SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 4)
VWR SCIENTIFIC PRODUCTS CORPORATION
(Name of Issuer)
Common Stock, par value $1.00 per share
(Title of Class of Securities)
918435 10 8
(CUSIP Number)
Klaus H. Jander, Esq.
Richard T. McDermott, Esq.
Rogers & Wells LLP
200 Park Avenue
New York, NY 10166
(212) 878-8000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 8, 1999
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box ?
Note. Schedules filed in paper format should include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for the other
parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 5 Pages)
Exhibits begin at page 6.
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CUSIP No. 918435 10 8 13D Page 2 of 5 Pages
1. NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
EM Laboratories, Incorporated
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)
(b
3. SEC USE ONLY
4. SOURCES OF FUNDS
AF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) OR 2(e)
6. CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF UNITS BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER
15,438,274
8. SHARED VOTING POWER
0
9. SOLE DISPOSITIVE POWER
15,438,274
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,438,274
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ?
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.89%
14. TYPE OF REPORTING PERSON
CO
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SCHEDULE 13D
FILED PURSUANT TO RULE 13d-1
OF THE GENERAL RULES AND REGULATIONS UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
This Amendment No. 4, which relates to shares of the common stock, par value
$1.00 per share (the "Common Stock") of VWR Scientific Products Corporation (the
"Issuer") and is being filed by EM Laboratories, Inc. ("EML"), supplements and
amends the statement on Schedule 13D originally filed with the Commission, as
amended.
Item 4. Purpose of the Transaction.
Item 4 is amended as follows:
As previously reported in this Schedule 13D, under the terms of the Standstill
Agreement dated February 27, 1995, as amended, among the Issuer, EM Industries,
Incorporated and EML, EML and its affiliates may not (subject to certain
exceptions specified therein) acquire additional shares of the Issuer except
pursuant to a tender offer recommended, prior to commencement thereof, to the
stockholders of the Issuer by a majority of the directors of the Issuer who have
not been designated for nomination by EML. The terms of such Standstill
Agreement also require that any such offer be made for a cash price to all of
the stockholders of the Issuer and that it be accepted by the holders of not
less a majority of the Common Stock of the Issuer, excluding any such shares
held by EML or any affiliate thereof.
On June 8, 1999, Merck KGaA, the ultimate parent company of EML, announced that
EML had entered into an Agreement and Plan of Merger, dated as of June 8, 1999
(the "Merger Agreement"), by and among EML, EM Subsidiary, Inc., a Pennsylvania
corporation and wholly owned subsidiary of EML ("Sub"), and the Issuer.
Pursuant to the terms of the Merger Agreement, Sub will commence a tender offer
(the "Offer") to acquire all of the Common Stock not currently held by EML and
its affiliates for $37.00 per share (the "Offer Price"), to be followed by a
merger (the "Merger") in which any remaining stock of the Issuer will be
exchanged for cash at the same per share price paid in the Offer.
The Offer will be conditioned upon, among other things, there having been
validly tendered and not withdrawn prior to the expiration of the Offer a number
of shares of Common Stock that represents a majority of the total number of
outstanding shares of Common Stock, excluding any shares held by Parent, Sub or
any affiliate thereof, as well as the expiration of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and compliance with Section 721 of Title VII of the Defense Production
Act of 1950, as amended, known as the Exon-Florio provisions, and other
customary conditions.
Concurrently with the execution of the Merger Agreement, EML and Sub entered
into a Shareholders Agreement, dated as of June 8, 1999 (the "Shareholders
Agreement"), with Jerrold B. Harris and N. Stewart Rogers (the "Shareholders")
pursuant to which the Shareholders have agreed, among other things, to tender,
in accordance with the terms of the Offer, and not withdraw, subject to the
terms of the Shareholders Agreement, all of the shares of Common Stock held by
the Shareholders. The shares held by the Shareholders represent, in the
aggregate, approximately 2.5% of the total issued and outstanding shares of
Common Stock on a fully diluted basis (assuming exercise of all options and
other rights to purchase such shares).
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Pursuant to the Shareholders Agreement, the Shareholders have also agreed to
grant EML and Sub an irrevocable proxy to vote their respective shares of Common
Stock in favor of the Merger; provided, however, that such proxies may be
revoked in the event that the Company's unaffiliated directors, that is the
directors not designated by EML, withdraw their approval and recommendation of
the Offer, the Merger or Merger Agreement or any transaction contemplated
thereby.
Sub will obtain funds to consummate the Offer and the Merger through a capital
contribution or a loan or a combination thereof from Merck KGaA, EML, or another
affiliate or other affiliates of Merck KGaA. The Offer is not conditioned on
obtaining financing. The foregoing is qualified in its entirely by reference to
the copies of the Merger Agreement and the Shareholders Agreement, which are
filed herewith as exhibits and incorporated herein by reference.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Item 6 is amended as follows:
As described above in Item 4, on June 8, 1999, EML, Sub and the Issuer entered
into the Merger Agreement and EML and Sub entered in the Shareholders Agreement
with the Shareholders, both of which agreements are filed herewith as exhibits
and incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
Exhibit A. Agreement and Plan of Merger, dated June 8, 1999, among EM
Laboratories, Incorporated, EM Subsidiary, Inc. and VWR
Scientific Products Corporation.
Exhibit B Shareholders Agreement, dated June 8, 1999, among EM Laboratories,
EM Subsidiary, Inc. and the Shareholders listed therein.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: June 9, 1999
EM LABORATORIES, INCORPORATED
By: /s/ Stephen J. Kunst
Name: Stephen J. Kunst
Title: Vice-President and Secretary
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EXHIBIT A: FORM OF MERGER AGREEMENT
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated June 8, 1999 (this "Agreement") among EM
LABORATORIES, INCORPORATED, a New York corporation ("Parent"), EM SUBSIDIARY,
INC., a Pennsylvania corporation and a wholly-owned subsidiary of Parent
("Sub"), and VWR SCIENTIFIC PRODUCTS CORPORATION, a Pennsylvania corporation
(the "Company") (Sub and the Company being hereinafter collectively referred to
as the "Constituent Corporations"). Except as otherwise set forth herein,
capitalized (and certain other) terms used herein shall have the meanings set
forth in Section 10.3.
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company have
approved the acquisition of the Company by Parent on the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause Sub to
make a cash tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to acquire all of the issued and outstanding
shares of Common Stock, par value $1.00, of the Company (the "Shares") (other
than Shares owned by Parent or any Affiliate thereof and excluding Shares owned
by the Company or by any Subsidiary of the Company) at a purchase price of
$37.00 per Share (such purchase price being referred to as the "Offer Price"),
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in this Agreement; and the Unaffiliated Directors
have unanimously adopted resolutions approving the Offer, this Agreement and the
Merger and recommending that the Company's shareholders accept the Offer and
adopt this Agreement;
WHEREAS, the respective Boards of Directors of Sub and the Company have each
approved the merger of Sub with and into the Company (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement, whereby each of
the Shares, other than Shares owned directly or indirectly by Parent, Sub or the
Company and Dissenting Shares, will be converted into the right to receive the
price per Share paid in the Offer;
WHEREAS, the Unaffiliated Directors have unanimously approved the terms of the
Shareholders Agreement (the "Shareholders Agreement") to be entered into by
Parent, Sub and certain holders of Shares, pursuant to which such holders have,
among other things, agreed to vote such shares in favor of the Merger and tender
such shares pursuant to the Offer; and
WHEREAS, Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and the Merger
and also to prescribe various conditions to the Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, Parent,
Sub and the Company hereby agree as follows:
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ARTICLE I - THE OFFER
Section 1.1. The Offer.
(a) Provided that this Agreement shall not have been terminated in accordance
with Section 9.1, and subject to the provisions of this Agreement, as promptly
as practicable but in no event later than five business days after the date of
the public announcement by Parent and the Company of this Agreement, Sub shall,
and Parent shall cause Sub to, commence the Offer. The offer to purchase which
is sent to the Company's shareholders in connection with the Offer shall provide
for an initial expiration date for the Offer (the "Expiration Date"") of 20
business days (as defined in Rule 14d-1 under the Exchange Act) from the date of
commencement of the Offer. The obligation of Sub to, and of Parent to cause Sub
to, commence the Offer and accept for payment, and pay for, any Shares tendered
pursuant to the Offer shall be subject only to the conditions set forth in
Exhibit A (the "Offer Conditions") (all of which are for the benefit of, and may
be asserted by Sub regardless of the circumstances giving rise to any such
condition and any of which may be waived in whole or in part by Sub in its sole
discretion, provided that, without the prior written consent of the Company, Sub
shall not waive the Minimum Condition (as defined in Exhibit A)). Sub expressly
reserves the right to modify the terms of the Offer, except that, without the
prior written consent of the Company, Sub shall not (i) reduce the number of
Shares to be purchased in the Offer, (ii) reduce the Offer Price, (iii) impose
any conditions to the Offer in addition to the Offer Conditions or modify the
Offer Conditions (other than to waive any Offer Conditions to the extent not
prohibited by this Agreement), (iv) except as provided in the next sentence,
extend the Offer, (v) change the form of consideration payable in the Offer or
(vi) make any other change or modification in any of the terms of the Offer in
any manner that is adverse to the holders of Shares. Notwithstanding the
foregoing, Sub may, without the consent of the Company, (i) extend the Offer, if
at the Expiration Date or extended expiration date of the Offer any of the Offer
Conditions shall not be satisfied or waived, until such time as such conditions
are satisfied or waived, (ii) extend the Offer for any period required by any
rule, regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer and (iii) on one or more occasions, extend the Offer for
a period of up to an aggregate of 15 business days if, on a scheduled expiration
date on which the Offer Conditions shall have been satisfied or waived, the
number of Shares that have been validly tendered and not withdrawn pursuant to
the Offer, when taken together with the Shares owned by Parent, Sub or an
Affiliate thereof do not constitute at least 80% of the then issued and
outstanding Shares. Parent and Sub agree that Sub shall not terminate the Offer
between scheduled expiration dates (except in the event that this Agreement is
terminated pursuant to Section 9.1) and that, in the event that Sub would
otherwise be entitled to terminate the Offer at any scheduled expiration date
thereof due to the failure of one or more of the Offer Conditions, unless this
Agreement shall have been terminated pursuant to Section 9.1, Sub shall, and
Parent shall cause Sub to, extend the Offer until such date as the Offer
Conditions have been satisfied or such later date as required by applicable law;
provided, however, that nothing herein shall require Sub to extend the Offer
beyond the Outside Date; provided, further, that neither Parent nor Sub shall be
obligated to make any such extension if, in the reasonable belief of Parent or
Sub, as applicable, all Offer Conditions are not capable of being satisfied
prior to the Outside Date. Subject to the terms and conditions of the Offer and
this Agreement, Sub shall, and Parent shall cause Sub to, accept for payment and
pay for, all Shares validly tendered and not withdrawn pursuant to the Offer
that Sub is permitted to accept for payment and pay for under applicable law, as
soon as practicable (and, in any event, within three business days after the
later of the expiration of the Offer and the receipt by the depository for the
Offer of the certificates representing such tendered Shares). If this Agreement
is terminated pursuant to Section 9.1(d), Parent or Sub shall terminate the
Offer. Sub may, at any time, transfer or assign to one or more corporations
directly or indirectly wholly-owned by Parent the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but any such transfer or
assignment shall not relieve Sub of its obligations under the Offer or prejudice
the rights of tendering shareholders to receive payment for Shares validly
tendered and accepted for payment.
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(b) On the date of commencement of the Offer, Parent and Sub shall file with the
SEC (i) a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") and
(ii) a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3")
with respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and summary advertisement (such Schedule 14D-1 and
Schedule 13E-3 and the documents included therein pursuant to which the Offer
shall be made, together with any supplements or amendments thereto, the "Offer
Documents"), and Parent and Sub shall cause the Offer Documents to be
disseminated to holders of Shares as and to the extent required by applicable
federal securities laws. Parent, Sub and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect, and Parent and Sub further agree to take all steps necessary
to cause the Schedule 14D-1 and the Schedule 13E-3 as so corrected to be filed
with the SEC and the other Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given reasonable
opportunity to review and comment upon the Offer Documents prior to their filing
with the SEC or dissemination to the Company's shareholders. Parent and Sub
agree to provide the Company and its counsel any comments Parent, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments and to cooperate with the
Company and its counsel in responding to such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely basis all
funds necessary to accept for payment, and pay for, any Shares that are validly
tendered and not withdrawn pursuant to the Offer and that Sub is permitted to
accept for payment under applicable law and pay for, pursuant to the Offer.
Section 1.2. Company Actions.
(a) The Company hereby approves of and consents to the Offer and represents and
warrants that the Board of Directors of the Company, at a meeting duly called
and held, duly adopted (by unanimous vote, with the Affiliated Directors (as
defined in the Standstill Agreement) not participating) resolutions approving
the Offer, this Agreement, the Merger and the Shareholders Agreement,
determining that the Offer and the Merger are fair to, and in the best interests
of, the Company's shareholders and recommending that the Company's shareholders
accept the Offer and approve and adopt this Agreement and the Merger.
Simultaneously with the execution of this Agreement, each of the Unaffiliated
Directors of the Company has indicated to the Company that he intends to tender
and sell his Shares in response to the Offer, except that Unaffiliated Directors
whose sales of their Shares in response to the Offer might result in liability
under Section 16(b) of the Exchange Act intend that if they do not tender and
sell their Shares in response to the Offer, they shall vote their Shares in
favor of the Merger. The Company represents and warrants that its Board of
Directors has received the opinion of each of BT Alex. Brown Incorporated ("BT
Alex. Brown") and Warburg Dillon Read LLC ("Warburg Dillon Read") to the effect
that, as of the date of this Agreement, the cash consideration to be received in
the Offer and the Merger by holders of Shares (other than Parent and Affiliates
thereof) is fair to such holders from a financial point of view. The Company
hereby consents to the inclusion in the Offer Documents of the recommendations
of the Company's Board of Directors described in this Section 1.2.
(b) On the date the Offer Documents are filed with the SEC, the Company shall
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer (such Schedule 14D-9, as amended from time to time, the
"Schedule 14D-9") containing the recommendation described in Section 1.2(a) and
shall cause the Schedule 14D-9 to be disseminated to the Company's shareholders
as and to the extent required by applicable federal securities laws. Each of the
Company, Parent and Sub agrees promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that such information
shall have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to amend or supplement the Schedule
14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed
with the SEC and disseminated to the Company's shareholders, in each case as and
to the extent required by applicable federal securities laws. Parent and its
counsel shall be given reasonable opportunity to review and comment upon the
Schedule 14D-9 prior to its filing with the SEC or dissemination to the
Company's shareholders. The Company agrees to provide Parent and its counsel any
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments and to
cooperate with Parent, Sub and their counsel in responding to such comments.
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(c) In connection with the Offer and the Merger, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Shares as of a recent date and of those
Persons becoming record holders subsequent to such date, together with copies of
all lists of shareholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Shares, and shall furnish to Sub such information and
assistance (including updated lists of shareholders, security position listings
and computer files) as Parent or Sub may reasonably request in communicating the
Offer to the record and beneficial holders of Shares. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Parent and Sub and their Affiliates, associates and agents shall
hold in confidence the information contained in any such labels, listings and
files, shall use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, shall promptly, upon request,
deliver, and shall use reasonable efforts to cause their Affiliates, associates
and agents to deliver, to the Company all copies of such information then in
their possession or control.
Section 1.3. Standstill Agreement. Effective upon the acquisition of Shares
pursuant to the Offer, the Standstill Agreement shall terminate in its entirety.
ARTICLE II - THE MERGER
Section 2.1. The Merger. Upon the terms and subject to the conditions hereof,
and in accordance with the PBCL, Sub shall be merged with and into the Company
at the Effective Time. Following the Effective Time, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub and the Company in accordance with the PBCL.
Section 2.2. Effective Time; Closing. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VIII, the parties hereto shall cause the Merger to be consummated by delivering
to the Secretary of State of the Commonwealth of Pennsylvania the articles of
merger, in such form as required by, and executed and acknowledged in accordance
with, the relevant provisions of the PBCL (the "Articles of Merger"), and shall
make all other filings and recordings required by the PBCL in connection with
the Merger. The Merger shall become effective at the time of filing of the
Articles of Merger with the Secretary of State of the Commonwealth of
Pennsylvania, or at such later time, which shall be as soon as reasonably
practicable, specified as the effective time in the Articles of Merger (the
"Effective Time"). Prior to such filing, a closing shall be held at the offices
of Rogers & Wells LLP, 200 Park Avenue, New York, New York 10166, USA, or such
other place as the parties shall agree, for the purpose of confirming the
satisfaction or waiver, as the case may be, of the conditions set forth in
Article VIII.
Section 2.3. Effects of the Merger. The Merger shall have the effects set forth
in Section 1929 of the PBCL.
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Section 2.4. Articles of Incorporation and By-laws; Officers and Directors.
(a) The Articles of Incorporation of the Company, as in effect immediately prior
to the Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The By-laws of the Company shall be amended as of the Effective Time to read
in their entirety as the By-laws of Sub, as in effect immediately prior to the
Effective Time, until thereafter changed or amended as provided, therein, by the
Articles of Incorporation of the Surviving Corporation or by applicable law.
(c) The directors of Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, until the next annual meeting of
shareholders of the Surviving Corporation (or the earlier of their resignation
or removal) and until their respective successors are duly elected and
qualified, as the case may be.
(d) The officers of the Company immediately prior to the Effective Time shall be
the officers of the Surviving Corporation until the earlier of their resignation
or removal and until their respective successors are duly elected and qualified,
as the case may be.
ARTICLE III - EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES
Section 3.1. Effect on Stock. As of the Effective Time, by virtue of the Merger
and without any action on the part of any of Sub, the Company or the holders of
any securities of the Constituent Corporations and in accordance with Section
1906 of the PBCL:
(a) Capital Stock of Sub. Each issued and outstanding share of capital stock of
Sub shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, $1.00 par value, of the Surviving
Corporation.
(b) Treasury Stock and Parent Owned Stock. Each Share that is owned by the
Company or by any Subsidiary of the Company and each Share that is owned by
Parent, Sub or any other Subsidiary of Parent shall automatically be cancelled
and retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Shares. Subject to Section 3.1(d), each Share issued and
outstanding (other than Shares to be cancelled in accordance with Section
3.1(b)), shall be cancelled and be converted into the right to receive from the
Surviving Corporation in cash, without interest or dividends, the price per
Share paid in the Offer (the "Merger Consideration"). As of the Effective Time,
all such Shares shall be cancelled, and when so cancelled, shall no longer be
outstanding and shall automatically be retired and shall cease to exist, and
each holder of a certificate representing any such Shares shall cease to have
any rights with respect thereto, except the right to receive the Merger
Consideration for each such Share, without interest or dividends.
(d) Shares of Dissenting Shareholders. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding Shares held by a Person (a
"Dissenting Shareholder") who has not voted in favor of or consented to the
Merger and complies in all respects with Sections 1930 and 1575 through 1580 of
the PBCL concerning the right of holders of Shares to require appraisal of their
Shares ("Dissenting Shares") shall not be converted as described in Section
3.1(c), but shall become the right to receive payment of the fair value of such
Shares in accordance with Sections 1930 and 1575 through 1580 of the PBCL. If,
after the Effective Time, a holder of Dissenting Shares withdraws his demand for
appraisal or fails to perfect or otherwise loses his right of appraisal, in any
case pursuant to the PBCL, his Shares shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration for each such
Share, without interest or dividends. The Company shall give Parent prompt
notice of any demands for appraisal of Shares received by the Company. The
Company shall not, without the prior written consent of Parent, make any payment
with respect to, or settle or offer to settle, any such demands.
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Section 3.2. Surrender of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a bank or
trust company who shall be reasonably satisfactory to the Company to act as
paying agent in the Merger (the "Paying Agent"), and from time to time, on,
prior to or after the Effective Time, Parent shall make available, or cause the
Surviving Corporation to make available, to the Paying Agent cash in the amounts
necessary for the payment of the Merger Consideration as provided in Section 3.1
upon surrender as part of the Merger of certificates formerly representing
Shares. Funds made available to the Paying Agent shall be invested by the Paying
Agent as directed by Parent (it being understood that any and all interest or
income earned on funds made available to the Paying Agent pursuant to this
Agreement shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after the Effective
Time, the Surviving Corporation shall cause the Paying Agent to mail to each
holder of record of a certificate or certificates that immediately prior to the
Effective Time represented Shares (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration as provided in Section 3.1. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
amount of cash, without interest or dividends, into which the Shares theretofore
represented by such Certificate shall have been converted pursuant to Section
3.1, and the Certificate so surrendered shall forthwith be cancelled. In the
event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made to a Person other than the
Person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the Person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a Person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 3.2, each Certificate (other than Certificates
representing Dissenting Shares) shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest or dividends, into which the Shares of stock theretofore
represented by such Certificate shall have been converted pursuant to Section
3.1. No interest shall be paid or shall accrue on the cash payable upon the
surrender of any Certificate. Parent or the Paying Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Shares such amounts as Parent or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under
the Code or under any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Parent or the Paying Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Shares in respect of which such deduction and withholding
was made by the Parent or the Paying Agent.
(c) No Further Ownership Rights in Shares. All cash paid upon the surrender of
Certificates in accordance with the terms of this Article III shall be deemed to
have been paid in full satisfaction of all rights pertaining to the Shares
theretofore represented by such Certificates. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Paying Agent for any reason, they shall be
cancelled and exchanged as provided in this Article III.
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(d) Termination of Payment Fund. Any portion of the funds made available to the
Paying Agent to pay the Merger Consideration which remains undistributed to the
holders of Shares for six months after the Effective Time shall be delivered to
Parent, upon demand, and any holders of Shares who have not theretofore complied
with this Article III and the instructions set forth in the letter of
transmittal mailed to such holders after the Effective Time shall thereafter
look only to the Surviving Corporation (subject to abandoned property, escheat
or other similar laws) for payment of the Merger Consideration to which they are
entitled, without interest or dividends.
(e) No Liability. None of Parent, Sub, the Company or the Paying Agent shall be
liable to any Person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) Company Options. The Company hereby represents and warrants that either (i)
all outstanding options to purchase Shares (the "Company Options"") granted
under the Company's 1986 Long Term Incentive Stock Plan and the 1995 Stock
Incentive Plan (the "Company Option Plans"), whether or not then exercisable or
vested, shall, pursuant to the terms of the Company Option Plans, be cancelled
as of the consummation of the Offer and the holders thereof shall be entitled to
receive from Parent upon consummation of the Offer, in respect of each Share
subject to such Company Option, an amount in cash equal to the excess, if any,
of the Merger Consideration over the exercise price per share thereof (such
payment to be net of applicable withholding taxes) or (ii) the Company shall
take all such steps as shall be necessary to achieve substantially the same
result as described in clause (i) of this paragraph (f).
(g) Company Option Plans. The Company hereby represents and warrants that all
Company Option Plans provide, or have been or will be amended as and when
required to provide for the actions described in Section 3.2(f) hereof. The
Company shall cause the Company Option Plans to terminate as of the Effective
Time.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In addition to the representations and warranties of the Company in Sections 1.2
and 3.2(f) and (g) hereof, the Company represents and warrants to Parent and
Sub as follows:
Section 4.1. Organization. The Company and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has requisite corporate power and
authority to carry on its business as now being conducted. The Company and each
of its Subsidiaries is duly qualified or licensed to do business and in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, except in such jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not reasonably be expected to
have a Materially Adverse Effect on the Company or prevent or materially delay
the consummation of the Offer and/or the Merger. The Company has delivered to
Parent complete and correct copies of its Articles of Incorporation and By-laws
and has made available to Parent the Articles of Incorporation and By-laws (or
similar organizational documents) of each of its Subsidiaries.
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Section 4.2. Subsidiaries. Exhibit A of the Company Letter lists each Subsidiary
of the Company. All of the outstanding shares of capital stock of each
Subsidiary that is a corporation have been validly issued and are fully paid and
nonassessable. Except as set forth in Item 4.2 of the Company Letter, all of the
outstanding shares of capital stock of each Subsidiary of the Company are owned
by the Company, free and clear of all Liens. Except as set forth in Item 4.2 of
the Company Letter and except for the capital stock of its Subsidiaries, the
Company does not own, directly or indirectly, any material capital stock or
other ownership interest in any corporation, partnership, joint venture, limited
liability company or other entity.
Section 4.3. Capital Structure. The authorized capital stock of the Company
consists of 25,000,000 shares of Preferred Stock, $1.00 par value (the
"Preferred Stock") and 120,000,000 shares of Common Stock, par value $1.00. At
the close of business on March 31, 1999, (i) no shares of Preferred Stock were
outstanding, (ii) 28,962,527 shares of Common Stock were issued and outstanding,
(iii) 4,978 shares of Common Stock were held by the Company in treasury and (iv)
2,396,184 shares of Common Stock were reserved for issuance pursuant to
outstanding Company Options or other rights to purchase Shares under the Company
Option Plans, the Company's Employee Stock Ownership Plan and the Company's
Executive Bonus Plan. Except (i) as set forth above and (ii) as provided in the
Standstill Agreement, as of the date hereof, there are no outstanding (A) shares
of capital stock or other voting securities of the Company, (B) securities of
the Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company, (C) options or other rights to acquire from
the Company, or other obligations, arrangements or commitments of the Company to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company or (D) equity
equivalents, stock appreciation rights, phantom stock, interests in the
ownership or earnings of the Company or other similar rights (collectively,
"Company Securities"). Each outstanding Share is, and each Share which may be
issued pursuant to the Company Option Plans and the other agreements and
instruments listed above will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. There are no
outstanding bonds, debentures, notes or other indebtedness of the Company having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matter on which the Company's shareholders may vote.
Except as set forth above or in Item 4.3 of the Company Letter, there are no
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company
or any of its Subsidiaries to issue, deliver or sell or create, or cause to be
issued, delivered or sold or created, additional shares of capital stock or
other voting securities or equity equivalents of the Company or of any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities, or any shares of capital
stock of any Subsidiaries of the Company.
Section 4.4. Authorization; Binding Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including, but not limited
to, the Offer and the Merger, have been duly and validly authorized by the
Company's Board of Directors and no other corporate proceedings on the part of
the Company or any of its Subsidiaries are necessary to authorize the execution
and delivery of this Agreement or to consummate the transactions contemplated
hereby (other than the adoption of this Agreement by the shareholders of the
Company to the extent required by the PBCL). This Agreement has been duly and
validly executed and delivered by the Company and constitutes the legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforceability hereof may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by principles
of equity regarding the availability of remedies. The Board of Directors of the
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Company has approved this Agreement, the Shareholder Agreement and the
transactions contemplated hereby and thereby (including but not limited to the
Offer, the Merger and the matters provided for in the Shareholder Agreement) so
as to render inapplicable hereto and thereto the limitation on business
combinations contained in Chapter 25 of the PBCL (or any similar provision). As
a result, the only vote of holders of any class or series of the Company's
capital stock required to adopt this Agreement and the transactions contemplated
hereby, including the Merger, is the affirmative vote of a majority of the
outstanding Shares, and if Section 1924(b)(1)(ii) of the PBCL is applicable to
the Merger, no such vote shall be required. No other state takeover or control
share statute or similar statute or regulation applies or purports to apply to
the Offer, the Merger, the Shareholder Agreement or any of the transactions
contemplated hereby or thereby.
Section 4.5. Consents and Approvals; No Violations. Except as set forth in Item
4.5 of the Company Letter, except for filings, permits, authorizations, consents
and approvals as may be required under, and other applicable requirements of,
the Exchange Act, the HSR Act, the PBCL, state takeover laws and foreign and
supranational laws relating to antitrust and anticompetition clearances, neither
the execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby nor the
consummation of the transactions contemplated by the Shareholders Agreement by
the parties thereto will (i) conflict with or result in any breach of any
provision of the Articles of Incorporation or By-laws of the Company or of the
similar organizational documents of any of its Subsidiaries, (ii) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity or other Person, (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, amendment, cancellation or acceleration) under, any of
the material terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its Subsidiaries is a party or by which any of
them or any of their properties or assets may be bound or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company, any of its Subsidiaries or any of their properties or assets.
Section 4.6. SEC Documents and Other Reports. The Company has filed with the SEC
all documents required to be filed by it since August 31, 1995 under the
Securities Act or the Exchange Act (the "Company SEC Documents"). As of their
respective filing dates, the Company SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, each as in effect on the date so filed, and at the time filed with
the SEC none of the Company SEC Documents, including the financial statements of
the Company and the notes thereto, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
(including the notes thereto) included in the Company SEC Documents comply as of
their respective dates as to form in all material respects with the then
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except in the case of the unaudited statements,
as permitted by Form 10-Q under the Exchange Act) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto) and fairly present the consolidated financial position of the Company
and its consolidated Subsidiaries as at the dates thereof and the consolidated
results of their operations and their consolidated cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments and to any other adjustments described therein none of which
were or will be material in amount or effect). The Company has heretofore
furnished or made available to Parent a complete and correct copy of any
amendments or modifications which have not yet been filed with the SEC to
executed agreements, documents or other instruments which previously had been
filed by the Company with the SEC pursuant to the Securities Act or the Exchange
Act. No Subsidiary is required to file any form, report or other document with
the SEC.
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Section 4.7. Absence of Materially Adverse Change. Except as disclosed in Item
4.7 of the Company Letter, since December 31, 1998, the Company and its
Subsidiaries have conducted their respective businesses in all material respects
only in the ordinary course, and there has not been (i) any Materially Adverse
Change with respect to the Company, (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to its capital stock
or any redemption, purchase or other acquisition of any of its capital stock,
(iii) any split, combination or reclassification of any of its capital stock or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, (iv)
any change in accounting methods, principles or practices by the Company
materially affecting its assets, liabilities, business or results of operations,
(v) any grant by the Company or its Subsidiaries to any officer of the Company
or its Subsidiaries of any increase in compensation, except as was required
under employment agreements in effect as of December 31, 1998 or as were made in
the ordinary course of business consistent with past practice, (vi) any grant by
the Company or its Subsidiaries to any such officer of any increase in severance
or termination pay, except as part of a standard employment package to any
person promoted or hired, or as was required under employment, severance or
termination agreements in effect as of December 31, 1998, (vii) any revaluation
by the Company of any of its material assets or (viii) any other action or
omission of the type described in subparagraphs (a), (b), (c), (e), (f), (g),
(h), (j), (k), (l), (m), (n) or (o) of Section 6.1.
Section 4.8. Information Supplied. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by reference
in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the information to be
filed by the Company in connection with the Offer pursuant to Rule 14f-1
promulgated under the Exchange Act (the "Information Statement") or (iv) the
proxy statement (together with any amendments or supplements thereto, the "Proxy
Statement") relating to the Shareholders Meeting, will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
shareholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's shareholders or at the time of the
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Shareholders
Meeting which has become false or misleading. The Schedule 14D-9, the
Information Statement and the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Sub specifically for inclusion or incorporation by reference therein.
Section 4.9. Compliance with Laws. Except as set forth in the Company SEC
Documents, the business and operations of the Company and each of its
Subsidiaries have been operated in compliance with all Laws applicable thereto,
except for any instances of non-compliance which, individually or in the
aggregate, have not had and would not be reasonably likely in the future to have
a Materially Adverse Effect on the Company.
Section 4.10. Permits. (i) The Company and its Subsidiaries have all material
permits, certificates, licenses, approvals and other authorizations required in
connection with the operation of their respective businesses (collectively,
"Company Permits"), (ii) neither the Company nor any of its Subsidiaries is in
violation in any material respect of any Company Permit and (iii) no proceedings
are pending or, to the knowledge of the Company, threatened, to revoke or limit
any Company Permit.
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Section 4.11. Contracts. Except as set forth in Item 4.11 of the Company Letter,
neither the Company nor any of its Subsidiaries is a party or is subject to any
note, bond, mortgage, indenture, contract, lease, license, agreement or
instrument that is required to be described in or filed as an exhibit to any
Company SEC Document (collectively, the "Company Material Contracts") which is
not so described in or filed as required by the Securities Act or the Exchange
Act. All such Company Material Contracts are valid and binding and are in full
force and effect and enforceable against the Company or such Subsidiary and, to
the knowledge of the Company, against the other parties thereto in accordance
with their respective terms, except to the extent that enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
principles of equity regarding the availability of remedies. Neither the Company
nor any of its Subsidiaries is in violation or breach of or default under any
such Company Material Contract.
Section 4.12. Taxes and Tax Returns. Except as set forth in Item 4.12 of the
Company Letter:
(a) The Company and each of its Subsidiaries and any consolidated, combined,
unitary or aggregate group for tax purposes of which the Company or any of its
Subsidiaries is or has been a member has timely filed, or caused to be timely
filed all Tax Returns required to be filed by it, and has paid, collected or
withheld, or caused to be paid, collected or withheld, all Taxes required to be
paid, collected or withheld, other than such Taxes for which adequate reserves
in the Company's financial statements have been established in accordance with
generally accepted accounting principles, consistently applied, or which are
being contested in good faith. All such Tax Returns were true, correct and
complete in all material respects. None of the Tax Returns contains any position
which is or would be subject to penalties under Section 6662 of the Code (or any
corresponding provision of state, local or foreign Tax law). There are no claims
or assessments pending against the Company or any of its Subsidiaries for any
alleged deficiency in any Tax, and the Company has not been notified in writing
of any proposed Tax claims or assessments against the Company or any of its
Subsidiaries (other than in each case, claims or assessments for which adequate
reserves in the Company's financial statements have been established or which
are being contested in good faith or are immaterial in amount). Neither the
Company nor any of its Subsidiaries has any waivers or extensions of any
applicable statute of limitations to assess any Taxes. There are no outstanding
requests by the Company or any of its Subsidiaries for any extension of time
within which to file any Tax Return or within which to pay any material amounts
of Taxes shown to be due on any return. No claim has been made in writing to the
Company or to any of its Subsidiaries in the past three years by an authority in
a jurisdiction where the Company or its Subsidiaries do not file Tax Returns
that it is or may be subject to taxation by that jurisdiction, nor is there any
meritorious basis for an investigation or other proceeding that would result in
such an assessment. To the best knowledge of the Company, there are no liens for
Taxes on the assets of the Company or any of its Subsidiaries except for
statutory liens for current Taxes not yet due and payable.
(b) Section 4.12 of the Company Letter sets forth (1) the taxable years of the
Company and its Subsidiaries as to which the respective statutes of limitations
have not expired, and (2) with respect to such years, sets forth those years for
which examinations have been completed, those years for which examinations are
presently being conducted, those years for which examinations have not been
initiated, and those years for which Tax Returns have not yet been filed.
(c) All material elections with respect to Tax affecting the Company as of the
date hereof are set forth in Section 4.12(c) of the Company Letter.
(d) Neither the Company nor any of its Subsidiaries has filed a consent under
Section 341(f) of the Code concerning collapsible corporations. Neither the
Company nor any of its Subsidiaries has made any payments, or is obligated to
make any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be deductible
under Sections 162(m) or 280G of the Code or any similar provision of foreign,
state or local law. Neither the Company nor any of its Subsidiaries is a party
to or bound by any tax indemnity, tax sharing or tax allocation agreement or
arrangement. Except for the group of which the Company is presently the common
parent, neither the Company nor any of its Subsidiaries has ever been a member
of an affiliated group of corporations, within the meaning of Section 1504 of
the Code.
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(e) Neither the Company nor any of its Subsidiaries has (i) a material amount of
income reportable for a period ending after the Effective Time, but attributable
to a transaction (e.g., an installment sale) occurring in or a change in
accounting method made for a period ending on or prior to the Effective Time
which resulted in a deferred reporting of income from such transaction or from
such change in accounting method (other than a deferred intercompany
transaction); or (ii) deferred gain or loss arising out of any deferred
intercompany transaction. Neither the Company nor any of its Subsidiaries has
any excess loss account (as defined in Treasury Regulation Section 1.1502-19)
with respect to the stock of any of its Subsidiaries. No "ownership change"
(within the meaning of Section 382(g) of the Code) has, to the Company's
knowledge, occurred prior to the date hereof which currently limits the
Company's ability to utilize any net operating loss carryovers under Section 382
of the Code.
(f) For purposes of this Agreement, the term "Tax" shall mean any federal,
state, local, foreign or provincial income, gross receipts, property, sales,
use, license, excise, franchise, employment, payroll, alternative or added
minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty imposed by any Governmental Entity. The
term "Tax Return" shall mean a report, return or other information (including
any attached schedules or any amendments to such report, return or other
information) required to be supplied to or filed with a Governmental Entity with
respect to any Tax, including an information return, claim for refund, amended
return or declaration or estimated Tax.
Section 4.13. Litigation and Liabilities. Except as disclosed in the Company SEC
Documents and except as set forth in Item 4.13 of the Company Letter or
otherwise disclosed in writing to Parent, (a) there is no suit, action,
arbitration, investigation, claim, proceeding or audit ("Litigation") pending
or, to the best knowledge of the Company, threatened against the Company or any
of its Subsidiaries, nor is there any judgment, decree, writ, award, injunction,
rule or order of any Governmental Entity outstanding against the Company or any
of its Subsidiaries that are reasonably likely, individually or in the
aggregate, to have a Materially Adverse Effect; (b) there are no obligations or
liabilities, contingent, absolute, determined, determinable or otherwise,
including, without limitation, those relating to environmental and occupational
safety and health matters, that are reasonably likely, individually or in the
aggregate, to have a Materially Adverse Effect and (c) as of the date hereof, no
facts are known to the executive officers or directors of the Company on the
date hereof that could reasonably be expected to form the basis for valid claims
as to which rights to indemnification and advancement of expenses to the
executive officers or directors of the Company or any Subsidiary would be
applicable.
Section 4.14. Employee Benefit Plans.
(a) As used in this Agreement, "Benefit Plan" shall mean any employee benefit
plan, including, without limitation, (i) any employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
together with all regulations thereunder ("ERISA") maintained or contributed to
by the Company or any Subsidiary during the three-year period preceding the date
hereof, whether or not such plan is subject to any or all of ERISA's provisions,
and (ii) whether or not described in the preceding clause, any pension, profit
sharing, severance, employment, change-in-control, bonus, stock bonus, deferred
or supplemental compensation, retiree medical or life insurance, death benefit
or insurance, retirement, thrift, stock purchase or stock option plan or any
other compensation, welfare, fringe benefit, perquisite or retirement plan, or
other material program, policy or arrangement of any kind or nature whatsoever,
whether oral or written, maintained or contributed to by the Company or any of
the Subsidiaries or otherwise providing for compensation, benefits for or the
welfare of any or all of the current or former employees, directors, consultants
or agents of the Company or any of its Subsidiaries or their beneficiaries or
dependents. Except as set forth in Item 4.14 of the Company Letter, neither the
Company nor any of its Subsidiaries contributes to or has at any time during the
six-year period preceding the date of this Agreement contributed to, or has any
outstanding liability with respect to, any Multiemployer Plan as defined in
Section 3(37) of ERISA.
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(b) Except as set forth in Item 4.14 of the Company Letter and except for such
instances of non-compliance with ERISA and the regulations promulgated
thereunder that, individually or in the aggregate, have not had and would not be
reasonably likely in the future to have a Materially Adverse Effect on the
Company: (i) each Benefit Plan has been established and administered in
accordance with its terms and in compliance with applicable provisions of ERISA,
the Code and all other applicable laws, rules and regulations; (ii) the Company
has received no notice from any Governmental Entity questioning or challenging
such compliance; (iii) each Benefit Plan which is intended to be tax-qualified
under Code Sections 401(a) and (k) (as applicable) is so qualified in form and
operation and has received a favorable determination letter as to its
qualification, and nothing has occurred, whether by action or failure to act,
that would cause the loss of such qualification; (iv) no event has occurred and
no condition exists with respect to a Benefit Plan or other plan (whether or not
covering employees of the Company or any of its Subsidiaries) that would subject
the Company or any of its Subsidiaries, either directly or by reason of their
affiliation with an ERISA Affiliate (as hereinafter defined) to any material
tax, fine, lien or penalty imposed by ERISA, the Code or other applicable laws,
rules and regulations; (v) for each Benefit Plan with respect to which a Form
5500 has been filed, no material change has occurred with respect to the matters
covered by the most recent Form 5500 since the date thereof; (vi) no "reportable
event" (as such term is defined in ERISA Section 4043) other than any event with
respect to which reporting is waived pursuant to the regulations under ERISA
Section 4043, "prohibited transactions" (as such term is defined in ERISA
Section 406 and Code Section 4975), "accumulated funding deficiency" (as such
term is defined in ERISA Section 302 and Code Section 412 (whether or not
waived)) or failure to make by its due date a required installment under Code
Section 412(m) has occurred with respect to any Benefit Plan, or any other plan
maintained for employees of any ERISA Affiliate of the Company or any of its
Subsidiaries. "ERISA Affiliate," as applied to any Person, means (i) any
corporation which is a member of a controlled group of corporations (within the
meaning of Code Section 414(b)) of which that Person is a member, (ii) any trade
or business (whether or not incorporated) which is a member of a group of trades
or businesses under common control (within the meaning of Code Section 414(c))
of which that Person is a member and (iii) any member of an affiliated service
group (within the meaning of Code Section 414(m) and (o)) of which that Person,
any corporation described in clause (i) above or any trade or business described
in clause (ii) above is a member.
(c) With respect to any Benefit Plan, (i) no actions, suits or claims (other
than routine claims for benefits in the ordinary course) are pending or, to the
knowledge of the Company, threatened and (ii) no facts or circumstances exist,
to the knowledge of the Company, that could reasonably be expected to give rise
to any such actions, suits or claims.
(d) Except as set forth in Item 4.14 of the Company Letter, no Benefit Plan
exists that could result in the payment to any present or former employee,
director, consultant or agent of the Company or any of its Subsidiaries of any
money or other property, or accelerate or provide any other rights or benefits,
to any such Person as a result of the transactions contemplated by this
Agreement, whether or not such payment would constitute a parachute payment
within the meaning of Code Section 280G, and no payment in respect of a Benefit
Plan would constitute an excess parachute payment under Code Section 280G.
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(e) With respect to each Benefit Plan, the Company has made available to Parent
a true and correct copy of (i) the Benefit Plans and all amendments thereto,
(ii) the most recent annual report on Form 5500 filed with the IRS, (iii) each
trust agreement and group annuity contract, if any, and all amendments thereto
relating to such Benefit Plan, (iv) the most recent actuarial report or
valuation relating to any such Benefit Plan subject to Title IV of ERISA, (v)
the most recent IRS determination letter with respect to any such Benefit Plan
which is intended to be "qualified" within the meaning of Section 401(a) of the
Code and (vi) the most recent summary plan descriptions.
(f) As of the date hereof, all material payments required to be made by or under
any Benefit Plan, any related trusts, or any related collective bargaining
agreement have been made or are being processed in accordance with normal
operating procedures, and except as set forth in the Company's financial
statements, all material amounts required to be reflected thereon have been
properly accrued to date as liabilities under or with respect to each Benefit
Plan for the current year.
(g) Except as identified in Item 4.14 of the Company Letter, no Benefit Plan is
or has ever been subject to Title IV of ERISA.
(h) Except as identified in Item 4.14 of the Company Letter, neither the Company
nor any of its Subsidiaries has any post-retirement or similar obligations under
any employee welfare benefit plan (as such term is defined in Section 3(1) of
ERISA) or otherwise to provide health or death benefits to or in respect of
current or former employees, directors, agents or consultants, except as
specifically required by the continuation requirements of Part 6 of Title I of
ERISA.
Section 4.15. Environmental Matters.
(a) Except as set forth in Item 4.15 of the Company Letter and except as,
individually or in the aggregate, have not had and are not reasonably likely in
the future to have a Materially Adverse Effect on the Company or prevent or
materially delay the consummation of the Offer or the Merger:
(i) the Company and its Subsidiaries are, and within the period of all
applicable statutes of limitation have been, in material compliance with all
Environmental Laws (as hereinafter defined);
(ii) the Company and its Subsidiaries hold all Environmental Permits (as
hereinafter defined) (each of which is in full force and effect) required for
any of their current operations and for any property owned, leased, or otherwise
operated by any of them (collectively, the "Premises"), and are, and within the
period of all applicable statutes of limitation have been, in material
compliance with the terms of all such Environmental Permits. No event has
occurred which, with the passage of time or the giving of notice or both, would
constitute material non-compliance with Environmental Laws;
(iii) no review by, or approval of, any Governmental Entity or other Person is
required under any Environmental Law in connection with the execution or
delivery of this Agreement or the transfer of title to the Premises, if any,
contemplated in connection therewith;
(iv) neither the Company nor any of its Subsidiaries has received any written
notice of an Environmental Claim (as hereinafter defined) that remains
unresolved and, to the knowledge of the Company, no such Environmental Claims
are currently pending or threatened;
(v) to the knowledge of the Company neither the Company nor any of its
Subsidiaries has reason to believe that any Hazardous Materials presently on the
Premises or on any other property are reasonably likely to form the basis of any
Environmental Claim against any of them; and
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(vi) the Company is involved in various environmental, contractual, warranty
and public liability cases and claims that are considered routine to the
Company's business and, in the opinion of the Company's management, the
potential financial impact of these matters is not material to the business,
properties, assets, prospects, operations or condition (financial or otherwise)
of the Company and its Subsidiaries.
(b) For purposes of this Agreement, the terms below shall have the following
meanings:
"Environmental Claim" means any claim, demand, action, suit, complaint,
proceeding, directive, investigation, lien, demand letter, or notice of alleged
noncompliance, violation or liability, by any Person or entity asserting
liability or potential liability (including without limitation, liability or
potential liability for enforcement, investigatory costs, remediation costs,
operation and maintenance costs, governmental response costs, natural resource
damages, property damage, personal injury, fines or penalties), regardless of
legal theory, arising out of, based on or resulting from (i) the presence,
discharge, emission, release or threatened release of any Hazardous Materials at
any location including, without limitation, the Premises, or (ii) the condition
of the Premises or the present use thereof, or (iii) otherwise relating to
obligations or liabilities under any Environmental Law.
"Environmental Laws" means any and all laws, rules, orders, regulations,
statutes, ordinances, guidelines, codes, decrees or other legally enforceable
requirement (including, without limitation, common law) of any foreign
government, the United States or any Governmental Entity regulating, relating to
or imposing liability or standards of conduct concerning protection of human
health or the environment, including, without limitation, ambient air, surface
waters, ground waters, lands, sub-surface strata, biota and cultural properties.
"Environmental Permit" means all permits, licenses, registrations, approvals,
exemptions and other filings with or authorizations by any Governmental Entity
under any Environmental Law.
"Hazardous Materials" means all hazardous or toxic substances, wastes, materials
or chemicals, petroleum (including crude oil or any fraction thereof), petroleum
products, asbestos, asbestos-containing materials, pollutants and contaminants
that are regulated pursuant to any Environmental Laws.
Section 4.16. Charter Provisions. The actions of the Board of Directors of the
Company previously taken and/or taken in approving the Offer (including the
purchase of Shares pursuant to the Offer), the Merger, this Agreement, the
Shareholders Agreement and the transactions contemplated by this Agreement and
the Shareholders Agreement, are sufficient to render irrevocably inapplicable
(i) Article VII of the Company's Articles of Incorporation and (ii) any state
anti-takeover law to (A) the Offer, the Merger, this Agreement and the
Shareholders Agreement, (B) the transactions contemplated by this Agreement
and/or the Shareholders Agreement and (C) any other transaction between Parent
and any of its Affiliates on the one hand, and the Company and any of its
Affiliates, on the other hand, consummated after the date that Sub acquires
Shares pursuant to the Offer. Pursuant to the Company's Articles of
Incorporation, Section 2538(a) and Subchapters E, F, G and H of Chapter 25 of
the PBCL are not applicable to the Company.
Section 4.17. Intellectual Property. Except as set forth in Item 4.17 of the
Company Letter, with respect to all patents, trademarks, trade names, service
marks, copyrights and any applications therefor, technology, know-how, trade
secrets, computer software programs or applications, trade names and tangible or
intangible proprietary information or materials that are used in the respective
businesses of the Company and its Subsidiaries as currently conducted, the
Company has no knowledge (a) that such use violates the rights of any third
Person or (b) of any pending or threatened litigation involving such use, which
violation or litigation in the aggregate has or could be reasonably expected to
have a Materially Adverse Effect on the Company.
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Section 4.18. Labor Relations. No representation election, arbitration
proceeding, grievance (other than with respect to incidents in the ordinary
course of business), labor strike, dispute (other than with respect to incidents
in the ordinary course of business), slowdown, stoppage or other labor trouble
is pending or, to the knowledge of the Company, threatened against the Company
or any of its Subsidiaries. No complaint against the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, threatened before
the National Labor Relations Board, the Equal Employment Opportunity Commission
or any similar foreign, state or local agency, by or on behalf of any employee
of the Company or any of its Subsidiaries. The Company and each of its
Subsidiaries is in compliance in all material respects with all laws and
regulations governing workplace safety, terms and conditions of employment,
payment of wages and overtime, employment of non-citizens, discrimination in the
workplace, and other employment and labor laws.
Neither the Company nor any of its Subsidiaries has engaged in any unfair labor
practice.
Section 4.19. Insurance. All insurance policies carried by, or covering, the
Company and its Subsidiaries with respect to their businesses, assets and
properties are, in respect of the risks insured against and the amount of
coverage provided, consistent with insurance policies customarily carried by
Persons similarly situated who engage in businesses similar to the businesses of
the Company and its Subsidiaries. All such insurance policies are in full force
and effect, and no notice of cancellation has been given with respect to any
such policy. All premiums due on such policies have been paid in a timely manner
and the Company and its Subsidiaries have complied in all material respects with
the terms and provisions of such policies.
Section 4.20. Finders and Investment Bankers. Neither the Company nor any of its
officers or directors has employed any broker, finder or financial advisor or
otherwise incurred any liability for any brokerage fees, commissions or
financial advisors' or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to an agreement or agreements with BT
Alex.
Brown and Warburg Dillon Read, copies of which has been provided to Parent.
Section 4.21. Contracts; Indebtedness. Except as disclosed in the Company SEC
Documents or as listed under Item 4.21 or other Items of the Company Letter, (a)
there are no contracts or agreements that are material to the business,
properties, assets, financial condition or results of operations of the Company
and its Subsidiaries taken as a whole, and (b) neither the Company nor any of
its Subsidiaries is in violation of or in default under (nor does there exist
any condition which upon the passage of time or the giving of notice would cause
such a violation of or default under) any loan or credit agreement, note, bond,
mortgage, indenture, lease, permit, concession, franchise, license or any other
contract, agreement, arrangement or understanding, to which it is a party or by
which it or any of its properties or assets is bound, except for violations or
defaults that could not reasonably be expected to result in a Materially Adverse
Effect on the Company.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 5.1. Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has requisite corporate power and
authority to carry on its business as now being conducted.
Section 5.2. Authority. Parent and Sub have the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Sub, and the consummation by Parent and Sub of the
Merger and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Sub, and
no other corporate proceedings on the part of Parent or Sub or their respective
Boards of Directors are necessary to authorize or approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Parent and Sub and constitutes the
legal, valid and binding agreement of the Parent and Sub, enforceable against
the Parent and Sub in accordance with its terms, except to the extent that
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by principles of equity regarding the availability of
remedies.
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Section 5.3. Consents and Approvals; No Violations. Except as set forth in Item
5.3 of the Parent Letter, except for filings, permits, authorizations, consents
and approvals as may be required under, and other applicable requirements of,
the Exchange Act, the HSR Act, the PBCL, state takeover laws and foreign and
supranational laws relating to antitrust and anticompetition clearances, neither
the execution, delivery or performance of this Agreement by Parent and Sub nor
the consummation by Parent and Sub of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the respective
Articles of Incorporation or By-laws of Parent and Sub, (ii) require any filing
with, or permit, authorization, consent or approval of, any Governmental Entity,
(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, amendment, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license, lease,
contract, agreement or other instrument or obligation to which Parent or any of
its Subsidiaries is a party or by which any of them or any of their properties
or assets may be bound or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Parent, any of its Subsidiaries or any
of their properties or assets.
Section 5.4. Information Supplied. None of the information supplied or to be
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
shareholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's shareholders or at the time of the
Shareholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Shareholders
Meeting which has become false or misleading, except that no representation or
warranty is made by Parent or Sub in connection with any of the foregoing with
respect to statements made or incorporated by reference therein based on
information supplied by the Company or any of its representatives specifically
for inclusion or incorporation by reference therein. The Offer Documents will
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder, except that no representation or
warranty is made by Parent or Sub in connection with any of the foregoing with
respect to statements made or incorporated by reference therein based on
information supplied by the Company or any of its representatives specifically
for inclusion or incorporation by reference therein.
Section 5.5. Interim Operations of Sub. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
Section 5.6. Finders and Investment Bankers. Neither Parent nor Sub nor any of
their respective officers or directors has employed any broker, finder or
financial advisor or otherwise incurred any liability for any brokerage fees,
commissions or financial advisors' or finders' fees in connection with the
transactions contemplated hereby, other than pursuant to an agreement with
Lehman Brothers.
Section 5.7. Financing. Parent has or will have, and shall provide Sub with, the
funds necessary to consummate the Offer and the Merger and the transactions
contemplated hereby in accordance with the terms hereof.
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ARTICLE VI - COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 6.1. Conduct of Business by the Company Pending the Merger. During the
period from the date of this Agreement until the earlier of the Effective Time
or such time as Parent's and Sub's designees shall constitute a majority of the
Board of Directors of the Company, the Company shall, and shall cause each of
its Subsidiaries to, in all material respects, except as contemplated by this
Agreement, carry on its business in the ordinary course as currently conducted
and, to the extent consistent therewith, with no less diligence and effort than
would be applied in the absence of this Agreement, seek to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers and others having business dealings with them to the end that goodwill
and ongoing businesses shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing, and except as otherwise contemplated
by this Agreement, during such period, the Company shall not, and shall not
permit any of its Subsidiaries to, without the prior written consent of Parent
(which consent shall not be unreasonably withheld or delayed):
(a) amend or propose to amend its Articles of Incorporation or By-laws (or
comparable governing instruments) or change the number of directors constituting
the entire Board of Directors of the Company or any of its Subsidiaries;
(b) authorize for issuance, issue, deliver, grant, sell, pledge, or otherwise
dispose of or propose to issue, deliver, grant, sell, pledge or otherwise
dispose of any shares of, or any options, warrants, commitments, subscriptions
or rights of any kind to acquire or sell any shares of, the capital stock or
other securities of the Company or any of its Subsidiaries including, but not
limited to, stock appreciation rights, phantom stock, any securities convertible
into or exchangeable for shares of stock of any class of the Company or any of
its Subsidiaries; provided, however, that the foregoing shall not prohibit the
issuance of Shares upon the exercise of Company Options granted prior to the
date of this Agreement;
(c) split, combine or reclassify any shares of its capital stock or declare, pay
or set aside any dividend or other distribution (whether in cash, stock,
securities or other property or any combination thereof) in respect of its
capital stock, or directly or indirectly redeem, purchase or otherwise acquire
or offer to acquire, directly or indirectly, any shares of its capital stock or
other securities;
(d) (i) except in the ordinary course of business consistent with past practice
(1) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, indirectly, continently or otherwise) for the obligations of
any Person or (2) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to one of its Subsidiaries); (ii)
acquire the stock or the assets of, or merge or consolidate with, any other
Person; (iii) voluntarily incur any liability or obligation (absolute, accrued,
contingent or otherwise) other than in the ordinary course of business
consistent with past practice; or (iv) sell, transfer, mortgage, pledge or
otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, pledge
or otherwise dispose of or encumber, any assets or properties, real, personal or
mixed of the Company and its Subsidiaries other than sales of products in the
ordinary course of business and in a manner consistent with past practice; (v)
incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any Person, or make any loans, advances or
capital contributions to, or investments in, any other Person (other than in the
ordinary course of business consistent with past practice); (vi) enter into any
contract or agreement, other than in the ordinary course of business consistent
with past practice, or amend, alter or terminate any Company Material Contract;
or (vii) authorize any capital expenditure except in compliance with procedures
heretofore established by resolutions duly adopted by the Board of Directors of
the Company;
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(e) increase in any manner the compensation of any of its directors, officers or
employees (other than in the ordinary course of business consistent with past
practice) or enter into, establish, amend or terminate any Benefit Plan,
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other welfare,
stock option or other equity, pension, retirement, vacation, severance, deferred
compensation or other compensation or benefit plan, policy, agreement, trust,
fund or arrangement with, for or in respect of, any shareholder, officer,
director, other employee, agent, consultant or Affiliate other than as required
pursuant to the terms of agreements in effect on the date of this Agreement and
set forth in Item 6.1 of the Company Letter;
(f) except as may be required as a result of a change in Law or in generally
accepted accounting principles, change any of the accounting practices or
principles used by it;
(g) make any material Tax election, settle or compromise any material federal,
state, local or foreign Tax liability, or waive any statute of limitations for
any Tax claim or assessment;
(h) settle or compromise any material pending or threatened suit, action or
claim;
(i) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger);
(j) pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction (i) in the ordinary course of business and
consistent with past practice of liabilities reflected or reserved against in
the financial statements of the Company or incurred in the ordinary course of
business and consistent with past practice and (ii) of liabilities required to
be paid, discharged or satisfied pursuant to the terms of any contract in
existence on the date hereof or entered into in accordance with this Section
6.1;
(k) permit any insurance policy naming the Company or any of its Subsidiaries as
a beneficiary or a loss payable payee to be cancelled or terminated without
notice to Parent, except in the ordinary course of business and consistent with
past practice; or
(l) take, or offer or propose to take, or agree to take, in writing or
otherwise, any of the actions described in this Section 6.1 or take or omit to
take any action which would make any of the representations or warranties of the
Company contained in this Agreement untrue and incorrect in any material respect
as of the date when made if such action had then been taken or omitted, or would
result in any of the Offer Conditions or the conditions set forth in Article
VIII hereof not being satisfied.
The Company shall, and the Company shall cause each of its Subsidiaries to, use
its or their best efforts to comply in all material respects with all Laws
applicable to it or any of its properties, assets or business and maintain in
full force and effect all the Company Permits necessary for such business.
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Section 6.2. No Solicitation.
(a) The Company shall not, nor shall it permit any of its Subsidiaries to, nor
shall it permit any of its executive officers, directors, authorized
representatives or authorized agents to, directly or indirectly, (i) solicit,
initiate or knowingly encourage (including by way of furnishing non-public
information) any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Takeover Proposal or (ii), except as
expressly permitted pursuant to paragraph (b) of this Section 6.2, participate
in any discussions or negotiations regarding any Takeover Proposal. For purposes
of this Agreement, "Takeover Proposal" means (x) any inquiry, proposal or offer
from any Person relating to any direct or indirect acquisition or purchase of
any of the assets of the Company or its Subsidiaries (other than the purchase of
inventory or other assets in the ordinary course of business) or any of the
Shares then outstanding, any tender offer or exchange offer for any of the
Shares then outstanding, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement or (y) any other transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or delay the Offer
and/or the Merger or which would reasonably be expected to dilute the benefits
to Parent of the transactions contemplated by this Agreement and the
Shareholders Agreement.
(b) Neither the Unaffiliated Directors nor any committee designated thereby
shall withdraw or modify, or propose publicly to (i) withdraw or modify, in a
manner adverse to Parent, the approval or recommendation by Unaffiliated
Directors or such committee of the Offer, the Merger or this Agreement (or any
transaction contemplated thereby); provided that, the Unaffiliated Directors
may, (A) in response to any Takeover Proposal, suspend such recommendation for a
period of up to 24 hours pending the analysis by the Unaffiliated Directors of
such Takeover Proposal, which analysis may include to the extent necessary
discussions with a Person making such Takeover Proposal regarding same, or (B)
at any time prior to the consummation of the Offer, modify or withdraw such
recommendation, but only if the Unaffiliated Directors determine in good faith,
based on a written opinion of Drinker Biddle & Reath LLP (a "Written Opinion"),
that it would be a breach of its fiduciary duties not to so modify or withdraw
such recommendation, (ii) approve or recommend, or propose publicly to approve
or recommend, any Takeover Proposal or (iii) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Takeover Proposal.
(c) In addition to the obligations of the Company contained in paragraphs (a)
and (b) of this Section 6.2, the Company shall immediately advise Parent orally
and in writing of any request for information or of any Takeover Proposal, the
material terms and conditions of such request or Takeover Proposal and the
identity of the Person making such request or Takeover Proposal.
(d) Subject to Section 6.2(e), nothing contained in this Section 6.2 shall
prohibit the Company from taking and disclosing to its shareholders a position
contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act or from
making any disclosure to the Company's shareholders if, in the good faith
judgment of the Board of Directors of the Company, based on a Written Opinion,
such disclosure is required under applicable law.
(e) If Sub purchases Shares pursuant to the Offer, the Company and its Board of
Directors shall take all actions legally permitted to permit the Merger to
occur.
Section 6.3. Disclosure to Parent; Delivery of Certain Filings. The Company
shall promptly advise Parent orally and in writing if there occurs, to the
knowledge of the Company, any change or event which results in the executive
officers of the Company having a good faith belief that such change or event has
resulted in or is reasonably likely to result in a Materially Adverse Effect on
the Company or that such change or event could materially delay the consummation
of the Offer and/or the Merger. The Company shall provide to Parent, and Parent
shall provide to the Company, copies of all filings made by the Company or
Parent, as the case may be, with any Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
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ARTICLE VII - ADDITIONAL AGREEMENTS
Section 7.1. Shareholder Approval; Preparation of Proxy Statement.
(a) If the approval of the Company's shareholders of this Agreement and the
Merger is required by law, the Company shall, at Parent's request, as soon as
practicable following the expiration of the Offer in accordance with the terms
of Section 1.1 of this Agreement, so long as permitted by law, duly call, give
notice of, convene and hold a meeting of its shareholders (the "Shareholders
Meeting") for the purpose of obtaining such approval. The Company shall, through
its Board of Directors (but subject to the right of the Company's Board of
Directors to withdraw or modify its approval or recommendation of the Offer, the
Merger and this Agreement as set forth in Section 6.2(b)), recommend to its
shareholders that the shareholders approve the Merger. Notwithstanding the
foregoing, if Sub or any other Subsidiary of Parent shall acquire 80% or more of
the then outstanding Shares, the parties shall, at the request of Parent, take
all necessary and appropriate actions to cause the Merger, pursuant to the terms
thereof, to become effective in accordance with Section 1924(b)(1)(ii) of the
PBCL, as promptly as practicable after such acquisition without a meeting of the
Shareholders of the Company, including, without limitation, adoption by the
board of directors of Sub of a short-form plan of merger in accordance with the
PBCL and consistent with the terms of the Merger.
(b) If the approval of the Company's shareholders of this Agreement and the
Merger is required by law, the Company shall, at Parent's request, as soon as
practicable following the expiration of the Offer in accordance with the terms
of Section 1.1, and to the extent permitted by law, prepare and file a
preliminary Proxy Statement with the SEC and shall use all reasonable efforts to
respond to any comments of the SEC or its staff, and, to the extent permitted by
law, to cause the Proxy Statement to be mailed to the Company's shareholders as
promptly as practicable after responding to all such comments to the
satisfaction of the staff. The Company shall notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and shall supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Shareholders Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company shall promptly prepare and mail to its shareholders such
an amendment or supplement. Parent shall cooperate with the Company in the
preparation of the Proxy Statement or any amendment or supplement thereto.
Parent and its counsel shall be given a reasonable opportunity to review and
comment upon the Proxy Statement and any such correspondence prior to its filing
with the SEC or dissemination to the Company's shareholders, and the Company
shall not so file or disseminate any Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer and all
other Shares of the Company entitled to vote on the Merger owned by Parent or
any Subsidiary of Parent to be voted in favor of the Merger.
Section 7.2. Access to Information. Between the date of this Agreement and the
Effective Time, the Company shall give, and shall cause its accountants and
legal counsel to give, Parent and its respective authorized representatives
(including, without limitation, its financial advisors, accountants and legal
counsel), at all reasonable times, access as reasonably requested to all
personnel, offices and other facilities and to all contracts, agreements,
commitments, books and records of or pertaining to the Company and its
Subsidiaries, shall permit the foregoing Persons to make such reasonable
inspections as they may require and, as permitted under applicable law and
subject to certain restrictions existing as of the date of this Agreement that
are known to all parties hereto, shall cause its officers promptly to furnish
Parent with (a) such financial and operating data and other information with
respect to the business and properties of the Company and its Subsidiaries as
Parent may from time to time reasonably request, and (b) a copy of each report,
schedule and other document filed or received by the Company or any of its
Subsidiaries pursuant to the requirements of applicable securities laws or the
NASD.
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Section 7.3. Expenses. All fees, costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such fees, costs or expenses, whether or not the Offer or the
Merger is consummated, subject to the rights of Parent under Section 9.2 hereof.
Section 7.4. Public Announcements. Parent and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law, fiduciary
duties or by obligations pursuant to any listing agreement with or regulation of
the NASD.
Section 7.5. State Takeover Laws. If any "fair price" or "control share
acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, Parent and the Company and
their respective Boards of Directors shall use all reasonable efforts to grant
or obtain such approvals and take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to minimize the effects of
any such statute or regulation on the transactions contemplated hereby.
Section 7.6. Indemnification, Exculpation and Insurance.
(a) All rights to indemnification and exculpation from liabilities for acts or
omissions occurring at or prior to the Effective Time existing in favor of the
current or former directors, officers or employees of the Company as provided in
the Company's Articles of Incorporation or By-laws or pursuant to agreements
existing on the date of this Agreement shall be assumed by the Surviving
Corporation, and Parent shall cause the Surviving Corporation to honor such
obligations in accordance with the terms thereof, without further action, as of
the Effective Time, and such rights shall continue in full force and effort in
accordance with their respective terms. Such rights, and the Surviving
Corporation's and Parent's related obligations, shall apply in all respects to
the current or former directors, officers and employees of each of its
Subsidiaries as though such directors, officers and employees were entitled to
indemnification rights pursuant to the Company's Articles of Incorporation or
By-laws as in effect on the date hereof or pursuant to such agreements, as the
case may be. In addition, from and after the Effective Time, directors and
officers of the Company who become or remain directors or officers of Parent
shall be entitled to the same indemnity rights and protections (including those
provided by directors' and officers' liability insurance) as are afforded to
other directors and officers of Parent. Notwithstanding any other provision
hereof, the provisions of this Section 7.6(a) are intended to be for the benefit
of, and shall be enforceable by, each indemnified party, his or her heirs and
his or her representatives and (ii) are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such person
may have by contract or otherwise.
(b) Parent shall, and shall cause the Surviving Corporation or one of its
Affiliates to, maintain in effect for six years after the Effective Time
policies of directors' and officers' liability insurance equivalent in all
material respects to those maintained by or on behalf of the Company and its
Subsidiaries on the date hereof (and having coverage and containing terms and
conditions which in the aggregate are not less advantageous to the persons
currently covered by such policies as insured) with respect to claims arising
from any actual or alleged wrongful act or omission occurring at or prior to the
Effective Time for which a claim has not been made against any director or
officer of the Company or any director or officer of its Subsidiaries prior to
the Effective Time.
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Section 7.7. Notification of Certain Matters. Parent shall give prompt notice to
the Company, and the Company shall give prompt notice to Parent, of: (i) the
occurrence, or non-occurrence, in each case, to the knowledge of the Company or
Parent, as the case may be, of any event the occurrence, or non-occurrence, of
which results in the executive officers of the Company or Parent, as the case
may be, having a good faith belief that such change or event would be reasonably
likely to cause (x) any representation or warranty of such entity contained in
this Agreement that is not qualified as to materiality to be untrue or
inaccurate in any material respect, (y) any representation or warranty of such
entity contained in this Agreement that is qualified as to materiality to be
untrue or inaccurate in any respect, or (z) any covenant, condition or agreement
of such entity contained in this Agreement not to be complied with or satisfied
in all material respects; and (ii) the executive officers of the Company or
Parent, as the case may be, believing in good faith that the Company or Parent,
as the case may be, has, to the knowledge of the Company or Parent, as the case
may be, failed to comply with in all material respects or satisfy in all
material respects any covenant, condition or agreement of such entity to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 7.7 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice. Each of the
Company, Parent and Sub shall give prompt notice to the other parties hereof of
any notice or other communication from any third party alleging that the consent
of such third party is or may be required in connection with the transactions
contemplated by this Agreement.
Section 7.8. Board of Directors. Promptly after such time as Sub purchases
Shares pursuant to the Offer (but subject to the satisfaction of the Minimum
Condition), Sub shall be entitled, to the fullest extent permitted by law, to
designate at its option up to that number of directors, rounded to the next
highest whole number, of the Company's Board of Directors, subject to compliance
with Section 14(f) of the Exchange Act, as shall make the percentage of the
Company's directors designated by Sub equal to the aggregate voting power of the
Shares held by Parent or any of its Subsidiaries; provided, however, that in the
event that Sub's designees are elected to the Board of Directors of the Company,
until the Effective Time, such Board of Directors shall have (i) at least three
Unaffiliated Directors who are directors on the date of this Agreement or are
designated by a majority of the Unaffiliated Directors of the Company who were
directors on the date hereof and (ii) the number of Affiliated Directors
required by the Standstill Agreement which shall be in addition to the number of
directors designated by Sub pursuant to this Section 7.8; and provided, further
that, in such event, if the number of Unaffiliated Directors shall be reduced
below three for any reason whatsoever, the remaining Unaffiliated Directors
shall, to the fullest extent permitted by law, designate a person to fill such
vacancy who shall be deemed to be an Unaffiliated Director for purposes of this
Agreement or, if no Unaffiliated Directors then remain, the other directors
shall designate three persons to fill such vacancies who shall not be officers
or Affiliates of the Company or any of its Subsidiaries, or officers or
Affiliates of Parent, of any of its Subsidiaries or of any other entity in which
Parent owns, directly or indirectly, any material amount of capital stock or
other significant ownership interest, and such persons shall be deemed to be
Unaffiliated Directors for purposes of this Agreement.
Following the election or appointment of Sub's designees pursuant to this
Section 7.8 and prior to the Effective Time, any termination or amendment of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Sub or waiver or
assertion of any of the Company's rights hereunder, and any other consent or
action by the Board of Directors of the Company with respect to this Agreement
(other than recommending or reconfirming the recommendation that the holders of
the Shares approve and adopt this Agreement and the Merger, and making
determinations in connection therewith, which recommendations and determinations
may be made by a majority of the Board of Directors as constituted at any time
after such election or appointment of Sub's designees pursuant to this Section)
shall to the fullest extent permitted by applicable law require the concurrence
of a majority of the Unaffiliated Directors and, to the fullest extent permitted
by law, no other action by the Company, including any action by any other
director of the Company, shall be required to approve such actions. To the
fullest extent permitted by applicable law, the Company shall take all actions
requested by Parent which are reasonably necessary to effect the election of any
such designee, including mailing to its shareholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, and the Company agrees to make such mailing
with the mailing of the Schedule 14D-9 (provided that Sub shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). Parent and Sub shall be
solely responsible for any information with respect to either of them and their
nominees, officers, directors and Affiliates required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. In connection with the
foregoing, the Company shall promptly, at the option of Parent, to the fullest
extent permitted by law, either increase the size of the Company's Board of
Directors and/or obtain the resignation of such number of its current directors
as is necessary to enable Sub's designees to be elected or appointed to the
Company's Board of Directors as provided above.
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Section 7.9. Additional Agreements.
(a) Subject to the terms and conditions herein provided, each of the parties
hereto agrees to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using all reasonable
efforts to obtain all necessary waivers, consents and approvals (including,
without limitation, obtaining consents from landlords under leases providing for
various remedies in the event of a change in control of the tenant) and effect
all necessary registrations and filings. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and/or directors of Parent, Sub and the
Company shall take all such actions.
(b) Each of Parent, Sub and the Company agrees to use its reasonable best
efforts promptly to take all reasonable steps to secure all clearances under the
HSR Act and under any applicable foreign laws relating to the regulation of
competition, or from federal, state or foreign governments or governmental
authorities or agencies with respect to the transactions contemplated by this
Agreement. Notwithstanding any other provision hereof, in no event shall Parent,
Sub or any of their Affiliates (collectively, the "Parent Group") be required to
take or fail to take any action in order to obtain or grant a consent arising
out of any contractual or legal obligation of or applicable to the Company or
its Subsidiaries, other than obligations such as those under the HSR Act which
apply to both the Company and the Parent Group and then only to the extent
applicable to the Parent Group, and in no event shall any member of the Parent
Group be required to enter into or offer to enter into any divestiture,
hold-separate, business limitation or similar agreement or undertaking in
connection with this Agreement or the transactions contemplated hereby or
otherwise.
Section 7.10. Certain Litigation. The Company agrees that it shall not settle
any litigation commenced after the date hereof against the Company or any of its
directors by any shareholder of the Company relating to the Offer, the Merger,
this Agreement or the Shareholders Agreement without the prior written consent
of Parent. In addition, the Company shall not voluntarily cooperate with any
third party that may hereafter seek to restrain or prohibit or otherwise oppose
the Offer or the Merger and shall cooperate with Parent and Sub to resist any
such effort to restrain or prohibit or otherwise oppose the Offer or the Merger.
Section 7.11. Severance Payments. Parent hereby agrees that for a period of one
year after the consummation of the Offer, all persons who, as of the date of
this Agreement, are employees of the Company or any of its Subsidiaries and who
are involuntarily terminated by the Company or the Surviving Corporation shall
be entitled to receive severance pay and benefits equal to the severance pay and
benefits provided for in the Company's severance pay plan, a description of
which plan is set forth as Exhibit D to the Company Letter.
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ARTICLE VIII - CONDITIONS PRECEDENT
Section 8.1. 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 fulfillment at or prior to the Effective Time of the following conditions:
(a) Offer. Subject to the satisfaction or waiver by Sub of all of the Offer
Conditions (it being understood that pursuant to Section 1.1(a) Sub cannot waive
the Minimum Condition without the prior written consent of the Company), Sub
shall have accepted for payment all Shares validly tendered in the Offer and not
withdrawn. Neither Parent nor Sub may invoke this condition if Sub fails to
purchase Shares so tendered and not withdrawn in violation of the terms of this
Agreement or the Offer.
(b) Shareholder Approval. If required by any applicable law or the constituent
documents of any party hereto, this Agreement and the Merger shall have been
approved at or prior to the Effective Time by the requisite vote of the
shareholders of the Company in accordance with the PBCL and the Company's
Articles of Incorporation and By-laws, which the Company has represented shall
be solely the affirmative vote of a majority of the outstanding Shares.
(c) No Injunction or Action. No order, statute, rule, regulation, executive
order, stay, decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court or other Governmental Entity which
temporarily, preliminarily or permanently prohibits or prevents the consummation
of the Merger which has not been vacated, dismissed or withdrawn prior to the
Effective Time.
(d) Other Approvals. On or prior to the Effective Time, the waiting period (and
any extension thereof) applicable to the Merger under the HSR Act and any
similar foreign Laws shall have been terminated or shall have expired and all
consents necessary for the consummation of the Merger shall have been obtained.
Section 8.2. Conditions of Obligations of Parent and Sub. The obligations of
Parent and Sub to effect the Merger are subject to the satisfaction of the
condition (which may be waived in whole or in part by Parent) that the Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement on or before the earlier of (i) such time
as Parent's or Sub's designees shall constitute at least a majority of the
Company's Board of Directors pursuant to Section 2.4 of this Agreement and (ii)
the Effective Time; provided, however, that no failure by the Company to have so
performed any such obligation shall constitute a failure of satisfaction of the
foregoing condition where the Company's failure of performance was caused by
Parent.
ARTICLE IX - TERMINATION AND AMENDMENT
Section 9.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after the approval of this Agreement and
the Merger by the shareholders of the Company (if required by applicable law):
(a) by mutual written consent of Parent, Sub and the Company;
(b) by any of Parent, Sub or the Company:
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(i) if (x) as a result of the failure of any of the Offer Conditions set forth
in Exhibit A, the Offer shall have terminated or expired in accordance with its
terms without Sub having accepted for payment any Shares pursuant to the Offer
or (y) Sub shall have, consistent with its obligations hereunder, failed to pay
for the Shares prior to December 31, 1999 (the "Outside Date"); provided,
however, that the right to terminate this Agreement pursuant to this Section
9.1(b)(i) shall not be available to any party whose failure to perform any of
its obligations under this Agreement results in the failure of any such Offer
Condition or if the failure of such condition results from facts or
circumstances that constitute a breach of any representation or warranty under
this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree or ruling or other action shall have become final and nonappealable;
provided, however, that Parent or the Company, as the case may be, may not
terminate this Agreement pursuant to this Section 9.1 if it has not complied
with its obligations under Section 7.09 hereof with respect to any such order,
decree, ruling, or other action;
(c) by either Parent or Sub if the Company shall have breached in any material
respect any of its material covenants or other agreements contained in this
Agreement which breach or failure to perform is incapable of being cured or, the
Company having been given reasonable written notice of such breach by Parent,
has not been cured within one business day prior to the then scheduled
Expiration Date;
(d) by any of Company, Parent or Sub if either Parent or Sub is entitled to
terminate the Offer as a result of the occurrence of any event set forth in
paragraph (c) of Exhibit A; provided that the temporary suspension of the
recommendation of the Company's Board of Directors referred to herein in
accordance with Section 6.2(b) shall not give rise to a right of termination
pursuant to this Section 9.1(d);
(e) by the Company if Parent or Sub shall have breached in any material respect
any of its material covenants or other agreements contained in this Agreement,
which breach or failure to perform is incapable of being cured or, Parent having
been given reasonable written notice of such breach by the Company, has not been
cured within one business day prior to the then scheduled Expiration Date; or
(f) by the Company, if the Offer has not been timely commenced in accordance
with Section 1.1.
Section 9.2. Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the abandonment of the
Offer or the Merger pursuant to this Article IX, this Agreement (other than
Sections 4.20, 5.6, 7.3, this Section 9.2, Article X, the penultimate sentence
of Section 1.1(a) and the last sentence of 1.2(c)) shall become void and of no
effect with no liability on the part of any party hereto (or of any of its
directors, officers, employees, agents, legal or financial advisors or other
representatives); provided, however, that no such termination shall relieve any
party hereto from any liability for any breach of this Agreement prior to
termination. If this Agreement is terminated as provided herein, each party
shall hold in confidence all materials obtained from, or based on or otherwise
reflecting or generated in whole or in part from information obtained from, any
other party hereto in connection with the transactions contemplated by this
Agreement, and shall not use any such materials for the purpose of competing
with the businesses of the other parties hereto, whether obtained before or
after the execution hereof.
(b) In the event that this Agreement is terminated by Parent pursuant to Section
9.1(d) hereof, then the Company shall promptly pay Parent upon its request all
reasonable out-of-pocket charges and expenses incurred by Parent or its
Affiliates in connection with this Agreement and the transactions contemplated
hereby, including without limitation reasonable and documented attorneys' and
accountants' fees and disbursements and fees and expenses of Parent's financial
advisor and any information agent and depositary retained in connection with the
Offer and all printing and mailing fees and expenses, in an amount not to exceed
$8,000,000.
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Section 9.3. Amendment. This Agreement may be amended by action taken by Parent,
Sub and the Company at any time before or after approval hereof by the
shareholders of the Company (if required), but, after any such approval, no
amendment shall be made which in any way materially adversely affects the rights
of such shareholders, without the further approval of such shareholders. Without
the prior approval of a majority of the then serving Unaffiliated Directors, if
any are then serving on the Board, this Agreement may not be amended at any time
(a) subsequent to the purchase by Sub of any Shares pursuant to the Offer and
(b) prior to the Effective Time. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 9.4. Waiver. At any time prior to the Effective Time, the parties hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant thereto and (c) subject to the terms of this Agreement, waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party
and, after the purchase of Shares pursuant to the Offer, but prior to the
Effective Time, as to the Company, only if such waiver is approved by a majority
of the then serving Unaffiliated Directors, if any are then serving on the
Board.
ARTICLE X - GENERAL PROVISIONS
Section 10.1. Non-Survival of Representations and Warranties and Agreements.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.1 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time of the
Merger.
Section 10.2. 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 overnight courier (providing proof of delivery) 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 Parent or Sub, to:
EM Laboratories, Incorporated
7 Skyline Drive
Hawthorne, New York 10532
Attn: President and Chief Executive Officer
Telecopy: (914) 592-8775
with copies to:
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attn: Klaus H. Jander, Esq.
Telecopy: (212) 878-3025
(b) if to the Company, to: VWR Scientific Products Corporation 1310 Goshen
Parkway West Chester, Pennsylvania 19380 Attn: Jerrold B. Harris Telecopy: (610)
436-1760
with copies to:
Drinker Biddle & Reath LLP
1000 Westlakes Drive, Suite 300
Berwyn, Pennsylvania 19312
Attn: Thomas E. Wood, Esq.
Telecopy: (610) 993-8585
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Section 10.3. Interpretation; Definitions. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article or a
Section of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." As used in
this Agreement, the phrase "made available" shall mean that the information
referred to has been made available if requested by the party to whom such
information is to be made available.
As used in this Agreement, the following terms have the meanings specified or
referred to in this Section 10.3 and shall be equally applicable to both the
singular and plural forms. Any agreement referred to below shall mean such
agreement as amended, supplemented or modified from time to time to the extent
permitted by the applicable provisions thereof and by this Agreement.
"Acquisition Agreement" shall have the meaning set forth in Section 6.2(b).
"Affiliate" with respect to any Person, means any other Person controlling,
controlled by or under common control with such Person.
"Affiliated Directors" shall have the meaning set forth in the Standstill
Agreement.
"Agreement" means this Agreement and Plan of Merger, dated as of June 8, 1999,
among Parent, Sub and the Company.
"Articles of Merger" shall have the meaning set forth in Section 2.2.
"Benefit Plans" shall have the meaning set forth in Section 4.14(a).
"Certificate" shall have the meaning set forth in Section 3.2(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the introductory paragraph of this
Agreement.
"Company Option Plans" shall have the meaning set forth in Section 3.2(f).
"Company Options" shall have the meaning set forth in Section 3.2(f).
"Company Letter" means the letter from the Company to Parent dated the date
hereof, which letter relates to this Agreement and is designated therein as the
Company Letter.
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"Company Material Contract" shall have the meaning set forth in Section 4.11.
"Company Permits" shall have the meaning set forth in Section 4.10.
"Company SEC Documents" shall have the meaning set forth in Section 4.6.
"Company Securities" shall have the meaning set forth in Section 4.3.
"Constituent Corporations" shall have the meaning set forth in the introductory
paragraph of this Agreement.
"Dissenting Shares" shall have the meaning set forth in Section 3.1(d).
"Dissenting Shareholder" shall have the meaning set forth in Section 3.1(d).
"Effective Time" shall have the meaning set forth in Section 2.2.
"Environmental Claim" shall have the meaning set forth in Section 4.15.
"Environmental Laws" shall have the meaning set forth in Section 4.15.
"Environmental Permits" shall have the meaning set forth in Section 4.15.
"ERISA" shall have the meaning set forth in Section 4.14.
"ERISA Affiliate" shall have the meaning set forth in Section 4.14(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, together
with the rules and regulations promulgated thereunder.
"Expenses" means documented and reasonable out-of-pocket fees and expenses
incurred or paid by or on behalf of Parent in connection with the Offer, the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including all fees and expenses of law firms, commercial banks,
investment banking firms, accountants, experts and consultants to Parent.
"Expiration Date" shall have the meaning set forth in Section 1.1(a).
"Governmental Entity" means any Federal, state, local or foreign government or
any court, tribunal, administrative agency or commission or other governmental
or other regulatory authority or agency, domestic, foreign or supranational.
"Hazardous Materials" shall have the meaning set forth in Section 4.15.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"Information Statement" shall have the meaning set forth in Section 4.8.
"knowledge" shall mean, with respect to the Company, the actual knowledge of its
executive officers and the actual knowledge of the senior officer of each of its
foreign Subsidiaries and, with respect to Parent, the actual knowledge of its
executive officers of Parent.
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"Law" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of the United States, any foreign country
or any domestic or foreign state, county, city or other political subdivision or
of any Governmental Entity.
"Liens" means any pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever.
"Litigation" shall have the meaning set forth in Section 4.14.
"Materially Adverse Change" or "Materially Adverse Effect" means, when used in
connection with the Company or Parent, as the case may be, any change or effect
(or any development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) or fact or condition (or any development that,
insofar as can reasonably be foreseen, is likely to result in any fact or
condition), except in respect of general economic or financial conditions in the
industry of which the Company, or Parent, as the case may be, is a part, that is
materially adverse to the business, properties, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken as
a whole, or Parent and its Subsidiaries taken as a whole, as the case may be.
"Merger" shall have the meaning set forth in the third Whereas provision of this
Agreement.
"Merger Consideration" shall have the meaning set forth in Section 3.1(c).
"Minimum Condition" shall have the meaning set forth in Exhibit A of this
Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Offer" shall have the meaning set forth in the second Whereas provision of this
Agreement.
"Offer Conditions" shall have the meaning set forth in Section 1.1(a).
"Offer Documents" shall have the meaning set forth in Section 1.1(b).
"Offer Price" shall have the meaning set forth in the second Whereas provision
of this Agreement.
"Outside Date" shall have the meaning set forth in Section 9.1(b)(i).
"Parent" shall have the meaning set forth in the introductory paragraph of this
Agreement.
"Parent Group" shall have the meaning set forth in Section 7.09(b).
"Parent Letter" means the letter from Parent to the Company dated the date
hereof, which letter relates to this Agreement and is designated therein as the
Parent Letter.
"Paying Agent" shall have the meaning set forth in Section 3.2(a).
"PBCL" means the Business Corporation Law of 1988, as amended, of the
Commonwealth of Pennsylvania.
"Person" shall mean any individual, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization or other
entity.
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"Preferred Stock" shall have the meaning set forth in Section 4.3.
"Premises" shall have the meaning set forth in Section 4.15(a)(ii).
"Proxy Statement" shall have the meaning set forth in Section 4.8.
"Schedule 13E-3" shall have the meaning set forth in Section 1.1(b).
"Schedule 14D-1" shall have the meaning set forth in Section 1.1(b).
"Schedule 14D-9" shall have the meaning set forth in Section 1.2(b).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, together with the
rules and regulations promulgated thereunder.
"Shares" shall have the meaning set forth in the second Whereas provision of
this Agreement.
"Standstill Agreement" means the Standstill Agreement by and between EM
Industries, Incorporated and the Company, dated as of February 27, 1995, as
amended by Amendment No. 1 to the Standstill Agreement, dated September 15,
1995, by and among EM Industries, Incorporated, Parent and the Company.
"Shareholders Agreement" shall have the meaning set forth in the fifth Whereas
provision of this Agreement.
"Shareholders Meeting" shall have the meaning set forth in Section 7.1(a).
"Sub" shall have the meaning set forth in the introductory paragraph of this
Agreement.
"Subsidiary" or "Subsidiary" of any Person means another Person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
Person.
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
"Takeover Proposal" shall have the meaning set forth in Section 6.2(a).
"Tax" shall have the meaning set forth in Section 4.12(f).
"Tax Return" shall have the meaning set forth in Section 4.12(f).
"Transfer Taxes" shall have the meaning set forth in Section 7.5.
"Unaffiliated Directors" shall have the meaning set forth in the Standstill
Agreement.
"Written Opinion" shall have the meaning set forth in Section 6.2(b).
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Section 10.4. Counterparts. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
Section 10.5. Entire Agreement; No Third-Party Beneficiaries. Except for the
Standstill Agreement and the Shareholders Agreement, this Agreement constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof. This Agreement is not intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
Section 10.6. Governing Law. This Agreement shall be exclusively governed by,
construed in accordance with, and interpreted according to the substantive law
of the Commonwealth of Pennsylvania without giving effect to the principles of
conflict of laws.
Section 10.7. Assignment. Except as otherwise provided in Section 1.1(a),
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned or delegated by any of the parties hereto without the prior
written consent of the other parties except that either Parent or Sub shall have
the right without the consent of the Company to assign all of its respective
rights and delegate all of its respective obligations under this Agreement to
any Affiliate of either Parent or Sub, subject in any case to Parent's guarantee
of the performance by such Affiliate of all of Parent's and Sub's obligations
hereunder, including without limitation the obligation to pay the Offer Price
and the Merger Consideration, and the Company shall take all action necessary to
permit such assignee to consummate the Merger after the purchase of Shares.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
Section 10.8. Severability. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable in a jurisdiction, such provision shall
be modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other jurisdiction.
Section 10.9. Enforcement of this Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, such remedy being in addition to any
other remedy to which any party is entitled at law or in equity.
Section 10.10. Obligations of Subsidiaries. Whenever this Agreement requires any
Subsidiary of Parent (including Sub) or of the Company to take any action, such
requirement shall be deemed to include an undertaking on the part of Parent or
the Company, as the case may be, to cause such Subsidiary to take such action.
Section 10.11. Merger of the Company into Sub. If at any time prior to the
Effective Time Parent notifies the Company that it desires for the Company to be
merged with and into Sub (in lieu of Sub merging with and into the Company), the
Company, Parent and Sub shall promptly negotiate in good faith an amendment to
and restatement of this Agreement which provides for such changes to this
Agreement as are necessary or appropriate to effectuate such merger (and upon
finalization thereof, the parties shall promptly enter into such amendment and
restatement).
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement to
be signed by their respective officers thereunto duly authorized all as of the
date first written above.
EM LABORATORIES, INCORPORATED
By: /s/ Stephen J. Kunst
________________________________
Name: Stephen J. Kunst
Title: Vice President and Secretary
EM SUBSIDIARY, INC.
By: /s/ Dieter Janssen
________________________________
Name: Dieter Janssen
Title: President
VWR SCIENTIFIC PRODUCTS CORPORATION
By: /s/ Jerrold B. Harris
________________________________
Name: Jerrold B. Harris
Title: President/CEO
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Sub shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) promulgated under the Exchange Act (relating to
Sub's obligation to pay for or return tendered Shares after termination or
withdrawal of the Offer), pay for, and (subject to any such rules or
regulations) may delay the acceptance for payment of any tendered Shares and
(except as provided in this Agreement) amend or terminate the Offer (whether or
not any Shares have been theretofore purchased or paid for pursuant to the
Offer) (A) unless the following conditions shall have been satisfied: (i) there
shall be validly tendered and not withdrawn prior to the expiration of the Offer
a number of Shares which represents a majority of the total number of
outstanding Shares, excluding any Shares held by Parent, Sub or any Affiliate
thereof (the "Minimum Condition") and (ii) any applicable waiting period under
the HSR Act or any similar applicable foreign Law, including but not limited to
the requirements of the German federal antitrust supervisory authority
(Bundeskartelamt), shall have expired or been terminated prior to the expiration
of the Offer and the required approval of any Governmental Entity for this
Agreement or the consummation of the transactions contemplated by this Agreement
shall have been obtained or (B) if at any time after the date of this Agreement
and before the time of payment for any such Shares (whether or not any Shares
have theretofore been accepted for payment or paid for pursuant to the Offer),
any of the following events shall occur and be continuing:
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(a) there shall be threatened or pending by any Governmental Entity any suit,
action or proceeding (i) challenging the acquisition by Parent or Sub of any
Shares under the Offer, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the other
transactions contemplated by this Agreement or the Shareholders Agreement or
seeking to obtain from the Company, Parent or Sub any damages that are material
in relation to the Company and its subsidiaries taken as a whole, (ii) seeking
to prohibit or materially limit the ownership or operation by the Company,
Parent or any of their respective Subsidiaries of any portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or Parent and its
Subsidiaries, taken as a whole, or to compel the Company or Parent to dispose of
or hold separate any portion of the business or assets of the Company and its
Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a
whole, as a result of the Offer or any of the other transactions contemplated by
this Agreement or the Shareholders Agreement, (iii) seeking to impose
limitations on the ability of Parent or Sub to acquire or hold, or exercise full
rights of ownership of, any Shares to be accepted for payment pursuant to the
Offer including, without limitation, the right to vote such Shares on all
matters properly presented to the shareholders of the Company, (iv) seeking to
prohibit Parent or any of its Subsidiaries from effectively controlling in any
respect any portion of the business or operations of the Company or its
Subsidiaries or (v) which otherwise is reasonably likely to have a Materially
Adverse Effect on the business, properties, assets, financial condition or
results of operations of the Company and its Subsidiaries taken as a whole;
(b) there shall be enacted, entered, enforced, promulgated or deemed applicable
to the Offer or the Merger by any Governmental Entity any statute, rule,
regulation, judgment, order or injunction, other than the application to the
Offer or the Merger of applicable waiting periods under the HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above;
(c) the Unaffiliated Directors, or any committee designated thereby, shall have
withdrawn, or modified or changed (including by amendment of the Schedule 14D-9)
their recommendation of the Offer, the Merger or this Agreement or approved or
recommended a Takeover Proposal, or shall have resolved to do so;
(d) it shall have been publicly disclosed or Parent or Sub shall have otherwise
learned that any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent 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 under the Exchange Act) of more than 20% of the Shares 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 the Shares;
(e) any of the representations and warranties of the Company set forth in this
Agreement (without giving effect to the materiality limitations contained
herein) shall not be true and correct in any respect as of the date of
consummation of the Offer as though made on and as of such date (except for
representations and warranties made as of a specified date, which shall not be
true and correct as of the specified date), except for any breach or breaches
which, in the aggregate, would not have a Materially Adverse Effect on the
Company;
(f) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under this Agreement;
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(g) there shall have occurred any event that, individually or when considered
together with any other matter, has had or is reasonably likely in the future to
have a Materially Adverse Effect on the Company; (h) there shall have occurred
(i) any general suspension of, or limitation on prices (other than suspensions
or limitations triggered by price fluctuations on a trading day) for, trading in
securities on any national securities exchange or the over-the-counter market in
the United States of America or the Federal Republic of Germany, (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States of America or in the Federal Republic of Germany,
(iii) any material limitation (whether or not mandatory) by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, on, the extension of credit by banks or other lending institutions,
(iv) a commencement of a war or armed hostilities or other national calamity
directly or indirectly involving the United States of America or the Federal
Republic of Germany and Parent shall have determined that there is a reasonable
likelihood that such event may be of materially adverse significance to it or
the Company, or (v) in the case of any of the foregoing existing at the time of
the execution of this Agreement, a material acceleration or worsening thereof;
(i) any applicable waiting period under Section 721 of Title VII of the Defense
Production Act of 1950, as amended by Section 5021 of the Omnibus Trade and
Competitiveness Act of 1988 and Section 837 of the National Defense Authority
Act for Fiscal Year 1993 (the "Exon-Florio Provisions") shall not have expired,
(b) the Committee on Foreign Investment in the United States ("CFIUS") shall
have initiated an investigation of the transactions contemplated under this
Agreement, or (c) if CFIUS initiates an investigation, the applicable waiting
period under the Exon-Florio Provisions relating to such investigation shall
have expired, or such investigation shall have been completed and the President
shall have announced a decision to take action pursuant to the Exon-Florio
Provisions before the expiration of the period ending on the 15th day (or if
such day is not a business day, the next business day) following the completion
of such investigation, which has a substantial likelihood of resulting, directly
or indirectly, in any of the consequences referred to in clauses (i) through (v)
of paragraph (a) above or such 15 day waiting period shall not have expired; or
(j) this Agreement shall have been terminated in accordance with its terms.
The foregoing conditions are for the sole benefit of Parent and Sub and may,
subject to the terms of this Agreement, be waived by Parent and Sub in whole or
in part at any time and from time to time in their sole discretion. The failure
by Parent or Sub at any time to exercise any of the foregoing rights shall not
be deemed a waiver of any such right, the waiver of any such right with respect
to particular facts and circumstances shall not be deemed a waiver with respect
to any other facts and circumstances and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time. Terms used
but not defined herein shall have the meanings assigned to such terms in the
Agreement to which this Exhibit A is a part.
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EXHIBIT B: FORM OF SHAREHOLDER AGREEMENT.
SHAREHOLDER AGREEMENT
This Shareholder Agreement, dated as of June 8, 1999 (this "Agreement"), is made
and entered into among EM Laboratories, a New York corporation ("Parent"), EM
Subsidiary, Inc., a Pennsylvania corporation and a wholly owned subsidiary of
Parent ("Sub"), and each of the parties listed on the signature pages hereto
(each a "Shareholder," and collectively, the "Shareholders").
WHEREAS, each of the Shareholders is, as of the date hereof, the beneficial
owner of the number of shares of common stock, par value $1.00 per share (the
"Common Stock"), of VWR Scientific Products Corporation, a Pennsylvania
corporation (the "Company"), set forth opposite his name on Annex I hereto;
WHEREAS, concurrently herewith, Parent, Sub and the Company have entered into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, upon the terms and subject to the conditions set
forth therein, for (i) the commencement by Sub of a tender offer (the "Offer")
for all of the issued and outstanding shares of Common Stock of the Company and
(ii) the subsequent merger of Sub with and into the Company (the "Merger");
WHEREAS, as a condition to the willingness of Parent and Sub to enter into the
Merger Agreement and in order to induce Parent and Sub to enter into the Merger
Agreement, Shareholders have agreed to enter into this Agreement; and
WHEREAS, capitalized terms used but not defined in this Agreement have the
meaning given to those terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Parent and Sub
of the Merger Agreement and the mutual representations, warranties, covenants
and agreements set forth herein and therein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be bound hereby, the parties hereto agree as follows:
ARTICLE I.
TENDER OF SHARES
Section 1.1. Tender. Each Shareholder hereby agrees validly to tender his Shares
(or cause the record owner of such Shares validly to tender), and not to
withdraw any Shares so tendered, promptly, and in any event not later than the
fifth business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); provided, however, that in the event that the
Unaffiliated Directors (as defined in the Merger Agreement) (or any committee
designated thereby) shall withdraw, or propose publicly to withdraw, the
approval or recommendation by such Unaffiliated Directors or such committee of
the Offer, the Merger or Merger Agreement (or any transaction contemplated
thereby), each Shareholder shall have the right to withdraw any Shares so
tendered. Sub hereby agrees to purchase all the Shareholder's Shares so tendered
at the Purchase Price or any higher price that may be paid in the Offer;
provided, however, that Sub's obligation to accept for payment and pay for the
Common Stock (including the Shares) in the Offer is subject to all the terms and
conditions of the Offer set forth in the Merger Agreement.
Section 1.2. Certain Warranties. Without limiting the generality or effect of
any other term or condition of the Offer, the transfer by each of the
Shareholders of his Shares to Sub in the Offer shall pass to and unconditionally
vest in Sub good and valid title to the Shares, free and clear of all liens,
claims, restrictions, security interests, pledges, limitations and Encumbrances
(as defined herein) whatsoever.
Section 1.3. Disclosure. Each Shareholder hereby authorizes Parent and Sub to
publish and disclose in the Offer Documents and, if approval of the Company's
shareholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC), his identity and ownership of
the Shares and the nature of his commitments, arrangements and understandings
under this Agreement provided that each Shareholder is provided with a
reasonable opportunity to review in advance any such disclosure contained in the
Offer Documents or the Proxy Statement.
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ARTICLE II.
GRANT OF PROXY
Section 2.1. Proxy. Each Shareholder hereby irrevocably appoints Parent and Sub
(and any nominee of either Parent or Sub) and each of them, with full power of
substitution and re-substitution, (i) as proxies for such Shareholder to vote
all of his Shares for and in the name, place, and stead of such Shareholder at
any meeting of the holders of Common Stock or any adjournments or postponements
thereof or pursuant to any consent in lieu of a meeting, or otherwise, with
respect only to the approval of this Agreement, the Merger Agreement, the Offer,
the transactions contemplated by the Merger Agreement, any matters related to or
in connection with the Merger and any corporate action, the consummation of
which would violate, frustrate the purposes of, prevent or delay the
consummation of the transactions contemplated by the Merger Agreement
(including, without limitation, any proposal to amend the Articles of
Incorporation or By-laws of the Company or approve any merger, consolidation,
sale or purchase of any assets, issuance of Common Stock or any other equity
security of the Company (or a security convertible into an equity security of
the Company), reorganization, recapitalization, liquidation, winding up of or by
the Company or any similar transaction) and (ii) as his true and lawful
attorneys-in-fact to execute one or more consents or other instruments from time
to time in order to take such actions informally without notice of a meeting of
the shareholders of the Company; provided, however, that in the event that the
Unaffiliated Directors (as defined in the Merger Agreement) (or any committee
designated thereby) shall withdraw, or propose publicly to withdraw, the
approval or recommendation by such Unaffiliated Directors or such committee of
the Offer, the Merger or Merger Agreement (or any transaction contemplated
thereby), such appointment of Parent and Sub as proxies shall become immediately
revocable. Each Shareholder agrees that the foregoing proxy and
power-of-attorney granted to Parent and Sub (and their respective nominees) in
this subsection shall be irrevocable during the term of this Agreement and shall
be deemed to be coupled with an interest. Each Shareholder represents that any
proxies heretofore given in respect of his Shares are not irrevocable, and that
such proxies are hereby revoked.
ARTICLE III.
OPTION
Section 3.1. Grant of Option. Each Shareholder hereby grants to Parent or Sub,
as Parent may designate (each, an "Optionee"), an irrevocable option (the
"Option") to purchase the number of shares of Common Stock opposite such
Shareholder's name on Annex I hereto and any additional shares of Common Stock
acquired by such Shareholder in any capacity (whether by exercise of options,
warrants or rights, the conversion or exchange of convertible or exchangeable
securities or by means of a purchase, distribution, dividend or otherwise)
(collectively, the "Shares") at a purchase price of $37.00 per share or such
higher price as may be paid by Parent or Sub pursuant to the Offer (the
"Purchase Price").
Section 3.2. Exercise of Option.
(a) Parent or Sub may exercise, but shall not be required to exercise, the
Option from time to time, in whole or in part, on or after the date of the
consummation of the Offer but prior to the Effective Date if the Offer is
consummated but (whether due to improper tender or withdrawal of tender) Sub has
not accepted for payment and paid for all of a Shareholder's Shares.
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(b) Parent and Sub's obligation to purchase Shares upon exercise of the Option
shall be subject to the conditions that:
(i) no preliminary or permanent injunction or other order issued by any court or
governmental, administrative or regulatory agency or authority prohibiting the
exercise of the Option pursuant to this Agreement shall be in effect (and no
action or proceeding shall have been commenced or threatened for the purpose of
obtaining such an injunction or order);
(ii) any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") or similar foreign law
required for the purchase of the Shares upon such exercise shall have expired;
and
(iii) there shall have been no material breach of the representations,
warranties or covenants of any Shareholder contained in this Agreement;
provided, that any failure by Parent or Sub to purchase Shares upon exercise of
the Option at any Closing (as defined below) as a result of the nonsatisfaction
of any of such conditions shall not affect or prejudice Parent or Sub's right to
purchase such Shares upon the subsequent satisfaction of such conditions.
(c) In the event that Parent or Sub, as the case may be, wishes to exercise the
Option, Parent or Sub, as the case may be, shall send a written notice to the
Shareholders specifying the total number of such Shareholder's Shares it wishes
to purchase and the place and date for the closing of such purchase (each, a
"Closing") at least three business days prior to such Closing; and
(d) At any Closing, (i) each Shareholder shall deliver to Parent or Sub (in
accordance with Parent or Sub's instructions) a certificate or certificates (the
"Certificates") representing all of such Shareholder's Shares being purchased by
Sub at the Closing, duly endorsed or accompanied by stock powers duly executed
in blank and (ii) Sub shall deliver to such Shareholder a certified or bank
cashier's check or checks payable to or upon the order of such Shareholder in an
amount equal to (A) the number of such Shareholder's Shares being purchased at
the Closing multiplied by (B) the Purchase Price.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
Each Shareholder severally, and not jointly, represents and warrants to Parent
and Sub as follows:
Section 4.1. Title to Shares. Such Shareholder is the sole beneficial owner of
the Shares (as may be adjusted from time to time pursuant to Section 7.1 hereof)
set forth opposite his name on Annex I to this Agreement, free and clear of any
pledge, lien, security interest, mortgage, charge, claim, equity, option, proxy,
voting restriction, voting trust or agreement, understanding, arrangement, right
of first refusal, limitation on disposition, adverse claim of ownership or use
or encumbrance of any kind ("Encumbrances"), other than restrictions imposed by
applicable securities laws or pursuant to this Agreement and the Merger
Agreement and except that as of the date hereof 40,000 Shares owned by N.
Stewart Rogers are pledged as security for a loan.
Section 4.2. Total Shares. On the date hereof, the Shares opposite such
Shareholder's name on Annex I hereto constitute all of the Shares owned by such
Shareholder. Such Shareholder has the exclusive right to vote or dispose of (or
exercise the voting or disposition of) such Shares and Shareholder owns no
options to purchase or rights to subscribe for or otherwise acquire any
securities of the Company other than as set forth on Annex I hereto.
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Section 4.3. Due Authorization. Each Shareholder has the legal capacity to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by or
on behalf of such Shareholder and, assuming its due authorization, execution and
delivery by Parent and Sub, constitutes a legal, valid and binding obligation of
such Shareholder, enforceable against such Shareholder in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other laws effecting creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
Section 4.4. No Conflicts; Required Filings and Consents.
(a) The execution and delivery of this Agreement by such Shareholder do not, and
the performance by such Shareholder of such Shareholder's obligations under this
Agreement will not (i) conflict with or violate any law applicable to such
Shareholder or by which such Shareholder or any of such Shareholder's properties
is bound or affected or (ii) result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, acceleration or cancellation
of, or result in the creation of a lien or encumbrance on any assets of such
Shareholder, including, without limitation, his Shares, pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which such Shareholder is a party
or by which such Shareholder or any of such Shareholder's assets is bound or
affected, except for any such breaches, defaults or other occurrences that would
not prevent or delay the performance by such Shareholder of such Shareholder's
obligations under this Agreement.
(b) The execution and delivery of this Agreement by such Shareholder do not, and
the performance by such Shareholder of such Shareholder's obligations under this
Agreement will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority
(other than any necessary filing under the HSR Act or similar foreign laws or
the Exchange Act), domestic or foreign, except where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by such Shareholder of
such Shareholder's obligations under this Agreement. There is no beneficiary or
holder of a voting trust certificate or other interest of any trust of which
such Shareholder is trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by Shareholder of the
transactions contemplated hereby.
Section 4.5. No Finder's Fees. No broker, investment banker, financial adviser
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Shareholder. Such
Shareholder hereby acknowledges that he is not entitled to receive any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated hereby or by the Merger Agreement.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF
SUB AND PURCHASER
Parent and Sub hereby, jointly and severally, represent and warrant to each
Shareholder as follows:
Section 5.1. Due Organization, Authorization, etc. Sub and Parent are
corporations duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation. Sub and Parent have all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby by each of Sub and Parent have been duly authorized by all necessary
corporate action on the part of Sub and Parent, respectively. This Agreement has
been duly executed and delivered by each of Sub and Parent and, assuming its due
authorization, execution and delivery by each Shareholder, constitutes a legal,
valid and binding obligation of each of Sub and Parent, enforceable against Sub
and Parent in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other laws affecting rights of creditors
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
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Section 5.2. Funds. Parent has sufficient funds available to it to pay for the
Shareholder Shares in accordance with this Agreement and the Merger Agreement.
Section 5.3. No Conflicts.
(a) The execution and delivery of this Agreement by Parent and Sub do not, and
the performance by Parent and Sub of their obligations under this Agreement will
not (i) conflict with or violate any law applicable to Parent or Sub or by which
Parent or Sub any of their properties is bound or affected or (ii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, acceleration or cancellation of, or result in the creation of a
lien or encumbrance on any assets of Parent or Sub, pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or Sub is a party or by which
Parent or Sub or any of their assets is bound or affected, except for any such
breaches, defaults or other occurrences that would not prevent or delay the
performance by Parent or Sub of their obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent and Sub do not, and
the performance by Parent and Sub of their obligations under this Agreement will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority (other than any
necessary filing under the HSR Act or similar foreign laws or the Exchange Act),
domestic or foreign, except where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay the performance by Parent or Sub of their obligations
under this Agreement.
Section 5.4. Purchase Without View to Distribute. Any Shareholder Shares
acquired by Sub hereunder are not being acquired with a view to distribution
within the meaning of the Securities Act of 1933, as amended (the "1933 Act"),
and the rules and regulations thereunder, and Sub will not distribute such
Shareholder Shares in violation of the 1933 Act.
ARTICLE VI.
COVENANTS OF THE SHAREHOLDERS
Section 6.1. No Inconsistent Arrangements. Each Shareholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
he shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of his Shares or any interest therein, (ii) enter into any contract, option
or other agreement or understanding with respect to any transfer of any or all
of such shares or any interest therein, (iii) grant any proxy, power-of-attorney
or other authorization in or with respect to his Shares, (iv) deposit his Shares
into a voting trust or enter into a voting agreement or arrangement with respect
to his Shares, or (v) take any other action that would in any way restrict,
limit or interfere with the performance of his obligations hereunder or the
transactions contemplated hereby or by the Merger Agreement.
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Section 6.2. Each Shareholder covenants and agrees that, during the term of this
Agreement, he shall not, directly or indirectly through any officer, director,
agent or other representative, solicit, initiate or encourage, or take any other
action designed or reasonably likely to facilitate, any inquiries or the making
of any proposal from any person (other than Parent, Sub and any of their
Affiliates (as defined below)) relating to (i) any acquisition of all or any
shares of Common Stock of the Company or (ii) any transaction that constitutes a
Takeover Proposal, or participate in any negotiations regarding, or furnish to
any person any information with respect to, or otherwise cooperate in any way
with, or assist or participate in or facilitate or encourage, any effort or
attempt by any person to do or seek to do any of the foregoing. Such Shareholder
immediately shall cease and cause to be terminated all existing discussions or
negotiations of such Shareholder and his agents or other representatives with
any person conducted heretofore with respect to any of the foregoing. Such
Shareholder shall notify Parent and Sub promptly if any such proposal or offer,
or any inquiry or contact with any person with respect thereto, is made and
shall, in any such notice to Parent and Sub, indicate in reasonable detail the
identity of the person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or contact.
Notwithstanding any provision of this Section 6.2 to the contrary, if such
Shareholder or any agent or representative of such Shareholder is a member of
the Board of Directors of the Company, such member of the Board of Directors of
the Company may take actions in such capacity to the extent permitted by Section
6.2 of the Merger Agreement. As used in this Agreement, with respect to any
person, "Affiliate" shall mean any entity directly or indirectly controlling,
controlled by, or under common control with, such person.
Section 6.3. Waiver of Appraisal Rights. Each Shareholder hereby waives any
rights of appraisal or rights to dissent from the Merger.
ARTICLE VII.
MISCELLANEOUS
Section 7.1. Certain Events. In the event of any stock split, stock dividend,
merger, reorganization, recapitalization or other change in the capital
structure of the Company affecting the Shares or the acquisition of additional
shares of capital stock or other securities or rights of the Company by any
Shareholder, the number of such Shareholder's Shares shall be adjusted
appropriately, and this Agreement and the rights and obligations hereunder shall
attach to any additional shares of Common Stock or other securities or rights of
the Company issued to or acquired by any such Shareholder in respect of such
Shareholder Shares.
Section 7.2. Termination. This Agreement shall terminate and be of no further
force and effect automatically and without any required action of the parties
hereto upon the earlier to occur of (A) the Effective Time and (B) the calendar
day immediately after the termination of the Merger Agreement in accordance with
its terms; provided, however, that Articles III, IV, V, VI and VII of this
Agreement shall survive the termination of this Agreement until the earlier to
occur of the Closing of the exercise of the Option and the expiration of the
Option. No such termination of this Agreement shall relieve any party hereto
from any liability for any breach of this Agreement prior to termination.
Section 7.3. Expenses. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be for the account of the
party incurring such costs and expenses.
Section 7.4. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
facsimile, receipt confirmed, or on the next business day when sent by overnight
courier or on the second succeeding business day when sent by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
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(a) if to Parent or Sub, to:
EM Industries, Incorporated
7 Skyline Drive
Hawthorne, New York 10532
Attention: Stephen J. Kunst
Facsimile: (914) 592-8775
with copies to:
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attention: Klaus H. Jander, Esq.
Facsimile: (212) 878-3025
(b) If to Shareholders, to the address set forth in Annex I hereto:
Section 7.5. Severability. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable by a court of competent jurisdiction, such
provision shall be modified or deleted, as to the jurisdiction involved, only to
the extent necessary to render the same valid, legal and enforceable, and the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby nor shall the validity, legality
or enforceability of such provision be affected thereby in any other
jurisdiction.
Section 7.6. Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, among the parties,
or any of them, with respect thereto.
Section 7.7. 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, and any such purported assignment shall be null and void; provided,
however, that either of Parent or Sub may, without the prior written consent of
any Shareholder, assign its rights and obligations to any of its direct or
indirect wholly owned subsidiaries. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by,
the parties and their respective successors and assigns, and the provisions of
this Agreement are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
Section 7.8. Amendment. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by all of the parties hereto; provided that Annex I hereto may be
supplemented by Parent by adding the name and other relevant information
concerning any shareholder of the Company who agrees to be bound by the terms of
this Agreement without the agreement of any other party hereto, and thereafter
such added shareholder shall be treated as a "Shareholder" for all purposes of
this Agreement.
Section 7.9. Further Assurances. Each Shareholder shall, upon request of Parent
or Sub, execute and deliver any additional documents and take such further
actions as may reasonably be deemed by Parent or Sub to be reasonably necessary
or desirable to consummate, in the most expeditious manner practicable, the
transactions contemplated by this Agreement.
Section 7.10. No Waiver. The failure of any party hereto to exercise any right,
power, or remedy provided under this agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with his or its obligations hereunder, any custom or practice of the
parties at variance with the terms hereof shall not constitute a waiver by such
party of his or its right to exercise any such or other right, power or remedy
or to demand such compliance.
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Section 7.11. Specific Performance. Each of the parties hereto acknowledges and
agrees that in the event of any breach of this Agreement, each non-breaching
party would be irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto (i) shall
waive, in any action for specific performance, the defense of adequacy of a
remedy at law and (ii) shall be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement.
Section 7.12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the Commonwealth of
Pennsylvania without regard to its conflict of laws principles.
Section 7.13. Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 7.14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of Parent and Sub has caused this Agreement to be
executed by its officer thereunto duly authorized and each Shareholder has
caused this Agreement to be executed, or duly executed by an authorized
signatory, as of the date first written above.
EM LABORATORIES, INCORPORATED
By:/s/ Stephen J. Kunst
__________________________________
Name: Stephen J. Kunst
Title: Vice President & Secretary
EM SUBSIDIARY, INC.
By:/s/ Dieter Janssen
____________________________________
Name: Dieter Janssen
Title: President
By:_____________________________________
Jerrold B. Harris
By:______________________________________
N. Stewart Rogers
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