 C.F.R. Section 220) and
Regulation U (12 C.F.R. Section 221) and the requirements for "performance-based
compensation" under Section 162(m) of the Code and the conditions for exemption
from short-swing profit recovery rules under Rule 16b-3 of the Exchange Act, and
shall be interpreted in a manner consistent with the requirements thereof.
2. Definitions.
For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Affiliate" means any entity if, at the time of
granting of an Award or a Loan, (i) the Company, directly or indirectly, owns at
least 50% of the combined voting power of all classes of stock of such entity or
at least 50% of the ownership interests in such entity
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or (ii) such entity, directly or indirectly, owns at least 50% of the combined
voting power of all classes of stock of the Company.
(b) "Award" means any Option, SAR (including a Limited SAR),
Restricted Stock, Restricted Stock Unit, Dividend Equivalent, Performance Share
or Other Stock-Based Award or Other Cash- Based Award granted under the Plan.
(c) "Award Agreement" means any written agreement, contract,
or other instrument or document evidencing an Award.
(d) "Beneficiary" means the person, persons, trust or trusts
which have been designated by a Grantee in his or her most recent written
beneficiary designation filed with the Company to receive the benefits specified
under the Plan upon his or her death, or, if there is no designated Beneficiary
or surviving designated Beneficiary, then the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive such
benefits.
(e) "Board" means the Board of Directors of the Company.
(f) "Change in Control" means a change in control of the
Company which will be deemed to have occurred if:
(i) any "person," as such term is used in Section
3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof except that such term shall not
include (A) the Company or any of its subsidiaries, (B) any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its
affiliates, (C) an underwriter temporarily holding securities
pursuant to an offering of such securities, (D) any
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of Stock, or (E) any person or
group as used in Rule 13d-1(b) under the Exchange Act, is or
becomes the Beneficial Owner, as such term is defined in Rule
13d-3 under the Exchange Act, directly or indirectly, of
securities
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of the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from
the Company or its affiliates other than in connection with
the acquisition by the Company or its affiliates of a
business) representing 50% or more of the combined voting
power of the Company's then outstanding securities;
(ii) there is consummated a merger or consolidation of
the Company with any other corporation, other than (A) a
merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) in combination
with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
any subsidiary of the Company, at least 40% of the combined
voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a
merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no person (as defined above) is or becomes the
beneficial owner, directly or indirectly, of securities of
of the Company (not including in the securities beneficially
owned by such person any securities acquired directly from
the Company or its affiliates other than in connection with
the acquisition by the Company or its affiliates of a
business) representing 60% or more of the combined voting
power of the Company's then outstanding securities; or
(iii) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there
is consummated an agreement for the sale or disposition by
the Company of all or substantially all of the Company's
assets (or any transaction having a similar effect) other
than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at
least 40% of the combined voting power of the voting
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securities of which are owned by stockholders of the Company
in substantially the same proportions as their owner ship of
the Company immediately prior to such sale.
(g) "Change in Control Price" means the higher of (i)
the highest price per share paid in any transaction constituting a Change in
Control or (ii) the highest Fair Market Value per share at any time during the
60-day period preceding or following a Change in Control.
(h) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(i) "Committee" means the Board or the commit tee
established by the Board to administer the Plan, the composition of which shall
at all times satisfy the provisions of Rule 16b-3.
(j) "Company" means Juno Lighting, Inc., a corporation
organized under the laws of the State of Delaware, or any successor corporation.
(k) "Dividend Equivalent" means a right, granted to a
Grantee under Section 6(g), to receive cash, Stock, or other property equal in
value to dividends paid with respect to a specified number of shares of Stock.
Dividend Equivalents may be awarded on a free-standing basis or in connection
with another Award, and may be paid currently or on a deferred basis.
(l) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and as now or hereafter construed,
interpreted and applied by regulations, rulings and cases.
(m) "Fair Market Value" means, with respect to Stock or
other property, the fair market value of such Stock or other property determined
by such methods or procedures as shall be established from time to time by the
Committee. Unless otherwise determined by the Committee in good faith, the per
share Fair Market Value of Stock as of a particular date shall mean (i) the
closing sales price per share of Stock on the national securities exchange on
which the Stock is principally traded, for the last preceding date on which
there was a sale of
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such Stock on such exchange, or (ii) if the shares of Stock are then traded in
an over-the-counter market, the average of the closing bid and asked prices for
the shares of Stock in such over-the-counter market for the last preceding date
on which there was a sale of such Stock in such market, or (iii) if the shares
of Stock are not then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee, in its sole discretion,
shall determine.
(n) "Grantee" means a person who, as an employee or
independent contractor of the Company, a Subsidiary or an Affiliate, has been
granted an Award or Loan under the Plan.
(o) "ISO" means any Option intended to be and designated
as an incentive stock option within the meaning of Section 422 of the Code.
(p) "Limited SAR" means a right granted pursuant to
Section 6(c) which shall, in general, be automatically exercised for cash upon a
Change in Control.
(q) "Loan" means the proceeds from the Company borrowed
by a Plan participant under Section 8 of the Plan.
(r) "NQSO" means any Option that is designated as a
nonqualified stock option.
(s) "Option" means a right, granted to a Grantee under
Section 6(b), to purchase shares of Stock. An Option may be either an ISO or an
NQSO; provided that, ISO's may be granted only to employees of the Company, a
Subsidiary or an Affiliate.
(t) "Other Cash-Based Award" means cash awarded under
Section 6(h), including cash awarded as a bonus or upon the attainment of
specified performance criteria or otherwise as permitted under the Plan.
(u) "Other Stock-Based Award" means a right or other
interest granted to a Grantee under Section 6(h) that may be denominated or
payable in, valued in whole or in part by reference to, or
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otherwise based on, or related to, Stock, including, but not limited to (1)
unrestricted Stock awarded as a bonus or upon the attainment of specified
performance criteria or otherwise as permitted under the Plan, and (2) a right
granted to a Grantee to acquire Stock from the Company for cash and/or a
promissory note containing terms and conditions prescribed by the Committee.
(v) "Performance Share" means an Award of shares of
Stock to a Grantee under Section 6(h) that is subject to restrictions based upon
the attainment of specified performance criteria.
(w) "Plan" means this Juno Lighting, Inc. 1999 Stock
Award and Incentive Plan, as amended from time to time.
(x) "Restricted Stock" means an Award of shares of Stock
to a Grantee under Section 6(d) that may be subject to certain restrictions and
to a risk of forfeiture.
(y) "Restricted Stock Unit" means a right granted to a
Grantee under Section 6(e) to receive Stock or cash at the end of a specified
deferral period, which right may be conditioned on the satisfaction of specified
performance or other criteria.
(z) "Rule 16b-3" means Rule 16b-3, as from time to time
in effect promulgated by the Securities and Exchange Commission under Section 16
of the Exchange Act, including any successor to such Rule.
(aa) "Stock" means shares of the common stock, par value
$.001 per share, of the Company.
(ab) "SAR" or "Stock Appreciation Right" means the
right, granted to a Grantee under Section 6(c), to be paid an amount measured by
the appreciation in the Fair Market Value of Stock from the date of grant to the
date of exercise of the right, with payment to be made in cash, Stock, or
property as specified in the Award or determined by the Committee.
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(ac) "Securities Act" means the Securities Act of 1933,
as amended from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and cases.
(ad) "Subsidiary" means any corporation in an unbroken
chain of corporations beginning with the Company if, at the time of granting of
an Award, each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
3. Administration.
The Plan shall be administered by the Committee. The Committee
shall have the authority in its discretion, subject to and not inconsistent with
the express provisions of the Plan, to administer the Plan and to exercise all
the powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Awards and make Loans; to determine the
persons to whom and the time or times at which Awards shall be granted and Loans
shall be made; to determine the type and number of Awards to be granted and the
amount of any Loan, the number of shares of Stock to which an Award may relate
and the terms, conditions, restrictions and performance criteria relating to any
Award or Loan; and to determine whether, to what extent, and under what
circumstances an Award may be settled, cancelled, forfeited, exchanged, or
surrendered; to reduce the exercise price of any Stock Option to the then Fair
Market Value, if the Fair Market Value of the Stock covered by such Stock Option
has declined since the date the Stock Option was granted; to make adjustments in
the terms and conditions of, and the criteria and performance objectives (if
any) included in, Awards and Loans in recognition of unusual or non-recurring
events affecting the Company or any Subsidiary or Affiliate or the financial
statements of the Company or any Subsidiary or Affiliate, or in response to
changes in applicable laws, regulations, or accounting principles; to designate
Affiliates; to construe and interpret the Plan and any Award or Loan; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the Award Agreements and any promissory
note or agreement related to any Loan
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(which need not be identical for each Grantee); and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Committee may appoint a chairperson and a secretary and may
make such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Committee shall be made by a majority of its members either present in person or
participating by conference telephone at a meeting or by written consent. The
Committee may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including the Company, and any Subsidiary, Affiliate or Grantee (or any person
claiming any rights under the Plan from or through any Grantee) and any
stockholder.
No member of the Board or Committee shall be liable for any
action taken or determination made in good faith with respect to the Plan or any
Award granted or Loan made hereunder.
4. Eligibility.
Subject to the conditions set forth below, Awards and Loans may
be granted to directors, including non-employee directors, selected employees
and independent contractors of the Company and its present or future
Subsidiaries and Affiliates, in the discretion of the Committee. In determining
the persons to whom Awards and Loans shall be granted and the type of any Award
or the amount of any Loan (including the number of shares to be covered by such
Award), the Committee shall take into account such factors as the Committee
shall deem relevant in connection with accomplishing the purposes of the Plan.
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5. Stock Subject to the Plan.
The maximum number of shares of Stock reserved for the grant of
Awards under the Plan shall be [940,000] shares of Stock, subject to adjustment
as provided herein. No more than 40% of the total shares available for grant may
be awarded to a single individual in a single year. Such shares may, in whole or
in part, be authorized but unissued shares or shares that shall have been or may
be reacquired by the Company in the open market, in private transactions or
otherwise. If any shares subject to an Award are forfeited, cancelled, exchanged
or surrendered or if an Award otherwise terminates or expires without a
distribution of shares to the Grantee, the shares of Stock with respect to such
Award shall, to the extent of any such forfeiture, cancellation, exchange,
surrender, termination or expiration, again be available for Awards under the
Plan; provided that, in the case of forfeiture, cancellation, exchange or
surrender of shares of Restricted Stock or Restricted Stock Units with respect
to which dividends or Dividend Equivalents have been paid or accrued, the number
of shares with respect to such Awards shall not be available for Awards
hereunder unless, in the case of shares with respect to which dividends or
Dividend Equivalents were accrued but unpaid, such dividends and Dividend
Equivalents are also forfeited, cancelled, exchanged or surrendered. Upon the
exercise of any Award granted in tandem with any other Awards or awards, such
related Awards or awards shall be cancelled to the extent of the number of
shares of Stock as to which the Award is exercised and, notwithstanding the
foregoing, such number of shares shall no longer be available for Awards under
the Plan.
In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, stock, or other
property), recapitalization, stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share ex change, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Grantees under the Plan, then the Commit tee shall make such equitable
changes or adjustments as it deems necessary or appropriate to any or all of (i)
the number and kind of shares of Stock or other securities which may thereafter
be issued in connection with Awards, (ii) the number and kind of shares of Stock
or other securities
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issued or issuable in respect of outstanding Awards, and (iii) the exercise
price, grant price, or purchase price relating to any Award; provided that, with
respect to ISOs, such adjustment shall be made in accordance with Section 424(h)
of the Code.
6. Specific Terms of Awards.
(a) General. The term of each Award shall be for such
period as may be determined by the Committee. Subject to the terms of the Plan
and any applicable Award Agreement, payments to be made by the Company or a
Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award may
be made in such forms as the Commit tee shall determine at the date of grant or
thereafter, including, without limitation, cash, Stock, or other property, and
may be made in a single payment or transfer, in installments, or on a deferred
basis. The Commit tee may make rules relating to installment or deferred
payments with respect to Awards, including the rate of interest to be credited
with respect to such payments. In addition to the foregoing, the Committee may
impose on any Award or the exercise thereof, at the date of grant or thereafter,
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine.
(b) Options. The Committee is authorized to grant
Options to Grantees on the following terms and conditions:
(i) Type of Award. The Award Agreement evidencing
the grant of an Option under the Plan shall designate the
Option as an ISO or an NQSO.
(ii) Exercise Price. The exercise price per share
of Stock purchasable under an Option shall be deter mined by
the Committee; provided that, in the case of an ISO, such
exercise price shall be not less than the Fair Market Value
of a share on the date of grant of such Option, and in no
event shall the exercise price for the purchase of shares be
less than par value. The exercise price for Stock subject to
an Option may be paid in cash or by an exchange of Stock
previously owned by the Grantee, or a combination of both, in
an amount having a combined value equal to
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such exercise price. A Grantee may also elect to pay all or a
portion of the aggregate exercise price by having shares of
Stock with a Fair Market Value on the date of exercise equal
to the aggregate exercise price withheld by the Company or
sold by a broker-dealer under circumstances meeting the
requirements of 12 C.F.R. Section 220 or any successor
thereof.
(iii) Term and Exercisability of Options. Unless
otherwise provided in an Award Agreement, the date on which
the Committee adopts a resolution expressly granting an
Option shall be considered the day on which such Option is
granted. Options shall be exercisable over the exercise
period (which shall not exceed ten years from the date of
grant), at such times and upon such conditions as the
Committee may determine, as reflected in the Award Agreement;
provided that, the Committee shall have the authority to
accelerate the exercisability of any outstanding Option at
such time and under such circumstances as it, in its sole
discretion, deems appropriate. An Option may be exercised to
the extent of any or all full shares of Stock as to which the
Option has become exercisable, by giving written notice of
such exercise to the Committee or its designated agent.
(iv) Termination of Employment, etc. An Option may
not be exercised unless the Grantee is then in the employ of,
or then maintains an independent contractor relationship
with, the Company or a Subsidiary or an Affiliate (or a
company or a parent or subsidiary company of such company
issuing or assuming the Option in a transaction to which
Section 424(a) of the Code applies), and unless the Grantee
has remained continuously so employed, or continuously
maintained such relationship, since the date of grant of the
Option; provided that, the Award Agreement may contain
provisions extending the exercisability of Options, in the
event of specified terminations, to a date not later than the
expiration date of such Option.
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(v) The Committee may require the voluntary
surrender of all or a portion of any Option granted under the
Plan as a condition precedent to the grant of a new Option.
Subject to the provisions of the Plan, such new Option shall
be exercisable at the price, during such period and on such
other terms and conditions as are specified by the Committee
at the time the new Option is granted. Consistent with the
provisions of Section 162(m), to the extent applicable, upon
their surrender, Options shall be canceled and the shares
previously subject to such canceled Options shall again be
available for grants of Options and other Awards hereunder.
(vi) Other Provisions. Options may be subject to
such other conditions including, but not limited to,
restrictions on transferability of the shares acquired upon
exercise of such Options, as the Committee may prescribe in
its discretion or as may be required by applicable law.
(c) SARs and Limited SARs. The Committee is authorized
to grant SARs and Limited SARs to Grantees on the following terms and
conditions:
(i) In General. Unless the Committee deter mines
otherwise, an SAR or a Limited SAR (1) granted in tandem with
an NQSO may be granted at the time of grant of the related
NQSO or at any time thereafter or (2) granted in tandem with
an ISO may only be granted at the time of grant of the
related ISO. An SAR or Limited SAR granted in tandem with an
Option shall be exercisable only to the extent the underlying
Option is exercisable.
(ii) SARs. An SAR shall confer on the Grantee a
right to receive an amount with respect to each share subject
thereto, upon exercise thereof, equal to the excess of (1)
the Fair Market Value of one share of Stock on the date of
exercise over (2) the grant price of the SAR (which in the
case of an SAR granted in tandem with an Option shall be
equal to the exercise price of the underlying
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Option, and which in the case of any other SAR shall be such
price as the Committee may determine).
(iii) Limited SARs. A Limited SAR shall confer on
the Grantee a right to receive with respect to each share
subject thereto, automatically upon the occurrence of a
Change in Control, an amount equal in value to the excess of
(1) the Change in Control Price (in the case of a LSAR
granted in tandem with an ISO, the Fair Market Value), of one
share of Stock on the date of such Change in Control over (2)
the grant price of the Limited SAR (which in the case of a
Limited SAR granted in tandem with an Option shall be equal
to the exercise price of the underlying Option, and which in
the case of any other Limited SAR shall be such price as the
Committee determines); provided that, in the case of a
Limited SAR granted to a Grantee who is subject to the
reporting requirements of Section 16(a) of the Exchange Act
(a "Section 16 Individual"), such Section 16 Individual shall
only be entitled to receive such amount if such Limited SAR
has been outstanding for at least six (6) months as of the
date of the Change in Control.
(d) Restricted Stock. The Committee is authorized to
grant Restricted Stock to Grantees on the following terms and conditions:
(i) Issuance and Restrictions. Restricted Stock
shall be subject to such restrictions on transferability and
other restrictions, if any, as the Committee may impose at
the date of grant or thereafter, which restrictions may lapse
separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the
Committee may determine. Such restrictions may include
factors relating to the increase in the value of the Stock or
to individual or Company performance such as the attainment
of certain specified individual, divisional or Company-wide
performance goals, sales volume increases or increases in
earnings per share. Except to the extent restricted under the
Award Agreement relating to the Restricted Stock, a
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<PAGE> 87
Grantee granted Restricted Stock shall have all of the rights
of a stockholder including, without limitation, the right to
vote Restricted Stock and the right to receive dividends
thereon.
(ii) Forfeiture. Upon termination of employment
with or service to the Company, or upon termination of the
independent contractor relationship, as the case may be,
during the applicable restriction period, Restricted Stock
and any accrued but unpaid dividends or Dividend Equivalents
that are at that time subject to restrictions shall be
forfeited; provided that, the Committee may provide, by rule
or regulation or in any Award Agreement, or may determine in
any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock will be waived in
whole or in part in the event of terminations resulting from
specified causes, and the Committee may in other cases waive
in whole or in part the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock
granted under the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing
Restricted Stock are registered in the name of the Grantee,
such certificates shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company shall retain physical
possession of the certificate.
(iv) Dividends. Dividends paid on Restricted Stock
shall be either paid at the dividend payment date, or
deferred for payment to such date as determined by the
Committee, in cash or in shares of unrestricted Stock having
a Fair Market Value equal to the amount of such dividends.
Stock distributed in connection with a stock split or stock
dividend, and other property distributed as a dividend, shall
be subject to restrictions and a risk of forfeiture to the
same extent as the Restricted Stock with respect to which
such Stock or other property has been distributed.
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(e) Restricted Stock Units. The Committee is
authorized to grant Restricted Stock Units to Grantees,
subject to the following terms and conditions:
(i) Award and Restrictions. Delivery of Stock or
cash, as determined by the Committee, will occur upon
expiration of the deferral period specified for Restricted
Stock Units by the Committee. In addition, Restricted Stock
Units shall be subject to such restrictions as the Committee
may impose, at the date of grant or thereafter, which
restrictions may lapse at the expiration of the deferral
period or at earlier or later specified times, separately or
in combination, in installments or otherwise, as the
Committee may determine. Such restrictions may include
factors relating to the increase in the value of the Stock or
to individual or Company performance such as the attainment
of certain specified individual, divisional or Company-wide
performance goals, sales volume increases or increases in
earnings per share.
(ii) Forfeiture. Upon termination of employment or
termination of the independent contractor relation ship
during the applicable deferral period or portion thereof to
which forfeiture conditions apply, or upon failure to satisfy
any other conditions precedent to the delivery of Stock or
cash to which such Restricted Stock Units relate, all
Restricted Stock Units that are then subject to deferral or
restriction shall be forfeited; provided that, the Committee
may provide, by rule or regulation or in any Award Agreement,
or may determine in any individual case, that restrictions or
forfeiture conditions relating to Restricted Stock Units will
be waived in whole or in part in the event of termination
resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of
Restricted Stock Units.
(f) Stock Awards in Lieu of Cash Awards. The Committee
is authorized to grant Stock as a bonus, or to grant other Awards, in lieu of
Company commitments to pay cash under other plans
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<PAGE> 89
or compensatory arrangements. Stock or Awards granted hereunder shall have such
other terms as shall be determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized
to grant Dividend Equivalents to Grantees. The Committee may provide, at the
date of grant or thereafter, that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in
additional Stock, or other investment vehicles as the Committee may specify,
provided that Dividend Equivalents (other than freestanding Dividend
Equivalents) shall be subject to all conditions and restrictions of the
underlying Awards to which they relate.
(h) Performance Shares and Other Stock- or Cash- Based
Awards. The Committee is authorized to grant to Grantees Performance Shares
and/or Other Stock-Based Awards or Other Cash- Based Awards as an element of or
supplement to any other Award under the Plan, as deemed by the Committee to be
consistent with the purposes of the Plan. Such Awards may be granted with value
and payment contingent upon performance of the Company or any other factors
designated by the Committee, or valued by reference to the performance of
specified Subsidiaries or Affiliates. The Committee shall determine the terms
and conditions of such Awards at the date of grant or, to the extent permitted
by Section 162(m) of the Code, thereafter; provided, that performance objectives
for each year shall be established by the Committee not later than the latest
date permissible under Section 162(m) of the Code. Such performance objectives
may be expressed in terms of one or more financial or other objective goals.
Financial goals may be expressed, for example, in terms of sales, earnings per
share, stock price, return on equity, net earnings growth, net earnings, related
return ratios, cash flow, earnings before interest, taxes, depreciation and
amortization (EBITDA), return on assets or total stockholder return. Other
objective goals may include the attainment of various productivity and long-term
growth objectives, including, without limitation reductions in the Company's
overhead ratio and expense to sales ratios. Any criteria may be measured in
absolute terms or as compared to another corporation or corporations. To the
extent applicable, any such performance objective shall be determined (i) in
accordance with the Company's audited financial statements and generally
accepted accounting principles and reported upon by the Company's independent
accountants
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<PAGE> 90
or (ii) so that a third party having knowledge of the relevant facts
could determine whether such performance objective is met. Performance
objectives shall include a threshold level of performance below which no Award
payment shall be made, levels of performance above which specified percentages
of target Awards shall be paid, and a maximum level of performance above which
no additional Award shall be paid. Performance objectives established by the
Committee may be (but need not be) different from year-to-year and different
performance objectives may be applicable to different Grantees.
7. Change in Control Provisions.
The following provisions shall apply in the event of a Change of
Control unless otherwise determined by the Committee or the Board in writing, at
or after the grant of an Award, but prior to the occurrence of such Change in
Control:
(a) no Award carrying a right to exercise that was not
previously exercisable and vested shall become fully exercisable and vested; and
(b) the restrictions, deferral limitations, payment
conditions, and forfeiture conditions applicable to any other Award granted
under the Plan shall remain in full force and effect.
8. Loan Provisions.
Subject to the provisions of the Plan and all applicable federal
and state laws, rules and regulations (including, if applicable, the
requirements of Regulation T (12 C.F.R. Section 220) and Regulation U (12 C.F.R.
Section 221)), the Committee shall have the authority to make Loans to Grantees
(on such terms and conditions as the Committee shall deter mine), to enable such
Grantees to purchase shares in connection with the realization of Awards under
the Plan. Loans shall be evidenced by a promissory note or other agreement,
signed by the borrower, which shall contain provisions for repayment and such
other terms and conditions as the Committee shall determine.
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9. General Provisions.
(a) Approval of Shareholders. The Plan shall take
effect upon its adoption by the Board but the Plan (and any grants of Awards
made prior to the shareholder approval mentioned herein) shall be subject to
ratification by the holder(s) of a majority of the issued and outstanding shares
of voting securities of the Company entitled to vote, which ratification must
occur within twelve (12) months of the date that the Plan is adopted by the
Board. In the event that the shareholders of the Company do not ratify the Plan
at a meeting of the shareholders at which such issue is considered and voted
upon, then upon such event the Plan and all rights hereunder shall immediately
terminate and no Grantee (or any permitted transferee thereof) shall have any
remaining rights under the Plan or any Award Agreement entered into in
connection herewith.
(b) Nontransferability. Awards shall not be
transferable by a Grantee except by will or the laws of descent and distribution
or, if then permitted under Rule 16b-3, pursuant to a qualified domestic
relations order as defined under the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder, and shall be
exercisable during the lifetime of a Grantee only by such Grantee or his
guardian or legal representative.
(c) No Right to Continued Employment, etc. Nothing in
the Plan or in any Award or Loan granted or any Award Agreement, promissory note
or other agreement entered into pursuant hereto shall confer upon any Grantee
the right to continue in the employ of or to continue as an independent
contractor of the Company, any subsidiary or any Affiliate or to be entitled to
any remuneration or benefits not set forth in the Plan or such Award Agreement,
promissory note or other agreement or to interfere with or limit in any way the
right of the Company or any such Subsidiary or Affiliate to terminate such
Grantee's employment or independent contractor relationship.
(d) Taxes. The Company or any Subsidiary or Affiliate
is authorized to withhold from any Award granted, any payment relating to an
Award under the Plan, including from a distribution of Stock, or any other
payment to a Grantee, amounts of withholding and
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<PAGE> 92
other taxes due in connection with any transaction involving an Award, and to
take such other action as the Committee may deem advisable to enable the Company
and Grantees to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Grantee's tax obligations.
(e) Amendment and Termination of the Plan. The Board
may at any time and from time-to-time alter, amend, suspend, or terminate the
Plan in whole or in part; provided that, no amendment which requires stockholder
approval in order for the Plan to continue to comply with Rule 16b-3, shall be
effective unless the same shall be approved by the requisite vote of the
stockholders of the Company entitled to vote thereon. Notwithstanding the
foregoing, no amendment shall affect adversely any of the rights of any Grantee,
without such Grantee's consent, under any Award or Loan theretofore granted
under the Plan.
(f) No Rights to Awards or Loans; No Stockholder
Rights. No Grantee shall have any claim to be granted any Award or Loan under
the Plan, and there is no obligation for uniformity of treatment of Grantees.
Except as provided specifically herein, a Grantee or a transferee of an Award
shall have no rights as a stockholder with respect to any shares covered by the
Award until the date of the issuance of a stock certificate to him for such
shares.
(g) Unfunded Status of Awards. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Grantee pursuant to an Award, nothing
contained in the Plan or any Award shall give any such Grantee any rights that
are greater than those of a general creditor of the Company.
(h) No Fractional Shares. No fractional shares of Stock
shall be issued or delivered pursuant to the Plan or any Award. The Committee
shall determine whether cash, other Awards, or other property shall be issued or
paid in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
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<PAGE> 93
(i) Regulations and Other Approvals.
(i) The obligation of the Company to sell or
deliver Common Stock with respect to any Award granted under
the Plan shall be subject to all applicable laws, rules and
regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or
appropriate by the Committee.
(ii) Each Award is subject to the requirement that,
if at any time the Committee determines, in its absolute
discretion, that the listing, registration or qualification
of Common Stock issuable pursuant to the Plan is required by
any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection
with, the grant of an Award or the issuance of Common Stock,
no such Award shall be granted or payment made or Common
Stock issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been
effected or obtained free of any conditions not accept able
to the Committee.
(iii) In the event that the disposition of Common
Stock acquired pursuant to the Plan is not covered by a then
current registration statement under the Securities Act and
is not otherwise exempt from such registration, such Common
Stock shall be restricted against transfer to the extent
required by the Securities Act or regulations thereunder, and
the Committee may require a Grantee receiving Common Stock
pursuant to the Plan, as a condition precedent to receipt of
such Common Stock, to represent to the Company in writing
that the Common Stock acquired by such Grantee is acquired
for investment only and not with a view to distribution.
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(j) Governing Law. The Plan and all determinations made
and actions taken pursuant hereto shall be governed by the laws of the State of
Delaware without giving effect to the conflict of laws principles thereof.
(k) Effective Date; Plan Termination. The Plan shall
take effect upon its adoption by the Board (the "Effective Date"), but the Plan
(and any grants of Awards made prior to the stockholder approval mentioned
herein), shall be subject to the approval of the holder(s) of a majority of the
issued and outstanding shares of voting securities of the Company entitled to
vote, which approval must occur within twelve months of the date the Plan is
adopted by the Board. In the absence of such approval, such Awards shall be null
and void. Notwithstanding the foregoing, the effectiveness of the Plan and the
validity of any Award or Loan granted hereunder is conditioned upon the
consummation of the merger of Jupiter Acquisition Corp. with and into the
Company (the "Merger") and shall be of no force and effect if the Merger is not
consummated.
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EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
JUNO LIGHTING, INC.
Juno Lighting, Inc. (the "Corporation"), a corporation organized and
duly existing under the General Corporation Law of the State of Delaware (the
"GCL") does hereby certify as follows:
(a) The original certificate of incorporation of the Corporation was
filed with the office of the Secretary of State of the State of Delaware on July
13, 1983.
(b) This Amended and Restated Certificate of Incorporation was duly
adopted by the Board of Directors of the Corporation (the "Board of Directors")
and by the stockholders of the Corporation in accordance with Sections 242 and
245 of the GCL.
(c) This Amended and Restated Certificate of Incorporation restates
and integrates and further amends the certificate of incorporation of the
Corporation, as heretofore amended or supplemented (the "Certificate of
Incorporation").
(d) The text of the Certificate of Incorporation is hereby amended and
restated in its entirety as follows:
<PAGE> 96
FIRST: The name of the Corporation is Juno Lighting, Inc. (hereinafter
the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at that address is The Corporation
Trust Company
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware
Code (the "GCL").
FOURTH:
A. The total number of shares of stock which the Corporation shall
have authority to issue is Fifty Million (50,000,000) shares of capital stock,
consisting of Forty-Five Million (45,000,000) shares of Common Stock, each
having a par value of $0.001 per share, and Five Million (5,000,000) shares of
Preferred Stock, each having a par value of $0.001 per share, of which One
Million Sixty Thousand (1,060,000) shares shall be designated Series A
Convertible Preferred Stock (the "Series A Preferred").
B. The Board of Directors is expressly authorized to provide for the
issuance of all or any of the remaining shares of the Preferred Stock in one or
more classes or series, and to fix for each such class or series such voting
powers, full or limited, or no voting powers, and such distinctive designations,
preferences and relative, participating, optional or other special rights and
such qualifications, limitations or restrictions thereof, as shall be stated and
expressed in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of such class or series and as may be permitted by
the GCL, including, without limitation, the authority to provide that any such
class or series may be (i) subject to redemption at such time or times and at
such price or prices; (ii) entitled to receive dividends (which may be
cumulative or non-cumulative) at such rates, on such conditions, and at such
times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes or any other series; (iii) entitled to
such rights upon the dissolution of, or upon any distribution of the assets of,
the Corporation; or (iv) convertible into, or exchangeable for, shares of any
other class or classes of stock, or
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of any other series of the same or any other class or classes of stock, of the
Corporation at such price or prices or at such rates of exchange and with such
adjustments; all as may be stated in such resolution or resolutions.
C. The rights, preferences, privileges, restrictions and other matters
relating to the Series A Preferred are as follows:
1. Dividends
(a) The holders of shares of Series A Preferred shall be entitled
to receive, whether or not declared by the Board of Directors, cumulative
quarterly dividends equal to the greater of: (i) dividends which would have been
payable to such holders of shares of Series A Preferred in such quarter had such
holders converted such shares of Series A Preferred into Common Stock
immediately prior to the record date of any dividend declared on the Common
Stock in such quarter, or (ii) 2% of the Stated Amount (as defined below) per
share. Dividends payable in respect of outstanding shares of Series A Preferred
shall begin to accrue and compound quarterly (by virtue of the increase to the
Stated Amount per share in accordance with Section 1(b) hereof) on the last day
of each of November, February, May and August in each year (each such date being
a "Quarterly Dividend Accrual Date") commencing in respect of each outstanding
share of Series A Preferred on the first Quarterly Dividend Accrual Date
occurring on or after the date that the first share of Preferred Stock is issued
(the "Original Issuance Date"), and continuing up to and including the last
Quarterly Dividend Accrual Date occurring on or prior to the fifth anniversary
of the Original Issuance Date (the "Final Quarterly Dividend Accrual Date"). For
purposes hereof, the Stated Amount shall mean $100 per share, as adjusted
pursuant to Section 1(b).
(b) The dividend set forth in Section 1(a) hereof shall be not be
payable in cash, but shall be payable by an increase, effective on each
Quarterly Dividend Accrual Date, in the Stated Amount Per Share equal to all
dividends which have accumulated on each outstanding share of Series A Preferred
during the quarterly period ending on the Quarterly Dividend Accrual Date (or
for such shorter period beginning on the date of issuance in the case of the
initial Quarterly Dividend Accrual Date).
(c) With respect to periods after the Final Quarterly Dividend
Accrual Date, the holders of shares of Series A Preferred shall be entitled to
receive, on the last day of such fiscal quarter and each fiscal quarter
thereafter (each such date, a "Cash Dividend Payment Date") out of funds legally
available for
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such purpose, cash dividends in an amount equal to the greater of: (i) dividends
which would have been payable to such holders of shares of Series A Preferred in
such quarter had such holders converted such shares of Series A Preferred into
Common Stock immediately prior to the record date of any dividend declared on
the Common Stock in such quarter, or (ii) 2% of the Stated Amount then in
effect. Such dividends shall be cumulative and shall accrue from and after each
Cash Dividend Payment Date whether or not declared by the Board of Directors and
whether or not there are any funds of the Corporation legally available for the
payment of dividends. Accrued but unpaid dividends shall not bear interest.
(d) The Board of Directors of the Corporation may fix a record date
for the determination of holders of Series A Preferred entitled to receive
payment of a dividend thereon pursuant to Section 1(a) or Section 1(c) hereof,
which record date shall be no more than sixty (60) days prior to the date fixed
for the payment thereof. All cash payments shall be made in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
(e) As long as any shares of Series A Preferred shall remain
outstanding, in no event shall any dividend be declared or paid upon, nor shall
any distribution be made upon, any capital stock of the Corporation other than
the Series A Preferred ("Junior Capital Stock"), including the Common Stock,
other than a dividend or distribution payable solely in shares of Common Stock,
nor shall any Junior Capital Stock be purchased or redeemed by the Corporation,
nor shall any monies be paid to or made available for a sinking fund for the
purchase or redemption of shares of any Junior Capital Stock, unless, in each
such case, (i) full cumulative dividends payable pursuant to Section 1(c)
hereof on the outstanding shares of Series A Preferred have been declared and
paid and (ii) any arrears or defaults in any redemption of shares of Series A
Preferred shall have been cured.
2. Protective Provisions
So long as at least 500,000 shares of Series A Preferred shall
be outstanding and unless the consent or approval of a greater number of shares
shall then be required by law, without first obtaining the consent or approval
of the holders of a majority of the number of then-outstanding shares of Series
A Preferred Stock, given in person or by proxy at a meeting at which the holders
of such shares shall be entitled to vote separately as a class, or by written
consent, the Corporation shall not:
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(a) authorize or create any class or series, or any shares of
any class or series, of capital stock of the Corporation having any preference
or priority (either as to dividends or upon redemption, liquidation,
dissolution, or winding up) over the Series A Preferred ("Senior Stock");
(b) authorize or create any class or series, or any shares of
any class or series, of capital stock of the Corporation ranking on parity
(either as to dividends or upon redemption, liquidation, dissolution or winding
up) with the Series A Preferred ("Parity Stock"); or
(c) reclassify, convert or exchange any shares of any capital
stock of the Corporation into shares of Senior Stock or Parity Stock;
(d) authorize any security exchangeable for, convertible into,
or evidencing the right to purchase any shares of Senior Stock or Parity Stock;
(e) amend, alter, repeal or waive any provision of the
Corporation's Certificate of Incorporation, as it may be amended from time to
time, or the Corporation's By-Laws, as they may be amended from time to time, to
alter or change the powers, designations, preferences, rights and
qualifications, limitations or restrictions of Series A Preferred Stock;
(f) redeem or repurchase any, shares of Junior Capital Stock,
other than from time to time during the period in which shares of Series A
Preferred Stock are outstanding, redemptions or repurchases of Junior Stock held
by management of the Corporation in connection with termination of employment,
retirement and similar circumstances; or
(g) increase or decrease the number of authorized shares of
Preferred Stock, Common Stock or any other capital stock of the Company.
3. Redemption
(a) Subject to the provisions of any credit agreement, loan
agreement or indenture entered into by the Corporation, the Corporation may, at
any time after the ninth anniversary of the original Issuance Date, redeem, out
of funds legally available therefor, all, but not less than all, outstanding
shares of Series A Preferred Stock by paying for each share of Series A
Preferred an amount in cash equal to the Stated Amount then in effect plus the
amount of any accumulated but unpaid cash dividends as of the Redemption Date
(as defined below).
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(b) Notice of any redemption of shares of Series A Preferred
pursuant to Section 3(a) (the "Redemption Notice") shall be mailed not less than
60 days prior to the date fixed for redemption to each holder of shares of
Series A Preferred to be redeemed, at such holder's address as it appears on the
transfer books of the Corporation, notifying each such holder of the redemption
to be effected and specifying the redemption date (the "Redemption Date"),
redemption price (the "Redemption Price"), the place at which payment may be
obtained and requesting each such holder to surrender to the Corporation, in the
manner and at the place designated, his certificate or certificates representing
the shares of Series A Preferred to be redeemed. On or after the Redemption
Date, each holder of Series A Preferred who has not previously elected to
convert its shares of Series A Preferred into Common Stock pursuant to Section 5
hereof shall surrender to the Corporation the certificate or certificates
representing such shares, in the manner and at the place designated in the
Redemption Notice, and thereupon the Redemption Price of such shares shall be
payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be
cancelled. In order to facilitate the redemption of shares of Series A
Preferred, the Board may fix a record date for the determination of the holders
of shares of Series A Preferred to be redeemed, not more than 60 days or less
than 10 days prior to the date fixed for such redemption.
(c) From and after any Redemption Date, unless there shall have
been a default in payment of the Redemption Price, all rights of the holders of
shares of Series A Preferred shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of the Corporation or be
deemed to be outstanding for any purpose whatsoever.
(d) On or prior to any Redemption Date, the Corporation shall
deposit the aggregate Redemption Price of all shares of Series A Preferred with
a bank or trust corporation having aggregate capital and surplus in excess of
$100,000,000 as a trust fund for the benefit of the respective holders of the
shares of Series A Preferred not yet redeemed, with irrevocable instructions and
authority to the bank or trust corporation to pay the Redemption Price for such
shares to their respective holders on or after the Redemption Date upon receipt
of notification from the Corporation that such holder has surrendered his share
certificate to the Corporation pursuant to section 3(b) above. As of the
Redemption Date, the deposit shall constitute full payment of the shares to
their holders, and from and after the Redemption Date the shares so called for
redemption shall be redeemed and deemed to be no longer outstanding, and the
holders thereof shall cease to be stockholders with respect to such shares and
shall have no rights with respect thereto except the right to receive
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<PAGE> 101
from the bank or trust corporation payment of the Redemption Price of the
shares, without interest, upon surrender of certificates therefor. Such
instructions shall also provide that any moneys deposited by the Corporation
pursuant to this Section 3(d) for the redemption of shares thereafter converted
into shares of the Corporation's Common Stock pursuant to Section 5 hereof prior
to the Redemption Date shall be returned to the Corporation forthwith upon such
conversion. The balance of any moneys deposited by the Corporation pursuant to
this Section 3(d) remaining unclaimed at the expiration of two (2) years
following the Redemption Date shall thereafter be returned to the Corporation
upon its request expressed in a resolution of the Board of Directors.
4. Liquidation, Dissolution or Winding Up
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series A
Preferred then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, before any payment
shall be made to the holders of any shares of Junior Capital Stock by reason of
their ownership thereof, an amount (the "Liquidation Preference") equal to the
greater of (i) the amount the holders of Series A Preferred would have received
had they converted their shares of Preferred Stock into Common Stock, in
accordance with the provisions of Section 5 hereof, immediately prior to such
liquidation, dissolution or winding up and (ii) the Stated Amount then in effect
plus (A) if such liquidation, dissolution or winding up occurs prior to the
Final Quarterly Dividend Accrual Date, the increase in the Stated Amount which
would have occurred on the Quarterly Dividend Accrual Date next following such
liquidation, dissolution or winding up, pro rated to the date of such
liquidation, dissolution or winding up or (B) if such liquidation, dissolution
or winding up occurs after the Final Quarterly Dividend Accrual Date, the amount
of any accumulated but unpaid cash dividends as of the date of such event. If
upon any such liquidation, dissolution or winding up of the Corporation the
remaining assets of the Corporation available for distribution to its
stockholders shall be insufficient to pay the holders of shares of Series A
Preferred the full amount to which they shall be entitled pursuant to this
Section 4(a), the holders of shares of Series A Preferred, and any other shares
ranking on a parity therewith, shall share ratably in any distribution of the
remaining assets and funds of the Corporation in proportion to the respective
amounts which would otherwise be payable in respect of the shares of Series A
Preferred held by them upon such distribution if all amounts payable on or with
respect to such shares were paid in full.
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(b) After the payment of all amounts required to be paid
pursuant to Section 4(a) to the holders of shares of Series A Preferred, and any
other shares ranking on a parity therewith, upon the dissolution, liquidation or
winding up of the Corporation, the holders of shares of Junior Capital Stock
then outstanding shall share in any distribution of the remaining assets and
funds of the Corporation in the manner provided by law, in the Restated
Certificate of Incorporation of the Corporation, as amended, or as provided in
any pertinent Certificate of Designations of the Corporation, as the case may
be.
(c) For purposes of this Section 4, (i) any acquisition of the
Corporation by means of a merger or other form of corporate reorganization in
which outstanding shares of the Corporation are exchanged for securities or
other consideration issued, or caused to be issued, by the acquiring corporation
or its subsidiary (other than a mere reincorporation transaction), (ii) any
other transaction or series of transactions which result in the voting
securities of the Company outstanding immediately prior thereto representing
less than 50% of the combined voting power of the Corporation immediately after
such transaction or (iii) any sale of all or substantially all of the assets of
the Corporation other than to a subsidiary of the Corporation, shall be treated
as a liquidation, dissolution or winding up of the Corporation and shall entitle
the holders of Preferred Stock to receive at the closing of such transaction the
Liquidation Preference.
5. Conversion
(a) Subject to the terms and conditions of this Section 5, the
holder of any share or shares of Series A Preferred shall have the right, at
his, her or its option at any time, to convert any such shares of Series A
Preferred into such number of fully paid and nonassessable whole shares of
Common Stock as is obtained by dividing (i) the Stated Amount per share then in
effect plus (A) if such conversion occurs prior to the Final Quarterly Dividend
Accrual Date, the increase in the Stated Amount which would have occurred on the
Quarterly Dividend Accrual Date next following such conversion, pro rated to the
date of such conversion or (B) if such conversion occurs after the Final
Quarterly Dividend Accrual Date, the amount of any accumulated but unpaid cash
dividends as of the date of such conversion, by (ii) the conversion price of
$26.25 per share, or, if there has been an adjustment of the conversion price,
by the conversion price as last adjusted and in effect at the date any share or
shares of Series A Preferred are surrendered for conversion (such price, or such
price as last adjusted, being referred to herein as the "Conversion Price").
Such right of conversion shall be exercised by the holder thereof by giving
written notice that the holder elects to convert a stated number of shares of
Series A Preferred into
8
<PAGE> 103
Common Stock and by surrender of a certificate or certificates for the shares so
to be converted to the Corporation at its principal office (or such other office
or agency of the Corporation as the Corporation may designate by notice in
writing to the holder or holders of the Series A Preferred) at any time during
its usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address), subject to compliance with
applicable laws to the extent such designation shall involve a transfer, in
which the certificate or certificates for shares of Common Stock shall be
issued.
(b) Promptly after the receipt by the Corporation of the written
notice referred to in Section 5(a) above and surrender of the certificate or
certificates for the share or shares of the Series A Preferred to be converted,
the Corporation shall issue and deliver, or cause to be issued and delivered, to
the holder, registered in such name or names as such holder may direct, subject
to compliance with applicable laws to the extent such designation shall involve
a transfer, a certificate or certificates for the number of whole shares of
Common Stock issuable upon the conversion of such share or shares of Series A
Preferred. To the extent permitted by law, such conversion shall be deemed to
have been effected and the Conversion Price shall be determined as of the close
of business on the date on which such written notice shall have been received by
the Corporation and the certificate or certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such shares or shares of Series A Preferred shall cease, and the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares represented thereby.
(c) (i) No fractional shares shall be issued upon conversion of
the Series A Preferred into Common Stock and the number of shares of Common
Stock to be issued shall be rounded to the nearest whole share. If any
fractional interest in a share of Common Stock would, except for the provisions
of this Section 5(c), be deliverable upon any such conversion, the Corporation,
in lieu of delivering the fractional share thereof, shall pay to the holder
surrendering the Preferred Stock for conversion an amount in cash equal to the
current fair market value of such fractional interest based upon the closing
price of the Common Stock on the NASDAQ National Market or, any other national
securities exchange on which such Common Stock is then traded, on the trading
day prior to the date of the notice of conversion, or if such Common Stock is
not then traded on a national securities exchange, as determined in good faith
by the Board of Directors of the Corporation.
9
<PAGE> 104
(ii) In case the number of shares of Series A Preferred
represented by the certificate or certificates surrendered pursuant to Section
5(a) exceeds the number of shares converted, the Corporation shall, upon such
conversion, execute and deliver to the holder thereof, at the expense of the
Corporation, a new certificate or certificates for the number of shares of
Series A Preferred Stock represented by the certificate or certificates
surrendered which are not to be converted.
(d) In the event that the Corporation shall declare or pay,
without consideration, any dividend or other distribution on the then
outstanding shares of Common Stock payable in Common Stock or in any right to
acquire Common Stock for no consideration (other than any dividend or
distribution made pursuant to any rights agreement entered into by the Company
after the date hereof, the terms of which provide for a dividend or distribution
to be made upon the occurrence of events substantially similar to those events
which would have resulted in a dividend or distribution under the terms of that
certain Rights Agreement between the Company and The First National Bank of
Chicago, as Rights Agent, dated as of August 3, 1989, as in effect immediately
prior to the date hereof (any such dividend or distribution, a "Rights Plan
Distribution")), or shall effect a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by stock split,
reclassification or otherwise than by payment of a dividend in Common Stock or
in any right to acquire Common Stock), or in the event that the then outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, then the applicable
Conversion Price for the Series A Preferred in effect immediately prior to such
event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate. In the event that the
Corporation shall declare or pay, without consideration, any dividend on the
then outstanding shares of Common Stock payable in any right to acquire Common
Stock for no consideration, then the Corporation shall be deemed to have made a
dividend payable in Common Stock in an amount of shares equal to the maximum
number of shares issuable upon exercise of such rights to acquire Common Stock.
(e) In the event that the Corporation shall declare or pay,
without consideration, any dividend or other distribution on the then
outstanding shares of Common Stock payable in securities of the Corporation
other than Common Stock or in any right to acquire securities of the Corporation
other than Common Stock for no consideration (other than a Rights Plan
Distribution) and other than as otherwise adjusted in this Section 5, then in
each such event provision shall be made
10
<PAGE> 105
so that the holders of the Series A Preferred shall be entitled to receive a
proportionate share of any such dividend or distribution as though they were the
holders of the number of shares of Common Stock of the corporation into which
their shares of Series A Preferred are convertible as of the record date fixed
for the determination of the holders of Common Stock of the corporation entitled
to receive such dividend or other distribution.
(f) If the Common Stock issuable upon conversion of the Series A
Preferred shall be changed into the same or a different number of shares of any
other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for in Section 5(d) above or a merger or other reorganization referred
to in Section 4(c) above), the Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or reclassification,
be proportionately adjusted so that the Series A Preferred shall be convertible
into, in lieu of the number of shares of Common Stock which the holders would
otherwise have been entitled to receive, a number of shares of such other class
of classes of stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon conversion of the Series
A Preferred immediately before that change. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 5
with respect to the rights of the holders of Series A Preferred after the
capital reorganization, reclassification or other action to the end that the
provisions of this Section 5 (including adjustment of the Conversion Price then
in effect and the number of shares issuable upon conversion of the Series A
Preferred) shall be applicable after such action and be as nearly equivalent as
possible.
(g) Upon any adjustment of the Conversion Price, then and in
each such case the Corporation shall give written notice thereof, by first class
mail, postage prepaid, addressed to each holder of shares of Series A Preferred
at the address of such holder as shown on the books of the Corporation (or its
transfer agent, if any), which notice shall state the Conversion Price resulting
from such adjustment, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
(h) In case at any time:
(i) the Corporation shall declare any dividend upon its
Common Stock payable in cash or stock or make any other distribution to the
holders of its Common Stock;
11
<PAGE> 106
(ii) the Corporation shall offer for subscription pro rata
to the holders of its Common Stock any additional shares of stock of any class
or other rights;
(iii) there shall be any reorganization, recapitalization
or reclassification of the capital stock of the Corporation (a "Reorganization")
or the Corporation shall enter into an agreement with respect to any transaction
described in Section 4(c) hereof (a "Change of Control Transaction"); or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, addressed to each holder of any shares of Series A
Preferred at the address of such holder as shown on the books of the Corporation
(or its transfer agent, if any), (A) at least 15 days' prior written notice of
the date on which the books of the Corporation (or its transfer agent) shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such Reorganization
or Change of Control Transaction, and (B) in the case of any such Reorganization
or Change of Control Transaction, at least 15 days' prior written notice of the
date when the same shall take place. Such notice in accordance with the
foregoing clause (A) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto, and such notice in accordance with the
foregoing clause (B) shall also specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such Reorganization or Change of Control Transaction,
as the case may be.
(i) All outstanding shares of Convertible Preferred Stock shall,
at the option of the Corporation, be automatically converted into Common Stock,
in accordance with the provisions of this Section 5, if at any time the number
of outstanding shares of Series A Preferred is less than or equal to 250,000.
(j) The Corporation will at all times reserve and keep available
out of its authorized but unissued Common Stock, solely for the purpose of
issuance upon the conversion of the Series A Preferred as herein provided, such
number of shares of Common Stock as shall then be issuable upon the conversion
of all outstanding shares of Series A Preferred. All shares of Common Stock
which shall be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges arising out of or by
reason of the issue thereof, and,
12
<PAGE> 107
without limiting the generality of the foregoing, the Corporation covenants that
it will from time to time take all such action as may be requisite to assure
that the par value per share of the Common Stock is at all times equal to or
less than the effective Conversion Price. The Corporation will take all such
action within its control as may be necessary on its part to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law or regulation, or of any requirements of any national securities exchange
upon which the Common Stock of the Corporation may be listed.
(k) Shares of Series A Preferred that are converted into shares
of Common Stock as provided herein shall not be reissued.
(l) The issuance of certificates for shares of Common Stock upon
conversion of the Series A Preferred Stock shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of Series A Preferred which is being
converted.
(m) The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 5
and in the taking of all such action as may be necessary or appropriate in order
to protect the conversion rights of the holders of the Series A Preferred
against impairment.
6. Voting Except as otherwise provided by law or in Section 2 above,
the holders of the Series A Preferred shall vote together with the holders of
Common Stock on all matters to be voted on by the stockholders of the
Corporation, and each holder of Series A Preferred shall be entitled to one vote
for each whole share of Common Stock that would be issuable to such holder upon
the conversion of all the shares of Series A Preferred held by such holder on
the record date for the determination of stockholders entitled to vote.
SIXTH: The following provisions are inserted for the
management of the business and the conduct of the affairs of the Corporation,
and for further definition, limitation and regulation of the powers of the
Corporation and of its directors and stockholders:
13
<PAGE> 108
(1) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stock
holders to make, alter, amend, change, add to or repeal the By-Laws of
the Corporation.
(3) The number of directors of the Corporation shall be as
from time to time fixed by, or in the manner provided in, the By-Laws
of the Corporation. Election of directors need not be by written
ballot unless the By-Laws so provide.
(4) No director shall be personally liable to the Corporation
or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware General Corporation Law or
(iv) for any transaction from which the director derived an improper
personal benefit. Any repeal or modification of this Article SIXTH by
the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at the
time of such repeal or modification with respect to acts or omissions
occurring prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or
by statute expressly conferred upon them, the directors are hereby
empowered to exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation, subject, nevertheless,
to the provisions of the GCL, this Certificate of Incorporation, and
any By-Laws adopted by the stockholders; provided, however, that no
ByLaws hereafter adopted by the stockholders shall invalidate any
prior act of the directors which would have been valid if such By-Laws
had not been adopted.
SEVENTH: Meetings of stockholders may be held within or
without the State of Delaware, as the By-Laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the GCL) outside
the State of
14
<PAGE> 109
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
EIGHTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
15
<PAGE> 110
I, THE UNDERSIGNED, being the President of the Corporation
hereby declare and certify that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand this _____ day of
_____, 1999.
--------------------------------
Name:
Title:
16
<PAGE> 111
EXHIBIT C
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement (this "Agreement") is made
and entered into as of ________, 1999, by and between Juno Lighting, Inc. a
Delaware corporation ("Juno"), and Fremont Partners, L.L.C., a Delaware limited
liability company ("Fremont").
BACKGROUND
A. In connection with the conduct and expansion of its business, Juno
requires certain management services to be rendered to it, including
strategic planning, finance, tax and accounting services (the "Services").
B. Fremont desires to render the Services and Juno desires to retain
Fremont to render the Services on the terms and conditions set forth in
this Agreement.
AGREEMENT
1. Services. Within the capabilities of its personnel, Fremont shall
provide to Juno such Services as may from time to time be reasonably
requested by Juno and which are necessary and appropriate for the
operation of the business of Juno. Fremont is hereby specifically
authorized to act on Juno's behalf in providing the Services, and Juno will
provide Fremont with such powers of attorney and other instruments as may
be necessary or appropriate for the provision of Services under this
Agreement. This Agreement is not exclusive and shall not be deemed to
prevent Juno from engaging others to perform the same or similar services
or to prevent Fremont from rendering the same or similar services to
others.
2. Compensation. Juno shall pay to Fremont an annual fee of $325,000.
3. Expenses. In addition to paying the compensation set forth in
Section 2 of this Agreement, Juno shall reimburse Fremont for all of
Fremont's reasonable out-of-pocket expenses reasonably incurred by Fremont
in providing the Services under this Agreement. All such reimbursements
shall be due and payable within 30 days after receipt by Juno of supporting
services therefor, provided that payments shall not be required more
frequently than on a monthly bases.
4. Termination. This Agreement shall be effective ______, 1999, and
shall continue until terminated by Juno or Fremont furnishing at least 60
days' prior
<PAGE> 112
written notice to the other party. All fees payable under this Agreement by
Juno to Fremont shall be prorated as of the date of any termination of this
Agreement.
5. Indemnity. Juno will indemnify and hold Fremont and its members,
officers, employees, agents, representatives and affiliates harmless from
and against any and all losses, damages, costs or expenses (including
reasonable attorneys' fees) which they may suffer arising out of their
performance of services under this Agreement, provided that they will not
be indemnified for losses resulting from their gross negligence or willful
misconduct.
6. Limitation of Liability. Fremont shall not be liable to Juno in
connection with services rendered hereunder except for gross negligence or
willful misconduct on the part of Fremont, and in no event shall Fremont be
liable to Juno in an amount in excess of the management fee paid to Fremont
under this Agreement.
7. Miscellaneous.
(a) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of California without giving
effect to choice of law principles thereunder.
(b) Any notice or other communication under this Agreement must be
given in writing and either (i) delivered in person, (ii) transmitted by
telex, telefax or telecopy mechanism or (iii) mailed by certified or
registered mail, postage prepaid, receipt requested, as follows:
If to Juno, addressed to:
-------------------------
-------------------------
-------------------------
Attention:
Telecopy:
2
<PAGE> 113
If to Fremont, addressed to:
Fremont Partners, L.L.C.
50 Fremont Street, Suite 3700
San Francisco, CA 94105
Attention: General Counsel
Telecopy: (415) 512-7121
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each notice or other communication
shall be effective if given by telecommunication, when transmitted to the
applicable number so specified in this Section 6(b) and an appropriate answer
back is received, if given by mail, three days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid
or if given by any other means, when actually delivered at such address.
(c) This Agreement may be executed in one or more counterparts and by
different parties in separate counterparts. All of such counterparts shall
constitute one in the same Agreement and shall become effective when one or
more counterparts of this Agreement have been signed by each party and
delivered to the other party. Fax signatures shall constitute original
signatures for all purposes of this Agreement.
(d) This Agreement may be amended only by agreement in writing of all
parties. No wavier of any provision nor consent to any exception to the
terms of this Agreement shall be effective unless in writing and signed by
the party to be bound and then only to the specific purpose, extent and
instance so provided.
(e) Fremont shall render and perform the Services under this Agreement
as an independent contractor and the parties agree that the relationship
between Fremont and Juno shall be that of an independent contractor and no
joint venture, partnership, employer/employee or other similar relationship
shall exist or be create by virtue of the terms of this Agreement.
3
<PAGE> 114
IN WITNESS WHEREOF, the parties have executed this Management Services
Agreement as of the date and year first set forth above.
FREMONT PARTNERS, L.L.C.,
a Delaware limited liability company
By: Fremont Group, L.L.C.,
its managing member
By: Fremont Investors, Inc.,
its manager
By:
---------------------------------
Name:
Title:
JUNO LIGHTING, INC.,
a Delaware corporation
By:
---------------------------------
Name:
Title:
FREMONT PARTNERS, L.P.
By: FP Advisors, L.L.C.
Its General Partner
By: Fremont Group, L.L.C.
Its Managing Member
By: Fremont Investors, Inc.
Its Manager
By:
-----------------------
Name:
Title:
4
<PAGE> 1
EXHIBIT 10.7(c)
THIRD AMENDMENT TO RIGHTS AGREEMENT
Third Amendment (this "Amendment") dated as of March 26, 1999 to the
Rights Agreement dated as of August 3, 1989, between Juno Lighting, Inc., a
Delaware corporation (the "Company") and The First National Bank of Chicago, as
Rights Agent, as amended by the First Amendment to the Rights Agreement, dated
June 17, 1991, and the Second Amendment to the Rights Agreement, dated June 17,
1991, between the Company and The First Chicago Trust Company of New York, as
the successor Rights Agent to The First National Bank of Chicago (as amended,
the "Rights Agreement"). The First Chicago Trust Company, a division of
Equiserve, is the successor Rights Agent (the "Rights Agent") to The First
Chicago Trust Company of New York.
WHEREAS, the Company proposes to enter into that certain Agreement and
Plan of Recapitalization and Merger dated as of the date hereof (as amended from
time to time, the "Merger Agreement") among Fremont Investors I, LLC, a Delaware
limited liability company ("Fremont Investors"), Jupiter Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Fremont Investors
("Jupiter Acquisition Corp."), and the Company;
WHEREAS, the Board of Directors of the Company believes that it is in
the best interests of the Company and its stockholders that the transactions
contemplated by the Merger Agreement be consummated on the terms set forth in
the Merger Agreement;
WHEREAS, the Board of Directors of the Company desires to amend the
Rights Agreement such that the execution of the Merger Agreement and the
consummation of the transactions contemplated thereby will not cause (i) Fremont
Investors, Jupiter Acquisition Corp. or their respective Affiliates or
Associates to become an Acquiring Person as a result of the acquisition of
securities of the Company pursuant to the Merger Agreement or (ii) a
Distribution Date or a Shares Acquisition Date to occur, irrespective of the
number of securities acquired pursuant to the Merger Agreement;
WHEREAS, Section 27 of the Rights Agreement authorizes the Board of
Directors of the Company and the Rights Agent to adopt the proposed amendment
without the approval of the Company's stockholders;
NOW, THEREFORE, in consideration of the recitals (which are deemed to be
a part of this Amendment) and agreements contained herein, the parties hereto
agree to amend the Rights Agreement as follows:
SECTION 1. AMENDMENT TO RIGHTS AGREEMENT. The Rights Agreement is hereby
amended as follows:
(a) The definition of "Exempt Person" set forth in Section 1(h) of the
Rights Agreement is hereby amended and restated to read in its entirety as
follows:
<PAGE> 2
(h) "Exempt Person" shall mean any of the following: (i) Robert
S. Fremont; (ii) any trust which is in existence on the date of this
Agreement and which has been established by Robert S. Fremont; (iii) the
estate of Robert S. Fremont, or any trust established by Robert S.
Fremont as grantor or with respect to which he acts as trustee; (iv)
Fremont Investors or any Affiliate or Associate of Fremont Investors; or
(v) Jupiter Acquisition Corp. or any Affiliate or Associate of Jupiter
Acquisition Corp.; provided that Fremont Investors, Jupiter Acquisition
Corp. and their respective Affiliates and Associates will cease to be an
Exempt Person in the event that any of Fremont Investors, Jupiter
Acquisition Corp. or any of their respective Affiliates or Associates
becomes the Beneficial Owner of 15% or more of the Common Shares then
outstanding other than pursuant to and in accordance with the terms of
the Merger Agreement.
(b) The definition of "Shares Acquisition Date" set forth in Section
1(l) of the Rights Agreement is hereby modified and amended by adding the
following sentence at the end thereof:
Notwithstanding any provision of this Agreement to the contrary, neither
the execution and delivery of the Merger Agreement nor consummation of
the transactions contemplated thereby shall be deemed to cause a Shares
Acquisition Date.
(c) Section 3(a) of the Rights Agreement is hereby modified and amended
by adding the following sentence at the end thereof:
Notwithstanding any provision of this Agreement to the contrary, neither
the execution and delivery of the Merger Agreement nor consummation of
the transactions contemplated thereby shall be deemed to cause a
Distribution Date.
(d) The definition of "Final Expiration Date" set forth in clause (i) of
Section 7(a) of the Rights Agreement is hereby amended and restated to read in
its entirety as follows:
(i) "the earlier of (A) the close of business on August 14, 1999 or (B)
the time immediately prior to the Effective Time (as defined in the
Merger Agreement) (the "Final Expiration Date"),
(e) Section 15 of the Rights Agreement is hereby modified and amended to
add the following sentence at the end thereof:
Nothing in this Agreement shall be construed to give any holder of
Rights or any other Person any legal or equitable rights, remedy or
claim under this Agreement in connection with any transactions
contemplated by the Merger Agreement.
SECTION 2. MISCELLANEOUS.
(a) Capitalized terms used and not otherwise defined herein shall have the
meaning assigned to such terms in the Rights Agreement.
-2-
<PAGE> 3
(b) The term "Agreement" as used in the Rights Agreement shall be deemed
to refer to the Rights Agreement as amended hereby.
(c) This Amendment shall be effective as of the time immediately prior
to the execution and delivery of the Merger Agreement, and, except as set forth
herein, the Rights Agreement shall remain in full force and effect and shall be
otherwise unaffected hereby.
(d) If any term, provision, covenant or restriction of this Third
Amendment is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the other terms, provisions, covenants and
restrictions of this Third Amendment, and of the Rights Agreement, shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
(e) In all respects not inconsistent with this Third Amendment, the
Rights Agreement is hereby ratified, approved and confirmed. In executing and
delivering this Third Amendment, the Rights Agent shall be entitled to all the
privileges and immunities afforded to the Rights Agent under the Rights
Agreement.
(f) This Amendment may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
(g) This Amendment shall be deemed to be a contract made under the laws
of the State of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to contracts to
be made and performed entirely within the State of Delaware.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
JUNO LIGHTING, INC.
<TABLE>
<CAPTION>
Attest:
<S> <C>
By /s/ Sonia Archer By /s/ Robert S. Fremont
------------------ ----------------------
Name: Sonia Archer Name: Robert S. Fremont
Title: Notary Public Title: Chairman and Chief Executive Officer
FIRST CHICAGO TRUST
COMPANY, as Rights Agent
Attest:
By /s/ Laurence A. Woods By Peter Sablich
------------------ ----------------------
Name: Laurence A. Woods Name: Peter Sablich
Title: Vice-President Title: Vice-President
</TABLE>
-4-
<PAGE> 1
EXHIBIT 99
JUNO LIGHTING, INC. ANNOUNCES $25.00 PER SHARE RECAPITALIZATION MERGER
WITH FREMONT PARTNERS AND REPORTS FIRST QUARTER SALES AND EARNINGS
March 26, 1999, Juno Lighting, Inc. ("Juno") (NASDAQ: JUNO) announced
today the signing of a merger and recapitalization agreement with an entity
controlled by Fremont Partners, L.P., Fremont Investors I, LLC ("Fremont"),
providing for the merger of Juno with Jupiter Acquisition Corp., a Delaware
corporation formed by Fremont.
The merger and recapitalization agreement provides that the owner of
each outstanding share of Juno common stock can elect either to receive $25.00
in cash for that share or to retain that share, subject to proration as
described below; provided that an aggregate of 2,400,000 shares (approximately
12.9% of the presently outstanding shares) must be retained by existing public
shareholders. If existing public shareholders elect to retain more than
2,400,000 of the outstanding shares, then the shares available will be prorated
among those electing to retain shares and cash will be paid for all other
shares. If holders elect to retain fewer than 2,400,000 of the outstanding
shares, the remaining available shares will be prorated among those electing
cash. Immediately following the merger, existing shareholders will hold an
approximate 39.5% fully diluted interest in Juno, not taking into account the
subsequent increase in the stated amount of the preferred stock referred to
below and the corresponding increase in the number of shares of common stock
issuable upon conversion of the preferred stock.
The merger and recapitalization agreement also provides for a
simultaneous purchase by Fremont of 1,060,000 newly issued convertible preferred
shares of Juno at a price of $100.00 per share or an aggregate initial stated
amount of $106,000,000. The preferred stock will generally have the right to
receive cumulative 2% quarterly dividends. These quarterly dividends will cause
an increase in the stated amount of the preferred stock for the first five years
following issuance; the dividends will become payable in cash thereafter. The
preferred stock will be convertible into a number of shares of common stock
derived by dividing the stated amount by the conversion price of $26.25 per
share, which is subject to adjustment in certain events. At any time beginning
on the ninth anniversary of the effective time of the merger, Juno may elect to
redeem the preferred stock at a price equal to the then stated amount plus any
accrued but unpaid dividends.
Juno's Board of Directors has unanimously recommended that
shareholders vote in favor of the transactions and has received a fairness
opinion from Juno's financial advisor, William Blair & Company, LLC. Upon
completion of the transaction, Juno expects to continue to operate as an
independent public company under its current name, and its headquarters are
expected to remain in Des Plaines, Illinois.
"This transaction provides public shareholders substantial value and a
significant premium to the market," stated Robert S. Fremont, Juno's chairman
and CEO. Mr. Fremont is not affiliated with Fremont.
<PAGE> 2
Mark Williamson, Managing Director of Fremont Partners, L.P., said,
"We are very pleased to be associated with Juno Lighting and with its
outstanding management team and employees. The Company has a strong history of
product leadership, growth and profitability and we look forward to
participating in the continuing development of this fine organization."
The merger and recapitalization is subject to customary terms and
conditions, including the approval of Juno's shareholders and funding of
financing arrangements. It is currently contemplated that the transaction would
be submitted to shareholders for approval at Juno's annual meeting to be held as
soon as practicable. A commitment has been obtained from Bank of America for up
to $125 million in senior debt financing and an investment bank has been engaged
to arrange approximately $125 million of senior subordinated debt to finance the
transaction.
The merger and recapitalization agreement includes provisions
prohibiting Juno from soliciting another purchaser and provides for the payment
of certain fees and the reimbursement of expenses to Fremont in the event of a
termination of the merger agreement under certain circumstances.
Juno also announced today that for the first quarter ended February
28, 1999 sales increased 8% to $37,277,000 compared to $34,386,000 for the like
period in 1998. Net income for the first quarter of 1999 increased 26% to
$6,009,000 ($0.32 per common share on a basic and diluted basis), compared to
$4,766,000 ($0.26 per common share on a basic and diluted basis) for the like
period in 1998.
Juno is a specialist in the design, manufacturing, and marketing of
lighting fixtures for commercial and residential use.
Fremont Partners, L.P., and certain affiliated entities, is a private
equity fund headquartered in San Francisco with committed capital of $605
million. Fremont Partners, L.P. is part of the Fremont Group, a private
investment company with approximately $10 billion of assets under management.
Any offering of securities in connection with the merger and
recapitalization will be made only by means of a prospectus. This news release
shall not constitute an offer to sell or the solicitation of any offer to buy
the securities described above, nor shall there be any sale of these securities
in any state in which such offering, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
state. This press release may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which reflect Juno's
current judgment on certain issues. Because such statements apply to future
events, they are subject to risks and uncertainties that could cause the actual
results to differ materially. Important factors which could cause actual results
to differ materially are described in Juno's reports on Form 10-K and 10-Q on
file with the Securities and Exchange Commission.
