<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Marietta Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
MARIETTA CORPORATION
37 Huntington Street
Cortland, New York 13045
--------------------
[________] [__], 199_
Dear Fellow Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Marietta Corporation, to be held at the [___________________], New York at 10:00
A.M. on [_______], [________], 1996, Your Board of Directors and management look
forward to greeting personally those shareholders able to attend.
At this important meeting you will be asked to consider and vote upon the
approval and adoption of the Agreement and Plan of Merger, dated as of August
26, 1995, as amended (the "Merger Agreement"), by and among BFMA Holding
Corporation ("Parent"), BFMA Acquisition Corporation ("Newco"), and your
Company, which provides for the merger (the "Merger"), of Newco, a wholly-owned
subsidiary of Parent, with and into Marietta, with the result that Marietta will
become a wholly-owned subsidiary of Parent. Parent is a corporation controlled
by Barry W. Florescue, a director of the Company since August 31, 1995, and the
owner of approximately 8.7% of Marietta's issued and outstanding shares of
common stock, $.01 par value (the "Shares"). IF THE MERGER IS CONSUMMATED,
SHAREHOLDERS OF THE COMPANY (OTHER THAN PARENT AND ITS AFFILIATES, AND HOLDERS
WHO EXERCISE THEIR DISSENTERS' RIGHTS) WILL RECEIVE $10.25 PER SHARE IN CASH.
Goldman, Sachs & Co., who has acted as the Company's financial advisor in
connection with the Merger, has issued a written opinion to the Board of
Directors as to the fairness of the consideration to be received by the
Company's shareholders (other than Parent and its affiliates) in connection with
the Merger. A copy of Goldman, Sachs & Co.'s opinion is attached to the enclosed
Proxy Statement.
The affirmative vote of the holders of two-thirds of the total number of
issued and outstanding Shares is required for approval and adoption of the
Merger Agreement. Parent has agreed to vote in favor of the Merger Agreement.
Accordingly, the vote of holders of approximately 58% of the Shares (other than
Parent and its affiliates) will be needed to approve and adopt the Merger
Agreement.
Enclosed with this Letter are the (i) Notice of Special Meeting, (ii) Proxy
Statement, and (iii) Proxy. The Proxy Statement describes in more detail the
Merger Agreement and the Merger, including a description of the conditions to
consummation of the Merger and the effect of the Merger on Marietta
shareholders. Please give this information your careful attention.
AFTER CAREFUL REVIEW, YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND
ADOPTED THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
IN VIEW OF THE IMPORTANCE OF THE ACTION TO BE TAKEN, WE URGE YOU TO COMPLETE,
SIGN, AND DATE THE ENCLOSED PROXY AND TO RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOUR VOTE IS IMPORTANT,
SO PLEASE ACT TODAY.
On behalf of your Board of Directors.
Sincerely,
STEPHEN D. TANNEN
President and Chief Executive Officer
<PAGE>
MARIETTA CORPORATION
37 HUNTINGTON STREET
CORTLAND, NEW YORK 13045
--------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on [________], 1996
Notice is hereby given to the shareholders of Marietta Corporation, a New
York corporation ("Marietta" or the "Company"), that a Special Meeting of
Shareholders (the "Meeting"), will be held at the [_____________], New York at
10:00 A.M. on [______], [________], 1996, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger, dated as of August 26, 1995, as amended (the "Merger
Agreement"), by and among BFMA Holding Corporation ("Parent"), BFMA Acquisition
Corporation ("Newco"), and the Company, which provides for the merger (the
"Merger"), of Newco, a wholly-owned subsidiary of Parent, with and into
Marietta, with the result that Marietta will become a wholly-owned subsidiary of
Parent. Parent is a corporation controlled by Barry W. Florescue, a director of
the Company since August 31, 1995, and the beneficial owner of approximately
8.7% of the issued and outstanding shares of common stock, $.01 par value (the
"Shares"), of the Company. If the Merger is consummated, shareholders of the
Company (other than Parent and its affiliates, and holders who exercise their
dissenters' rights) will receive of $10.25 per Share in cash; and
2. To transact such other business as may properly come before the Meeting
or any postponement or adjournment thereof.
Only shareholders of record at the close of business on Tuesday, January 9,
1996, are entitled to notice of and to vote at the Meeting or any adjournment
thereof. Information regarding the matters to be acted upon at the Meeting is
contained in the Proxy Statement attached to this Notice.
A copy of the Annual Report on Form 10-K for the fiscal year ended September
30, 1995, accompanies this Notice.
By Order of the Board of Directors,
Ronald C. DeMeo
Secretary
Cortland, New York
[________] [__], 199_
IMPORTANT
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS
TIME. IF YOU HAVE ANY QUESTIONS OR REQUIRE ASSISTANCE, PLEASE CALL D.F. KING &
CO., INC., WHICH IS ASSISTING YOUR COMPANY, TOLL-FREE AT 1-800 549-6746.
<PAGE>
MARIETTA CORPORATION
37 HUNTINGTON STREET
CORTLAND, NEW YORK 13045
--------------------
PROXY STATEMENT
--------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD [________], 1996
INTRODUCTION
This Proxy Statement is being furnished to the shareholders of Marietta
Corporation, a New York corporation ("Marietta" or the "Company"), in connection
with the solicitation of proxies by the Board of Directors of the Company (the
"Board"), for use at a Special Meeting of Shareholders (the "Meeting"), to be
held at the [_____________], New York at 10:00 A.M. on [______], [________],
1996 and at any adjournment or postponement thereof. This Proxy Statement and
the accompanying form of proxy (the "Proxy"), is being mailed to shareholders on
or about [________] [__], 199_.
PROPOSAL TO BE CONSIDERED AT THE MEETING
At the Meeting, shareholders will consider and vote upon a proposal to approve
and adopt the Agreement and Plan of Merger, dated as of August 26, 1995, as
amended (the "Merger Agreement"), by and among BFMA Holding Corporation
("Parent"), BFMA Acquisition Corporation ("Newco"), and the Company, which
provides for the merger (the "Merger"), of Newco, a wholly-owned subsidiary of
Parent, with and into Marietta, with the result that Marietta will become a
wholly-owned subsidiary of Parent. Parent is a corporation controlled by Barry
W. Florescue, a director of the Company since August 31, 1995, and the
beneficial owner of approximately 8.7% of the issued and outstanding shares of
common stock, $.01 par value ("Shares"), of the Company. If the Merger is
consummated, shareholders of the Company (other than Parent and its affiliates,
and holders who exercise their dissenters' rights) will receive $10.25 per Share
in cash (the "Per Share Price"). A copy of the Merger Agreement is attached
hereto as Annex I.
Parent and Newco were organized for the purpose of the transactions contemplated
by the Merger Agreement. As a result of the Merger, Mr. Florescue and his
affiliates will acquire the entire equity interest in the Company and
shareholders of the Company, other than Mr. Florescue and his affiliates, will
no longer have any continuing equity interest in the Company.
Shares are listed for trading on the Nasdaq National Market System ("NASDAQ"),
under the symbol "MRTA." On August 25, 1995, the last trading day before public
announcement of the execution of the Merger Agreement, the last sale price of
Shares as reported on NASDAQ was $9.00 per Share. If the Merger is approved and
adopted, Shares will be delisted from NASDAQ.
It is not anticipated that any other matter will be presented at the Meeting.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT.ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
i
<PAGE>
VOTING
The Board has fixed the close of business on Tuesday, January 9, 1996 (the
"Record Date"), as the date of the determination of shareholders entitled to
notice of, and to vote at, the meeting and any adjournment or postponement
thereof. Accordingly, only holders of record of Shares on the Record Date will
be entitled to notice of, and to vote at, the Meeting. As of the Record Date
there were 3,596,049 Shares issued and outstanding, held by approximately
[______] holders of record. Each holder of record of Shares on the Record Date
is entitled to one vote per Share at the Meeting.
The affirmative vote of the holders of two-thirds of the total number of
issued and outstanding Shares is required for approval and adoption of the
Merger Agreement. Mr. Florescue has agreed to vote in favor of the Merger
Agreement. Accordingly, the vote of the holders of approximately 58% of the
Shares (other than Parent and its affiliates) will be needed to approve and
adopt the Merger Agreement. Although there is no agreement to do so (except with
respect to Mr. Florescue, who has agreed to vote in favor of the Merger), the
Company believes that each of the directors and executive officers of the
Company will vote his Shares or Shares over which he controls the voting power,
representing in the aggregate approximately [14.4]% of the Shares entitled to
vote at the Meeting, in favor of approval and adoption of the Merger Agreement.
Any shareholder on the Record Date who objects to the Merger may dissent from
the Merger and demand in writing that the Company pay to such shareholder in
cash the fair value of all of his Shares (excluding any element of value arising
from the accomplishment or expectation of the Merger) as of the day prior to the
voting by the shareholders on the Merger, in lieu of receiving $10.25 per Share
in cash under the Merger Agreement. This right to dissent and to receive payment
is available pursuant to Section 910 of the Business Corporation Law of the
State of New York ("BCL"), provided that the shareholder strictly complies with
Section 623 of the BCL. All references to, and summaries of, Sections 623 and
910 of the BCL in this Proxy Statement are qualified in their entirety by
reference to the texts thereof which are annexed to this Proxy Statement as
Annex II hereto. See "Rights of Dissenting Shareholders."
All Shares that are entitled to vote and are represented at the Meeting by
properly executed Proxies received prior to or at the Meeting, and not revoked,
will be voted at the Meeting in accordance with the instructions indicated on
such Proxies. If no instructions are indicated, the Proxy will be voted FOR
approval and adoption of the Merger Agreement. The presence, in person or by
Proxy, at the Meeting of the holders of a majority of the total number of issued
and outstanding Shares entitled to vote is necessary to constitute a quorum at
the Meeting. Abstentions and broker non-votes (where a broker or other record
holder submits a Proxy but does not have authority to vote a customer's Shares)
will be considered present for purposes of establishing a quorum.
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, at or before the taking of the vote at the
Meeting, a written notice of revocation bearing a later date than the Proxy,
(ii) duly executing a later-dated Proxy relating to the same Shares and
delivering it to the Secretary of the Company before the taking of the vote at
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute a revocation of
the Proxy). Any written notice of revocation or subsequent Proxy should be sent
so as to be delivered to the Company at the address set forth above, or hand
delivered to the Secretary of the Company, at or before the taking of the vote
at the Meeting.
The cost of printing and mailing this Proxy Statement will be borne by the
Company. In addition to solicitation by use of the mails, Proxies may be
solicited by directors, officers and employees of the Company in person or by
telephone, telegram or other means of communication. Such directors, officers
and employees will not be additionally compensated, but may be reimbursed for
reasonable out-of-pocket expenses in connection with such solicitation.
Arrangements will also be made with custodians, nominees and fiduciaries for
forwarding of solicitation materials to beneficial owners of Shares held of
record by such custodians, nominees and fiduciaries, and the Company will
reimburse such custodians, nominees and fiduciaries for reasonable expenses
incurred in connection therewith. In addition, the Company has retained D.F.
King & Co., Inc. to assist in soliciting Proxies and to provide solicitation
materials to shareholders, banks, brokerage firms, nominees, fiduciaries, and
other custodians. The Company will pay to D.F. King & Co., Inc. a fee of
approximately $5,000, plus expenses.
All information contained in this Proxy Statement concerning Parent, Newco and
Mr. Florescue were supplied by Parent and Mr. Florescue. Except as otherwise
indicated, all other information contained in this Proxy Statement has been
supplied by the Company.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION......................................................... i
Proposal to be Considered at the Meeting...................... i
Voting........................................................ ii
SUMMARY.............................................................. 1
THE PARTIES................................................... 1
INFORMATION CONCERNING THE MEETING............................ 1
THE MERGER.................................................... 3
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA............... 8
SPECIAL FACTORS............................................... 9
GENERAL DESCRIPTION........................................... 9
BACKGROUND OF THE MERGER...................................... 9
MARIETTA'S REASONS FOR THE MERGER;
RECOMMENDATION OF MARIETTA'S BOARD OF DIRECTORS.............. 14
RECOMMENDATION OF PARENT AND NEWCO............................ 15
OPINION OF MARIETTA'S FINANCIAL ADVISOR....................... 15
INTERESTS OF MANAGEMENT OF THE COMPANY........................ 18
PAYMENT FOR SHARES............................................ 18
SOURCE AND AMOUNT OF FUNDS.................................... 18
INTERESTS OF CERTAIN PERSONS IN THE MERGER.................... 21
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER......... 21
GOVERNMENTAL AND REGULATORY APPROVALS......................... 22
ANTICIPATED ACCOUNTING TREATMENT.............................. 22
PLANS FOR COMPANY IF MERGER NOT CONSUMMATED................... 22
CERTAIN TERMS OF THE MERGER AGREEMENT................................ 22
GENERAL....................................................... 22
MANNER OF CONVERTING SHARES; OPTIONS.......................... 23
MERGER CONSIDERATION.......................................... 24
CONDITIONS TO THE MERGER...................................... 24
REPRESENTATIONS AND WARRANTIES................................ 25
CERTAIN COVENANTS; CONDUCT OF BUSINESS PRIOR TO THE MERGER.... 25
</TABLE>
<PAGE>
<TABLE>
<S> <C>
TERMINATION OF THE MERGER AGREEMENT........................... 26
EFFECT OF TERMINATION OF THE MERGER AGREEMENT................. 27
INDEMNIFICATION OF DIRECTORS AND OFFICERS..................... 27
AMENDMENT AND MODIFICATION.................................... 28
WAIVER........................................................ 28
EXPENSES...................................................... 28
COOPERATION PRIOR TO CLOSING.................................. 29
RIGHTS OF DISSENTING SHAREHOLDERS.................................... 29
MARKET PRICES OF SHARES.............................................. 30
DESCRIPTION OF MARIETTA CAPITAL STOCK................................ 31
INDEPENDENT PUBLIC ACCOUNTANTS....................................... 31
SHAREHOLDERS' PROPOSALS.............................................. 31
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....... 31
OTHER RECENT DEVELOPMENTS............................................ 32
AVAILABLE INFORMATION................................................ 33
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................... 33
</TABLE>
ANNEX I - AGREEMENT AND PLAN OF MERGER and AMENDMENT NO. 1 TO AGREEMENT AND
PLAN OF MERGER
ANNEX II - SECTIONS 623 AND 910 OF THE BUSINESS CORPORATION LAW OF THE STATE
OF NEW YORK
ANNEX III - FAIRNESS OPINION OF GOLDMAN SACHS & CO.
<PAGE>
SUMMARY
The following is a brief summary of certain information contained elsewhere in
this Proxy Statement. Reference is made to, and this summary is qualified in its
entirety by, the more detailed information contained in or incorporated by
reference in this Proxy Statement. Shareholders are urged to carefully read this
Proxy Statement in its entirety. Certain capitalized terms used in this
description and not elsewhere defined are defined in the Merger Agreement and
used with the meanings provided therein. See pages 1 through 8 of Annex I.
THE PARTIES
MARIETTA.............................. Marietta is primarily engaged in the
design, manufacture, packaging,
marketing and distribution of guest
amenity programs to the travel and
lodging industry in the United States
and abroad, and provides customized
"sample-size" and "unit-of-use"
packaging products and services to
companies in the toiletries,
cosmetics, pharmaceutical and
household products industries.
Marietta is organized under the laws
of the State of New York and its
principal executive offices are
located at 37 Huntington Street,
Cortland, New York 13045, and the
telephone number at such offices is
(607) 753-6746.
BFMA HOLDING CORPORATION (PARENT)..... Parent, a corporation controlled by
Barry W. Florescue, was organized
under the laws of the State of
Delaware for the purpose of the
Merger. Parent has no operating
history. The principal executive
offices of Parent are located at 701
S.E. 6th Avenue, Suite 204, Delray
Beach, Florida 33483, Attention:
Barry W. Florescue, and the telephone
number at such offices is (407)
272-7746.
BFMA ACQUISITION CORPORATION (NEWCO).. Newco, a wholly-owned subsidiary of
Parent, was organized under the laws
of the State of New York for the
purpose of the Merger. Newco has no
operating history. The principal
executive offices of Newco are
located at 701 S.E. 6th Avenue, Suite
204, Delray Beach, Florida 33483,
Attention: Barry W. Florescue, and
the telephone number at such offices
is (407) 272-7746.
INFORMATION CONCERNING THE MEETING
DATE, TIME, PLACE AND PURPOSE......... The Meeting will be held at the
[__________________], New York at
10:00 A.M. on [_________],
[________], 1996, for the purpose of
(i) considering and voting upon a
proposal to approve and adopt the
Merger Agreement, and (ii)
transacting such other business as
may properly come before the Meeting.
RECORD DATE AND SHARES ENTITLED TO
VOTE................................. Holders of record of Shares on the
Record Date are entitled to notice of
the Meeting. Only holders of record
of Shares at the close of business on
the Record Date are entitled to vote
at the Meeting. On the Record Date,
there were 3,596,049 Shares issued
and outstanding, each of which will
be entitled to one vote on each
matter to be acted upon at the
Meeting.
1
<PAGE>
QUORUM AND VOTE REQUIRED.............. The presence in person or by properly
executed Proxy of the holders of a
majority of the issued and
outstanding Shares entitled to vote
at the Meeting is necessary to
constitute a quorum. The affirmative
vote of holders of two-thirds of the
total number of issued and
outstanding Shares is required to
approve and adopt the Merger
Agreement.
AGREEMENT BY CERTAIN MARIETTA
SHAREHOLDERS......................... Mr. Florescue has agreed to vote in
favor of the approval and adoption of
the Merger Agreement. Accordingly,
the vote of holders of approximately
58% of the Shares (other than Parent
and its affiliates) will be needed to
approve and adopt the Merger
Agreement.
DETERMINATIONS OF THE BOARD OF THE BOARD HAS DETERMINED THAT THE
DIRECTORS............................ MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, MARIETTA AND ITS
SHAREHOLDERS AND UNANIMOUSLY
RECOMMENDS TO THE HOLDERS OF SHARES
THAT THEY VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT. See
"Special Factors -- Background of the
Merger" and "--Marietta's Reasons for
the Merger; Recommendation of
Marietta's Board of Directors."
OPINION OF MARIETTA'S FINANCIAL
ADVISOR.............................. Goldman Sachs has acted as financial
advisor to Marietta in connection
with the Merger and has issued a
written opinion, dated as of the date
of this Proxy Statement, to the
effect that, as of such date and
based on various considerations and
assumptions, the $10.25 per Share in
cash to be received by Marietta
shareholders (other than Parent and
its affiliates) pursuant to the
Merger Agreement is fair to such
shareholders.
The full text of the opinion of
Goldman Sachs, which sets forth the
assumptions made, procedures
followed, matters considered and
limits of its review, is attached to
this Proxy Statement as Annex III,
and should be read carefully in its
entirety. See "Special Factors -
Opinion of Marietta's Financial
Advisor."
RIGHTS OF DISSENTING SHAREHOLDERS..... Holders of Shares who do not vote to
approve and adopt the Merger
Agreement may dissent from the Merger
and elect to have the fair value of
their Shares, based on all relevant
factors and excluding any element of
value arising from the accomplishment
or expectation of the Merger,
judicially determined and paid to
them in cash. Such shareholders must
deliver a written demand for such
appraisal to the Company prior to the
taking of the vote on the Merger
Agreement and comply with the other
requirements of Section 623 of the
BCL, the full text of which is
attached to this Proxy Statement as
Annex II. Any deviation from such
requirements may result in a
forfeiture of appraisal rights. See
"Rights of Dissenting Shareholders."
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.... As of December 1, 1995, directors and
executive officers of Marietta,
including Mr. Florescue, were
beneficial owners of an aggregate of
[526,919] issued and outstanding
Shares (approximately [14.4]% of such
Shares then issued and outstanding).
See "Security Ownership of Certain
Beneficial Owners and Management."
INTERESTS OF CERTAIN PERSONS IN THE
MERGER; CONFLICT OF INTEREST......... Parent, a corporation controlled by
Mr. Florescue, will be, as of the
date of the Meeting, the beneficial
owner of 314,365 Shares or
approximately 8.7% of the issued and
outstanding Shares. Newco is a
wholly-owned subsidiary of Parent. In
light of the fact that Mr. Florescue
and a designee of Mr. Florescue, Mr.
Charles W. Miersch, serve as
directors of the Company, Mr.
Florescue may be viewed as having a
conflict of interest in connection
with the Merger.
Mr. Florescue has agreed to vote all
Shares beneficially owned by him in
favor of the Merger Agreement.
As a result of the Merger, certain
officers of the Company may be
entitled to receive payments in the
aggregate amount of $[________] from
the Company pursuant to change in
control provisions in existing
employment agreements with the
Company. In addition, certain
officers and directors of the Company
hold options or cash only stock
appreciation rights which, upon
consummation of the Merger, would
result in the payment to such
individuals of approximately
$367,926. In light of such payments,
those officers and directors may be
viewed as having conflicts of
interest in that they may receive a
benefit as a result of the Merger not
received by the Company's other
shareholders. Mr. Florescue has
indicated that it is his present
intention to make available up to 10%
of the outstanding common stock of
Parent to management of the Surviving
Corporation (as defined below);
however, no formal arrangements have
been made between Parent and any
officers of the Company at this time.
THE MERGER
GENERAL DESCRIPTION OF THE MERGER..... At the Effective Time (as hereinafter
defined) of the Merger, Newco will
merge with and into Marietta, with
Marietta being the surviving
corporation (the "Surviving
Corporation"), and a wholly-owned
subsidiary of Parent. As a result of
the Merger, the holders of the then
issued and outstanding Shares will
receive $10.25 per Share in cash. The
full text of the Merger Agreement is
included in this Proxy Statement as
Annex I.
EFFECTIVE TIME OF THE MERGER.......... If the Merger is approved and adopted
by the requisite vote of Marietta
shareholders and the other conditions
to the obligations of the parties to
consummate the Merger are either
satisfied of waived (as permitted),
the Merger
3
<PAGE>
will be consummated and will become
effective on the date and at the time
that a Certificate of Merger,
reflecting the Merger, is filed with
the Secretary of State of the State
of New York (the "Effective Time").
PAYMENT TO SHAREHOLDERS............... Promptly after the Effective Time
each Share issued and outstanding
immediately prior to the Effective
Time (other than Shares (i) owned by
Parent or an affiliate of Parent, or
(ii) owned by holders, if any, who
exercise their dissenter's rights)
shall be converted into the right to
receive $10.25 per Share in cash.
Promptly after the Effective Time
each record holder of Marietta will
be mailed a transmittal letter (with
instructions) to use in effecting the
surrender and cancellation of each of
their Share certificates in exchange
for $10.25 per Share in cash. See
"Special Factors - Payment For
Shares." NO SHAREHOLDER SHOULD
SURRENDER ANY CERTIFICATE FOR SHARES
WITH THE PROXY.
CERTAIN EFFECTS OF THE MERGER......... As a result of the Merger, Parent
will acquire the entire equity
interest in the Company. Therefore,
following the Merger the present
holders of Shares (other than Parent
and its affiliates) will no longer
have an equity interest in the
Company and will no longer share in
future earnings or losses and growth,
if any, of the Company, the risks
associated with the continuing
operations of the Company, or the
potential to realize greater value
for their Shares through
divestitures, strategic acquisitions
or other corporate opportunities that
may be pursued by the Company in the
future. Instead, each such holder of
Shares will have the right to receive
the Per Share Price for each Share
held or to seek dissenters' rights as
described herein. See "Rights of
Dissenting Shareholders." After the
Effective Time Shares will no longer
be listed or traded through NASDAQ
and the registration of Shares under
the Securities Exchange Act of 1934
will be terminated.
CERTAIN INCOME TAX CONSEQUENCES....... As a result of the Merger, each
shareholder (other than Parent and
its affiliates) of Marietta will
recognize taxable gain or loss for
federal income tax purposes equal to
the difference between such
shareholder's adjusted tax basis in
his Shares and the cash received as a
result of the Merger. EACH
SHAREHOLDER SHOULD CONSULT HIS/HER
TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES OF THE TRANSACTION. See
"Special Factors - Certain Federal
Income Tax Consequences of the
Merger."
ANTICIPATED ACCOUNTING TREATMENT...... As required by generally accepted
accounting principles, the purchase
method of accounting will be used by
Parent to account for the Merger. See
"Special Factors -Anticipated
Accounting Treatment."
CONDITIONS TO THE MERGER.............. The obligations of Parent and Newco
under the Merger Agreement are
subject to the satisfaction or
waiver, at or before the Closing, of
certain conditions, including that
(i) the number of Dissenting Shares,
if any, with respect to
4
<PAGE>
<TABLE>
<S> <C>
which the holders thereof shall have
properly demanded appraisal, the
holders of which shall not have
withdrawn such demand as of the
Closing Date, shall not exceed ten
percent (10%) of the issued and
outstanding Shares entitled to vote
thereon; (ii) the Merger Agreement
and the transactions contemplated
thereby shall have been approved and
adopted by the holders of sixty-six
and two-thirds percent (66 2/3%) of
the issued and outstanding Shares;
(iii) Parent shall have received from
the Company an audited balance sheet,
dated as of September 30, 1995,
showing that the Company has (a) at
least $27,750,000 in net current
assets less an amount, not to exceed
$100,000, equal to the out-of-pocket
expenses incurred in connection with
the completion of a physical
inventory (see "Certain Terms of the
Merger Agreement - Conditions to the
Merger"), and (b) inventory recorded
on the books and records of the
Company in accordance with GAAP of
not more than $14,150,000; and (iv)
Parent shall have secured the
financing necessary to consummate the
Merger. As of September 30, 1995, the
conditions relating to the Company's
net current assets and inventory,
described in clause (iii) above, have
been satisfied. Although Parent has
provided the Company with commitment
letters from financial institutions
with respect to such financing, there
can be no assurance that Parent will
be able to secure the financing
necessary to consummate the Merger.
Mr. Florescue has advised the Company
that he is pursuing financing on more
favorable terms then those set forth
in the commitment letters from
financial institutions provided to
Marietta at the time of the execution
of the Merger Agreement, on August
26, 1995. See "Special Factors
-Source and Amount of Funds".
The obligations of the Company under
the Merger Agreement are subject to
the satisfaction or waiver, at or
before the Closing, of certain
conditions, including, without
limitation, that, (i) the Company
shall have received from Goldman
Sachs a favorable opinion as to the
fairness of the Per Share Price to be
received by the shareholders (other
than Parent and its affiliates) in
the Merger; and (ii) the Merger
Agreement and the transactions
contemplated thereby shall have been
approved and adopted by holders of
sixty-six and two-thirds percent (66
2/3%) of the issued and outstanding
Shares. A copy of such opinion is
attached hereto as Annex III. See
"Certain Terms of the Merger
Agreement - Conditions to the Merger."
TERMINATION OF THE MERGER AGREEMENT... The Merger Agreement may be
terminated and the Merger abandoned
at any time before the Effective Time
(i) by mutual consent of Parent and
the Company; (ii) by Parent or the
Company (a) if any governmental
authority shall have enacted, issued,
promulgated, enforced or entered any
law or judgment which has the effect
of prohibiting consummation of the
Merger, (b) if the Board fails
to
</TABLE>
5
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<TABLE>
<S> <C>
recommend the Merger to the
shareholders or recommends an offer
which it believes is a superior offer
rather than recommending shareholder
approval and adoption of the Merger,
or the shareholders fail to approve
and adopt the Merger at the Meeting,
or (c) if, without fault on the part
of the terminating party, the Merger
does not occur prior to January 31,
1996, unless this Proxy Statement has
not been mailed prior to January 11,
1995, in which case such date shall
be extended to a date twenty days
from the date this Proxy Statement is
mailed to shareholders but not later
than February 15, 1996; (iii) by
Parent, if any of the conditions to
Parent's obligations have not been
met within five days of approval and
adoption of the Merger Agreement or
any time prior thereto any such
condition becomes incapable of being
met; or (iv) by the Company, if any
of the conditions to the Company's
obligations have not been met within
five days of approval and adoption of
the Merger Agreement or any time
prior thereto any such condition
becomes incapable of being met. See
"Certain Terms of the Merger
Agreement - Termination of the Merger
Agreement."
EFFECTS OF TERMINATION OF THE MERGER
AGREEMENT........................... A fee of $1,250,000 is payable to
Parent if the Merger Agreement is
terminated because the Board fails to
recommend approval and adoption of
the Merger to shareholders, the Board
recommends to shareholders an offer
which it believes is a superior offer
rather than recommending shareholder
approval and adoption of the Merger,
or the Company fails to obtain a
favorable opinion from Goldman Sachs
as to the fairness of the Per Share
Price to be received by the
shareholders (other than Parent and
its affiliates) in the Merger. A
copy of such opinion is attached
hereto as Annex III. A fee of
$600,000 is payable to Parent if the
Merger Agreement is terminated
because the Company breaches certain
of its representations in the Merger
Agreement, the Company does not meet
certain specified levels of net
current assets (such levels have been
achieved), holders of more than 10%
of the issued and outstanding Shares
exercise their appraisal rights under
the BCL, or shareholders fail to
approve and adopt the Merger. A fee
of $250,000 is payable to Parent in
certain other limited circumstances.
In no event shall the Company be
obligated to pay more than one of the
aforementioned fees. See "Certain
Terms of the Merger Agreement -
Effect of Termination of the Merger
Agreement."
MARKET PRICES......................... Marietta Stock is traded on the
Nasdaq National Market System (the
"NASDAQ") under the symbol "MRTA." On
August 25, 1995, the last trading day
prior to the announcement by the
Company that it had executed the
Merger Agreement, the closing per
share sales price of Shares as
reported on the NASDAQ was $9.00. See
"Market Prices of Shares."
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
OTHER MATTERS......................... At the date of this Proxy Statement,
the Board does not know of any
business to be presented at the
Meeting other than as set forth in
the notice accompanying this Proxy
Statement. If any other matters
should properly come before the
Meeting, it is intended that Shares
represented by Proxies at the Meeting
will be voted with respect to such
matters in accordance with the
judgment of the persons voting such
Proxies.
</TABLE>
7
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below for, and as of the
end of, each of the fiscal years in the five-year period ended September 30,
1995 have been derived from the audited Consolidated Financial Statements of the
Company. Set forth below is certain Selected Financial Data for the Company:
<TABLE>
<CAPTION>
FISCAL YEARS ENDING IN:
------------- ---------- --------- ------------- -------------
September 30, October 1, October 2, September 26, September 28,
1995 1994 1993 1992 1991
------------- ---------- --------- ------------- -------------
(In Thousand of Dollars Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales $ 72,407 $ 68,231 $ 65,845 $ 69,111 $ 58,080
Gross profit 16,649 19,129 17,588 17,920 12,129
Income (loss) before extraordinary
item or change in accounting principle 5 2,282 1,443 2,115 (1,954)
Extraordinary item (1991) or change in
accounting principle (1994) - 337 - - 724
Net income (loss) 5 2,618 1,443 2,115 (1,230)
Per Share Data:
Income (loss) before extraordinary item
or change in accounting principle 0 0.64 0.40 0.59 (0.54)
Extraordinary item (1991) or change in
accounting principle (1994) - 0.09 - - 0.20
Net income (loss) 0 0.73 0.40 0.59 (0.34)
Weight average shares outstanding and
common share equivalents
(in thousands of shares) 3,610 3,586 3,572 3,570 3,609
Book Value per Share 13.10 13.06 12.36 12.08 11.62
Ratio of earnings to fixed charges .85 5.00 2.40 1.79 .29
BALANCE SHEET DATA
Working capital $ 23,622 $ 25,142 $ 24,714 $ 23,264 $ 22,225
Total assets 64,131 61,836 58,661 59,477 58,153
Long-term debt 6,514 6,851 7,213 8,548 10,778
Convertible subordinated notes 278 274 269 265 261
Shareholder's equity 46,498 46,275 43,301 42,238 40,584
Cash dividends per common share NONE NONE NONE NONE NONE
</TABLE>
This data should be read in conjunction with the consolidated financial
statements and related notes and the report of independent public accountants
included in Marietta's Annual Report on Form 10-K for the fiscal year ended
September 30, 1995, which accompanies this Proxy Statement.
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<PAGE>
SPECIAL FACTORS
GENERAL DESCRIPTION
The Merger Agreement provides that, at the Effective Time, Newco will merge
with and into Marietta with Marietta being the Surviving Corporation and
becoming a wholly-owned subsidiary of Parent. The Surviving Corporation will
possess all of the assets and liabilities of Marietta at the Effective Time. In
the Merger, the holders of Shares (other than Parent and its affiliates and
holders who exercise their dissenters' rights) will receive $10.25 per Share in
cash.
BACKGROUND OF THE MERGER
Mr. Florescue commenced acquiring Shares in February 1994. On October 3, 1994,
Mr. Florescue filed a Schedule 13D with the SEC indicating that as of such date
he beneficially owned an aggregate of 186,165 Shares, representing approximately
5.2% of the then issued and outstanding Shares. The report stated that Mr.
Florescue had purchased such Shares for investment purposes.
On May 20, 1994, at the request of Mr. Florescue, Philip Shager, Treasurer and
Chief Accounting Officer of the Company, met with Mr. Florescue to discuss the
Company and its recent financial performance. Such recent performance had been
disclosed by the Company in its quarterly report on Form 10-Q for the period
ended April 2, 1994. The meeting was requested by Mr. Florescue for
informational purposes.
On September 9, 1994, at the request of Mr. Florescue, Chesterfield F.
Seibert, Sr., then Chairman of the Board and Chief Executive Officer of the
Company, and Mr. Shager met with Mr. Florescue to discuss the Company's (i)
financial performance for the first nine months of the Company's fiscal year,
(ii) strategies for growth of the Company's business, and (iii) search for a new
chief executive officer. The Company's financial performance had recently been
disclosed by the Company in its quarterly report on Form 10-Q for the period
ended July 2, 1994. Subsequent to the September 9, 1994 meeting, during the
first quarter of fiscal 1995, Mr. Florescue contacted Mr. Seibert and requested
that the Board include representatives of the Company's substantial
shareholders. Mr. Seibert suggested that Mr. Florescue make such request
formally in a letter to the Board. Mr. Florescue did not make such a written
request.
On January 17, 1995, prior to the announcement of the Dickstein Proposal (as
defined below), Mr. Florescue met with Stephen D. Tannen, who had been recently
elected President and Chief Executive officer of the Company. Mr. Florescue
requested this meeting principally to become acquainted with Mr. Tannen and to
learn his future plans for the Company. At this meeting, Mr. Tannen and Mr.
Florescue also discussed the Company's weak stock performance. Mr. Florescue
suggested that the weak stock performance may be related to outstanding
litigation arising from the purchase by Marietta of Marietta American in 1989
and certain unresolved issues related to John S. Nadolski, the former chief
executive officer of the Company. Mr. Florescue indicated to Mr. Tannen that he
might be interested in increasing his equity ownership pursuant to a privately
negotiated purchase of Shares from the Company if such a transaction was in
connection with a resolution of the issues relating to Marietta American and Mr.
Nadolski.
On January 17, 1995, Dickstein Partners, Inc. ("Dickstein"), made an
unsolicited conditional proposal to acquire by means of a cash merger, all
outstanding Shares at a price of $11 per Share (the "Dickstein Proposal"). Prior
to January 17, 1995, the Company had no discussions with Dickstein. On January
20, 1995, Dickstein filed a Schedule 13D with the SEC, stating that it would
pursue the Dickstein Proposal. Dickstein's Schedule 13D stated that Dickstein
beneficially owned an aggregate of 526,000 Shares, representing approximately
14.6% of the then outstanding Shares and that on January 19, 1995, Dickstein had
filed preliminary proxy materials with the SEC indicating Dickstein's intention,
at the Company's 1995 annual meeting of shareholders, to propose a slate of its
own directors. The Schedule 13D also stated that the nominees of Dickstein
"would be committed to a program of offering the Company for sale, and selling
the Company, to the buyer who is willing to pay the highest price, so long as
the price is at least $11 per share."
On January 23, 1995, at the request of Mr. Florescue, Mr. Tannen and legal
counsel to the Company met with Mr. Florescue and legal counsel to Mr.
Florescue. At this meeting the Dickstein Proposal was discussed. Mr. Florescue
indicated that his prime objective was the enhancement of shareholder value. Mr.
Florescue discussed the alternatives he believed were available to the Company
including the possibility of the Company pursuing a recapitalization plan in
response to the
9
<PAGE>
Dickstein Proposal. In connection with such alternatives, Mr. Florescue again
offered to provide assistance to the Company, financial or otherwise. Mr.
Florescue emphasized at this meeting that it was his belief that the Company
must propose an alternative transaction to the shareholders, in response to the
Dickstein Proposal. Mr. Tannen informed Mr. Florescue that the Company had not
had an opportunity to study fully the Dickstein Proposal and that the Company
would respond at an appropriate time. Mr. Tannen also stated that the Company
would consider Mr. Florescue's suggestion. Mr. Florescue has advised the Company
that following this meeting he reviewed his alternatives in light of the
Dickstein Proposal. Such alternatives included supporting the Dickstein
Proposal, supporting the Board, proposing his own slate of directors, and
formulating his own proposal to acquire the Company.
Following the announcement of the Dickstein Proposal, the Board determined to
retain the services of a financial advisor. After interviewing four nationally
regarded investment advisors, at a meeting held on January 25, 1995, the Board
authorized the exclusive engagement of Goldman Sachs to assist the Company in
reviewing financial alternatives available to the Company. The Board also
designated Thomas D. Walsh, a non-management director of the Company, to work on
behalf of the Board with Goldman Sachs and assist management, as necessary, in
any related matters that came to the attention of the Company. Mr. Walsh was
compensated for these services at the rate of $1,000 per day for each day that
he rendered services to the Company.
In February 1995, the Company filed its quarterly report on Form 10-Q for the
first quarter of its 1995 fiscal year. In such report the Company stated that
it was "undertaking significant capital improvements" and that "projects
approved to date total approximately $3,610,000." Such improvements were being
made primarily to finance the expansion of the Company's warehouse facility in
Olive Branch, Mississippi, to upgrade the Company's bottling equipment and to
upgrade the Company's soap manufacturing equipment.
On March 7, 1995, Mr. Florescue sent a letter to Mr. Tannen, reiterating that
his prime objective was the enhancement of shareholder value. The letter
expressed concern with the Company's (i) failure as of such date to respond to
the Dickstein Proposal, (ii) intention to make significant capital and other
expenditures in fiscal 1995 (as disclosed in the Company's quarterly report on
Form 10-Q for the period ended December 31, 1994), which amount was
approximately twice the level of the prior year's amount, and (iii) agreement
retaining Goldman Sachs as the Company's financial advisor. In particular Mr.
Florescue stated that "[t]he Company appears to continue to be operated without
recognition of the important issues now facing it and without regard to the
impact of decisions on shareholders." Mr. Florescue further stated that "[t]he
commitment for these capital expenditures have been made notwithstanding the
fact the Company has performed poorly and continues to lag in sales and
earnings. It is difficult to understand how doubling capital expenditures is
prudent or justified or benefits shareholders at this time. In addition, the
Company hired Goldman, Sachs & Co. and agreed to pay it a minimum of $1.5
million. . . . Taken together these actions could lead one to conclude that the
Company's Board of Directors is insensitive to the interests of shareholders and
is merely taking steps to reduce the Company's attractiveness and financial
options, to the detriment of shareholders." In such letter Mr. Florescue
requested that the Company expand its Board to include representatives of the
Company's substantial shareholders. Mr. Florescue's letter stated that "[g]iven
the recent conduct of the Board of Directors and its lack of an ownership
interest in the Company, I believe it is apparent that this Board is unable or
unwilling to deal with the Dickstein Proposal or other alternatives in a manner
which will enhance shareholder value. I therefore demand that the Company
immediately expand the Board of Directors to include representatives of
substantial equity owners so that the Board, as reconstituted, can consider the
important issues facing the Company from the shareholders' perspective."
On March 13, 1995, the Company, after consultation with its legal and
financial advisors, announced that the Board had unanimously rejected the
Dickstein Proposal as inadequate and not in the best interests of the Company
and its shareholders. In light of the fact that such unsolicited proposal was
subject to financing and due diligence conditions, as well as the negotiation of
definitive agreements, the Board could not conclude that the Dickstein Proposal
was a bona fide offer. In addition, the Board was not prepared to accept any
offers for the purchase of the Company without exploring a sale process which it
believed would result in the shareholders receiving the highest price for their
Shares. After its rejection of the Dickstein Proposal, the Board instructed
management, together with its financial and legal advisors, to explore possible
financial alternatives available to the Company, including, among others, a
merger, an acquisition or disposition of assets or securities, a
recapitalization or other form of business combination.
In order to carry out the Board's instructions, management, together with its
financial and legal advisors, compiled documentation relating to the Company and
identified parties that might be interested in acquiring the Company or entering
into a transaction with the Company. In connection with this process, contact
was made with over 100 parties. Such parties included potential strategic and
financial purchasers in addition to parties who could provide the financing
necessary to finance a recapitalization of the Company. Over 50 of the parties
contacted requested and received information regarding the Company and 41 of the
parties contacted, including Mr. Florescue and Dickstein, executed
confidentiality agreements. A number of parties, including Mr. Florescue and
Dickstein, inspected the Company's books and records and visited its facilities
and met
10
<PAGE>
with members of senior management. Senior officers of the Company accompanied
parties on inspections of the Company's Cortland New York, Olive Branch,
Mississippi and Canadian facilities. In addition, parties were invited to the
offices of the Company's legal counsel to conduct due diligence with respect to
the Company.
The foregoing process produced two conditional offers to acquire all Shares,
one from Dickstein at $11.00 per Share in cash (the "Second Dickstein
Proposal"), and the other from Florescue Family Corporation ("FFC"), a
corporation controlled by Mr. Florescue, at $12.30 per Share in cash (the
"Florescue Proposal"). The Second Dickstein Proposal was subject to various
conditions, including (i) the securing of financing to fund the proposed
acquisition, and (ii) the Company producing operating income of not less than
(x) $775,000 during the Company's third 1995 fiscal quarter and (y) $1,975,000
during the Company's third and fourth 1995 fiscal quarters. In addition, the
Second Dickstein Proposal provided for a breakup fee payable to Dickstein in the
amount of $3.5 million if Dickstein terminated such agreement for certain
specified reasons, including the Company's failure to attain the above-specified
levels of operating income or the election by holders of more than 10% of the
outstanding Shares to exercise their dissenters' rights pursuant to applicable
state law. (Dickstein subsequently offered to reduce such fee to $1.75 million).
The Florescue Proposal was subject to various conditions, including the securing
of financing to fund the proposed acquisition and completion of its due
diligence review of the Company. Mr. Florescue indicated that FFC would expect
to receive "fair remuneration", in the form of a breakup fee, from the Company
if the Board subsequently withdrew its support for the Florescue Proposal.
In addition to the Second Dickstein Proposal and the Florescue Proposal,
proposals from three other parties were received that expressed an interest in
entering into a transaction with the Company. One party proposed making an
equity investment of an unspecified amount. Such party indicated that its
investment would value the Shares in a range of between $8.00 and $9.00 per
Share. Such party proposed that the investment would be used by the Company to
fund growth opportunities. The Company rejected this offer because such party
was unwilling to raise the value of its offer above $9.00 per Share. Another
party proposed acquiring certain assets of the Company's custom packaging
business for $8.8 million. The proposed purchased price was conditioned upon an
audit of the Company, confirmation that the value of the inventory and work in
process was at least $3 million, verification of the condition of the equipment,
the transferability and profitability of ongoing customer contracts, and current
backlog data. Such offer was rejected because the Board believed that such
proposal would not maximize shareholder value and would impair the value of the
Company's ongoing operations. The third proposal received by the Company was
made by Valley Products Company ("Valley Products"). In its proposal Valley
Products proposed purchasing or leasing Marietta's soap manufacturing facility.
This offer was also rejected because the Board believed that such proposal would
not maximize shareholder value and would impair the value of the Company's
ongoing operations. In addition, the Board was concerned that the sale of the
soap manufacturing facility would require the Company to buy its soap products
on the open market which might increase its costs. The Company's exploration of
financial alternatives did not produce any acquisition opportunities for the
Company.
As part of the process to maximize shareholder value, the Company received an
indication from a banking institution of preliminary interest in, for a due
diligence fee, exploring a debt financing with the Company, in an amount to be
agreed upon. Such financing was for the purpose of enabling the Company to
declare a special dividend to all shareholders or finance a self tender by the
Company of some of its outstanding Shares. The Board did not pursue this
alternative because it believed that it would not be in the best interest of
shareholders to declare a special dividend or conduct a self-tender for its
Shares. The Board believed that the financing of such alternatives would require
the Company to incur significant indebtedness at a time when it was experiencing
financial and operating uncertainty. Further, the Board was concerned that a
special dividend or self-tender would adversely affect the market liquidity of
Shares and could limit institutional research coverage of the Company. In
addition, the Board believed that it was unlikely that financing for such
alternatives could be secured. The Board believed that a sale of the Company was
the alternative that would maximize shareholder value and determined to pursue
to sale process to its conclusion before considering a special dividend,
self-tender or any other financial alternative. For a description of certain
analyses that were performed by the Company's financial advisor and presented to
the Board, see "Opinion of Marietta's Financial Advisor - (V) Leveraged Buyout
Analysis."
On June 22, 1995, the Board met to discuss the Second Dickstein Proposal and
the Florescue Proposal. At such meeting the Board determined that based upon the
various conditions contained in each proposal, accepting either proposal would
create an obligation of the Company to sell itself to a purchaser without
concurrently obligating the purchaser to consummate such purchase. Such belief
was based upon the Board's concern that both proposals contained a number of
conditions (the satisfaction of some of which conditions were in the purchaser's
sole discretion) that might not be satisfied, thus permitting the purchaser, to
terminate its offer without liability to the Company.
With respect to the Second Dickstein Proposal, the Board was particularly
concerned that Dickstein had not provided adequate assurance of its ability to
finance the acquisition. Moreover, the Board believed that if the Company
accepted the Second Dickstein Proposal, the failure by the Company to achieve
the specified levels of operating income during the Company's third and fourth
1995 fiscal quarters would have resulted in an obligation by the Company to pay
a substantial breakup fee to Dickstein and, if the agreement were so terminated
for this reason, it would have an adverse impact on the value of the Shares and
on the process of maximizing shareholder value. Based upon the Company's most
recent projections for the third quarter, the Board was concerned about the
Company's ability to achieve the required levels of operating income. In fact,
the Company did not achieve such levels of operating income.
With respect to the Florescue Proposal, the Board believed that Mr. Florescue
had also not provided adequate assurance of his ability to finance the
acquisition of the Company and that the due diligence condition contained in
such proposal was not appropriate. The Board believed that Mr. Florescue had
been given adequate time and access to the Company to conduct due diligence. The
Board believed that the due diligence condition would allow Mr. Florescue to
terminate his offer at any time and, if the agreement were so terminated for
this reason, it would have an adverse impact on the value of the Shares
11
<PAGE>
and on the process of maximizing shareholder value. Accordingly, the Board was
unwilling to execute a merger agreement (i) without adequate assurance that Mr.
Florescue could obtain the required financing to complete the transaction, and
(ii) without removal of the due diligence condition that would permit Mr.
Florescue to terminate the merger agreement in his sole discretion. In addition,
in light of the Company's most recent projections, the Company was concerned
about Mr. Florescue's ability to obtain financing for a purchase that valued the
Shares at $12.30.
Despite these reservations the Company authorized its representatives to
continue discussions with Dickstein and Mr. Florescue to determine if more
reasonable terms could be agreed to which in the Board's opinion would be in the
best interests of all shareholders. The Board further determined that it would
recommend to shareholders that the highest offer containing reasonable
conditions be accepted, provided that such offer was at least $11.00 per Share
in cash for all Shares and that the bidder demonstrate to the Board that it had
the financial ability to complete the transaction.
On July 31, 1995, Dickstein further amended its Schedule 13D filed with the
SEC, in which Dickstein stated that it was withdrawing the Second Dickstein
Proposal and proposed that Marietta acquire up to 2,000,000 Shares through a
self-tender (the "Self-Tender Proposal"). Dickstein indicated that in such self-
tender it would not tender any of its Shares, thereby increasing Dickstein's
ownership of the Company through a transaction financed by the Company. Although
the Board did not ascribe a specific aggregate value to the Self-Tender
Proposal, it did consider the Company's uncertain operating and financial
prospects, in light of which, the Board did not deem it prudent to cause the
Company to incur significant amounts of indebtedness that might weaken the
Company's financial condition in order to effect the Self-Tender Proposal. The
Board also was unwilling to support a transaction that might have resulted in
Dickstein obtaining control of the Company without acquiring all of the Shares.
Further, the Board was concerned that the Self-Tender Proposal would adversely
affect the market liquidity of the Shares and could limit institutional research
coverage of the Company. In addition, Dickstein also stated that it expected its
expenses to be reimbursed by the Company. The Board believed these expenses
would be significant and was unwilling to reimburse Dickstein for such
expenses.
On August 1, 1995, the Board reviewed with its advisors the progress of the
ongoing process. At such time the Board once again determined to pursue the sale
process to its conclusion. The Board also determined that if by September 30,
1995, no agreement for the sale of the Company had been entered into, the Board
would suspend efforts to seek a buyer for the Company and would, thereafter,
concentrate the Company's resources on its operations and on improving its core
businesses and financial results. The Board also determined that it would
continue to evaluate other potential financial alternatives.
On August 3, 1995, the Company announced its financial results for the third
fiscal quarter. Net sales for the third quarter, as compared to the third
quarter of the Company's prior fiscal year, had declined 1.2% and the Company's
net loss for the third quarter was $457,124 ($0.13 per Share) as compared to net
income of $785,574 ($0.22 per Share) in the third quarter of fiscal 1994. The
Company indicated that the third quarter of fiscal 1995 was negatively affected
by approximately $652,000 in legal and professional fees incurred primarily in
connection with the matters relating to the Dickstein Proposal. Other
significant factors contributing to the results for the third quarter were
higher than anticipated materials costs. The Company also announced increased
prices effective August 15, 1995, to offset the higher materials costs and
stated that it expected that capital expenditures made by the Company during
fiscal 1995 would result in improved productivity and efficiency at its soap
manufacturing facility.
On August 4, 1995, the Board again reviewed with its advisors the progress of
the ongoing process. It was noted that although Mr. Florescue's offer to
purchase the Company had expired, Mr. Florescue had expressed continued interest
in acquiring the Company. The Board authorized its representatives to continue
negotiations with Mr. Florescue to determine if an agreement to purchase the
Company could be reached on terms acceptable to the Board. The Board was also
advised that Mr. Florescue had requested representation on the Board. The Board
believed that in light of Mr. Florescue's significant investment in the Company
it was appropriate to offer Mr. Florescue representation on the Board.
Accordingly, the Board determined to offer Mr. Florescue the opportunity to
propose two nominees (acceptable to the Board) to an expanded Board comprised of
nine members.
On August 8, 1995, it was reported at a meeting of the Board that Mr.
Florescue had accepted the Board's offer to propose two nominees to the
Company's Board. At such meeting, the Board agreed to nominate Mr. Florescue and
Charles
12
<PAGE>
W. Miersch, two nominees designated by Mr. Florescue, for election to the Board
at the Company's 1995 Annual Meeting of Shareholders scheduled to be held on
August 31, 1995. Mr. Florescue at the same time agreed to vote all Shares
beneficially owned by him in favor of the Board's nominees.
During the period from August 8, 1995 through August 26, 1995, Mr. Florescue
continued to conduct a due diligence review of the Company. In particular, the
Company provided specific information requested by Mr. Florescue and his
representatives concerning the Company's third quarter results and the Company's
projections for the fourth quarter. In addition, during such period
representatives of the Company and Mr. Florescue were negotiating the terms of
the Merger Agreement. Among other matters, the parties negotiated the
representations, warranties, covenants and agreements to be made by the Company
in the Merger Agreement, termination fees to be payable by the Company in the
event the Merger was not consummated for certain specified reasons, conditions
to the parties' respective obligations under the Merger Agreement, the rights
and obligations of the Company in the event a third party made or indicated its
interest in making an offer to acquire the Company, and matters relating to
employee benefits. The parties did not begin discussions of the price per Share
to be paid by Mr. Florescue until August 21, 1995.
On August 14, 1995, the Company distributed its proxy statement to the
Company's shareholders. On August 15, 1995, Dickstein distributed a proxy
statement to the Company's shareholders, setting forth his own slate of nominees
for election as directors of the Company, who, if elected, indicated that they
were committed to seeking to implement the Self-Tender Proposal.
On August 21, 1995, Mr. Florescue offered $10.00 per Share in cash. Mr.
Florescue stated that in light of the Company's financial results for the third
fiscal quarter he was unwilling to resubmit an offer of $12.30 per Share. On
August 23, 1995, the Board was advised on the status of negotiations and the
material issues on which the Company and Mr. Florescue were not in agreement. It
was decided that representatives of the Company should continue discussions with
Mr. Florescue with a view toward entering into the Merger Agreement. On August
24, 1995 and August 25, 1995, representatives of the Company and Mr. Florescue
negotiated a resolution of all issues on which the parties were not in
agreement. During such negotiations, Mr. Florescue increased his offer to $10.25
per Share in cash. The Board was advised at a meeting held on August 25, 1995 on
the status of the negotiations. Such meeting was adjourned, however, without any
action being taken by the Board because Mr. Florescue had not yet provided the
Board with commitment letters from financial institutions with respect to the
financing necessary to consummate the Merger.
On August 26, 1995, the August 25, 1995 meeting was reconvened. Earlier that
day, Mr. Florescue provided the Company with commitment letters from Foothill
Capital Corporation ("Foothill Capital") and Siena Capital Partners, L.P.
("Siena Capital") to provide $35.5 million of financing necessary to complete
the transaction. See "Source and Amount of Funds." Such commitment letters were
subject, among other things, to satisfactory completion by such lenders of their
due diligence, approval by the credit committees of such lenders (including
whether to require participants for up to $10 million of such financing) and
execution of definitive agreements. Pursuant to such commitment letters, an
additional equity investment by Mr. Florescue of approximately $4.5 million was
required, and this equity investment was guaranteed by FFC. The Board was
informed by its financial and legal advisors as to the terms of the agreement
reached by the parties and that Mr. Florescue's final offer was $10.25 per Share
in cash. Thereafter, the Board carefully considered the terms of the Merger and,
relying on the factors listed below under "Marietta's Reasons for The Merger;
Recommendation of Marietta's Board of Directors," voted unanimously to approve
the Merger Agreement.
In a separate agreement, dated August 26, 1995, relating to Mr. Florescue's
joining the Board, Mr. Florescue and his affiliates agreed not to increase their
ownership of Shares above 14.99% or to commence a tender offer, proxy contest or
other similar action, unless consented to by the Board. Such agreement has a
term of two years, subject to earlier termination in certain cases.
On August 27, 1995, the Company announced that it had signed the Merger
Agreement.
On August 29, 1995, Dickstein further amended its Schedule 13D stating that on
August 28, 1995 and August 29, 1995 Dickstein and its affiliates had sold
306,000 Shares. On August 30, 1995, Dickstein again amended its Schedule 13D
stating that on August 30, 1995 it and its affiliates had sold an additional
61,500 Shares. These sales reduced Dickstein's stake in the Company from
approximately 14% to less than 5%. On August 30, 1995, Dickstein announced that,
in light of the Merger Agreement, it was withdrawing its slate of nominees for
consideration by the Company's shareholders.
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At the Company's 1995 Annual Meeting of Shareholders held on August 31, 1995,
the Board's nominees, including Mr. Florescue and Mr. Miersch, were elected to
serve as directors of the Company.
Pursuant to an amendment to the Merger Agreement agreed to by Parent, Newco
and the Company on November 30, 1995, the termination date of the Merger
Agreement was extended from December 31, 1995 to February 15, 1996.
MARIETTA'S REASONS FOR THE MERGER; RECOMMENDATION OF MARIETTA'S BOARD OF
DIRECTORS
At its August 26, 1995 meeting, the Board, a majority of whose members are
outside directors who are not affiliates of Mr. Florescue, unanimously
determined that the Merger Agreement was fair to the shareholders of the Company
and recommended that such shareholders accept the terms of the Merger and
approve and adopt the Merger Agreement.
The decision by the Board to enter into the Merger Agreement reflected, in
part, an assessment of the risks and potential benefits of other strategic and
financial alternatives available to the Company as compared with the risks and
benefits of a transaction that would offer all shareholders of the Company
(other than Parent and its affiliates) the opportunity to receive a premium over
the market price for their Shares. In its deliberations, the Board considered a
number of factors, including (i) the Board's knowledge of the business,
operations, properties, assets, financial condition, operating results and
prospects of the Company; (ii) the fact that the offer made by Parent resulted
from an extensive, publicly announced sale process for the Company; and (iii)
the terms of the Merger Agreement. The Board also believed that the sale process
it conducted had allowed for the broadest possible exposure of the Company to
potential buyers. As previously disclosed, contact was made with over 100
parties and the Company's management along with Goldman Sachs actively
participated in facilitating the sale process. Strategic as well as financial
buyers were contacted by Goldman Sachs. The Board noted that during the seven
months of publicity concerning a potential transaction involving the Company
prior to the execution of the Merger Agreement, no parties other than Parent and
Dickstein expressed an interest in acquiring the entire Company. Further, even
after the public announcement of the Merger, no third party indicated a bona
fide interest with respect to a possible transaction involving the Company.
The Board, in agreeing to $10.25 per Share in cash, considered that such price
was less than had originally been offered for the Shares under both the Second
Dickstein Proposal and the Florescue Proposal. However, the Board determined
that in light of the Company's recent financial results and the extensive sales
efforts, $10.25 represented a fair price for all shareholders. The Board
considered, in particular, the premium which $10.25 in cash represented over the
recent price performance of the Shares. Such amount is approximately 28% above
the high bid for Shares on January 3, 1995, the day preceding the day on which
Dickstein began purchasing Shares in connection with the Dickstein Proposal and
approximately 12% above the high bid for Shares on August 25, 1995, the day
preceding the day on which the Merger Agreement was approved by the Board.
The Board believed that the Company's process of exploring financial
alternatives yielded the best indication of the Company's value. Given the
nature of the Company's assets and business, the Board did not believe that a
liquidation of the Company, as opposed to a sale of all or part of the Company
as a going concern, would result in shareholder value being maximized.
The Board also considered (i) the fact that the price of $10.25 per Share will
be paid in cash; and (ii) possible alternatives to the Merger, including
continuing to operate the Company as an independent public company, initiating a
self-tender, as well as the impact, short term and long term, of such
alternatives on shareholder value, and determined that the offer made by Parent
represented the alternative that would maximize shareholder value. With regard
to the possible alternatives considered, the Board believed that it would not be
in the best interest of the Company's shareholders to declare a special dividend
or conduct a self-tender for its Shares since such alternatives would require
the Company to incur significant indebtedness that might weaken the Company's
financial position. In addition, in light of the Company's uncertain operating
and financial prospects, the Board did not deem it advisable to cause the
Company to incur significant debt. Further, the Board was concerned that a
special dividend or self-tender would adversely affect the market liquidity
of the Shares and could limit institutional reserach coverage of the
Company. Accordingly, in view of the foregoing factors the Board concluded that
there could be no assurance that the Company's shareholders would be able to
realize any greater value for their Shares in any of the other transactions
considered by the Board. See "Special Factors - Background of the Merger" and "
- - Opinion of Marietta's Financial Advisor."
In accepting a price of $10.25 per Share pursuant to the Merger Agreement the
Board took note of the fact that such price was less than $12.80, the book value
per Share at July 1, 1995, the date of the Company's most recent financial
statements at the time the Merger Agreement was executed. The Company did not
believe that the fact that book value per Share exceeded $10.25 was indicative
of an impairment of the Company's assets or that the Company had failed to
record additional liabilities. The Board believed, in light of the factors
listed above, including the extensive, publicly announced sale process for the
Company, the premium that $10.25 represented over the recent price performance
of the Shares and the fact that $10.25 resulted from extensive negotiations
between the Company and Mr. Florescue, that $10.25 was fair to the shareholders
of the Company even though book value per Share exceeded $10.25. The Board
believed that the other variables represented more relevant indications of the
value of the Company than book value.
In connection with the Board's consideration of the Merger Agreement, the
Board considered the impact of the "no-solicitation" provision of the Merger
Agreement on the Company's ability to negotiate with any third parties who
desire to acquire the Company. Although the Merger Agreement prohibits the
Company from, among other things, soliciting, encouraging or initiating third-
party offers, or furnishing information or engaging in negotiations in
connection therewith,
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the Company is permitted, under certain circumstances, to furnish information
to, or participate in negotiations or discussions with, third parties who have
made a bona fide proposal, and the Merger Agreement may be terminated by the
---- ----
Board in the event that an offer more favorable than Parent's offer is received
from a third-party. See "Certain Terms of the Merger Agreement." In such event,
the Company would be required to pay Parent a termination fee of $1,250,000. The
Board concluded that the aggregate amount of such fee was less than 3.5% of the
total value of the transaction, such fee was reasonable and not disproportionate
to fees payable in comparable transactions of this nature. Further, the Board
believed that such fee was not disproportionate to Parent's expenses and that
such fee would not preclude a third-party from making an offer that was
materially more favorable to the Company's shareholders.
In view of the wide variety of factors considered by the Board in connection
with its evaluation of the Merger and the Per Share Price, the Board did not
find it practicable to quantify or otherwise attempt to assign relative weights
to the specific factors considered in making its determination, nor did it
evaluate whether such factors were of equal weight. As a general matter, the
Board believed that the factors discussed above supported its decision to
approve the Merger.
After extensive deliberations and for the foregoing reasons, your Board
approved the terms of the Merger and believes that the Merger Agreement is fair
to, and in the best interests of, Marietta and its shareholders.
RECOMMENDATION OF PARENT AND NEWCO
Parent and Newco have concluded, based on the factors listed above, that the
$10.25 per Share cash consideration proposed to be paid to shareholders in the
Merger is fair to shareholders from a financial point of view. Parent and Newco
did not attach relative weights to the specific factors considered in reaching
such conclusion as to fairness. Furthermore, in reaching such conclusion, in
addition to the foregoing factors, the negotiations conducted by Parent with the
Company were also considered in Parent's decision to increase the price to be
paid in the Merger to $10.25 per Share.
OPINION OF MARIETTA'S FINANCIAL ADVISOR
The Board retained Goldman Sachs as the Company's exclusive financial advisor.
The Board selected Goldman Sachs based on its substantial experience in mergers
and acquisitions and in securities valuation generally. The Board believed that
it was not necessary to retain an independent advisor to act solely on behalf of
unaffiliated shareholders. The Board based its decision on the fact that at all
relevant times prior to and after the execution of the Merger Agreement a
majority of the Board was composed of outside directors who were not affiliates
of Mr. Florescue, and that no director (other than Mr. Florescue) owned in
excess of 2% of the issued and outstanding Shares.
Goldman Sachs assisted the Company in its exploration of financial
alternatives, including having contact with over 100 parties.
Goldman Sachs has delivered to the Board its written opinion, dated the date
of this Proxy Statement, to the effect that, as of such date and based on
various considerations and assumptions, $10.25 per Share in cash is fair to the
holders of Shares (other than Parent and its affiliates). In its opinion Goldman
Sachs noted that consummation of the Merger is subject to certain conditions,
including the securing by Parent of financing necessary to consummate the
Merger. The full text of Goldman Sachs' written opinion, which sets forth the
assumptions made, procedures followed, matters considered and limits of its
review, is attached hereto as Annex III and is incorporated by reference herein.
HOLDERS OF SHARES ARE URGED TO AND SHOULD READ SUCH OPINION IN ITS ENTIRETY.
In connection with its written opinion, Goldman Sachs reviewed, among other
things, the Merger Agreement; this Proxy Statement; Annual Reports to
shareholders of the Company for the five fiscal years ended October 1, 1994;
Annual Reports on Form 10-K of the Company for the five fiscal years ended
October 1, 1994; the Company's financial statements for the year ended September
30, 1995; certain interim reports to shareholders and Quarterly Reports on Form
10-Q of the Company; certain other communications from the Company to its
shareholders; and certain internal financial analyses and forecasts for the
Company prepared by its management. In addition, Goldman Sachs reviewed the
reported price and trading activity for Shares, compared certain financial and
stock market information for the Company with similar information for certain
other companies the securities of which are publicly traded, reviewed the
financial terms of certain recent business combinations in the specialty
packaging industry specifically and in other industries generally and performed
such other studies and analyses as Goldman Sachs considered appropriate.
Goldman Sachs relied without independent verification upon the accuracy and
completeness of all the financial and other information reviewed by it for the
purposes of its opinion. In addition, Goldman Sachs did not make an independent
evaluation or appraisal of the assets and liabilities of the Company or any of
its subsidiaries nor has Goldman Sachs been furnished with any such evaluation
or appraisal.
The following is a summary of certain of the financial analysis reviewed by
Goldman Sachs with the Board on November 27, 1995 and used by it in connection
with its written opinion, dated as of the date of this Proxy Statement.
(I) Analysis of the Per Share Price. Goldman Sachs prepared a financial
-------------------------------
analysis of the Merger and calculated the aggregate consideration and various
financial multiples based upon the cash consideration of $10.25 per Share,
using historical results for the Company's fiscal year 1995 and management
projections for the Company's fiscal years 1996 and 1997. The multiples of
levered aggregate consideration (aggregate consideration plus debt less cash)
were as follows: (i) sales - 0.5x, 0.4x and 0.4x, for fiscal years 1995, 1996
and 1997, respectively; (ii) earnings before interest, taxes, depreciation
and amortization ("EBITDA") - 7.7x, 4.0x and 3.7x for fiscal years 1995, 1996
and 1997, respectively; (iii) earnings before interest and taxes ("EBIT") -
29.2x, 6.9x and 6.2x for fiscal years 1995, 1996 and 1997, respectively; (iv)
earnings per share ("EPS") - 39.4x, 11.1x and 10.0x for fiscal years 1995,
1996 and 1997,
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<PAGE>
respectively. For purposes of the foregoing analysis, the multiples for
EBITDA, EBIT, and EPS relating to fiscal years 1995 and 1996 exclude certain
extraordinary expenses related to the actions taken by the Company in
response to the Dickstein Proposal.
In addition, Goldman Sachs analyzed the consideration to be received by
shareholders (other than Parent and its affiliates) pursuant to the Merger
Agreement in relation to the recent price of such Shares. Such analysis
indicated that $10.25 per Share represented a premium of 20.6% based on the
$8.50 closing price of Shares on November 21, 1995.
(II) Selected Companies Analysis. Goldman Sachs reviewed and compared certain
---------------------------
financial information relating to the Company to corresponding financial
information, ratios and public market multiples for the sole publicly traded
guest amenity firm identified (Guest Supply, Inc.), selected publicly traded
custom packaging companies (AptarGroup, Inc., PCI Services, Inc., and Seda
Specialty Packaging Co.), and selected publicly traded personal care
companies (Alberto-Culver Company, Colgate-Palmolive Company, The Dial Corp.
and Helene Curtis Industries, Inc.) (such companies, collectively, the
"Selected Companies"). The Selected Companies were chosen because they are
publicly traded companies with operations that, for purposes of analysis, may
be considered similar to the Company, however, given the Company's
specialized operations, no company used in the analysis as a comparison is
identical to the Company. Goldman Sachs calculated and compared various
financial multiples and ratios. The multiples of each of the Selected
Companies were based on the most recent publicly available information. With
respect to the Selected Companies, Goldman Sachs considered levered market
capitalization (market value of common equity plus debt less cash) as a
multiple of LTM sales, as a multiple of LTM EBITDA and as a multiple of LTM
EBIT. Goldman Sachs' analyses of the Selected Companies indicated levered
multiples of LTM sales, which were 0.7x for Guest Supply, Inc. and ranged
from lows of 0.7x and 0.3x to highs of 2.3x and 1.7x, with means of 1.4x and
0.9x for the selected custom packaging and personal care companies,
respectively, as compared to 0.4x for the Company based on pre-announcement
stock price and operating data (the "pre-announcement data") and as compared
to 0.5x for the Company based on the Per Share Price and operating data
for the 12 month period ending September 30, 1995 (the "current data"); LTM
EBITDA, which were 10.3x for Guest Supply, Inc. and ranged from lows of 5.7x
and 4.3x to highs of 7.9x and 11.0x, with means of 7.0x and 7.8x for the
selected custom packaging and personal care companies, respectively, as
compared to 3.4x for the Company based on pre-announcement data and as
compared to 7.6x for the Company based on the current data; and LTM EBIT,
which were 14.0x for Guest Supply, Inc. and ranged from lows of 8.8x and 7.7x
to highs of 12.9x and 13.5x, with means of 10.9x and 10.6 for the selected
custom packaging and personal care companies, respectively, as compared to
6.2x for the Company based on pre-announcement data and as compared to 26.7x
for the Company based on the current data. Goldman Sachs also considered for
the Selected Companies estimated calendar year 1995 price/earnings ratios
(based on IBES estimates), which were 28.4x for Guest Supply, Inc. and ranged
from lows of 10.4x and 15.2x to highs of 17.9x and 21.0x, with means of 14.6x
and 18.1x for the selected custom packaging and personal care companies,
respectively, as compared to 10.6x for the Company based on pre-announcement
data and as compared to 13.1x for the Company based on the current data and
estimated calendar year 1996 price/earnings ratios (based on IBES estimates),
which were 20.4x for Guest Supply, Inc. and ranged from lows of 9.9x and
12.9x to highs of 15.6x and 16.5x, with means of 12.2x and 14.3x for the
selected custom packaging and personal care companies, respectively, as
compared to 9.6x for the Company based on pre-announcement data and as
compared to 11.9x for the Company based on the current data. The analysis
indicated that in each of the foregoing cases, based on pre-announcement
data, the multiples of the Company were at the low end of the range in
comparison with those of the Selected Companies and improved, based upon
current data, due to the increases in the market value of common equity of
the Company after the announcement of the Dickstein Proposal and the
reduction in operating results for the later 12 month period. Goldman Sachs
also considered for the Selected Companies the ratios of estimated calendar
year 1996 price/earnings ratio (based on IBES estimates) to IBES Long Term
Growth Rates, which were 0.8x for Guest Supply, Inc., 1.0x for the selected
custom packaging companies and 1.3x for the selected personal care companies,
as compared to 0.8x for the Company based on pre-announcement data and as
compared to 1.0x for the Company based on the current data. Many of the
companies analyzed have higher IBES Long Term Growth Rates than the growth
projected for the Company by its management. IBES is a data service which
monitors and publishes a compilation of earnings estimates produced by
selected research analysts on companies of interest to investors.
(III) Selected Transaction Analysis. Goldman Sachs analyzed certain
-----------------------------
information relating to selected transactions in the specialty packaging
industry since 1986 (the "Selected Transactions"). Given the Company's
specialized operations, no transaction used in the analysis as a comparison
is identical to the transaction considered. Such analysis indicated that for
the Selected Transactions (i) levered aggregate consideration as a multiple
of LTM sales ranged from a low of 0.2x to a high of 1.8x, with a mean of 1.1x
and a median of 1.0x, compared to 0.5x for the levered aggregate
consideration to be received in the Merger, (ii) levered aggregate
consideration as a multiple of LTM EBIT ranged from a low of 3.2x to a high
of 28.2x with a mean of 12.4x and a median of 11.6x compared to 29.2x for the
levered aggregate consideration to be received in the Merger, and (iii)
levered aggregate consideration as a multiple of LTM EBITDA ranged from a low
of 1.7x to a high of 8.4x with a mean of 6.8x and a median of 7.5x, compared
to 7.7x for the levered aggregate consideration to be received in the Merger.
The analysis indicated that the price of $10.25 per Share being paid in the
Merger was, as a multiple of LTM sales, at the low end of the range and, as a
multiple of LTM EBIT and LTM EBITDA, at the high end of the range in
comparison with the selected transactions.
(IV) Discounted Cash Flow Analysis. Goldman Sachs performed a discounted cash
-----------------------------
flow analysis using projections provided by the management of the Company.
Free cash flow represents the amount of cash generated and available for
principal, interest and dividend payments after providing for ongoing
business operations and taxes. Goldman Sachs aggregated (x) the present value
of the projected free cash flows over the five year period from 1996 through
2000 with (y) the present value of the range of terminal values described
below. Goldman Sachs calculated the Company's
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<PAGE>
terminal values in the year 2000 based on multiples ranging from 4x to 5x
projected 2000 EBITDA. These terminal values as well as the projected cash
flows for the years 1996 through 2000 were then discounted to present value
using discount rates from 11% to 15%. Based upon the foregoing discounted
cash flow analysis, the net present value per Share ranged from $9.17 to
$14.57.
Goldman Sachs also performed a sensitivity analysis on the discounted cash
flow analysis. Assuming a fixed terminal value multiple of 5x projected 2000
EBITDA and a 14% discount rate, projected sales growth was varied by a range
of (2.0)% to 2.0% and EBIT margins were varied by a range of (3.0)% to 2.0%.
Based upon the sensitivity analysis, the net present value per share of
Common Stock ranged from $7.43 to $14.26, which compare to the $11.22 value
at the illustrative terminal value and discount rate of 5% and 14%.
The discounted cash flow analysis is an analysis that should be considered
with the recognition that this analysis is most applicable to a
strategic/corporate potential acquiror and with the recognition than an
acquiror typically would not look to pay the full discounted cash flow
valuation of a company. Paying the full valuation would equate to an acquiror
transferring full value to selling stockholders while retaining no projected
value and full risk for the acquiror's stockholders.
(V) Leveraged Buyout Analysis. Goldman Sachs performed a leveraged buyout
-------------------------
analysis using projections provided by the management of the Company and
based upon the cash consideration of $10.25 per share. Coverage ratios, cash
available to service principal repayment and equity returns were calculated
using a capital structure consisting of $25.0 million in senior debt, $3.2
million in revolving debt and $8.0 million in equity. The coverage ratios,
defined as EBITDA less capital expenditures divided by interest expense,
were, 1.7x, 2.3x and 3.1x for estimated 1996, 1998 and 2000. Cash available
to service principal repayment was $0.0, $0.0 $1.0 and $7.1 for estimated
1996, 1998, 2000 and 2002. Equity returns in estimated 2000 were 34.6% and
42.6% given a 5x EBITDA exit value and a 6x EBITDA exit value, respectively.
Prior to the foregoing presentation, in late summer of 1995, Goldman Sachs
updated a Share repurchase analysis it had earlier prepared (updated for the
most recent management projections). The analysis indicated that a repurchase of
Shares at a price of $10.25 per Share in varying aggregate amounts of $5.8, $10,
$16 and $25 million would result in pro forma projected fiscal 1995 EBIT-Cap Ex
Ratios (earnings before interest and taxes, less capital expenditures divided by
net interest and other expense) of 2.4, 1.2, 0.7 and 0.4, respectively. In all
scenarios based on 1995 projected earnings, the repurchases would have been
dilutive and in all scenarios, based on 1996 projected earnings, the repurchases
would have been accretive. The above coverage ratios associated with a major
Share repurchase program (or, alternatively, payment of a significant special
dividend), particularly those ratios associated with the larger transactions,
suggest that such transactions would be difficult to finance. Prior to entering
into the Merger Agreement, the Board of Marietta concluded that it would be
unwise to incur significant amounts of indebtendness to finance a significant
Share repurchase or special dividend in light of recent operating results.
The valuation process is a complex process and is not necessarily susceptible
to partial analysis or summary description. Selecting portions of the analyses
or the summary set forth above, without considering the analyses as a whole,
could create an incomplete view of the processes underlying Goldman Sachs'
analysis. No company or transaction used in the above analyses as a comparison
is identical to the Company or the contemplated transaction. The analyses were
prepared solely for purposes of Goldman Sachs' discussion with the Board in
connection with the $10.25 in cash to be received by the Company's shareholders
(other than Parent and its affiliates) in exchange for each Share pursuant to
the Merger Agreement and do not purport to be appraisals or necessarily reflect
the prices at which businesses or securities actually may be sold. Analyses
based upon forecasts of future results are not necessarily indicative of actual
future results, which may be significantly more or less favorable than suggested
by such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of the parties or
their respective advisors, none of the Company, Goldman Sachs or any other
person assumes responsibility if future results are materially different from
those forecasts.
The foregoing summary does not purport to be a complete description of the
analysis performed by Goldman Sachs. A copy of the report presented by Goldman
Sachs to the Board on November 27, 1995, is available for inspection and copying
at the Company's headquarters during regular business hours by any interested
shareholder or his designated representative.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive bidding,
secondary distribution of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes.
The terms of the Company's engagement of Goldman Sachs are set forth in a
letter agreement, dated January 25, 1995, between Goldman Sachs and the Company
(the "Goldman Sachs Engagement Letter"). Pursuant to the terms of the Goldman
Sachs Engagement Letter, the Company has paid Goldman Sachs a fee of $250,000
and will pay Goldman Sachs upon consummation of the Merger an additional
transaction fee based on the Per Share Price times the number of outstanding
Shares and amounts paid to holders of options (the "Aggregate Consideration").
The transaction fee will be 3.75% of the Aggregate Consideration. In addition,
the Company has agreed to reimburse Goldman Sachs for its reasonable out-of-
pocket expenses, including the fees and disbursements of its counsel, arising in
connection with its engagement, and to indemnify Goldman Sachs against certain
liabilities relating to or arising out of its engagement, including liabilities
under the Federal securities laws.
17
<PAGE>
INTERESTS OF MANAGEMENT OF THE COMPANY
Under the Merger Agreement, the executive officers and directors of the
Company, together with all other shareholders (other than Parent and its
affiliates, and shareholders, if any, who exercise their dissenter's rights)
will be entitled to receive $10.25 per Share in cash for each Share owned by
them. In the aggregate the executive officers and directors of the Company
(other than Parent and affiliates of Parent) will receive approximately
$1,879,831 in the Merger in exchange for the Shares, options and cash only stock
appreciation rights held by such executive officers and directors.
Certain officers of the Company have entered into employment arrangements with
the Company, each of which arrangement may result in certain severance benefits
to the relevant officer in the event such officer's employment is terminated for
specified reasons, including termination by the Company upon a change of control
of the Company. Pursuant to the Merger Agreement, Parent has agreed to cause the
Surviving Corporation to honor (without modification) the termination and
individual benefit arrangements of such officers the Company and (i) to pay, at
the Effective Time, all amounts then owing under such agreements and
arrangements as a result of the triggering of "change of control" and other
provisions; or (ii) if, subsequent to the Effective Time but prior to the
expiration or renewal of any such agreement or arrangement with an executive
officer, such executive officer is terminated (other than for cause) or is not
employed in a position substantially equivalent to his position at the Effective
Time at a location within 25 miles of the location where he performed such
duties at the Effective Time, such executive officer shall be entitled to
receive all amounts then payable under such agreement as if the "change of
control" occasioned by the Merger and the subsequent termination or change in
position or location occurred simultaneously.
Mr. Florescue has indicated that it is his present intention to make available
up to 10% of the outstanding common stock of Parent to management of the
Surviving Corporation (as defined below); however, no formal arrangements have
been made between Parent and any officers of the Company at this time.
PAYMENT FOR SHARES
It is a condition precedent to the consummation of the Merger that Parent
deposit with [_____________] (the "Exchange Agent") the cash to which holders of
Shares will be entitled at the Effective Time. As soon as practicable after the
Effective Time, the Exchange Agent will mail to each such holder of record of
Shares at the Effective Time a letter of transmittal to be returned to the
Exchange Agent (which will specify that the delivery shall be effected, and the
risk of loss shall pass, only upon receipt of such certificates by the Exchange
Agent) and instructions for effecting the surrender of certificates for Shares
in exchange for $10.25 per Share in cash (without interest thereon). From and
after the Effective Time, the shares held by former shareholders of Marietta
will represent the right to receive $10.25 per Share in cash but will not
represent any equity interest in the Surviving Corporation.
Upon surrender of a certificate for Shares, together with a duly executed
letter of transmittal, the holder thereof will receive in exchange for each
Share formerly represented by such certificate $10.25 in cash (without interest
thereon). Any cash held by the Exchange Agent that remains unclaimed by
shareholders twelve (12) months after the Effective Time will be delivered to
the Surviving Corporation, after which time persons entitled thereto may look,
subject to applicable abandoned property, escheat and other similar laws, only
to the Surviving Corporation for payment thereof, without any interest thereon.
SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATE WITH THEIR PROXY
SOURCE AND AMOUNT OF FUNDS
GENERAL
The aggregate consideration payable by Parent pursuant to the Merger and
payment of related fees and expenses will be approximately $__,___,___. A
substantial portion of such funds will be provided from the proceeds of
financing arrangements entered into by Parent. Subsequent to the execution of
the Merger Agreement, the Company was advised by Parent that it had determined
to pursue financing on terms more favorable than the terms set forth in the
commitment letters with Foothill Capital and Siena Capital. See "Special Factors
- - Background of the Merger." Parent has further advised the
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Company that the financing would include (i) the issuance by Foothill Capital of
a credit facility in an aggregate amount not to exceed $28,500,000 (the "Senior
Facility"), including (A) an accounts receivable subline, an inventory subline,
and a letter of credit facility not to exceed an aggregate of $20,000,000 (the
"Revolving Credit Facility"), and (B) a term loan in the aggregate amount of
$8,500,000 (the "Term Loan"), provided, however, that Foothill Capital's
obligation to provide funds under the Senior Facility in excess of $20,000,000
is subject to a third party senior lender or third party senior lenders
agreeing to commit the portion of such funds in excess of $20,000,000; (ii) the
issuance of subordinated secured debt and warrants to Churchill Capital Partners
II, a Minnesota limited partnership ("Churchill") in the aggregate amount
of up to $15,000,000 (the "Subordinated Debt"); and (iii) the contribution of
equity by Parent in the aggregate amount of $[7,500,000] from a combination of
cash and common stock and certain other consideration agreed to by the lenders.
REVOLVING CREDIT FACILITY
Newco has obtained a [letter of commitment] from the Foothill Capital to
provide the Surviving Corporation with an aggregate amount not to exceed
$20,000,000 principal amount of the Revolving Credit Facility, which includes an
accounts receivable subline, an inventory subline and a letter of credit
facility, on the terms described below. The Revolving Credit Facility will bear
interest at a fixed annual rate equal to one and three-quarters percentage
points (1.75%) above the reference rate or prime rate publicly announced by
major banks selected by the Foothill Capital. In no event will the rate of
interest charged be less than six percent (6%). The Revolving Credit Facility
will expire in five years. Foothill Capital will be granted a first priority
perfected lien and security interest in and to the Surviving Corporation's
accounts, chattel paper, contract rights, documents, equipment, fixtures,
general intangibles, instruments, inventory, real property, securities, and
proceeds of the foregoing with respect to all of Surviving Corporation's present
and future obligations to the Foothill Capital.
(a) Accounts Receivable Subline: Foothill Capital will extend the
Surviving Corporation with credit up to the lesser of (i) $20,000,000, or (ii)
up to 85% of eligible accounts receivable of the Surviving Corporation;
provided, however, that the credit extended against accounts receivable will be
- -------- -------
limited to an amount equal to the Surviving Corporation's cash collections for
the immediately preceding 60 day period.
(b) Inventory Subline: Foothill Capital will extend the Surviving Corporation
with credit up to the lesser of (i) $10,000,000, or (ii) up to 50% of the lower
of cost or market value of eligible inventory; provided, however, that the
-------- -------
credit extended against inventory will be limited to the amount of credit
availability extended against the accounts receivable as set forth in (a) above.
Eligible inventory will exclude slow moving goods or obsolete items, restrictive
or custom items, work-in-process, packaging and shipping materials, bill and
hold goods, returned or defective goods, "seconds," inventory acquired on
consignment and such other inventory reserves as the Foothill Capital deems
appropriate.
(c) Letters of Credit: Under the Revolving Credit Facility, the Surviving
Corporation will be entitled to request that Foothill Capital issue letters
of credit for the account of the Surviving Corporation ("Letters of Credit") or
issue guarantees ("Letter of Credit Guarantees") of payment with respect to
letters of credit issued by one or more issuing banks in an aggregate undrawn
amount not to exceed $5,000,000. The aggregate undrawn amount of outstanding
Letters of Credit and Letter of Credit Guarantees will be reserved against the
Revolving Credit Facility.
TERM LOAN
Foothill Capital has also agreed to provide the Surviving Corporation with an
aggregate of $8,500,000 principal amount of the Term Loan, on the terms
described below. The Term Loan will bear interest at an annual rate equal to
12.50% or prime plus 2.75% at the Surviving Corporation's option prior to
closing financing. The Term Loan will mature in five years. Principal and
interest on the Term Loan will be payable in 59 installments of $100,000/month,
with the remaining outstanding principal to be due and payable on the fifth
anniversary of the issuance of the Term Loan.
SUBORDINATED DEBT
Parent and Newco have obtained a [letter] from Churchill to provide
the Surviving Corporation with an aggregate of up to $15,000,000 principal
amount of the Subordinated Debt, on the terms described below. The Subordinated
Debt will bear interest at an annual rate of eighteen percent (18%), payable
monthly, of which up to four percent (4%) may
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<PAGE>
be deferred for up to four years after the issuance of the Subordinated Debt,
subject to monthly compounding at a rate of eighteen percent (18%). The
Subordinated Debt will mature eight years after its issuance, with principal to
be repaid in equal quarterly installments in years seven and eight. In addition,
a percentage to-be-determined of available excess cash will be used to pay down
any deferred interest on the Subordinated Debt and may be used under certain
circumstances to reduce the principal of the Subordinated Debt and/or to pay
other senior debt of the Surviving Corporation. Churchill will be granted a
second security interest on all assets of the Surviving Corporation secured
under the Senior Facility. See "Source and Amount of Funds - General - Revolving
Credit Facility and - Term Loan". In addition, Parent will guarantee payment of
the Subordinated Debt on a non-recourse basis and, in connection therewith, will
pledge the capital stock of the Surviving Corporation to Churchill.
In connection with the issuance of the Subordinated Debt, Parent will grant
Churchill warrants to acquire eight percent (8%) of the
fully-diluted common equity of the Parent for a nominal exercise
price.
Parent has advised the Company that if such arrangements are not concluded it
will pursue the financing arrangements with Foothill Capital and Sienna Capital
as contemplated by the commitment letters provided to the Company by Parent.
There can be no assurance that Parent will be able to secure the financing
necessary to consummate the transactions contemplated by the Merger Agreement.
SOURCES AND USES OF FUNDS
The sources and uses of the funds constituting the Financing and the estimated
fees and expenses incurred or to be incurred by the Company, Newco and Parent in
connection with the Merger are approximately as follows:
<TABLE>
<CAPTION>
SOURCES OF FUNDS
- ----------------
<S> <C>
Issuance of Subordinated Debt $15,000,000
Amount available under Revolving Credit Facility 13,000,000
Issuance of Term Loan 8,500,000
Contribution of cash and common stock [8,000,000]
Cash on hand 12,600,000
Total sources $56,000,000
USES OF FUNDS
- -------------
Purchase of Company capital stock $37,300,000
Refinance Company debt 6,700,000
Post-Merger working capital 7,500,000
Advisory fees(2)..................................
Bank financing fees and expenses..................
Legal fees and expenses...........................
Accounting fees and expenses......................
Commission filing fees............................
Printing and mailing expenses.....................
</TABLE>
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<PAGE>
Exchange Agent fees and expenses..................
Proxy solicitation fees and expenses..............
Miscellaneous expenses............................ .
-----------
Total uses $56,000,000
- ---------------------------------------------------------------
(1) Includes payment for all outstanding Shares other than those owned by the
Parent or its Affiliates plus payments in settlement of outstanding employee
stock options in accordance with the Merger Agreement.
(2) Includes the fees and estimated expenses of Goldman Sachs.
See "Certain Terms of the Merger Agreement -- Expenses" for a description of
certain provisions for the payment of expenses and other fees.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Parent, a corporation controlled by Mr. Florescue, will be, as of the date of
the Meeting, the beneficial owner of 314,365 Shares or approximately 8.7% of the
outstanding Shares. Newco is a wholly-owned subsidiary of Parent. In light of
the fact that Mr. Florescue and a designee of Mr. Florescue, Mr. Charles W.
Miersch, serve as directors of the Company (see "Special Factors - Background of
the Merger"), Mr. Florescue may be viewed as having a conflict of interest in
connection with the Merger. Mr. Florescue has agreed to vote all Shares
beneficially owned by him in favor of the Merger Agreement.
Mr. Florescue has indicated that it is his present intention to make available
up to 10% of the outstanding common stock of Parent to management of the
Surviving Corporation; however, no formal arrangements have been made between
Parent and any officers of the Company at this time.
As a result of the Merger, the promissory notes issued to the Company by John
Nadolski (former chief executive officer and director of the Company) in the
amount of $364,500, Chesterfield F. Seibert, Sr. (former chief executive officer
and director of the Company) in the amount of $121,500 and Thomas D. Walsh (a
director of the Company) in the amount of $121,500, each become immediately due
and payable. The Company has been advised by each of such persons that such
person's note will be repaid in connection with the consummation of the Merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The receipt of $10.25 per Share in cash in exchange for Shares will be a
taxable transaction for federal income tax purposes under the Internal Revenue
Code (the "Code"), and may also be a taxable transaction under applicable state,
local, foreign and other tax laws. The following discussion does not address
potential foreign, state, local, and other tax consequences, nor does it address
taxpayers subject to special treatment under the federal income tax laws, such
as life insurance companies, tax-exempt organizations, S corporations, and
taxpayers subject to the alternative minimum tax.
In general, a shareholder will recognize gain or loss equal to the difference
between the tax basis for Shares held by such shareholder and the amount of cash
received in exchange therefor. Such gain or loss will be a capital gain or loss
if the holding period for Shares is more than one year. Under current law long-
term capital gains recognized by shareholders who are individuals are taxable
for federal income tax purposes at a maximum rate of 28% (as compared with a
maximum rate of 39.6% on ordinary income). Corporations generally are subject to
tax at a maximum rate of 35% on both capital gains and ordinary income. The
distinction between capital gain and ordinary income may be relevant for certain
other purposes, including the taxpayer's ability to utilize capital loss
carryovers to offset any gain recognized.
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<PAGE>
The foregoing discussion may not be applicable to shareholders who acquired
Shares pursuant to the exercise of options or other compensation arrangements or
who are not citizens or residents of the United States or who are otherwise
subject to special tax treatment under the Code.
Under the federal income tax backup withholding rules, unless an exemption
applies, the Exchange Agent will be required to withhold, and will withhold, 31%
of all cash payments to which a holder of Shares or other payee is entitled
pursuant to the Merger Agreement, unless the shareholder or other payee provides
a tax identification number (social security number, in the case of an
individual, or employee identification number, in the case of other holders) and
certifies that such number is correct. Each shareholder, and, if applicable,
each other payee, should complete and sign the Substitute Form W-9 included as
part of the letter of transmittal to be returned to the Exchange Agent in order
to provide the information and certification necessary to avoid backup
withholding, unless an applicable exemption exists and is proved in a manner
satisfactory to the Exchange Agent.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE
MERGER IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED ON EXISTING TAX LAW
AS OF THE DATE OF THIS PROXY STATEMENT, WHICH MAY DIFFER ON THE DATE OF THE
CONSUMMATION OF THE MERGER OR AT THE EFFECTIVE TIME. EACH SHAREHOLDER IS URGED
TO CONSULT SUCH SHAREHOLDER'S OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO SUCH SHAREHOLDER OF THE MERGER, INCLUDING THE APPLICABILITY AND
EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
GOVERNMENTAL AND REGULATORY APPROVALS
The Company is not aware of any approval or other action by any Federal, state
or local government authority that would be required for consummation of the
Merger. Should any such approval or other action be required, it is presently
contemplated that such approval or action would be sought.
ANTICIPATED ACCOUNTING TREATMENT
The Merger will be accounted for by Parent under the "purchase" method of
accounting in accordance with generally accepted accounting principles.
Therefore, the aggregate consideration paid by Parent in the Merger will be
allocated to the Company's assets based on their fair values.
PLANS FOR COMPANY IF MERGER NOT CONSUMMATED
As consummation of the Merger is subject to fulfillment and satisfaction of
certain covenants and conditions, including the Company obtaining shareholder
approval and adoption of the Merger, there can be no assurance that the Merger
will be consummated. If the Merger is not consummated, the Company currently
plans to continue to work to enhance shareholder value by concentrating the
Company's resources on its operations and on improving its core businesses and
financial results.
CERTAIN TERMS OF THE MERGER AGREEMENT
The following description does not purport to be complete and is qualified in
its entirety by reference to the full text of the Merger Agreement, attached to
this Proxy Statement as Annex I and incorporated herein by reference. Certain
capitalized terms used in this description and not elsewhere defined are defined
in the Merger Agreement and used with the meanings provided therein. See pages 1
through 8 of Annex I.
GENERAL
As promptly as practicable after the satisfaction or waiver of the conditions
to consummating the Merger, the parties shall cause the Merger to be consummated
by filing a Certificate of Merger with the Secretary of State of the State of
New York, in such form as required by, and executed in accordance with, the
relevant provisions of the BCL. Simultaneously therewith, Newco shall merge with
and into Marietta and the separate existence of Newco shall thereupon cease and
the
22
<PAGE>
Company shall continue as the Surviving Corporation. The separate corporate
existence of the Company, as the Surviving Corporation, with all its purposes,
objects, rights, privileges, powers, certificates and franchises, shall continue
unimpaired by the Merger. The Surviving Corporation shall succeed to all the
Assets of the Constituent Corporations and to all debts, chooses in action and
other interests due or belonging to the Constituent Corporations and shall be
subject to, and responsible for, all the debts, liabilities, obligations and
duties of the Constituent Corporations with the effect set forth in Section 906
of the BCL. It is anticipated that, if the Merger Agreement is approved and
adopted at the Meeting and all other conditions to the Merger have been
satisfied or waived, the Effective Time will occur on the date of the Meeting or
as soon thereafter as practicable.
MANNER OF CONVERTING SHARES; OPTIONS; SAR'S
Promptly after the Effective Time, each Share together with the associated
right (the "Right") to purchase shares of Series A Participating Preferred
Stock, pursuant to the Rights Agreement, dated as of September 11, 1989, by and
between the Company and Continental Stock Transfer & Trust Company, as Rights
Agent, issued and outstanding immediately prior to the Effective Time (other
than Shares and Rights (i) owned by Parent or an affiliate of Parent and (ii)
owned by holders, if any, who exercise their dissenter's rights) shall be
converted into the right to receive $10.25 per Share in cash.
In order to receive $10.25 per Share in cash, each holder of the Shares will
be required to surrender his stock certificate(s) together with a duly executed
letter of transmittal, to such bank or trust company designated in a letter of
transmittal. Upon receipt of such certificate(s), together with a duly executed
letter of transmittal, the Exchange Agent will mail a check to the registered
owner or his transferee in an amount equal to $10.25 per Share for each Share
represented by such certificate(s), or will otherwise pay such owner or
transferee pursuant to his instruction.
INSTRUCTIONS WITH REGARD TO THE SURRENDER OF STOCK CERTIFICATES, TOGETHER WITH
A LETTER OF TRANSMITTAL TO BE USED FOR THIS PURPOSE, WILL BE FORWARDED TO
SHAREHOLDERS AS PROMPTLY AS PRACTICABLE FOLLOWING THE EFFECTIVE TIME.
SHAREHOLDERS SHOULD SURRENDER CERTIFICATES FOR SHARES ONLY AFTER RECEIVING A
LETTER OF TRANSMITTAL. SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATE AT
THIS TIME.
Upon surrender to the Exchange Agent of such certificate(s), together with the
properly completed and duly executed letter of transmittal, such certificate(s)
will be canceled. If payment is to be made to a person other than the person in
whose name the certificate(s) surrendered is registered, it is a condition of
payment that the certificate(s) so surrendered be properly endorsed or otherwise
in proper form for transfer and that the person requesting such payment pay
transfer or other taxes required by reason of the payment to a person other than
the record holder of the certificate(s) surrendered or establish to the
satisfaction of the Company that such tax has been paid or is not applicable.
Until properly surrendered, such certificate(s) (other than certificates
representing Shares held by Dissenting Shareholders) will represent for all
purposes the right to receive the consideration provided for in the Merger
Agreement, without any interest thereon.
As a result of the Merger, each option ("Option") which has been granted under
the Company's 1986 Incentive Stock Option Plan or 1986 Stock Option Plan
(together, the "Option Plans") and which is outstanding at the Effective Time,
whether or not then exercisable, will be deemed converted into, and the holder
of each such Option will be entitled to receive from the Exchange Agent upon
surrender of the Option for cancellation, an amount of cash equal to the product
of (i) the positive difference, if any, between $10.25 and the exercise price of
each such Option; times (ii) the number of Shares covered by such Option.
As a result of the Merger, each cash only stock appreciation right ("SAR")
which is outstanding at the Effective Time, whether or not then exercisable,
will be deemed converted into, and the holder of each such SAR will be entitled
to receive from the Exchange Agent upon surrender of such SAR for cancellation,
an amount of cash, which in no event shall be more than $630,000, equal to the
product of (i) the positive difference, if any, between $10.25 and $7.00; times
(ii) the number of SARs.
23
<PAGE>
MERGER CONSIDERATION
The total amount of consideration payable in the Merger to shareholders
(assuming no Dissenting Shareholders) is approximately $33,644,147 plus
approximately $383,676 payable to holders of Options and SARs.
CONDITIONS TO THE MERGER
Conditions to Parent's and Newco's Obligations. The obligations of Parent and
----------------------------------------------
Newco under the Merger Agreement are subject to the satisfaction or waiver, at
or before the Closing, of certain conditions, including, without limitation,
that (i) the Company shall have obtained and delivered to Parent all required
third party consents, except where the failure to obtain such consents would not
be reasonably likely, individually or in the aggregate, to result in an adverse
change in the financial condition, business or results of operations of the
Company or any of its Subsidiaries, which is material to the Company and its
Subsidiaries, taken as a whole; (ii) from and after the date of the Merger
Agreement, there shall have occurred or be threatened no event relative to the
Assets or business of the Company and its Subsidiaries which is reasonably
likely, individually or in the aggregate, to result in an adverse change in the
financial condition, business or results of operations of the Company or any of
its Subsidiaries, which is material to the Company and its Subsidiaries, taken
as a whole; (iii) the number of Dissenting Shares, if any, with respect to which
the holders thereof shall have properly demanded appraisal in accordance with
the BCL before the taking of a vote on the Merger at the Meeting or any
adjournment thereof, the holders of which shall not have withdrawn such demand
as of the Closing Date, shall not exceed ten percent (10%) of the issued and
outstanding Shares entitled to vote thereon; (iv) the Merger Agreement and the
Merger shall have been approved and adopted by the holders of sixty-six and two-
thirds percent (66 2/3%) of Shares; (v) simultaneously with the Closing, Parent
shall have closed the Financing; (vi) there shall not be pending or threatened
before any Governmental Authority any action, suit or proceeding which, if
adversely determined, would (a) make the purchase by Parent of Shares illegal,
(b) require the divestiture by Parent of all or a material portion of the
business or Assets of the Surviving Corporation or any of its Subsidiaries as a
result of the Merger, (c) impose limitations which adversely affect to a
significant extent the ability of the Surviving Corporation to exercise full
rights of ownership of the Assets or business of the Company and its
Subsidiaries, as currently conducted by the Company, as a result of the
transactions contemplated hereby, (d) prevent the consummation of the Merger or
(e) cause the Merger to be rescinded following consummation of the Merger, and
no judgment with respect to any of the foregoing shall be in effect; and (vii)
Parent shall have received from the Company an audited balance sheet dated as of
September 30, 1995, certified by the Company's Accounting Officer and Deloitte &
Touche LLP, showing that the Company has (a) at least $27,750,000 in net current
assets (consisting of total current assets plus restricted cash and marketable
securities plus common stock notes receivable, less current liabilities (other
than the current portion of long-term debt)) less an amount, not to exceed
$100,000, equal to the out-of-pocket expenses incurred in connection with the
completion of a physical inventory and (b) inventory recorded on the books and
records of the Company in accordance with GAAP of not more than $14,150,000. In
connection with the audit, a physical inventory shall be taken. As of September
30, 1995, the conditions relating to the Company's net current assets and
inventory, described in clause (vii) above, have been satisfied.
Conditions to the Company's Obligations. The obligations of the Company under
---------------------------------------
the Merger Agreement are subject to the satisfaction or waiver, at or before the
Closing, of certain conditions, including, without limitation, that, (i) the
Company shall have received from Goldman Sachs a favorable opinion as to the
fairness of the consideration to be received by the shareholders (other than
Parent and its affiliates) in the Merger, a copy of such opinion is attached
hereto as Annex III; (ii) there shall not be pending or threatened before any
Governmental Authority any action, suit or proceeding which, if adversely
determined, would (a) make the purchase by Parent of Shares illegal, (b) prevent
the consummation of the Merger, or (c) cause the Merger to be rescinded
following consummation of the Merger, and no Judgment with respect to any of the
foregoing shall be in effect; (iii) simultaneously with the Closing, Parent
shall have closed the Financing and deposited the proceeds with the Exchange
Agent in accordance with the Merger Agreement; and (iv) the Merger Agreement and
the transactions contemplated thereby shall have been approved and adopted by
holders of sixty-six and two-thirds percent (66 2/3%) of Shares.
There can be no assurance that all of the conditions to the Merger will be
satisfied or waived.
24
<PAGE>
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of the
Company relating to, among other things, (i) its organization and similar
corporate matters, (ii) its capitalization, (iii) authorization, execution,
delivery, performance and enforceability of the Merger Agreement and related
matters, (iv) the absence of conflicts, violations and defaults under its
certificate of incorporation and bylaws and certain other agreements and
documents, (v) required consents and transferability rights under agreements to
which the Company is a party, (vi) the documents and reports filed with the
Commission and the accuracy of the information contained therein, (vii) the
absence of undisclosed liabilities, (viii) absence of specified changes, (ix)
taxes, (x) insurance, (xi) contracts, (xii) real property, (xiii) tangible
property, (xiv) environmental matters, (xv) intangible and other property, (xvi)
employee benefit matters, (xvii) labor matters, (xviii) customers and suppliers,
(xix) accounts receivable, (xx) inventory, (xxi) compliance with laws, (xxii)
licenses and permits, (xxiii) legal proceedings, (xxiv) brokers, (xxv) the
accuracy of certain other information provided, and (xxvi) books and records.
The Merger Agreement contains various representations and warranties of Parent
and Newco relating to, among other things, (i) each of their respective
organizations and similar corporate matters, (ii) authorization, execution,
delivery, performance and enforceability of the Merger Agreement and related
matters, (iii) the absence of conflicts, violations and defaults under their
respective certificates of incorporation and bylaws and certain other agreements
and documents, (iv) required consents, (v) the financing needed to consummate
the transaction, (vi) legal proceedings, (vii) brokers, and (viii) the accuracy
of certain other information provided.
No person other than the Company, Parent and Newco has any rights or remedies
under the Merger Agreement with respect to such representations and warranties.
The representations and warranties of the Company, Parent and Newco all expire
at the Effective Time.
CERTAIN COVENANTS; CONDUCT OF BUSINESS PRIOR TO THE MERGER; SUPERIOR OFFER
Pursuant to the Merger Agreement the Company agreed that it shall, and that it
shall cause each of its Subsidiaries to, except as otherwise expressly
contemplated by the Merger Agreement or as specifically consented to in writing
by Parent (which consent shall not be unreasonably withheld or delayed), from
and after the date of the Merger Agreement until the Closing Date, use all
reasonable efforts to preserve its present business organization intact, keep
available the services of its present employees, preserve its present
relationships with Persons having business dealings with such Company or
Subsidiary, operate its business in the ordinary and regular course consistent
with its prior practices (including the payment of trade payables and the
collection of accounts receivables), maintain its books and records in
accordance with good business practice, on a basis consistent with prior
practice and in accordance with GAAP, and maintain all insurance, certificates
and licenses and permits necessary for the conduct of its business, as currently
conducted and as proposed by the Company to be conducted; provided, however,
-------- -------
that nothing in the Merger Agreement requires the Company or any of its
Subsidiaries to make any payment or incur any obligation which (i) is not in the
ordinary course of business or (ii) is inconsistent with its existing policies
and practices or the Merger Agreement.
Pursuant to the Merger Agreement, the Company agreed that, until the Closing
Date, except as otherwise expressly contemplated by the Merger Agreement or as
otherwise consented to by Parent in writing, it will not, and it will cause each
of the Subsidiaries not to: (i) declare, set aside or pay any dividend or other
distribution in respect of its capital stock or redeem, purchase or acquire any
shares of its capital stock (other than cashless exercises of stock options by
employees or directors); (ii) issue any of its capital stock, stock options or
rights requiring it to sell or issue any of its capital stock or securities,
except for the issuance of Shares upon exercise of outstanding options or stock
purchase rights under the Option Plans and the Company's Employee Stock Purchase
Plan; (iii) amend its charter or By-laws; (iv) make any capital expenditure or
capital commitment, other than those expenditures or commitments made between
July 1, 1995 and the Closing Date which do not exceed $2,500,000 in the
aggregate; (v) make any change in its business, as currently conducted or as
proposed by the Company to be conducted other than in the ordinary course of
business; (vi) dispose of any material rights with respect to any intellectual
property or intangible property, other than in the ordinary course of business;
(vii) change its accounting principles, methods or practices, investment
practices, payment and processing practices or policies regarding intercompany
transactions, except for such changes as are necessary to conform with GAAP and
are disclosed to Parent prior to such change; (viii) hire, or renew any existing
contract with, any person as an officer or director; (ix) hire, or renew any
existing contract with, any person as a consultant, independent contractor or
non-officer employee, if such person would receive pro-rated annual compensation
(including salary, fringe benefits and bonuses) in excess of $100,000;
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<PAGE>
(x) incur any obligation (not part of normal, continuing operations, such as
payroll and taxes, or in the operation of the Company and its Subsidiaries in
the ordinary course of business or the performance of Contracts disclosed in any
Schedule to the Merger Agreement) in excess of $100,000 in the aggregate; (xi)
increase, reduce, draw-down or reverse any of its reserves, other than in
accordance with GAAP; (xii) settle certain litigations; (xiii) enter into
certain material transactions; or (xiv) agree or commit orally or in writing to
do any of the foregoing. In addition, neither the Company nor any of its
Subsidiaries shall adopt, enter into or amend, or extend by action or inaction,
any benefit plan (other than in the ordinary course of business or as required
by law).
Pursuant to the Merger Agreement, Parent has agreed to cause the Surviving
Corporation to honor (without modification) the termination agreements and
individual benefit arrangements of certain employees of the Company and (i) to
pay, at the Effective Time, all amounts then owing under such agreements and
arrangements as a result of the triggering of "change of control" and other
provisions; or (ii) if, subsequent to the Effective Time but prior to the
expiration or renewal of any such agreement or arrangement with an executive
officer, such executive officer is terminated (other than for cause) or is not
employed in a position substantially equivalent to his position at the Effective
Time at a location within 25 miles of the location where he performed such
duties at the Effective Time, such executive officer shall be entitled to
receive all amounts then payable under such agreement as if the "change of
control" occasioned by the Merger and the subsequent termination or change in
position or location occurred simultaneously.
Until the Effective Time or the earlier termination of the Merger Agreement,
the Company agreed that it shall not, and the Company agreed to use all
reasonable efforts to cause its officers, employees, representatives or agents
not to, directly or indirectly, solicit, encourage, initiate, discuss with
others or induce the making of any inquiries or proposals for the acquisition of
any of the capital stock, Assets (other than in the ordinary course of business)
or business of or the merger with, or any similar transaction concerning, the
Company, or furnish information to, or engage in negotiations relating to the
foregoing or otherwise cooperate in any way with, or accept any proposal
relating to the foregoing from, any Person or group other than Parent and its
officers, employees, representatives and agents, provided, however, that the
-------- -------
Board may furnish or cause to be furnished such information to, and may
participate in such discussions or negotiations with, Persons who have made a
bona fide proposal if the Board believes, in good faith, after consultation with
- ---- ----
its financial advisors, that such bona fide proposal is for a transaction more
---- ----
favorable to the Company's shareholders than the transactions contemplated
hereby and, in the opinion of outside counsel to the Board, the Board's
fiduciary duty under applicable Law requires it to furnish or cause to be
furnished such information and/or participate in such discussions or
negotiations (a "Superior Offer").
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated and the Merger abandoned at any time
before the Effective Time, whether before or after approval and adoption by the
shareholders of the Company or Parent (a) by mutual consent of Parent and the
Company; (b) by Parent giving written notice to the Company if, without fault on
the part of Parent or its affiliates, the Closing does not occur prior to
January 31, 1996, unless the Proxy Statement has not been mailed prior to
January 11, 1996 in which case such date shall be extended to a date 20 days
after the date of mailing of the Proxy Statement (such later date not to be
later than February 15, 1996); (c) by Parent or the Company, if any governmental
authority shall have enacted, issued, promulgated, enforced or entered any law
or judgment which has the effect of prohibiting consummation of the transactions
contemplated by the Merger Agreement; (d) by Parent, if without fault on the
part of Parent or its affiliates, any of the conditions precedent to Parent's
obligations required to have been met (i) are not met within five days of
approval and adoption by the shareholders of the Company of the Merger, or (ii)
at any time prior to the time in clause (i) hereof become incapable of being
met, and such failure has not been waived by Parent or cured by the Company; (e)
by Parent or the Company, if prior to the Closing (i) the Board votes to
recommend to the shareholders of the Company a Superior Offer rather than
recommending shareholder approval and adoption of the Merger, or (ii) the Board
fails to recommend the Merger to the shareholders of the Company in the Proxy
Statement, or (iii) the shareholders of the Company fail to approve and adopt
the Merger at the Meeting; (f) by the Company giving written notice to Parent
if, without fault on the part of the Company or its officers or affiliates, the
Closing does not occur prior to January 31, 1996, unless the Proxy Statement has
not been mailed prior to January 11, 1996, in which case such date shall be
extended to a date 20 days after the date of mailing of the Proxy Statement
(such later date not to be later than February 15, 1996); (g) by the Company, if
without fault on the part of the Company or its affiliates, any of the
conditions precedent to the Company's obligations required to have been met (i)
are not met within five days of approval and adoption by the shareholders of the
Company of the Merger, or (ii) at any time prior to the time in clause (i)
hereof become incapable of being met, and such breach or failure has not been
26
<PAGE>
waived by the Company or cured by Parent; (h) by the Company, if it does not
obtain from Goldman Sachs a favorable opinion as to the fairness of the
consideration to be received by the Company's shareholders (other than Parent
and its affiliates) in the Merger; or (i) by Parent, if a Change-in-Control
shall have occurred.
EFFECT OF TERMINATION OF THE MERGER AGREEMENT
In the event the Merger Agreement is terminated and such termination is the
result of a Payment Event (as defined below), the sole and exclusive right of
Parent and its Affiliates shall be the payment by the Company to Parent of a
cancellation fee, as specified below.
A "Payment Event" shall mean the termination of the Merger Agreement as a
result of any of the following: 1) any Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Law or Judgment which has
the effect of prohibiting consummation of the Merger as a result of an action or
inaction by the Company not directly related to Parent, Newco or their
respective Affiliates; 2) certain of the Company's representations shall not be
true and correct as of the Closing Date; 3) the Company's representations (x) as
to the accuracy of its SEC reports and its financial statements (including the
representation that its financial statements have been prepared in accordance
with GAAP), (y) as to the absence of undisclosed liabilities or (z) that the
Company has not changed its accounting principles, methods or practices or
investment practices, including such changes as were necessary to conform with
GAAP shall have been breached; 4) the Company's audited balance sheet, dated as
of September 30, 1995, (a) does not show that the Company has at least
$27,750,000 in net current assets (consisting of total current assets plus
restricted cash and marketable securities plus common stock notes receivable,
less current liabilities (other than the current portion of long-term debt))
less an amount, not to exceed $100,000, equal to the out-of-pocket expenses
incurred in connection with the completion of a physical inventory or (b) shows
that inventory recorded on the books and records of the Company in accordance
with GAAP is more than $14,150,000, or holders of more than 10% of the issued
and outstanding Shares exercise their dissenter's rights under New York law; 5)
the shareholders of the Company fail to approve and adopt the Merger at the
Meeting; 6) the Board votes to recommend to the shareholders of the Company a
Superior Offer rather than recommending shareholder approval and adoption of the
Merger, or the Board fails to recommend the Merger to the shareholders in the
Proxy Statement; or 7) the Company does not obtain from Goldman Sachs a
favorable opinion as to the fairness of the consideration to be received by the
Company's shareholders (other than Parent and its affiliates) in the Merger.
If the Merger Agreement is terminated as a result of (I) events sets forth in
clauses 1-2 above the Company shall pay to Parent an amount equal to $250,000,
(II) events set forth in clauses 3-5 above, the Company shall pay Parent an
amount equal to $600,000, and (III) events set forth in clauses 6 or 7 above the
Company shall pay to Parent an amount equal to $1,250,000.
In the event that the transactions contemplated by the Merger Agreement do not
occur for any reason or if the Merger Agreement is terminated for any reason,
except as otherwise set forth above, the parties will have no remedies against,
and will have no liability to, each other or their respective officers,
directors, shareholders, partners, representatives or Affiliates.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to the Merger Agreement, from and after the Effective Time, Parent
shall cause the Surviving Corporation to, and the Surviving Corporation agrees
to, indemnify, defend and hold harmless in accordance with the Certificate of
Incorporation and By-laws of the Company, and subject to the limitations of the
BCL, each present and past officer, director, employee, representative or agent
(other than Mr. John S. Nadolski and Mr. Thomas J. Blair), of the Company (or
any subsidiary or division thereof), including, without limitation, each person
controlling any of the foregoing persons (individually, an "Indemnified Party"
and collectively, the "Indemnified Parties"), against all losses, claims,
damages, liabilities, costs or expenses (including attorneys' fees), judgments,
fines, penalties and amounts paid in settlement in connection with any claim,
action, suit, proceeding or investigation arising out of or pertaining to acts
or omissions, or alleged acts or omissions, by them in their capacities as such,
whether commenced, asserted or claimed before or after the Effective Time. In
the event of any such claim, action, suit, proceeding or investigation (an
"Action"), (i) the Surviving Corporation shall advance the reasonable fees and
expenses of counsel selected by the Indemnified Party, which counsel shall be
reasonably acceptable to Parent, in advance of the final disposition of any such
action; provided, however, that prior to advancement of fees and expenses, the
Indemnified Party shall provide an undertaking in form and substance reasonably
27
<PAGE>
satisfactory to the Surviving Corporation, and (ii) the Surviving Corporation
will cooperate in the defense of any such matter; provided, however, that the
Surviving Corporation shall not be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld or
delayed) and provided, further, that the Surviving Corporation shall not be
obligated to pay the fees and disbursements of more than one counsel for all
Indemnified Parties in any single Action except to the extent that, in the
opinion of counsel for the Indemnified Parties, to do so would be inappropriate
due to actual or potential differing interests between or among such parties.
For a period of six years after the Effective Time, the Surviving Corporation
shall not amend the provisions of its Certificate of Incorporation and By-laws
providing for exculpation of director and officer liability and indemnification,
except as required by applicable law.
Parent shall cause the Surviving Corporation to, and the Surviving Corporation
agrees to, maintain in effect for the Indemnified Parties for not less than
three years the current policies of directors' and officers' liability insurance
and fiduciary liability insurance maintained by the Company and the Company's
subsidiaries with respect to matters occurring at or prior to the Effective
Time; provided, that Parent may substitute therefor policies of substantially
the same coverage containing terms and conditions which are no less
advantageous, in any material respect, to the Indemnified Parties.
Parent shall cause the Surviving Corporation to, and the Surviving Corporation
agrees to, pay all expenses, including attorneys' fees, that may be incurred by
any Indemnified Parties in enforcing the indemnity and other obligations
provided for in the Merger Agreement.
The rights of each Indemnified Party shall be in addition to any other rights
such Indemnified Party has under the Certificate of Incorporation or By-laws of
the Company, under the BCL or otherwise.
AMENDMENT AND MODIFICATION
The Merger Agreement, including the Schedules thereto, may be amended or
modified only by written agreement executed by all parties thereto; provided,
however, that after approval and adoption of the Merger Agreement by the
shareholders of the Company, no amendment shall be made which changes the
consideration payable in the Merger or adversely affects the rights of the
Company's shareholders hereunder without the approval of such shareholders.
WAIVER
At any time prior to the Closing, each of the parties to the Merger Agreement
may (i) extend the time for the performance of any of the obligations or other
acts of any other party thereto, (ii) waive any inaccuracies in the
representations and warranties contained therein or in any document delivered
pursuant thereto, or (iii) waive compliance with any of the covenants,
agreements or conditions contained therein. Any agreement on the part of a party
thereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed by the party granting such waiver. Such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or future failure.
EXPENSES
Except as otherwise specifically provided, the Merger Agreement provides that,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
shall be paid by the party incurring such cost or expense.
Pursuant to the terms of the Merger Agreement, under certain circumstances
Parent is entitled to payments of up to $1,250,000. A fee of $1,250,000 is
payable to Parent if the Merger Agreement is terminated because the Board fails
to recommend approval and adoption of the Merger to shareholders, the Board
recommends to shareholders an offer which it believes is a superior offer rather
than recommending shareholder approval and adoption of the Merger, or the
Company fails to obtain a favorable opinion from Goldman Sachs as to the
fairness of the Per Share Price to be received by the shareholders (other than
Parent and its affiliates) in the Merger. A copy of such opinion is attached
hereto as Annex III. A fee of $600,000 is payable to Parent if the Merger
Agreement is terminated because the Company breaches certain of its
representations in the Merger Agreement, the Company does not meet certain
specified levels of net current assets, holders
28
<PAGE>
of more than 10% of the issued and outstanding Shares exercise their appraisal
rights under the BCL, or shareholders fail to approve and adopt the Merger. A
fee of $250,000 is payable to Parent in certain other limited circumstances. In
no event shall the Company be obligated to pay more than one of the
aforementioned fees. See "Certain Terms of the Merger Agreement - Effect of
Termination of the Merger Agreement."
COOPERATION PRIOR TO CLOSING
Each of the parties to the Merger Agreement has agreed to use all reasonable
efforts to take (or cause to be taken) all actions and to do (or cause to be
done), and to assist and cooperate with the other parties to the Merger
Agreement in doing, all things necessary to expeditiously consummate the Merger
and all transactions contemplated by the Merger Agreement, including obtaining
necessary consents and approvals from third parties, defending lawsuits or other
proceedings challenging the Merger or related transactions, and executing any
additional instruments necessary to consummate the Merger Agreement and related
transactions.
RIGHTS OF DISSENTING SHAREHOLDERS
Any holder of Shares who does not wish to accept $10.25 per Share in cash has
the right to dissent from approval and adoption of the Merger Agreement and to
receive the value in cash of such holder's Shares, provided that such holder
strictly complies with the provisions of Section 623 of the BCL.
The following is a summary of the material statutory procedures to be followed
by a holder of Shares in order to dissent from the Merger and perfect
dissenters' rights under Section 623. This summary discusses the material
provisions of Section 623 but is not intended to be complete and is qualified in
its entirety by reference to the text of Section 623, which is included as Annex
II hereto. Any shareholder considering exercising dissenters' rights and
demanding payment for his Shares is advised to consult legal counsel before the
Meeting because the failure to precisely follow all the necessary legal
requirements may result in the loss of such dissenters' rights.
Holders of record of Shares who desire to exercise their dissenters' rights
must: (i) not vote in favor of the approval and adoption of the Merger Agreement
and (ii) file with the Company written objection to the Merger prior to the
Meeting or at the Meeting but prior to the vote on the Merger Agreement. The
written objection must state that the shareholder elects to dissent from the
Merger, the name and residence address of the shareholder, the number of Shares
as to which the shareholder dissents, and a demand for payment of the fair value
for Shares if the Merger is consummated. A shareholder may not dissent as to
less than all Shares owned beneficially and of record by such shareholder. A
fiduciary or nominee that is the record owner of Shares may not dissent, on
behalf of any beneficial owner, to less than all Shares of such beneficial
owner. Written objection should be filed with the Company at its executive
offices as set forth above, Attention: Secretary. Voting to approve and adopt
the Merger Agreement will constitute a waiver of the shareholder's dissenters'
rights and will nullify any written objection by the shareholder.
Within 10 days after approval of the Merger Agreement by its shareholders, the
Company shall give written notice to all shareholders who filed written
objection and who did not vote in favor of the Merger, that the Merger Agreement
was approved and adopted. At the time of filing the notice of election to
dissent, or within one month thereafter, a dissenting shareholder must submit
the certificates for Shares covered by the dissent to the Company or its
transfer agent, Continental Stock Transfer & Trust Company. The Company or its
transfer agent will conspicuously note on such certificates that a notice of
election to dissent has been filed, and then return the certificates to the
shareholder. If a shareholder fails to so submit the certificates for Shares,
then at the Company's option exercised within 45 days after the filing of the
notice of election to dissent, the shareholder will lose dissenters' rights
unless a court determines otherwise upon good cause shown. Any transferee of a
stock certificate bearing a notation that the shareholder has exercised
dissenters' rights shall acquire no rights in the Surviving Corporation except
for the rights held by the dissenting shareholder at the time of transfer.
Within 15 days after the later of the deadline for the filing of notices of
election to dissent or the consummation of the Merger, but in not event later
than 90 days after the approval and adoption of the Merger Agreement by the
shareholders of the Company, the Surviving Corporation, must make a written
offer ("Written Offer") to each shareholder who has elected dissenters' rights
to pay a specified price for Shares which the Surviving Corporation considers to
be their "fair value." (In the event any shareholder dissents, the Company does
not expect the Surviving Corporation to make a Written Offer at a price in
excess of $10.25 per Share.) If the shareholder and the Surviving Corporation,
do not agree upon a price within
29
<PAGE>
30 days, then the Surviving Corporation must commence a proceeding within 20
days in the New York Supreme Court for the district that includes Cortland, New
York for a determination of rights of dissenting shareholders and the fair value
of Shares. If the Surviving Corporation fails to institute the proceeding then
any dissenting shareholder may institute the proceeding within 30 days after
such 20 day period. If such proceeding is not instituted within such 30 day
period, all dissenter's rights shall be lost unless the Supreme Court, for just
cause shown, shall otherwise direct. The final order of the court shall include
an allowance for interest, at such rate as the court finds to be equitable, from
the date of the consummation of the Merger to the date of payment, however, if
the court finds that the refusal of any dissenting shareholder to accept a
written offer to pay was arbitrary, vexatious or not in good faith, no interest
shall be allowed to such shareholder.
Upon consummation of the Merger, any dissenting shareholder will cease to have
rights as such except for the right to obtain payment for Shares. A notice of
election to dissent may be withdrawn for up to 60 days after consummation of the
Merger, provided that the shareholder has not previously accepted an offer of
payment. Thereafter, withdrawal can only be upon consent of the Surviving
Corporation. If a shareholder dissents, and thereafter the Merger is not
consummated, or the election to dissent is withdrawn, or the court determines
that the shareholder is not entitled to dissenters' rights or are otherwise
lost, then the shareholder will be restored to all rights as a shareholder,
without prejudice to any action that may have been taken in the interim.
As noted, the foregoing summary is qualified in its entirety by reference to
Section 623 of the BCL (see Annex II hereto), and any shareholder who
contemplates the exercise of his right to dissent is urged to read the same
carefully.
MARKET PRICES OF SHARES
Marietta Stock is traded on the NASDAQ under the symbol "MRTA." The following
table sets forth, for the periods indicated, the range of high and low closing
prices per Share as reported by the NASDAQ.
<TABLE>
<CAPTION>
High Low
YEAR ENDED OCTOBER 1, 1994
<S> <C> <C>
First Quarter 8 1/2 6 1/2
Second Quarter 9 6
Third Quarter 9 3/8 7 1/2
Fourth Quarter 9 1/2 7 1/2
YEAR ENDED SEPTEMBER 30, 1995
First Quarter 8 3/4 6 3/4
Second Quarter 11 1/2 7 1/2
Third Quarter 11 1/8 9 1/2
Fourth Quarter 10 1/2 7
YEAR ENDED SEPTEMBER 30, 1996
First Quarter __ __
</TABLE>
==============================================
On August 25, 1995, the last full trading day before the public announcement
of the execution of the Merger Agreement, the high bid for Shares as reported by
the NASDAQ was $9.13.
During the Company's last five fiscal years, no dividends have been declared
by the Company with respect to Shares. If for any reason the Merger is not
consummated, the Company has no intention to pay cash dividends in the
foreseeable future. Pursuant to one of the Company's loan agreements, the
Company is limited in the amount of cash dividends it may declare to 50% of the
Company's cumulative net income for each fiscal year commencing with its 1993
fiscal year.
30
<PAGE>
DESCRIPTION OF MARIETTA CAPITAL STOCK
The authorized capital stock of the Company consists of (a) 10,000,000 Shares
and (b) 1,000,000 shares of preferred stock, par value $.01 per share, none of
which is outstanding. At the Record Date (i) 3,596,049 Shares were issued and
outstanding, (ii) 76,218 Shares subject to options to purchase Shares under the
Option Plans were issued and outstanding and (iv) 6,886 Shares subject to rights
under the Stock Purchase Plan. In addition the Company has issued 90,000 SARs.
As of [___________ [__], 199_, there were approximately [_______] holders of
Shares. Pursuant to the Merger each Right shall be cancelled.
INDEPENDENT PUBLIC ACCOUNTANTS
It is expected that representatives of Deloitte & Touche LLP, Marietta's
independent public accountants, will be present at the Meeting to respond to
appropriate questions and to make a statement if they so desire.
SHAREHOLDERS' PROPOSALS
If the Merger is not consummated, any proposals of shareholders of Marietta
intended to be presented at the Annual Meeting of Shareholders of Marietta to be
held in 1996 must be received by Marietta, no later than April 16, 1996, to
be considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The security ownership of certain beneficial owners of five percent (5%) or
more of the outstanding Shares and executive officers and directors of the
Company as of December, 1, 1995, is set forth in the table below.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP(2)(3) PERCENT OF CLASS(3)
--------------------------------------- -------------------- -------------------
<S> <C> <C>
Mentor Partners, L.P.(4)............................... 357,800 9.8 %
500 Park Avenue
New York, New York 10022
Elliot Associates(5)................................... 339,425 9.3
712 Fifth Avenue
New York, New York 10019
John S. Nadolski(6)(7)................................. 330,268 9.1
3855 Highland Road
Cortland, New York 13045
Barry W. Florescue..................................... 314,365 8.6
Frank Magrone(8)(9).................................... 64,468 1.8
Ronald C. DeMeo(8)(10)................................. 43,809 1.2
David P. Hempson(8)(11)................................ 37,761 1.0
Thomas D. Walsh(8)(10)................................. 24,935 (15)
Chesterfield F. Seibert Sr.(8)(9)...................... 17,193 (15)
Robert C. Buhrmaster(10)............................... 9,154 (15)
Philip A. Shager(12)................................... 5,358 (15)
Dominic J. La Rosa(10)................................. 4,154 (15)
Stephen D. Tannen(10).................................. 4,154 (15)
Charles W. Miersch..................................... 1,000 (15)
Thomas Fairhurst....................................... 568 (15)
Leonard J. Sichel...................................... 0 0.0
Wallace Bruce.......................................... 0 0.0
All executive officers and directors as a group (14
persons)(7)(8)(9)(10)(11)(12)(13)..................... 526,919 14.4
</TABLE>
31
<PAGE>
- ---------------
(1) Unless otherwise indicated address is that of the Company set forth above.
(2) All persons listed have sole voting and investment power with respect to
their shares unless otherwise indicated.
(3) Based on the number of Shares issued and outstanding at, or acquirable
within 60 days of, October 1, 1995.
(4) Information as to the holdings of Mentor Partners L.P. ("Mentor"), is based
on a report on a Schedule 13D filed on or about August 8, 1995, as amended.
Such report was filed with the SEC on behalf of Mentor with respect to
Shares owned by Mentor and Mentor Offshore Fund Limited. The general partner
of Mentor is WTG & Co., L.P. ("WTG") and the general partner of WTG is D.
Tisch & Co., Inc., all of the common stock of which is owned by Daniel R.
Tisch.
(5) Information as to the holdings of Elliot Associates, L.P. ("Elliot"), is
based upon a report on Amendment No. 2 to Schedule 13D filed on or about
July 21, 1995. Such report was filed with the SEC jointly by Elliot,
Westgate International, L.P. ("Westgate") and Martley International, Inc.
("Martley"). Paul E. Singer ("Singer") and Braxton Associates, L.P., a New
Jersey limited partnership ("Braxton"), which is controlled by Singer, are
the general partners of Elliot. Hambledon, Inc., a Cayman Island corporation
("Hambledon"), is the sole general partner of Westgate. Martley is the
investment manager for Westgate.
(6) Information as to the holdings of John S. Nadolski is based upon Amendment
No. 5, dated February 3, 1994, to a report on Schedule 13G, dated April 28,
1989, filed with the SEC by Mr. Nadolski.
(7) Includes 8,000 Shares held by the two children of Mr. Nadolski, as to which
Mr. Nadolski disclaims beneficial ownership.
(8) Includes options to purchase 8,160 Shares granted on February 9, 1989 to
each of Messrs. DeMeo, Hempson, Magrone, Seibert and Walsh, all of which are
currently exercisable. The exercise price for such Shares exceeds the Per
Share Price.
(9) Includes options to purchase 8,308 Shares granted on December 1, 1993, to
each of Mr. Magrone and Mr. Seibert, all of which are currently exercisable.
(10) Includes options to purchase 4,154 Shares granted on December 1, 1993, to
Messrs. Buhrmaster, DeMeo, LaRosa, Tannen and Walsh, all of which are
currently exercisable, or become exercisable within the next 60 days, by
each such person.
(11) Includes 400 Shares held by the two children of Mr. Hempson, as to which
Mr. Hempson disclaims beneficial ownership, and includes 300 Shares held by
Mr. Hempson jointly with his spouse.
(12) Includes options to purchase 5,000 Shares granted on May 10, 1993 to Mr.
Shager 3,333 of which are currently exercisable.
(13) Includes Mr. Siebert, who does not presently serve as an executive officer
or director of the Company.
(14) Less than 1.0%
OTHER RECENT DEVELOPMENTS
On August 18, 1995 the Company announced that it had consented to a final
judgment and order in settlement of a SEC investigation. The Complaint was filed
in the United States District Court for the Northern District of New York by the
SEC (Civil Action No. 95-CV-1154) against the Company, John S. Nadolski and
Thomas J. Blair, former officers and directors of the Company. In the
settlement, the Company agreed, without admitting or denying any wrongdoing, to
the entry of an order enjoining the Company from violating certain provisions of
the Federal securities laws. No monetary damages were paid by the Company in
connection with such settlement.
The complaint by the SEC related to previously reported misstatements in the
Company's quarterly and annual financial statements during the Company's 1989
and 1990 fiscal years and in a Registration Statement filed by the Company in
1989 with respect to the sale of 1,400,000 Shares. The misstatements in the
Company's financial statements resulted in, among other things, overstatements
of the Company's fixed assets, revenue, income and expenses.
32
<PAGE>
AVAILABLE INFORMATION
The Company and Parent have filed with the SEC a Rule 13e-3 Transaction
Statement (including any amendments thereto, the "Schedule 13E-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect
to the Merger. This Proxy Statement does not contain all the information set
forth in the Schedule 13E-3 and the exhibits thereto, certain parts of which are
omitted in accordance with the rules and regulations of the SEC.
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files reports, proxy statements and other
information with the SEC.
The Schedule 13E-3 and the respective exhibits thereto, as well as such
reports, proxy statements and other information filed by the Company, can be
inspected and copied at the public reference facilities maintained by the SEC at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
Regional Offices at Suite 1300, Seven World Trade Center, New York, New York
10048. Copies of such materials also can be obtained at prescribed rates from
the Public Reference Section of the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement incorporates by reference documents which are not
presented herein or delivered herewith. Copies of any such documents relating to
the Company, other than exhibits to such documents (unless such exhibits
specifically are incorporated by reference in such documents), are available
without charge, upon written or oral request, from Marietta Corporation, 37
Huntington Street, Cortland, New York 13045, Attention: Director of Investor
Relations, telephone: (607) 753-6746. In order to ensure timely delivery of the
documents requested, any such request should be made by January 5, 1995.
The Company's Annual Report on Form 10-K for the fiscal year ended September
30, 1995 accompanies this Proxy Statement
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein, or in any other subsequently filed document that also is or is deemed to
be incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute part of this Proxy Statement.
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IMPORTANT
YOUR BOARD BELIEVES THAT IT IS IN THE BEST INTERESTS OF MARIETTA SHAREHOLDERS
TO APPROVE THE MERGER AGREEMENT.
Your vote is important, regardless of how many shares you own. The Board urges
you to support the Merger Agreement by signing, marking, dating and promptly
mailing the enclosed proxy card.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER, OR OTHER NOMINEE, WE
URGE YOU TO CONTACT THE PARTY RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER
TO VOTE "FOR" THE MERGER. YOU SHOULD ALSO SIGN, MARK, DATE AND MAIL YOUR PROXY
CARD ONCE YOU RECEIVE IT FROM YOUR BANK OR BROKER TO ENSURE YOUR VOTE IS
COUNTED.
If you have any questions or request assistance in voting your shares, please
call D.F. King & Co., Inc., which is assisting your company, toll-free at 1-800
549-6746.
34
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ANNEX I
<PAGE>
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- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 26, 1995,
BY AND AMONG
BFMA HOLDING CORPORATION,
BFMA ACQUISITION CORPORATION
AND
MARIETTA CORPORATION
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<PAGE>
TABLE OF CONTENTS
<TABLE>
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1. Definitions...................................................................... 1
1.1Defined Terms................................................................. 1
1.2Use of Defined Terms.......................................................... 8
1.3Accounting Terms.............................................................. 8
1.4Sections, Exhibits and Schedules.............................................. 8
1.5Miscellaneous Terms........................................................... 8
2. Special Meeting; Annual Meeting.................................................. 8
2.1Special Meeting............................................................... 8
2.2Proxy Statement............................................................... 9
2.3Company Action................................................................ 11
3. Merger........................................................................... 11
3.1Merger........................................................................ 11
3.2Effect of the Merger.......................................................... 11
3.3Effective Time................................................................ 11
3.4Articles of Incorporation and By-Laws of the Surviving Corporation............ 12
3.5Directors and Officers of the Surviving Corporation........................... 12
3.6Conversion of Shares.......................................................... 12
3.7Dissenting Shares............................................................. 13
3.8Stock Options and Stock Appreciation Rights................................... 13
3.9Stock Purchase Plan........................................................... 14
3.10Repayment of Promissory Notes................................................ 14
3.11Exchange of Certificates..................................................... 14
3.12The Closing.................................................................. 16
4. Representations and Warranties of the Company.................................... 17
4.1Organization and Qualification................................................ 17
4.2Capitalization................................................................ 17
4.3Authority Relative to this Agreement.......................................... 18
4.4Compliance.................................................................... 18
4.5Consents; Transferability..................................................... 18
4.6Commission Filings............................................................ 19
4.7Absence of Undisclosed Liabilities............................................ 20
4.8Absence of Specified Changes.................................................. 20
4.9Taxes......................................................................... 21
4.10Insurance.................................................................... 23
4.11Contracts.................................................................... 24
4.12Real Property................................................................ 25
4.13Tangible Property............................................................ 27
4.14Environmental Matters........................................................ 27
4.15Intangible and Other Property................................................ 29
4.16Employee Benefit Plans....................................................... 29
4.17Labor Matters................................................................ 31
4.18Customers and Suppliers...................................................... 32
4.19Inventory.................................................................... 32
4.20Accounts Receivable.......................................................... 32
4.21Compliance With Laws......................................................... 32
4.22Licenses and Permits......................................................... 33
4.23Legal Proceedings............................................................ 33
4.24No Brokers................................................................... 34
4.25Disclosure................................................................... 34
</TABLE>
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<TABLE>
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<S> <C> <C>
4.26Books and Records............................................................ 34
5. Representations and Warranties of the Parent and Newco........................... 34
5.1Organization and Qualification................................................ 34
5.2Authority Relative to this Agreement.......................................... 35
5.3Compliance.................................................................... 35
5.4Consents...................................................................... 35
5.5Financing..................................................................... 35
5.6Legal Proceedings............................................................. 36
5.7No Brokers.................................................................... 36
5.8Disclosure.................................................................... 36
6. Covenants and Other Agreements................................................... 36
6.1Conduct of Business........................................................... 36
6.2No Shop; Non-Disclosure....................................................... 38
6.3Employment Agreements......................................................... 39
6.4Parent's Access to Information................................................ 39
6.5Consents...................................................................... 39
6.6Notification of Certain Matters............................................... 39
6.7Action of Shareholders of the Company; Voting and Disposition of the Shares... 40
6.8Financial Statements.......................................................... 40
6.9Indemnification of Directors and Officers..................................... 40
6.10Additional Agreements........................................................ 41
7. Conditions Precedent to the Parent's Obligations................................. 42
7.1Accuracy of the Company's Representations and Warranties...................... 42
7.2Performance by the Company.................................................... 42
7.3Deliveries By the Companies at Closing........................................ 42
7.4Consents...................................................................... 43
7.5Changes in the Business....................................................... 43
7.6Dissenting Shares............................................................. 43
7.7Shareholder Approval.......................................................... 44
7.8Simultaneous Closing.......................................................... 44
7.9Opinion of the Company's Counsel.............................................. 44
7.10Absence of Litigation........................................................ 44
7.11Proceedings and Documents.................................................... 44
7.12Current Assets; Inventory.................................................... 44
8. Conditions Precedent to the Company's Obligations................................ 45
8.1Accuracy of the Parent's Representations and Warranties....................... 45
8.2Performance by the Parent..................................................... 45
8.3Deliveries by the Parent at Closing........................................... 45
8.4Consents...................................................................... 46
8.5Opinion of the Parent's Counsel............................................... 46
8.6Fairness Opinion.............................................................. 46
8.7Absence of Litigation......................................................... 46
8.8Simultaneous Closing.......................................................... 46
8.9Shareholder Approval.......................................................... 46
8.10Proceedings and Documents.................................................... 46
9. Termination...................................................................... 47
9.1Termination................................................................... 47
9.2Effect of Termination......................................................... 48
9.3Termination Payments and Expenses............................................. 48
</TABLE>
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<TABLE>
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10. Survival of Representations and Warranties....................................... 49
11. Miscellaneous.................................................................... 50
11.1 Headings.................................................................... 50
11.2 Notices..................................................................... 50
11.3 Successors and Assigns...................................................... 51
11.4 Governing Law............................................................... 51
11.5 Entire Agreement............................................................ 51
11.6 Counterparts................................................................ 51
11.7 Severability................................................................ 51
11.8 No Prejudice................................................................ 52
11.9 No Third Party Beneficiaries................................................ 52
11.10 Amendment and Modification................................................. 52
11.11 Waiver..................................................................... 52
</TABLE>
iv
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SCHEDULES
<TABLE>
<S> <C>
Schedule 4.1 --Organization and Qualification.
Schedule 4.2 --Capitalization.
Schedule 4.4 --Compliance.
Schedule 4.5 --Consents; Transferability.
Schedule 4.7 --Absence of Undisclosed Liabilities.
Schedule 4.8 --Absence of Specified Changes.
Schedule 4.9 --Taxes.
Schedule 4.10 --Insurance.
Schedule 4.11 --Contracts.
Schedule 4.12 --Real Property.
Schedule 4.13 --Tangible Property.
Schedule 4.14 --Environmental Matters.
Schedule 4.15 --Intangible and Other Property.
Schedule 4.16 --Employee Benefit Plans.
Schedule 4.17 --Labor Matters.
Schedule 4.18 --Customers and Suppliers.
Schedule 4.22 --Licenses and Permits.
Schedule 4.23 --Legal Proceedings.
Schedule 5.3 --Compliance.
Schedule 5.4 --Consents.
Schedule 5.7 --No Brokers.
Schedule 6.1 --Conduct of Business.
Schedule 6.3(b) --Individual Employment Agreements.
</TABLE>
EXHIBITS
Exhibit A --Form of Certificate of Merger
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<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered into as
of August 26, 1995, by and among BFMA Holding Corporation, a Delaware
corporation (the "Parent"), BFMA Acquisition Corporation, a New York
corporation and a wholly-owned subsidiary of the Parent ("Newco"), and Marietta
Corporation, a New York corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Parent, Newco and the
Company desire to effect, and have approved on the terms and subject to the
conditions of this Agreement, a business combination of the Company and Parent
in which Newco will merge with and into the Company (such merger being referred
to herein as the "Merger"), pursuant to which among other things, the holders
of the then outstanding shares of the common stock, $.01 par value (the
"Shares"), of the Company, and the holders of the then outstanding stock
options of the Company exercisable or convertible into Shares, will receive a
price of $10.25 per Share, on a fully-diluted basis (and, in the case of
options, $10.25 per Share into which such options are convertible or
exercisable, less any exercise price or other payments payable by the holders
thereof to the Company), in cash without interest (the "Per Share Price");
WHEREAS, the respective Boards of Directors of the Parent, Newco and the
Company have duly approved the Merger and the Company's Board of Directors has
resolved to recommend its acceptance by the Company's shareholders.
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, each intending to be legally bound, hereby agree as follows:
1. DEFINITIONS.
1.1 Defined Terms. As used herein, the following terms shall have the
following meanings:
Action: Defined in Section 6.9.
Affiliate: With respect to any Person, any director or executive officer
of such Person or any of its Subsidiaries and any member of the immediate
family of any such director or officer and any other Person who or which,
directly or indirectly, controls, is controlled by, or is under common
control with such Person or any of its Subsidiaries.
Affiliate Contracts: Defined in Section 4.17.
Agreement: This Agreement and Plan of Merger, including the Exhibits and
Schedules annexed hereto.
Assets: All Intangible and Other Property, Tangible Property and Real
Property.
BCL: The New York Business Corporation Law, as amended.
Benefit Plans: Defined in Section 4.16.
best knowledge or knowledge: When modifying a representation and warranty
made by a Person under this Agreement as to the existence or non-existence
of any fact or situation described therein, that the appropriate
Responsible Official of such Person has actual knowledge or has made
reasonable inquiry in determining the existence or non-existence of such
fact or situation as of the date such representation and warranty is made
or deemed made except in any representation or warranty wherein knowledge
is stated to be without due inquiry.
Business Day: Any day of the year on which banks are not required or
authorized to be closed in the State of New York.
A-1
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CERCLA: The Comprehensive Environmental Response Compensation and
Liability Act, as amended, and the rules and regulations promulgated
thereunder.
Certificates: Defined in Section 3.11.
Change-in-Control: A Change-in-Control shall be deemed to have occurred
if a proxy contest for the election of directors of the Company results in
the persons constituting the Company Board immediately prior to the
initiation of such proxy contest ceasing to constitute a majority of the
Company Board upon the conclusion of such proxy contest.
Closing: Defined in Section 3.12.
Closing Date: Defined in Section 3.12.
Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
Commission: The Securities and Exchange Commission.
Commission Filings: Defined in Section 4.6.
Company: Defined in the prologue to this Agreement.
Company Board: The Board of Directors of the Company.
Company's Counsel: The law firm of Rubin Baum Levin Constant & Friedman.
Company Group Member: The Company, its subsidiaries and its predecessors
and (i) each Person that is or was at any time within the preceding five
(5) Benefit Plan years a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as the
Company, its subsidiaries or its predecessors, (ii) each trade or business,
whether or not incorporated, that is or was at any time within the
preceding five (5) Benefit Plan years under common control (within the
meaning of Section 414(c) of the Code) with the Company, its subsidiaries
or its predecessors, and (iii) each trade or business, whether or not
incorporated, that is or was at any time within the preceding five (5)
Benefit Plan years a member of the same affiliated service group (within
the meaning of Sections 414(m) and (o) of the Code) as the Company, its
subsidiaries or its predecessors.
Consents: All governmental and third party consents, permits, approvals,
orders, authorizations, qualifications, and waivers necessary for the
consummation of the transactions contemplated by this Agreement or that
thereafter may be necessary for the Surviving Corporation or its
subsidiaries to continue to have the same interest as the interest of the
Company and its Subsidiaries immediately prior to the Effective Time in any
Contract, License and Permit or other license, permit, approval, order,
authorization, qualification or waiver.
Constituent Corporations: Defined in Section 3.1.
Contract: Any contract, agreement, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant,
right, instrument or other similar document or agreement, whether written
or oral.
Dissenting Shares: Defined in Section 3.7.
Dollars or "$": The legal currency of the United States of America.
Effective Time: Defined in Section 3.3.
Environmental Claim: With respect to any Person, any written notice,
claim or demand by any other Person alleging or asserting such Person's
liability for investigatory costs, cleanup costs, Governmental Authority
response costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from (a)
the presence, or release into the environment, of any Hazardous Material at
any location, whether or not owned by such Person, or (b) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law. The term "Environmental Claim" shall include any claim
by any Governmental Authority for enforcement,
A-2
<PAGE>
cleanup, removal, response, remedial or other actions or damages pursuant
to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation
or injunctive relief resulting from the presence of hazardous materials or
arising from alleged injury or threat of injury to health, safety or the
environment.
Environmental Laws: Any Laws relating to the regulation or protection of
human health, safety or the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes into the environment
(including ambient air, soil, surface water, ground water, wetlands, land
or subsurface strata), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes.
ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Fairness Opinion: Defined in Section 8.6.
Exchange Agent: Defined in Section 3.11.
Financing: Defined in Section 5.5.
GAAP: Generally accepted accounting principles set forth in the opinions
and pronouncements of the Financial Accounting Standards Board, applied on
a consistent basis and consistent with past practices.
Governmental Authority: Any United States or foreign governmental
authority, including all agencies, bureaus, commissions, authorities or
bodies of the federal government or any state, county, municipal or local
government, including any court, judge, justice or magistrate.
Hazardous Materials: Any pollutants, hazardous or toxic materials,
substances or wastes, including: petroleum and petroleum products and
derivatives; asbestos; radon; polychlorinated bi-phenyls; urea-formaldehyde
foam insulation; explosives; radioactive materials; laboratory wastes and
medical wastes; and any chemicals, materials or substances designated or
regulated as hazardous or as toxic substances, materials, or wastes, or
otherwise regulated, under any Environmental Law.
Indemnified Party: Defined in Section 6.9.
Indemnified Parties: Defined in Section 6.9.
Insurance: Defined in Section 4.10.
Intangible and Other Property: All Contracts, certificates of deposit,
bank accounts, securities, partnership or other ownership interests, rights
to receive money or property by assignment, future interests, claims and
rights against third parties, accounts receivable, notes receivable,
Intellectual Property, Software, prepaid expenses, acquisition costs and
other intangible property of any nature owned, leased, licensed, used or
held for use, directly or indirectly, by, on behalf of or for the account
of a Person.
Intellectual Property: All patents, trademarks, trademark rights, trade
names, product designations, service marks, copyrights, and applications
for any of the foregoing, used, licensed, leased or owned, directly or
indirectly, by, on behalf of or for the account of a Person.
Judgment: Any judgment, writ, order, injunction, determination, award or
decree of or by any Governmental Authority.
Law: Any statute, ordinance, code, rule, regulation, order or other law
enacted, adopted, promulgated or applied by any Governmental Authority.
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Licenses and Permits: All licenses, permits, certificates, approvals,
franchises, registrations, accreditations or authorizations (i) required by
Law or (ii) issued to the Company or any of its Subsidiaries by a
Governmental Authority and used in their respective businesses, as
currently conducted.
Lien: Any security agreement, financing statement (whether or not filed),
security or other like interest, conditional sale or other title retention
agreement, lease or consignment or bailment given for security purposes,
lien, mortgage, deed of trust, indenture, pledge, constructive or other
trust or attachment.
Material Adverse Effect: An adverse change in the financial condition,
business or results of operations of the Company or any of its
Subsidiaries, or the Parent or Newco, as the case may be, which is material
to the Company and its Subsidiaries, taken as a whole, or Parent and Newco,
taken as a whole, as the case may be.
Merger: Defined in the prologue of this Agreement.
Nadolski Note: Defined in Section 3.10.
Newco: Defined in the prologue of this Agreement.
NPL: The National Priorities List under CERCLA.
Option: Defined in Section 3.8.
Option Plans: Defined in Section 3.8.
Other Filings: Defined in Section 2.2.
Parent: Defined in the prologue of this Agreement.
Parent's Counsel: The law firm of Shereff, Friedman, Hoffman & Goodman,
LLP.
Payment Event: Defined in Section 9.3(b).
Permitted Liens: Includes liens arising by operation of law in favor of
materialmen, mechanics, warehousemen, carriers, lessors or other similar
persons incurred by the Company in the ordinary course of business which
secure its obligations to such person, liens (excluding environmental
liens) securing taxes, assessments or governmental charges or levies not
yet due, liens (excluding environmental liens) securing taxes, assessments
or government charges or levies that are being contested in good faith and
as to which adequate reserves (determined in accordance with GAAP) have
been provided, and liens incurred or pledges and deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security
benefits; provided, however, that the Company is not in default with
respect to any payment obligation with respect thereto; provided further,
however, that all such liens individually or in the aggregate have no
reasonable likelihood of having a Material Adverse Effect.
Per Share Price: Defined in the prologue of this Agreement.
Person: Any individual, trustee, corporation, general or limited
partnership, limited liability partnership, limited liability company,
joint venture, joint stock company, bank, firm, Governmental Authority,
trust, association, organization or unincorporated entity of any kind or
nature whatsoever.
Proxy Statement: Defined in Section 2.2.
Real Property: All realty, fixtures, easements, rights-of-way and other
interests (excluding Tangible Property) in real property, buildings,
improvements and construction-in-progress.
Responsible Official: With respect to any particular representation or
warranty of the Company or any of its Subsidiaries, the corporate officer
of the Company or a Subsidiary of the Company who, because of his
management and supervisory positions, is informed of the business and
affairs of the Company or such Subsidiary and, as a result, is suited to
make such representation and warranty of the Company set forth in this
Agreement.
A-4
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Returns: All returns, declarations and reports filed with a taxing
authority and all information returns and statements of any kind or nature
whatsoever filed with a taxing authority.
Rights: Defined in Section 3.6.
SARs: Defined in Section 3.8.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
Seibert Note: Defined in Section 3.10.
Shares: Defined in the prologue of this Agreement.
Software: All electronic data processing systems, information systems,
computer software programs, program specifications, designs, charts,
procedures, input data, routines, data bases, report layouts, formats,
record file layouts, written manifestations (in both source code and object
code form), diagrams, functional specifications, narrative descriptions and
flow charts, and other related material, used, licensed, leased or owned,
directly or indirectly, by, on behalf of or for the account of a Person.
Special Meeting: Defined in Section 2.1.
Stock Purchase Plan: Defined in Section 3.9.
Subsidiary: With respect to any Person, any corporation, association or
other business entity of which more than fifty percent (50%) of the issued
and outstanding stock or equivalent thereof having ordinary voting power is
owned or controlled by such Person, by one or more Subsidiaries or by such
Person and one or more Subsidiaries or which a Person otherwise has the
power to control the management thereof.
Superior Offer: Defined in Section 6.2.
Surviving Corporation: Defined in Section 3.1.
Tangible Property: All cash, furnishings, machinery, equipment, computer
systems (hardware only), supplies, inventories, vehicles, books and records
and other tangible property and facilities of any kind or nature
whatsoever.
Taxes: All foreign, federal, state, county, local, municipal and other
taxes, levies, impositions, deductions, charges and withholdings, including
income, employment, property, ad valorem, sales and use taxes, and shall
include any interest, penalties or additions thereto.
Termination Agreements: Defined in Section 4.17.
Walsh Note: Defined in Section 3.10.
1.2 Use of Defined Terms. Any defined term used in the plural shall refer to
all members of the relevant class, and any defined term used in the singular
shall refer to any one or more of the members of the relevant class. The use of
any gender shall be applicable to all genders.
1.3 Accounting Terms. All accounting terms not otherwise defined in this
Agreement shall be construed in conformity with, and all financial data
required to be submitted by this Agreement shall be prepared in conformity
with, GAAP, except as expressly permitted by this Agreement.
1.4 Sections, Exhibits and Schedules. References in this Agreement to
Sections, Exhibits and Schedules are to Sections, Exhibits and Schedules of and
to this Agreement. The Exhibits and Schedules to this Agreement are hereby
incorporated herein by this reference as if fully set forth herein.
1.5 Miscellaneous Terms. The term "or" shall not be exclusive. The terms
"herein," "hereof," "hereto," "hereunder" and other terms similar to such terms
shall refer to this Agreement as a whole and not merely to the specific
article, section, paragraph or clause where such terms may appear. The term
"including" shall mean "including, but not limited to."
A-5
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2. SPECIAL MEETING; ANNUAL MEETING.
2.1 Special Meeting. In order to consummate the Merger, the Company, acting
through the Company Board, in accordance with applicable Law, at the earliest
practicable date, shall duly call, give notice of, convene and hold a special
meeting of shareholders of the Company (the "Special Meeting") for the purpose
of considering, adopting and approving this Agreement, the Merger and the
transactions contemplated hereby.
2.2 Proxy Statement.
(a) Subject to the terms and conditions of this Agreement, at the earliest
practicable date after the date hereof, the Company shall prepare and, subject
to the review and, with respect to information relating to the Parent, Newco,
their respective Affiliates or the operation of the Company after the Effective
Time, approval of the Parent (which review and approval shall not be
unreasonably withheld or delayed), file with the Commission the Proxy Statement
of the Company for the Special Meeting. Subject to the terms and conditions of
this Agreement, the Company shall use all reasonable efforts to have the Proxy
Statement cleared for mailing by the Commission. Subject to the terms and
conditions of this Agreement, promptly after the Commission has approved the
Proxy Statement for distribution to the shareholders of the Company, the
Company will mail the Proxy Statement to the shareholders of the Company
entitled to receive it, and will otherwise comply in all material respects with
all applicable legal requirements in connection with the vote of shareholders
at the Special Meeting. The term "Proxy Statement" as used herein shall mean
the proxy statement of the Company for the Special Meeting at the time it is
initially mailed, and all amendments or supplements thereto, if any, similarly
filed and mailed. Subject to the terms and conditions of this Agreement, the
Proxy Statement shall contain the recommendation of the Company Board in favor
of this Agreement and the Merger and the recommendation that the shareholders
of the Company vote for the adoption and approval of this Agreement and the
Merger. Subject to the terms and conditions of this Agreement, the Company
shall use all reasonable efforts to solicit proxies in connection with the vote
of shareholders with respect to the Merger and the Company shall solicit such
proxies in favor of the adoption and approval of this Agreement and the Merger.
(b) The Parent and Newco shall, and shall cause their respective Affiliates
to, promptly furnish all information, and take such other actions, as may
reasonably be requested by the Company in connection with the actions
contemplated by this Section 2.2. The Proxy Statement, on the date filed with
the Commission and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representation or warranty as to any information supplied by the Parent or
Newco, or their respective Affiliates, for inclusion in the Proxy Statement or,
with respect to information relating to the Parent, Newco, their respective
Affiliates or the operation of the Company after the Effective Time, approved
by the Parent for inclusion in the Proxy Statement; provided further, however,
that Parent and Newco make no representation or warranty as to any information
not supplied or approved by them for inclusion in the Proxy Statement. The
Parent and Newco represent and warrant that the information to be supplied or
approved by them for inclusion in the Proxy Statement shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company (and the Parent and Newco, with respect to information supplied by them
for use in the Proxy Statement) agrees promptly, and Parent and Newco shall
cause their respective Affiliates, to correct the Proxy Statement if and to the
extent that it shall have become false or misleading in any material respect
and the Company shall take all steps necessary to cause the Proxy Statement as
so corrected to be filed with the Commission and mailed to the Company's
shareholders to the extent required by applicable federal securities Laws.
(c) As soon as practicable after the date hereof, the Company shall promptly
and properly prepare and file any other filings of the Company required under
the Exchange Act or any other federal or state securities
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Laws relating to the Merger and the transactions contemplated hereby (the
"Other Filings"), subject to review and, with respect to information relating
to the Parent, Newco, their respective Affiliates or the operation of the
Company after the Effective Time, approval of the Parent (which review and
approval shall not be unreasonably withheld or delayed). The Other Filings, on
the date filed, shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes no
representation or warranty as to any information supplied by the Parent or
Newco, or their respective Affiliates, for inclusion in the Other Filings or,
with respect to information relating to the Parent, Newco, their respective
Affiliates or the operation of the Company after the Effective Time, approved
by the Parent for inclusion in the Other Filings; provided further, however,
that Parent and Newco make no representation or warranty as to any information
not supplied or approved by them for inclusion in the Other Filings. The Parent
and Newco represent and warrant that the information to be supplied by them for
inclusion in the Other Filings shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company (and the
Parent or Newco, or their respective Affiliates, with respect to information
supplied by them for use in the Other Filings) agrees promptly, and Parent and
Newco shall cause their respective Affiliates, to correct the Other Filings if
and to the extent that any of them shall have become false or misleading in any
material respect.
(d) The Company shall notify the Parent promptly of the receipt by the
Company of any comments of the Commission and of any request by the Commission
for amendments or supplements to the Proxy Statement or by the Commission or
any other Governmental Authority with respect to any Other Filing or for
additional information and will supply the Parent with copies of all
correspondence between the Company and its representatives, on the one hand,
and the Commission or the members of its staff or any other appropriate
Governmental Authority, on the other hand, with respect to the Proxy Statement
and any Other Filings. The Company shall use all reasonable efforts to obtain
and furnish the information required to be included in the Proxy Statement and
any Other Filings. After the review and, with respect to information relating
to the Parent, Newco, their respective Affiliates or the operation of the
Company after the Effective Time, approval of the Parent (which review and
approval shall not be unreasonably withheld or delayed), the Company shall use
all reasonable efforts to respond promptly to any comments made by the
Commission or any other Governmental Authority with respect to the Proxy
Statement and any Other Filing and any preliminary version thereof and cause
the Proxy Statement and related form of proxy to be mailed to its shareholders
at the earliest practicable date after clearance of the Proxy Statement by the
Commission; provided, however, that the Company shall not be required to cause
the Proxy Statement and the related form of proxy to be mailed until such time
as all of the conditions to closing relating to the Financing, other than the
completion of definitive documents, have been satisfied.
2.3 Company Action. The Company represents that the Company Board has duly
adopted and approved the execution of this Agreement, including the Merger, and
resolved to recommend the adoption and approval of the Merger by the Company's
shareholders.
3. MERGER.
3.1 Merger. At the Effective Time and subject to the terms and conditions of
this Agreement and the provisions of the BCL, the separate existence of Newco
shall thereupon cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation"). Newco and the Company are sometimes
hereinafter referred to collectively as the "Constituent Corporations."
3.2 Effect of the Merger. The separate corporate existence of the Company, as
the Surviving Corporation, with all its purposes, objects, rights, privileges,
powers, certificates and franchises, shall continue unimpaired by the Merger.
The Surviving Corporation shall succeed to all the Assets of the Constituent
Corporations and to all debts, choses in action and other interests due or
belonging to the Constituent
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Corporations and shall be subject to, and responsible for, all the debts,
liabilities, obligations and duties of the Constituent Corporations with the
effect set forth in Section 906 of the BCL.
3.3 Effective Time. Subject to the terms and conditions hereof, the Merger
shall be consummated as promptly as practicable after the satisfaction or
waiver of the conditions of this Agreement by duly filing an appropriate
Certificate of Merger in such form as is required by, and executed in
accordance with, the relevant provision of the BCL. The Merger shall be
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of New York in accordance with the BCL or at
such later time as is specified in the Certificate of Merger (the "Effective
Time").
3.4 Articles of Incorporation and By-Laws of the Surviving Corporation.
(a) At the Effective Time and without any further action on the part of the
Company or Newco, the Articles of Incorporation of Newco, as in effect at the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation.
(b) At the Effective Time and without further action on the part of the
Company or Newco, the By-laws of Newco, as in effect at the Effective Time,
shall be the By-laws of the Surviving Corporation.
3.5 Directors and Officers of the Surviving Corporation. At the Effective
Time, the directors of Newco immediately prior to the Effective Time shall be
the directors of the Surviving Corporation, each of such directors to hold
office, subject to the applicable provisions of the Articles of Incorporation
and By-laws of the Surviving Corporation, until the next annual shareholders'
meeting of the Surviving Corporation and until their successors shall be duly
elected or appointed and shall duly qualified. At the Effective Time, the
officers of the Surviving Corporation shall consist of the Persons designated
in writing by the Parent prior to the Closing who shall hold the positions
designated by the Parent, which officers shall be the officers of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified.
3.6 Conversion of Shares. At the Effective Time and by virtue of the Merger
and without any action on the part of the holders thereof:
(a) Each Share together with the associated right to purchase shares of
Series A Participating Preferred Stock (each a "Right"), pursuant to the
Rights Agreement, dated as of September 11, 1989 by and between the Company
and Continental Stock Transfer & Trust Company, as Rights Agent, issued and
outstanding immediately prior to the Effective Time (other than Shares and
Rights owned by Parent and Shares to be cancelled pursuant to subparagraph
(b) below, Dissenting Shares and Shares as outlined in Section 3.10 hereof)
shall be converted into the right to receive the Per Share Price.
(b) Each Share (together with the associated Right) held in the treasury
of the Company and each Share (together with the associated Right) owned by
the Company, or by any direct or indirect Subsidiary of the Company, shall
be cancelled and retired without payment of any consideration therefor.
(c) Each share of common stock, par value $.01 per share, of Newco issued
and outstanding immediately prior to the Effective Time shall be converted
into one validly issued, fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
3.7 Dissenting Shares.
(a) Notwithstanding the provisions of Section 3.6 or any other provision of
this Agreement to the contrary, Shares that are issued and outstanding
immediately prior to the Effective Time and are held by shareholders who have
not voted such Shares in favor of the approval and adoption of this Agreement
and who shall have properly demanded appraisal of such Shares in accordance
with the BCL (the "Dissenting Shares") shall not be converted into the right to
receive the Per Share Price at or after the Effective Time, unless and until
the holder of such Dissenting Shares shall have failed to perfect or shall have
effectively withdrawn or lost such right to appraisal and payment under the
BCL. If a holder of Dissenting Shares shall
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have so failed to perfect or shall have effectively withdrawn or lost such
right to appraisal and payment, then, as of the Effective Time or the
occurrence of such event, whichever last occurs, such holder's Dissenting
Shares shall be converted into and represent solely the right to receive the
Per Share Price, without any interest thereon, as provided in Section 3.6
hereof.
(b) The Company shall give the Parent (i) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
instruments served pursuant to Section 910 (or any successor or replacement) of
the BCL which are received by the Company, and (ii) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal under
the BCL. The Company will not voluntarily make any payment with respect to any
demands for appraisal and will not, except with the prior written consent of
the Parent, settle or offer to settle any such demands.
3.8 Stock Options and Stock Appreciation Rights.
(a) As a result of the Merger, each option ("Option") which has been granted
under the Company's 1986 Incentive Stock Option Plan or 1986 Stock Option Plan
(together, the "Option Plans") and which is outstanding at the Effective Time,
whether or not then exercisable, will be deemed converted into, and the holder
of each such Option will be entitled to receive from the Exchange Agent upon
surrender of the Option for cancellation, an amount of cash equal to the
product of the following:
(i) the positive difference, if any, between the Per Share Price and the
exercise price of each such Option; times
(ii) the number of Shares covered by such Option.
(b) As a result of the Merger, each Stock Appreciation Right ("SAR") which is
outstanding at the Effective Time, whether or not then exercisable, will be
deemed converted into, and the holder of each such SAR will be entitled to
receive from the Exchange Agent upon surrender of such SAR for cancellation, an
amount of cash, which in no event shall be more than $630,000, equal to the
product of the following:
(i) the positive difference, if any, between the Per Share Price and
$7.00; times
(ii) the number of SARs.
3.9 Stock Purchase Plan. As a result of the Merger, the Company's 1986
Employee Stock Purchase Plan (the "Stock Purchase Plan") and the current
offering period thereunder (the "Offering Period") which commenced on April 1,
1995 and is scheduled to terminate on March 31, 1996 (the "Scheduled
Termination Date"), shall terminate, and each then participant in the Offering
Period shall be entitled to receive from the Exchange Agent, at the Effective
Time, an amount of cash equal to the difference between (a) the product of the
following:
(i) the Per Share Price, times
(ii) the number of Shares which would have been issued to such
participant had such participant continued participation in the Offering
Period through the Scheduled Termination Date; and
(b) the amount remaining to be deducted from the participant's compensation
subsequent to the Effective Time in accordance with the provisions of the Stock
Purchase Plan had such participant continued participating in the Offering
Period through the Scheduled Termination Date.
3.10 Repayment of Promissory Notes. As a result of the Merger and the
transactions contemplated thereby, the promissory notes issued to the Company
by each of John Nadolski in the amount of $364,500 (the "Nadolski Note"),
Chester F. Seibert, Sr. in the amount of $121,500 (the "Seibert Note") and
Thomas D. Walsh in the amount of $121,500 (the "Walsh Note") each become
immediately due and payable.
3.11 Exchange of Certificates.
(a) Prior to the Effective Time, the Parent shall designate a bank or trust
company located in the United States with assets in excess of $500,000,000 and
reasonably satisfactory to the Company (the
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"Exchange Agent") to act as exchange agent in effecting the exchange, for the
Per Share Price multiplied by the number of Shares formerly represented
thereby, of certificates (the "Certificates") that, prior to the Effective
Time, represented Shares entitled to payment pursuant to Section 3.6. Upon the
surrender of each Certificate and a properly executed letter of transmittal and
any other required documents and the issuance and delivery by the Exchange
Agent of the Per Share Price in exchange therefor, such Certificate shall
forthwith be cancelled. Until so surrendered and exchanged, each such
Certificate (other than Certificates representing Shares held by the Parent or
the Company or any direct or indirect subsidiary of the Parent or the Company,
Dissenting Shares and Shares governed by the provisions of Section 3.10) shall
represent solely the right to receive the total Per Share Price multiplied by
the number of Shares represented by such Certificate. Upon the surrender and
exchange of such an outstanding Certificate, the holder shall receive the total
Per Share Price without any interest thereon. If any cash is to be paid to a
name other than the name in which the Certificate representing Shares
surrendered in exchange therefor is registered, it shall be a condition to such
payment or exchange that the Person requesting such payment or exchange shall
pay to the Exchange Agent any transfer or other Taxes required by reason of the
payment of such cash to a name other than that of the registered holder of the
Certificate surrendered, or such Person shall establish to the satisfaction of
the Exchange Agent that such Tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of Shares for the Per Share Price delivered to a
public official pursuant to applicable abandoned property, escheat and similar
Laws. In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and the posting by such Person of a
bond in such amount as the Parent may reasonably require as an indemnity
against any claim that may be made against the Parent or the Surviving
Corporation with respect to such Certificate, the Parent shall cause the
Exchange Agent to issue, in exchange for such Certificate, the Per Share Price
payable in respect thereof pursuant to this Agreement.
(b) Simultaneously with the Closing, the Exchange Agent shall be provided
with an amount in cash (which amount shall not be more than the amount of cash
and cash equivalents on the consolidated financial statements of the Company on
such date, less amounts held by the Company or any Subsidiary in escrow or in
trust for Persons (including, without limitation, sales, accrued payroll, use
and withholding Taxes)) designated by the Parent in writing prior to the
Closing to allow for cash payments pursuant to Section 3.6 hereof (which amount
shall also take into account the Company's cash needs in the short term), which
cash shall be deposited with the Exchange Agent in trust for the benefit of
holders of the Shares and shall not be used for any purpose except as set forth
in this Agreement. Simultaneously with the Closing, the Parent shall, or shall
cause Newco to, provide the Exchange Agent with sufficient cash (after taking
into account the cash to be provided by the Company pursuant to the prior
sentence) to pay in full the balance of cash payments pursuant to Sections 3.6,
3.8 and 3.9 hereof, which cash shall be deposited with the Exchange Agent in
trust for the benefit of holders of the Shares, the Options and the SARs and
shall not be used for any purpose except as set forth in this Agreement.
(c) Promptly following the date which is twelve (12) months after the
Effective Time, the Exchange Agent shall return to the Surviving Corporation
all cash in its possession relating to the transactions described in this
Agreement, and the Exchange Agent's duties shall terminate. Thereafter, each
holder of a Certificate formerly representing a Share may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar Laws) receive in exchange therefor the Per Share
Price, without any interest thereon, but shall have no greater rights against
the Surviving Corporation than may be accorded to general creditors of the
Surviving Corporation under applicable Law. If any Certificates representing
Shares entitled to payment pursuant to Section 3.6 shall not have been
surrendered for such payment prior to the third anniversary of the Effective
Time (or prior to such earlier date on which any payment in respect thereof
would otherwise escheat to or become the property of any Governmental
Authority) the consideration payable in respect of such Shares shall, to the
extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any Person previously
entitled thereto.
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(d) Promptly after the Effective Time, the Exchange Agent shall mail to each
record holder of Certificates that immediately prior to the Effective Time
represented Shares a form of letter of transmittal and instruction in form and
substance reasonably acceptable to the Parent and the Company, for use in
surrendering such Certificates and receiving the Per Share Price therefor.
(e) At and after the Effective Time, holders of Certificates shall cease to
have any rights as shareholders of the Company except for the right to
surrender such Certificates in exchange for the Per Share Price or to perfect
their right to receive payment for their Shares pursuant to the BCL and Section
3.6 hereof, and there shall be no transfers on the stock transfer books of the
Company or the Surviving Corporation of any Shares that were outstanding
immediately prior to the Merger. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Exchange Agent, they shall be
cancelled and exchanged for the Per Share Price, as provided in Section 3.6
hereof, subject to applicable Law and the provisions of this Agreement in the
case of Dissenting Shares.
3.12 The Closing. Subject to the terms and conditions of this Agreement, the
closing (the "Closing") of this Agreement and the transactions contemplated
hereunder (except for the filing of the Certificate of Merger with the
Secretary of State of the State of New York, which shall take place at the
offices of the Secretary of State of the State of New York) shall take place at
the offices of Shereff, Friedman, Hoffman & Goodman, LLP, 919 Third Avenue, New
York, New York, at 10:00 a.m., local time, on the date which is three (3)
Business Days after the satisfaction or waiver of all conditions to
consummation of the transactions contemplated hereby or at such other time and
place as the Company and the Parent shall mutually agree in writing (the day on
which the Closing takes place is referred to herein as the "Closing Date").
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Parent and Newco as
follows:
4.1 Organization and Qualification. Each of the Company and its Subsidiaries
is a corporation duly incorporated, organized, validly existing and in good
standing under the Laws of its jurisdiction of incorporation, and the Company
and the Subsidiaries have the requisite corporate power to own their respective
properties and carry on their respective businesses as now being conducted.
Each of the Company and its Subsidiaries is duly qualified as a foreign
corporation to do business, and is in good standing, in each other jurisdiction
where the character of its properties owned or held under lease or the nature
of its activities makes such qualification necessary, except to the extent that
such failures to so qualify are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. An accurate, correct and complete
list, as of the date hereof, of all of the Subsidiaries of the Company, the
percentage owned by the Company and their jurisdictions of incorporation is set
forth in Schedule 4.1 annexed hereto. Other than the Subsidiaries and Persons
set forth in Schedule 4.1 annexed hereto and Persons whose stock, bonds or
other equity rights are held by the Company or any of its Subsidiaries as an
investment of cash, neither the Company nor any of its Subsidiaries controls,
directly or indirectly, or has any direct or indirect equity participation in,
any Person.
4.2 Capitalization. The authorized capital stock of the Company consists of
(a) 10,000,000 Shares and (b) 1,000,000 shares of preferred stock, par value
$.01 per share, none of which is outstanding. As of the date hereof, (i)
3,596,049 Shares were issued and outstanding, (ii) 90,000 Shares subject to
SARs were issued and outstanding, (iii) 76,218 Shares subject to options to
purchase Shares under the Option Plans were issued and outstanding and (iv)
6,886 Shares subject to rights under the Stock Purchase Plan (a correct and
complete list of such options, including their respective exercise prices, is
set forth in Schedule 4.2 annexed hereto). Except as set forth in Schedule 4.2
annexed hereto and reflected in the prior sentence, there are no options,
warrants or other rights, agreements or commitments obligating the Company to
issue any shares of its capital stock or securities convertible into its
capital stock. On the Closing Date, no more than 3,686,158 Shares, calculated
on a fully-diluted basis, will be issued and outstanding. All Shares
outstanding on the date hereof are, and all Shares subject to issuance upon
exercise or vesting of any options or restricted stock rights, upon
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issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be, duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. All the outstanding capital stock
of each of the Subsidiaries is duly authorized, validly issued, fully paid and
non-assessable and is owned by the Company, free and clear of any Lien. There
are no existing options, warrants or other rights, agreements or commitments of
any character relating to the issued or unissued capital stock or other
securities of any Subsidiary.
4.3 Authority Relative to this Agreement. The Company has all requisite
corporate power and authority to enter into this Agreement and to perform all
of its obligations under this Agreement. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company (except for the need to obtain the affirmative vote of the Company's
shareholders for the transactions contemplated hereby). This Agreement has been
duly executed and delivered by the Company and assuming due authorization,
execution and delivery by the Parent and Newco, this Agreement constitutes the
valid and binding agreement of the Company enforceable in accordance with its
terms except as may be limited by bankruptcy, moratorium and insolvency Laws
and other Laws affecting the rights of creditors' generally and except as may
be limited by the availability of equitable remedies.
4.4 Compliance. Neither the execution and delivery of this Agreement by the
Company, nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the provisions hereof will
(i) violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Lien upon any of the
Assets of the Company or any of its Subsidiaries under, any of the terms,
conditions or provisions of (x) the charter or By-laws of the Company or any of
its Subsidiaries, or (y) any Contracts to which the Company or any of its
Subsidiaries is a party or to which any of them or any of their respective
Assets is subject; or (ii) violate any Judgment applicable to the Company or
any of its Subsidiaries or any of their respective Assets, except for, in the
case of each of clauses (i)(y) and (ii) above, such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of Liens (A) which
are set forth in Schedule 4.4 annexed hereto (or which arise between the date
hereof and the Closing) and (B) which are not reasonably likely, individually
or in the aggregate (together with the items set forth in Schedule 4.4 annexed
hereto), to have a Material Adverse Effect.
4.5 Consents; Transferability.
(a) Other than (i) in connection with or in compliance with the Exchange Act,
(ii) as set forth in Schedule 4.5 annexed hereto or (iii) in connection with
obtaining the adoption by and approval of the Company's shareholders for the
transactions contemplated hereby, no notice to, filing with, or Consent of, any
Person is necessary for the consummation by the Company of the transactions
contemplated by this Agreement, except for such Consents which, if not
obtained, are not reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect. Prior to the Closing, the Company shall have given
all notices, made all filings and obtained all Consents set forth in Schedule
4.5 annexed hereto.
(b) Subject to obtaining the Consents set forth in Schedule 4.5 annexed
hereto, the interest of the Company in all claims, Contracts, licenses, leases
and commitments and all of the other Assets in which the Company has an
interest shall not, upon the consummation of the transactions contemplated
hereby, including the Merger, be terminated or defaulted in any manner
whatsoever by said consummation except for such terminations or defaults which
are not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect, and such claims, Contracts, licenses, leases, commitments and
Assets shall be the property of the Surviving Corporation immediately
thereafter, and the Surviving Corporation shall have all of the right, title
and interest which the Company had available to it prior to the consummation of
the Merger in and to such claims, Contracts, licenses, leases, commitments and
Assets except where the failure to obtain such right, title and interest are
not reasonably likely, individually or in the aggregate, to have a Material
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Adverse Effect. The interest of the Company in all claims, Contracts, licenses,
leases, commitments and its Assets is sufficient to allow the Surviving
Corporation to operate the business of the Company and its Subsidiaries, as
currently conducted.
(c) Schedule 4.5 annexed hereto sets forth all material Contracts (other than
purchase orders entered into in the ordinary course of business) which
terminate or become renewable at any time prior to December 31, 1995 and,
except as set forth in Schedule 4.5 annexed hereto, to the best knowledge of
the Company, there are no facts or circumstances in existence which are
reasonably likely to prevent the Company from renewing each such renewable
Contract (other than purchase orders entered into in the ordinary course of
business).
4.6 Commission Filings. The Company has filed all required forms, reports and
other documents with the Commission since October 1, 1993 (collectively, the
"Commission Filings"), each of which has complied in all material respects with
all applicable requirements of the Securities Act and the Exchange Act. The
Company has heretofore made available to the Parent all of the Commission
Filings. As of their respective dates, the Commission Filings (including all
exhibits and schedules thereto and documents incorporated by reference therein)
did not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of the Company and its Subsidiaries included or incorporated by
reference in such Commission Filings have been prepared in accordance with GAAP
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q), complied as of their
respective dates in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, and fairly present the consolidated financial position of the
Company and its Subsidiaries as of the dates thereof and the consolidated
income and retained earnings and sources and applications of funds for the
periods then ended (subject, in the case of any unaudited interim financial
statements, to the absence of footnotes required by GAAP and normal year-end
adjustments).
4.7 Absence of Undisclosed Liabilities. Except as set forth in Schedule 4.7
annexed hereto or in the Commission Filings made since October 1, 1994
(including the financial statements and the notes thereto contained therein),
as of the date hereof, neither the Company nor any of its Subsidiaries has any
indebtedness, duties, responsibilities, liabilities, claims or obligations of
any nature, whether absolute, accrued, contingent or otherwise, whether as
principal, agent, partner, co-venturer, guarantor or in any capacity
whatsoever, related to or arising from the operation of its businesses or other
ownership, possession or use of its respective Assets, other than (i)
indebtedness, duties, responsibilities, liabilities, claims or obligations
which were incurred by the Company in the ordinary course of business or (ii)
indebtedness, duties, responsibilities, liabilities, claims or obligations
which would not require separate disclosure in the Company's Form 10-K.
4.8 Absence of Specified Changes. Except as set forth in Schedule 4.8 annexed
hereto or disclosed in the Commission Filings, from October 1, 1994 (except as
otherwise noted below) to the date hereof, there has not been with respect to
the Company or its Subsidiaries any:
(a) sales not in the ordinary course of business, which sales have a
value individually in excess of $50,000 or in excess of $100,000 in the
aggregate;
(b) material damage, destruction or loss, whether or not insured, (i)
affecting its business, as currently conducted or as proposed by the
Company to be conducted, or (ii) to its Assets;
(c) failure to maintain in full force and effect substantially the same
level and types of Insurance coverage as in effect on October 1, 1994 for
destruction, damage to, or loss of any of its Assets;
(d) change in accounting principles, methods or practices or investment
practices, including such changes as were necessary to conform with GAAP;
(e) change in payment and processing practices or policies regarding
intercompany transactions;
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(f) write-ups of the valuation of any Assets on its books or records;
(g) declaration, setting aside, or payment of a dividend or other
distribution in respect of its capital stock, or any direct or indirect
redemption, purchase or other acquisition of any shares of its capital
stock;
(h) issuance or sale of any shares of its capital stock or of any other
equity security or of any security convertible into or exchangeable for its
equity securities, except for the issuance of (i) options to purchase 5,000
Shares under the Company's Option Plans (exclusive of 90,000 Shares
cancelled subsequent to October 1, 1994), (ii) 12,077 Shares pursuant to
the Stock Purchase Plan and (iii) 90,000 SARs;
(i) amendment to its Articles of Incorporation or By-laws or equivalent
organizational documents;
(j) increase or commitment to increase the salary or other compensation
payable, or to pay any bonus, to (i) any of its employees, agents or
independent contractors who earn in excess of $100,000 per annum, other
than in the ordinary course of business, or (ii) any of its officers or
directors who earn in excess of $100,000 per annum, whether or not in the
ordinary course of business, except to the extent provided in such person's
current Contract listed on Schedule 4.17;
(k) execution of additional termination, severance or similar agreements
with its officers or directors, other than those listed on Schedule 4.17;
(l) increase, reduction, draw-down or reversal of its reserves (other
than in accordance with GAAP; or
(m) agreement or understanding legally obligating it to take any of the
actions described above in this Section 4.8.
4.9 Taxes.
(a) All Tax Returns for all periods ending on or before the Closing Date that
are or were required to be filed by the Company or any of its Subsidiaries on
or before the Closing Date have been or shall be filed on a timely basis (after
taking into account all extensions which may be available) in accordance with
the Laws of the applicable Governmental Authority. All such Tax Returns that
have been filed were, when filed, and continue to be, true, correct and
complete in all material respects.
(b) Schedule 4.9 annexed hereto lists all United States federal, state, local
and foreign Tax Returns that have been filed from October 1, 1987 through the
date hereof by the Company and each of its Subsidiaries. Schedule 4.9 annexed
hereto describes all adjustments to Tax Returns filed by, or on behalf of, the
Company and each of its Subsidiaries for all taxable periods from October 1,
1987 through the date hereof that have been proposed by any representative of
any Governmental Authority, and the resulting Taxes, if any, proposed to be
assessed. Prior to the Closing, the Company will provide to the Parent an
accurate, correct and complete list of (i) all federal, state, local and
foreign Tax Returns that have been filed from the date hereof through the
Closing Date by the Company or any of its Subsidiaries and (ii) all adjustments
to Tax Returns filed by, or on behalf of, the Company or any of its
Subsidiaries for all taxable periods from October 1, 1987 through the Closing
Date not set forth in Schedule 4.9 annexed hereto that have been proposed by
any representative of any Governmental Authority, and the resulting Taxes, if
any, proposed to be assessed. All Taxes proposed to be assessed (plus interest,
penalties and additions to Tax that were or are proposed to be assessed
thereon, if any) as a result of any examinations have been paid, reserved
against, settled, or, as set forth in Schedule 4.9 annexed hereto, are being
contested in good faith by appropriate proceedings. Except as set forth in
Schedule 4.9 annexed hereto, there are no outstanding waivers or extensions of
any statute of limitations relating to the assessment or collection of Taxes
for which the Company or any of its Subsidiaries may be liable and no
Governmental Authority has requested such a waiver or extension.
(c) Each of the Company and its Subsidiaries has paid, will pay prior to the
Closing Date or will make provision for the payment of all Taxes that have or
may become due for all periods ending on or before the Closing Date, including
all Taxes reflected on the Tax Returns referred to in this Section 4.9, or in
any assessment, proposed assessment or notice, either formal or informal,
received by the Company or any of its
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Subsidiaries, except such Taxes, if any, as are set forth in Schedule 4.9
annexed hereto that are being contested in good faith and as to which adequate
reserves (determined in accordance with GAAP) have been provided. The charges,
accruals and reserves with respect to Taxes on the consolidated books and
records of the Company (determined in accordance with GAAP) are adequate for
Taxes of the Company and its Subsidiaries. All Taxes that the Company or any of
its Subsidiaries is or was required by law to withhold or collect have been
duly withheld or collected and, to the extent required, have been paid to the
appropriate Governmental Authorities. There are no Liens with respect to Taxes
upon any of the Assets of the Company or any of its Subsidiaries (except for
Permitted Liens).
(d) No consent under Section 341(f)(2) of the Code has been filed with
respect to any Assets held or acquired or to be acquired by the Company or any
of its Subsidiaries.
(e) None of the Assets owned by the Company or any of its Subsidiaries are
Assets that the Parent, the Surviving Corporation, the Company or its
Subsidiaries is or shall be required to treat as being owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately before the enactment of the Tax
Reform Act of 1986, or is "tax-exempt use property" within the meaning of
Section 168(h)(1) of the Code.
(f) None of the Company or any of its Subsidiaries is currently or ever was
included in a consolidated or combined Tax Return for federal or state Tax
purposes, other than a Tax Return in which only the Company or its Subsidiaries
were included. There are no existing and since October 1, 1987 there have not
been any Tax sharing agreements or other Contracts providing for the payment or
allocation of Taxes to which the Company or any of its Subsidiaries is a party.
(g) Except as set forth in Schedule 4.9 annexed hereto, none of the Company
or any of its Subsidiaries (i) has agreed to or been required to make any
adjustment pursuant to Section 481(a) of the Code, (ii) has knowledge that the
Internal Revenue Service has proposed any such adjustment or change in
accounting method with respect to it, or (iii) has an application pending with
a Governmental Authority requesting permission for any change in accounting
method.
(h) Except as set forth in Schedule 4.9, there is no Contract or arrangement
of the Company or any of its Subsidiaries covering any Person that,
individually or collectively with all other Contracts or arrangements, as a
consequence of this transaction could give rise to the payment of any amount
that would not be deductible as an excess parachute payment by the Parent, the
Surviving Corporation, the Company or its Subsidiaries by reason of Section
280G of the Code.
4.10 Insurance. Schedule 4.10 annexed hereto sets forth, as of the date
hereof, an accurate, correct and complete list of all binders or policies of
fire, liability, product liability, directors' and officers' liability, workers
compensation, vehicular, unemployment and other insurance, self insurance
programs and fidelity bonds (collectively, "Insurance") maintained by the
Company or any of its Subsidiaries. Prior to the Closing, the Company shall
provide to the Parent an accurate, correct and complete list of all Insurance
policies or binders entered into by the Company or any of its Subsidiaries from
the date hereof through the Closing Date. All Insurance has been issued under
valid and enforceable policies or binders for the benefit of the Company and
its Subsidiaries, and all such policies or binders are in full force and effect
and none of the premiums therefor are past due. Each of the Company and its
Subsidiaries is in compliance with the terms of all such policies and binders
in all material respects. All Insurance is of such types and in such amounts
and for such risks, casualties and contingencies as is reasonable based upon
the business of the Company and its Subsidiaries, as currently conducted. As of
the date hereof, there are no pending or asserted claims outstanding against
any Insurance carrier as to which any insurer has denied liability, and there
are no pending or asserted claims outstanding under any Insurance policy or
binder that have been disallowed or improperly filed. The Company shall
promptly notify the Parent if, from the date hereof through the Closing Date,
(i) any insurer has denied liability of any pending or asserted claim
outstanding against any Insurance carrier or (ii) any pending or asserted claim
outstanding under any Insurance policy or binder is disallowed or improperly
filed.
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4.11 Contracts. (a) Schedule 4.11 annexed hereto sets forth an accurate,
correct and complete list of the following Contracts, in effect at any time
from October 1, 1994 through the date hereof, to which the Company or any of
its Subsidiaries is or was a party, by which any of them are bound or pursuant
to which the Company or any of its Subsidiaries is or was an obligor or a
beneficiary:
(i) Any material Contracts with respect to Real Property (which restrains
the ability of the Company or any of its Subsidiaries to use such Real
Property), Intangible and Other Property, all Affiliate Contracts (whether
or not material), Termination Agreements (whether or not material), Benefit
Plans (whether or not material), and labor matters;
(ii) Any Contract for capital expenditures or services by the Company or
any of its Subsidiaries which involves consideration payable by the Company
or any of its Subsidiaries in excess of $100,000 in any fiscal year;
(iii) Any Contract evidencing any indebtedness for borrowed money in
excess of $50,000 or obligation for the deferred purchase price of Assets
in excess of $100,000 (excluding normal trade payables) or guaranteeing any
indebtedness, obligation or liability in excess of $100,000;
(iv) Any material Contract wherein the Company or any of its Subsidiaries
has agreed to a non-competition provision;
(v) Any material joint venture, partnership, cooperative arrangement or
any other material Contract involving a sharing of profits;
(vi) Any material Contract with any Governmental Authority other than for
sale of merchandise in the ordinary course of business;
(vii) Any power of attorney, proxy or similar instrument granted by or to
the Company or any of its Subsidiaries; and
(viii) Any other Contract related to the business of the Company or any
of its Subsidiaries, as currently conducted, which provides for a period of
performance which extends beyond twelve (12) months from the date hereof or
is not cancelable upon ninety (90) days' notice.
Accurate, correct and complete copies of each such written Contract and
written summaries of each such oral Contract have been delivered by the Company
to the Parent or made available to the Parent at the Company's offices. Prior
to the Closing, the Company will provide to the Parent an accurate, correct and
complete list, and make available to the Parent at the Company's offices
accurate, correct and complete copies, of all written Contracts and written
summaries of each oral Contract entered into by the Company or any of its
Subsidiaries from the date hereof through the Closing Date of a type that is
described in this Section 4.11(a).
(b) Each Contract listed or referred to on Schedule 4.11 to which the Company
or any of its Subsidiaries is or was a party, by which any of them is bound or
pursuant to which the Company or any of its Subsidiaries is or was an obligor
or a beneficiary is in full force and effect, except as is not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
Each of the Company and its Subsidiaries has complied with all commitments and
obligations on its part to be performed or observed under each such Contract,
except for such noncompliance which is not reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect. To the knowledge of the
Company without due inquiry, each party to each such Contract other than the
Company and its Subsidiaries has complied with all commitments and obligations
on its part to be performed or observed thereunder, except for such
noncompliance which is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. Except as set forth in Schedule 4.11 annexed
hereto, none of the Company or any of its Subsidiaries has received any notice
of a default under any such Contract and no event or condition has happened or
presently exists which constitutes a default or, after notice or lapse of time
or both, would constitute a default under any such Contract, except for such
notices and defaults which are not reasonably likely, individually or in the
aggregate (together with the items set forth in Schedule 4.11 annexed hereto),
to have a Material Adverse Effect. Except as set forth in Schedule 4.11 annexed
hereto, the Merger will not be considered an assignment of any of the
Contracts.
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4.12 Real Property. (a) Schedule 4.12 annexed hereto and the Commission
Filings set forth, as of the date hereof, a correct and complete list of all
Real Property owned, leased or subleased by the Company or any of its
Subsidiaries. The Company or its Subsidiaries are the sole and exclusive legal
and equitable owners of all right, title and interest in, and have good,
marketable and insurable title to, all of the Real Property set forth on
Schedule 4.12 annexed hereto as being owned by the Company or any of its
Subsidiaries, free and clear of all Liens, except as set forth on Schedule
4.12, the Commission Filings and Permitted Liens. Except as set forth in
Schedule 4.12 annexed hereto, and except for changes occurring between the date
hereof and the Closing Date which are not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect, all Real Property owned,
leased or subleased by the Company or any of its Subsidiaries is in condition
and repair adequate for its current use, is suitable for the purposes for which
it is presently being used and is adequate to meet all present requirements of
the business of the Company and its Subsidiaries, as currently conducted.
Except as set forth in Schedule 4.12 annexed hereto, and except for changes
occurring between the date hereof and the Closing Date which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect,
the Company or its Subsidiaries have been in peaceable possession of the
premises covered by each Real Property lease or sublease since the commencement
of the original term of such lease or sublease.
(b) Except for Real Property leases and subleases which expire by their terms
between the date hereof and the Closing Date which are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect, each of
the Real Property leases and subleases (and leases underlying such subleases)
is in full force and effect and contains no terms other than the terms
contained in the copies heretofore delivered to the Parent or made available to
the Parent at the Company's offices. Each of the Company and its Subsidiaries
has complied with all commitments and obligations on its part to be performed
or observed under each Real Property lease or sublease, except for such
noncompliance which is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. To the knowledge of the Company without due
inquiry, each party to each Real Property lease or sublease other than the
Company and its Subsidiaries has complied with all commitments and obligations
on its part to be performed or observed thereunder, except for such
noncompliance which is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. To the knowledge of the Company, none of the
Company nor any of its Subsidiaries has received any notice of a default,
offset or counterclaim under any Real Property lease or sublease (or lease
underlying such sublease) and, to the knowledge of the Company, no event or
condition has happened or presently exists which constitutes a default or,
after notice or lapse of time or both, would constitute a default under any
Real Property lease or sublease (or lease underlying such sublease), except for
such notices, defaults, offsets or counterclaims which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
There is no Lien upon any leasehold interest of the Company or any of its
Subsidiaries under any Real Property lease or sublease, to the best knowledge
of the Company. Except as set forth in Schedule 4.12 annexed hereto, the Merger
will not be considered an assignment of any of the Real Property leases
(requiring the consent or approval by another Person) and subleases and shall
not constitute a default under any of the Real Property leases or subleases.
(c) Except for changes occurring between the date hereof and the Closing Date
which are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect, to the best knowledge of the Company, there are no
pending or threatened actions or proceedings (including condemnation and
foreclosure) which could adversely affect the Real Property or any of the Real
Property leases or subleases against the Company or any of its Subsidiaries
and, to the best knowledge of the Company, there are no such actions or
proceedings against other parties. There are no violations of any Law affecting
the Real Property leased or subleased by the Company or any of its Subsidiaries
which are reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect.
(d) Except for changes occurring between the date hereof and the Closing Date
which are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect, to the knowledge of the Company without due inquiry,
there are no defaults by the landlords under any of the Real Property leases or
subleases
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and such landlords have performed all of their obligations thereunder to the
extent that such performance was to be completed heretofore. Neither the
Company nor any of its Subsidiaries has waived any obligation of any landlord
or any right under any of the Real Property leases or subleases, except as set
forth in any written agreement disclosed to the Parent together with the leases
and subleases.
4.13 Tangible Property. (a) The Company or its Subsidiaries have good and
marketable title to all of the Tangible Property owned by the Company or any of
its Subsidiaries, free and clear of all Liens, except for Commission Filings
and Permitted Liens. Except as set forth in Schedule 4.13 annexed hereto, all
Tangible Property in use by the Company or any of its Subsidiaries is in good
operating condition and repair (reasonable wear and tear excepted), is suitable
for the purposes for which it is presently being used and is adequate to meet
all present requirements of the business of the Company and its Subsidiaries,
as currently conducted.
(b) Each of the Tangible Property leases is in full force and effect, except
as the same is not reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect. Each of the Company and its Subsidiaries has
complied with all commitments and obligations on its part to be performed or
observed under each Tangible Property lease or sublease, except for such
noncompliance which is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect. None of the Company or any of its
Subsidiaries has received any notice of a default, offset or counterclaim under
any Tangible Property lease, and no event or condition has happened or
presently exists which constitutes a default or, after notice or lapse of time
or both, would constitute a default under any Tangible Property lease, except
for such notices, defaults, offsets or counterclaims which are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
4.14 Environmental Matters. (a) Except for Environmental Claims which would
not, individually or in the aggregate, have a Material Adverse Effect or as
otherwise disclosed in the Commission Filings or on Schedule 4.14, no Judgment
has been issued since January 1, 1987, no Environmental Claim has been filed
since January 1, 1987 and no penalty has been assessed, and the Company is not
aware of any investigation or review which has occurred or is pending or
threatened against the Company or any of its Subsidiaries, by any Governmental
Authority with respect to (i) any alleged failure by the Company or any of its
Subsidiaries to have any License and Permit required under applicable
Environmental Laws, (ii) any Environmental Laws or (iii) any generation,
treatment, storage, recycling, transportation, discharge, disposal or release
of any Hazardous Materials generated by the Company or any of its Subsidiaries,
and, furthermore, to the best knowledge of the Company, there are no facts or
circumstances in existence which could form the basis for any such Judgment,
Environmental Claim or penalty.
(b) None of the Company or any of its Subsidiaries owns, operates or leases a
treatment, storage or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, as amended, or under any other comparable state
or local Law; and, without limiting the foregoing, except as are not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect,
(i) no polychlorinated bi-phenyl is or has been brought, (ii) no asbestos or
asbestos-containing material is or has been brought, (iii) no underground
storage tanks or surface impoundments for hazardous materials, active or
abandoned, have been installed or operated by the Company or any of its
Subsidiaries and (iv) no Hazardous Material has been released in a quantity
reportable under, or in violation of, any Environmental Law or otherwise
released, in the cases of clauses (i) through (iv), at, on or under any site or
facility now owned, operated or leased or to the knowledge of the Company
without due inquiry previously owned, operated or leased by the Company or any
of its Subsidiaries.
(c) None of the Company or any of its Subsidiaries has transported or
arranged for the transportation of any Hazardous Material to any location that
is (i) listed on the NPL, (ii) listed for possible inclusion on the NPL or any
similar state or local list by the Environmental Protection Agency or similar
state or local Governmental Authority or (iii) the subject of enforcement
actions by any Governmental Authority that may lead to Environmental Claims
against the Company or any of its Subsidiaries.
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(d) No Hazardous Material generated by the Company or any of its Subsidiaries
has been recycled, treated, stored, disposed of or released by the Company or
any of its Subsidiaries at any location in violation of any applicable
Environmental Law.
(e) No notification of a release of Hazardous Materials has been registered
or filed by or on behalf of the Company or any of its Subsidiaries and no site
or facility now owned, operated or leased or to the knowledge of the Company
without due inquiry previously owned, operated or leased by the Company or any
of its Subsidiaries is listed or proposed for listing on the NPL or any similar
list of sites requiring investigation or clean-up.
(f) No Liens have arisen under or pursuant to any Environmental Law on any
site or facility now owned, operated or leased or to the knowledge of the
Company without due inquiry previously owned, operated or leased by the Company
or any of the Subsidiaries, and no Governmental Authority action has been taken
or is in process that could subject any such site or facility to such Liens,
and none of the Company or any of its Subsidiaries would be required to place
any notice or restriction relating to the presence of Hazardous Materials at
any site or facility owned by it in any deed to the Real Property on which such
site or facility is located.
(g) All environmental investigations, studies, audits, tests, reviews or
other analyses conducted by, or that are in the possession of, the Company or
any of its Subsidiaries relating to any site or facility now or previously
owned, operated or leased by the Company or any of its Subsidiaries have been
delivered to the Parent or made available to the Parent at the Company's
offices.
4.15 Intangible and Other Property. (a) Schedule 4.15 annexed hereto sets
forth an accurate, correct and complete list, as of the date hereof, of all
material Intellectual Property of the Company or any of its Subsidiaries.
Unless specifically noted in Schedule 4.15 annexed hereto, the Company and its
Subsidiaries owns, is licensed or otherwise has the right to use all material
Intangible and Other Property used in the business of the Company and its
Subsidiaries, as presently conducted by the Company, except for such Intangible
and Other Property the loss of the use of which is not reasonably likely,
individually or in the aggregate (together with the items set forth in Schedule
4.15 annexed hereto), to have a Material Adverse Effect.
(b) Unless specifically noted in Schedule 4.15 annexed hereto, (i) to the
knowledge of the Company, without due inquiry the use of the Intangible and
Other Property by the Company or any of its Subsidiaries does not infringe upon
or otherwise violate the rights of any third party in or to such Intangible and
Other Property and (ii) since October 1, 1993 no claim has been asserted by any
Person against the Company or its Subsidiaries that the use of any item of
Intangible and Other Property infringes or violates the rights of such Persons,
except for such infringements, violations or claims which are not reasonably
likely, individually or in the aggregate (together with the items set forth in
Schedule 4.15 annexed hereto), to have a Material Adverse Effect. The Merger
will not be considered an assignment of any of the Intangible or Other
Property.
4.16 Employee Benefit Plans.
(a) Benefit Plans. Schedule 4.16 annexed hereto sets forth a correct and
complete list (including the name of the plan, the employee class covered
thereunder, the annual contribution by the Company and, in the case of profit-
sharing plans, the payments made by the Company to such plan during the last
five (5) fiscal years) of all "employee benefit plans" (as defined in Section
3(3) of ERISA), bonus, profit sharing, deferred compensation, incentive or
other compensation plans or arrangements, and other employee fringe benefit
plans, whether funded or unfunded, qualified or unqualified, maintained or
contributed to by any of the Company Group Members in the current year or, to
the extent there may be any liability, in the prior five (5) Benefit Plan years
for the benefit of any of their respective directors, officers or employees or
other Persons (all the foregoing are collectively referred to herein as the
"Benefit Plans"). All Benefit Plans, related trust Contracts or annuity
Contracts (or any other funding instrument) are in full force and effect.
Except as
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set forth in Schedule 4.16 annexed hereto, no Benefit Plan which had previously
been in effect has been terminated.
(b) Funding. All contributions to, and payments from, the Benefit Plans that
may have been required to be made in accordance with the Benefit Plans have
been made in a timely manner during the prior five (5) Benefit Plan years. All
such contributions to the Benefit Plans for any period ending before the
Closing that are not yet required to be made shall be properly accrued. No
Benefit Plan is a "defined benefit plan" within the meaning of Section 3(35) of
ERISA.
(c) Compliance With the Code and ERISA. All necessary governmental approvals
for the Benefit Plans have been obtained. Each of the Company Group Members and
each Benefit Plan (and any related trust agreement or annuity Contract or any
other funding instrument) complies currently, and has complied in the past,
both as to form and operation, with the provisions of all Laws applicable to
Benefit Plans, except for such noncompliance which could not, individually or
in the aggregate, in the sole good faith opinion of the Parent, have a Material
Adverse Effect.
(d) Administration. Each Benefit Plan has been administered in compliance, in
all material respects, with the requirements of the Code and ERISA. All
reports, Returns and similar documents with respect to the Benefit Plans
required to be filed since the commencement of the Benefit Plans with any
Government Authority or distributed to any Benefit Plan participant have been
duly and timely filed or distributed (after taking into account all extensions
and deferral rights), except for such failure to file or distribute which could
not individually or in the aggregate, in the sole good faith opinion of the
Parent, have a Material Adverse Effect. There are no investigations by any
Governmental Authority, termination proceedings or other claims (except claims
for benefits payable in the normal operation of the Benefit Plans), suits or
proceedings against or involving any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan pending or, to the best knowledge of
the Company, threatened that could give rise to any liability in any material
respect to any of the Company Group Members, or the directors, officers or
employees of the Company or any of its Subsidiaries or a trustee, administrator
or other fiduciary of any trusts created under any Benefit Plan.
(e) Prohibited Transactions. No "prohibited transaction" (as defined in
Section 4975 of the Code or Section 406 of ERISA) has ever occurred which
involves the Assets of any Benefit Plan and which could subject to a material
extent any of the Company Group Members, or any of the directors, officers or
employees of the Company or any of its Subsidiaries, or a trustee,
administrator or other fiduciary of any trusts created under any Benefit Plan,
to the tax or penalty on prohibited transactions imposed by Section 4975 of the
Code or the sanctions imposed under Title I of ERISA. Neither the Company Group
Members nor, to the best knowledge of the Company, the directors, officers or
employees of the Company or any of its Subsidiaries, a trustee, administrator
or other fiduciary of any Benefit Plan, nor any agent of any of the foregoing,
has ever engaged in any transaction or acted or failed to act in a manner which
could subject any of the Company Group Members, their businesses, the Surviving
Corporation or the Parent to any liability for breach of fiduciary duty under
ERISA or any other applicable Law, except for such liability which could not,
individually or in the aggregate, in the sole good faith opinion of the Parent,
have a Material Adverse Effect.
(f) Multiemployer Plans. None of the Benefit Plans is, and none of the
Company Group Members has ever been a party to, a "multiemployer pension plan"
as defined in Section 3(37) of ERISA.
(g) Medical or Death Benefits. No Benefit Plan, including any welfare plan
(as defined in Section 3(1) of ERISA), maintained by any Company Group Member
provides medical or death benefits with respect to current or former employees
beyond their termination of employment (other than coverage mandated by Law).
Each such welfare plan to which Section 601-609 of ERISA and Section 4980B of
the Code apply has been administered in compliance in all material respects,
with such sections.
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(h) Compensation. Except for stock option agreements and as set forth in
Schedule 4.17 annexed hereto, no Contract entitles any individual to severance
or termination pay or accelerates the time of payment and vesting, or increases
the amount of compensation due, or benefits payable under any Benefit Plan with
respect to, any Person.
4.17 Labor Matters.
(a) Affiliate Contracts. Schedule 4.17 annexed hereto sets forth, as of the
date hereof, a correct and complete list (including the name of the parties,
term and rate of compensation) of all Contracts (other than stock option
agreements) between the Company or any of its Subsidiaries and any executive
officer and director of the Company or any of its Subsidiaries, or Affiliates
of any of the foregoing (collectively, "Affiliate Contracts"). Prior to the
Closing, the Company will provide to the Parent a correct and complete list of
all Affiliate Contracts entered into by the Company or any of its Subsidiaries
from the date hereof through the Closing Date.
(b) Termination Agreements; Compensation. Schedule 4.17 annexed hereto sets
forth a correct and complete list of all termination, severance, or similar
agreements with the Company's officers or directors (the "Termination
Agreements") in effect as of the date hereof to which the Company or any of its
Subsidiaries is or may be bound or affected and under which the Company or any
of its Subsidiaries have any remaining obligations. Schedule 4.17 annexed
hereto sets forth a correct and complete list of the fifteen (15) most highly
compensated employees of the Company or any of its Subsidiaries (including
bonuses, commissions and deferred compensation) for each of the Company's 1993
and 1994 fiscal years.
(c) Labor Contracts; Disputes. There are no controversies pending or, to the
best knowledge of the Company, threatened involving the employees of the
Company or any of its Subsidiaries and, except as set forth on Schedule 4.17
annexed hereto, there are no collective bargaining or other union Contracts to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries may be bound. None of the Company or any of its
Subsidiaries has suffered or sustained any work stoppage and, to the best
knowledge of the Company, no such work stoppage is threatened. To the best
knowledge of the Company, no union organizing, election or other activities
involving any employees of the Company or any of its Subsidiaries are in
progress or threatened.
4.18 Customers and Suppliers. Schedule 4.18 annexed hereto sets forth an
accurate, correct and complete list of the twenty (20) largest customers (in
terms of gross revenues) of the Company and its Subsidiaries, on a consolidated
basis, for fiscal years 1993, 1994 and 1995 (year-to-date) and the ten (10)
largest suppliers (in terms of purchases) to the Company and its Subsidiaries,
on a consolidated basis, for fiscal years 1992, 1993 and 1994.
4.19 Inventory. All inventory of the Company and its Subsidiaries was
acquired or manufactured in the ordinary course of business and is usable and
saleable in the ordinary course of such business or is otherwise recorded on
the books and records of the Company in accordance with GAAP. The Company and
its Subsidiaries have good and valid title to the inventory, free and clear of
all Liens.
4.20 Accounts Receivable. All accounts receivable of the Company and its
Subsidiaries reflected on the balance sheet as at the date set forth in the
most recent Commission Filings and all accounts receivable of the Company and
its Subsidiaries arising subsequent to the date thereof have arisen in the
ordinary course of business of the Company and its Subsidiaries and, to the
best knowledge of the Company, are subject to no defenses, offsets or
counterclaims, other than reserves reflected on the balance sheet as at the
most recent Commission Filings.
4.21 Compliance With Laws. Each of the Company and its Subsidiaries, complies
with all Laws applicable to such Company or Subsidiary, its business and its
Assets, except for such noncompliance which is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. As of the
date hereof, there are no unsatisfied Judgments applicable to the Company or
any of its Subsidiaries, their
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respective businesses and their respective Assets (and having any current or
future effect on the Company or any of its Subsidiaries). The Company and its
Subsidiaries are in compliance with all Judgments applicable to the Company or
any of its Subsidiaries, their respective businesses and their respective
Assets, except for such noncompliance which is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
4.22 Licenses and Permits. Schedule 4.22 annexed hereto contains an accurate,
correct and complete list of all Licenses and Permits which are material to the
business of the Company and its Subsidiaries, as currently conducted by the
Company. All such Licenses and Permits are valid and in full force and effect
and there are no pending or, to the best knowledge of the Company, threatened
proceedings which could result in the termination, revocation, limitation or
impairment of any of such Licenses and Permits, except for such terminations,
revocations, limitations or impairments which are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect. The
Licenses and Permits are sufficient to enable the Company and its Subsidiaries
to own and conduct their business, as currently conducted by the Company.
4.23 Legal Proceedings. There is no action, suit, proceeding, complaint,
charge, Tax or other audit, investigation or arbitration or other method of
settling disputes or disagreements by or before any Governmental Authority
pending or, to the best knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or their respective Assets,
except as summarized in Schedule 4.23 annexed hereto or in the Commission
Filings, and except as the same is not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect. Except as summarized on
Schedule 4.23 or disclosed in the Commission Filings, on the Closing Date,
there will be no action, suit, proceeding, complaint, charge, Tax or other
audit, investigation or arbitration or other method of settling disputes or
disagreements by or before any Governmental Authority pending or, to the best
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or their respective Assets, except as the same is not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect. There is, and at the Closing Date there will be, no action, suit,
proceeding, complaint, charge, Tax or other audit, investigation or arbitration
or other method of settling disputes or disagreements by or before any
Governmental Authority which questions the validity of this Agreement or any
action taken or to be taken by the Company or any of its Subsidiaries in
connection with the transactions contemplated hereby. Neither the Company, its
Subsidiaries nor any of the Assets of the Company or its Subsidiaries are
subject to any Judgment which restricts the ability of the Company or any of
its Subsidiaries to consummate the Merger or, except as summarized in Schedule
4.23 annexed hereto, to operate the business of the Company and its
Subsidiaries, as currently conducted.
4.24 No Brokers. Except as set forth in the Commission Filings, neither the
Company nor any of its Subsidiaries has entered into any Contract, arrangement
or understanding with any Person or incurred any liability which could result
in the obligation of any Person to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with this Agreement or the
transactions contemplated hereby.
4.25 Disclosure. No representation, warranty or statement made by the Company
in this Agreement, the Exhibits and the Schedules, or in any other material
furnished or to be furnished by the Company to the Parent or its
representatives, financing sources, attorneys and accountants, pursuant to this
Agreement or the transactions contemplated hereby, contains or shall contain
any untrue statement of a material fact, or omits or shall omit to state a
material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
4.26 Books and Records. The books of account and other financial records of
the Company and its Subsidiaries are accurate, correct and complete in all
material respects. The minute books of each of the Company and its Subsidiaries
contain accurate, correct and complete records of the respective charters (as
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amended or restated) and By-laws (as amended or restated) and accurately
reflect all corporate action of the shareholders and the Board of Directors of
such Company or Subsidiary.
5. REPRESENTATIONS AND WARRANTIES OF THE PARENT AND NEWCO.
The Parent and Newco hereby represent and warrant to the Company as follows:
5.1 Organization and Qualification. The Parent is a corporation duly
incorporated, organized, validly existing and in good standing under the Laws
of the State of Delaware, and Newco is a corporation duly incorporated,
organized, validly existing and in good standing under the Laws of the State of
New York. Each of the Parent and Newco has the requisite corporate power to own
its properties and carry on its business as now being conducted. Each of the
Parent and Newco is duly qualified as a foreign corporation to do business, and
is in good standing, in each other jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary, except to the extent that any such failure so to
qualify is not reasonably likely, individually or in the aggregate, to have a
material adverse effect on the business, Assets, operations or financial
condition of the Parent or Newco.
5.2 Authority Relative to this Agreement. Each of the Parent and Newco has
all requisite corporate power and authority to enter into this Agreement and to
perform all of its obligations under this Agreement. The execution, delivery
and performance of this Agreement and the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of each of
the Parent and Newco. This Agreement has been duly executed and delivered by
the Parent and Newco and assuming due authorization, execution and delivery by
the Company, this Agreement constitutes the valid and binding agreement of the
Parent and Newco enforceable in accordance with its terms, except as may be
limited by bankruptcy, moratorium and insolvency Laws and other Laws affecting
the rights of creditors' generally and except as may be limited by the
availability of equitable remedies.
5.3 Compliance. Neither the execution and delivery of this Agreement by the
Parent or Newco, nor the consummation by the Parent or Newco of the
transactions contemplated hereby, nor compliance by the Parent and Newco with
any of the provisions hereof will (i) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required by, or result in
a right of termination or acceleration under, or result in the creation of any
Lien upon any of the Assets of the Parent or Newco under, any of the terms,
conditions or provisions of (x) the charter or By-laws of the Parent or Newco,
or (y) any Contracts to which the Parent or Newco is a party or to which the
Parent or Newco or their respective Assets may be subject; or (ii) violate any
Judgment applicable to the Parent or Newco or their respective Assets, except
for, in the case of each of clauses (i)(y) and (ii) above, such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
Liens which are set forth on Schedule 5.3 annexed hereto and which are not
reasonably likely, individually or in the aggregate (together with the items
set forth in Schedule 5.3 annexed hereto), to have a Material Adverse Effect on
the business, Assets, operations or financial condition of the Parent or Newco.
5.4 Consents. Other than (i) in connection with or in compliance with the
Exchange Act and (ii) as set forth on Schedule 5.4 annexed hereto, no notice
to, filing with, or Consent of, any Person is necessary for the consummation by
the Parent or Newco of the transactions contemplated by this Agreement. Prior
to the Closing, the Parent or Newco shall have given all notices, made all
filings and obtained all Consents set forth on Schedule 5.4 annexed hereto.
5.5 Financing. The Parent has delivered to the Company the commitment letters
annexed hereto relating to the financing (the "Financing") needed to consummate
the transactions contemplated by the Agreement. Parent represents that it has
sufficient funds to finance the equity portion of the Financing, as outlined in
the commitment letters. In addition, Florescue Family Corporation has delivered
a letter guarantying the availability of the equity portion of the Financing.
The debt portion of the Financing, the
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equity portion of the Financing and the anticipated net working capital of the
Company is sufficient to consummate the transactions contemplated by the
Agreement.
5.6 Legal Proceedings. There is no action, suit, proceeding, complaint,
charge, Tax or other audit, investigation or arbitration or other method of
settling disputes or disagreements by or before any Governmental Authority
pending or, to the best knowledge of the Parent and Newco, threatened against
or affecting the Parent, Newco or their respective Assets. There is, and at the
Closing Date there will be, no action, suit, proceeding, complaint, charge, Tax
or other audit, investigation or arbitration or other method of settling
disputes or disagreements by or before any Governmental Authority which
questions the validity of this Agreement or any action taken or to be taken by
the Parent or Newco in connection with the transactions contemplated hereby.
Neither the Parent, Newco nor any of their respective Assets are subject to any
Judgment or other agreement which restricts the ability of the Parent or Newco
from consummating the Merger or purchasing the Shares.
5.7 No Brokers. Except as set forth on Schedule 5.7 annexed hereto, neither
the Parent nor Newco has entered into any Contract, arrangement or
understanding with any Person which could result in the obligation of any
Person to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with this Agreement or the transactions contemplated
hereby.
5.8 Disclosure. No representation, warranty or statement made by the Parent
in this Agreement, the Exhibits and the Schedules, or in any other material
furnished or to be furnished by the Parent to the Company or its
representatives, attorneys and accountants pursuant to or, in connection with
this Agreement or the transactions contemplated hereby, contains or shall
contain any untrue statement of a material fact, or omits or shall omit to
state a material fact required to be stated herein or therein or necessary to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
6. COVENANTS AND OTHER AGREEMENTS.
The parties hereto covenant and agree as follows:
6.1 Conduct of Business. (a) The Company shall, and the Company shall cause
each of the Subsidiaries to, except as otherwise expressly contemplated by this
Agreement or as specifically consented to in writing by the Parent (which
consent shall not be unreasonably withheld or delayed), from and after the date
of this Agreement until the Closing Date, use all reasonable efforts to
preserve its present business organization intact, keep available the services
of its present employees, preserve its present relationships with Persons
having business dealings with such Company or Subsidiary, operate its business
in the ordinary and regular course consistent with its prior practices
(including the payment of trade payables and the collection of accounts
receivables), maintain its books and records in accordance with good business
practice, on a basis consistent with prior practice and in accordance with
GAAP, and maintain all Insurance, certificates and Licenses and Permits
necessary for the conduct of its business, as currently conducted and as
proposed by the Company to be conducted; provided, however, that nothing in
this Section 6.1 shall require the Company or any of its Subsidiaries to make
any payment or incur any obligation which (i) is not in the ordinary course of
business or (ii) is inconsistent with its existing policies and practices or
this Agreement.
(b) During the period from and after the date of this Agreement until the
Closing Date, except as otherwise expressly contemplated by this Agreement or
set forth in Schedule 6.1 annexed hereto or as otherwise consented to by the
Parent in writing, the Company shall not, and the Company shall cause each of
the Subsidiaries not to: (i) declare, set aside or pay any dividend or other
distribution in respect of its capital stock or redeem, purchase or acquire any
shares of its capital stock (other than cashless exercises of stock options by
employees or directors); (ii) issue any of its capital stock, stock options or
rights requiring it to sell or issue any of its capital stock or securities,
except for the issuance of Shares upon exercise of outstanding options or stock
purchase rights under the Option Plans and the Stock Purchase Plan; (iii) amend
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its charter or By-laws; (iv) make any capital expenditure or capital
commitment, other than those expenditures or commitments made between July 1,
1995 and the Closing Date which do not exceed $2,500,000 in the aggregate; (v)
make any change in its business, as currently conducted or as proposed by the
Company to be conducted other than in the ordinary course of business; (vi)
dispose of any material rights with respect to any Intellectual Property or
Intangible and Other Property, other than in the ordinary course of business;
(vii) change its accounting principles, methods or practices, investment
practices, payment and processing practices or policies regarding intercompany
transactions, except for such changes as are necessary to conform with GAAP and
are disclosed to the Parent prior to such change; (viii) hire, or renew any
existing Contract with, any Person as an officer or director; (ix) hire, or
renew any existing Contract with, any Person as a consultant, independent
contractor or non-officer employee, if such Person would receive pro-rated
annual compensation (including salary, fringe benefits and bonuses) in excess
of $100,000; (x) incur any obligation (not part of normal, continuing
operations, such as payroll and Taxes, or in the operation of the Company and
its Subsidiaries in the ordinary course of business or the performance of
Contracts disclosed in any Schedule annexed hereto) in excess of $100,000 in
the aggregate; (xi) increase, reduce, draw-down or reverse any of its reserves,
other than in accordance with GAAP; (xii) settle any litigations or dispute
with Messrs. Rowe or Nadolski; (xiii) enter into any other transaction that
would be required to be set forth in Schedule 4.8 annexed hereto if such
transaction occurred between October 1, 1994 and the date hereof; or (xiv)
agree or commit orally or in writing to do any of the foregoing.
6.2 No Shop; Non-Disclosure. (a) Until the Closing or the termination of this
Agreement as provided in Section 9.1, except as mutually agreed in writing by
the parties hereto, the Company shall not, and the Company shall use all
reasonable efforts to cause its officers, employees, representatives or agents
(including Goldman, Sachs & Co.) not to, directly or indirectly solicit,
encourage, initiate, discuss with others or induce the making of any inquiries
or proposals for the acquisition of any of the capital stock, Assets (other
than in the ordinary course of business) or business of, or the merger with, or
any similar transaction concerning, the Company, or furnish information to, or
engage in negotiations relating to the foregoing or otherwise cooperate in any
way with, or accept any proposal relating to the foregoing from, any Person or
group other than the Parent and its officers, employees, representatives and
agents, provided, however, that the Company Board may furnish or cause to be
furnished such information to, and may participate in such discussions or
negotiations with, Persons who have made a bona fide proposal if the Company
Board believes, in good faith, after consultation with its financial advisors,
that such bona fide proposal is for a transaction more favorable to the
Company's shareholders than the transactions contemplated hereby and, in the
opinion of outside counsel to the Company Board, the Company Board's fiduciary
duty under applicable Law requires it to furnish or cause to be furnished such
information and/or participate in such discussions or negotiations (a "Superior
Offer"). The Company shall promptly communicate in writing to the Parent the
principal substance of any discussion and the terms of any proposal received or
the fact that the Company has received inquiry with respect to, or will
participate in discussions or negotiations in respect of, any such transactions
on the same date that the Company knows that such discussions will take place,
and, on the same date or promptly thereafter, the Company shall promptly
communicate to the Parent the existence of any such discussions or
negotiations.
(b) No party (or its representatives, agents, counsel or accountants) hereto
shall disclose to any third party, other than potential lenders, any
confidential or proprietary information about the business, Assets or
operations of the Company or its Subsidiaries or the transaction contemplated
hereby, except as may be required in connection with a Superior Offer. The
parties hereto agree that the remedy at law for any breach of the requirements
of this subsection will be inadequate and that any breach would cause such
immediate and permanent damage as would be impossible to ascertain, and,
therefore, the parties hereto agree and consent that in the event of any breach
of this subsection, in addition to any and all other legal and equitable
remedies available for such breach, including a recovery of damages, the non-
breaching parties shall be entitled to obtain preliminary or permanent
injunctive relief without the necessity of proving actual damage by reason of
such breach and, to the extent permissible under applicable Law, a temporary
restraining order may be granted immediately on commencement of such action.
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6.3 Employment Agreements. (a) From the date hereof until the Closing or
earlier termination of this Agreement, neither the Company nor any of its
Subsidiaries shall adopt, enter into or amend, or extend by action or inaction,
any Benefit Plan (other than in the ordinary course of business or as required
by law), whether or not such Benefit Plans were previously approved by the
Company Board.
(b) Parent shall cause the Surviving Corporation to honor (without
modification) the Termination Agreements and individual benefit arrangements
listed on Schedule 6.3(b), all as in effect at the Effective Time, and agrees
(i) to pay, at the Effective Time, all amounts then owing under such agreements
and arrangements as a result of the triggering of "change of control" and other
provisions; or (ii) if, subsequent to the Effective Time but prior to the
expiration or renewal of any such agreement or arrangement with an executive
officer, such executive officer is terminated (other than for cause) or is not
employed in a position substantially equivalent to his position at the
Effective Time at a location within 25 miles of the location where he performed
such duties at the Effective Time, such executive officer shall be entitled to
receive all amounts then payable under such agreement as if the "change of
control" occasioned by the Merger and the subsequent termination or change in
position or location occurred simultaneously.
6.4 Parent's Access to Information. From and after the date hereof, the
Parent, its outside financing sources and investors, and their respective
counsel, accountants, representatives and agents, shall have full access, upon
reasonable notice and during normal business hours, to the Company and the
financial, legal, accounting and other representatives of the Company with
knowledge of the business and the Assets of the Company and, upon reasonable
notice, shall be furnished all relevant documents, records and other
information concerning the business, finances and properties of the Company and
its Subsidiaries that the Parent, its outside financing sources, investors and
their respective counsel, accountants, representatives and agents, may
reasonably request. The Parent agrees not to contact any employees, personnel,
suppliers or customers of the Company or its Subsidiaries without the prior
approval of the Company (which approval shall not be unreasonably withheld or
delayed).
6.5 Consents. The Company shall use all reasonable efforts to give any
notices, make any filings, and obtain any Consents set forth on Schedule 4.5
annexed hereto. The Parent and Newco shall use all reasonable efforts to give
notices, make any filings and obtain any Consents set forth on Schedule 5.4
annexed hereto.
6.6 Notification of Certain Matters. Each of the parties hereto agrees to
give prompt notice to the other parties hereto of (i) the occurrence, or
failure to occur, of any event which occurrence or failure to occur is
reasonably likely to cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate at any time from the
date hereof to the Closing Date, (ii) any failure on its part to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder and (iii) any breach of any representation or warranty of such
party hereunder; provided, however, that the delivery of or the failure to
deliver any notice pursuant to this Section 6.6 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
6.7 Action of Shareholders of the Company; Voting and Disposition of the
Shares. The Company shall take all action necessary, in accordance with the BCL
and its Articles of Incorporation and By-laws, to convene the Special Meeting
as promptly as practicable to consider and vote upon the Merger. At the Special
Meeting, each of the Parent and Newco shall vote, or cause to be voted, all of
the Shares then owned by it, if any, in favor of the Merger.
6.8 Financial Statements. From and after the date hereof until the Closing,
as soon as practicable after the end of each calendar month (but no later than
thirty (30) days after the end of such calendar month), the Company shall
deliver to the Parent an unaudited consolidated balance sheet of the Company
and its Subsidiaries at the last day of such calendar month, an unaudited
consolidated statement of income of the Company and its Subsidiaries for such
calendar month and an unaudited consolidated statement of cash flows of the
Company and its Subsidiaries for such calendar month. All such unaudited
financial statements shall be (x) in accordance with the books of account,
records and past practices of the Company and its Subsidiaries
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for interim financial statements; (y) fair presentations of the material
liabilities and obligations, financial condition, accruals for incentive or
bonus payments, reserves for incurred but unreported claims and results of
operations of the Company and its Subsidiaries as of the dates and for the
periods indicated; and (z) prepared in accordance with GAAP; provided, however,
that such financial statements need not contain all of the footnotes required
by GAAP, and may be condensed and subject to year-end and quarter-end
adjustments.
6.9 Indemnification of Directors and Officers.
(a) From and after the Effective Time, Parent shall cause the Surviving
Corporation to, and the Surviving Corporation agrees to, indemnify, defend and
hold harmless in accordance with the Certificate of Incorporation and By-laws
of the Company, and subject to the limitations of the BCL, each present and
past officer, director, employee, representative or agent (other than Nadolski
and Blair), of the Company (or any subsidiary or division thereof), including,
without limitation, each person controlling any of the foregoing persons
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties"), against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged
acts or omissions, by them in their capacities as such, whether commenced,
asserted or claimed before or after the Effective Time. In the event of any
such claim, action, suit, proceeding or investigation (an "Action"), (i) the
Surviving Corporation shall advance the reasonable fees and expenses of counsel
selected by the Indemnified Party, which counsel shall be reasonably acceptable
to Parent, in advance of the final disposition of any such action; provided,
however, that prior to advancement of fees and expenses, the Indemnified Party
shall provide an undertaking in form and substance reasonably satisfactory to
the Surviving Corporation, and (ii) the Surviving Corporation will cooperate in
the defense of any such matter; provided, however, that the Surviving
Corporation shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld or delayed) and
provided, further, that the Surviving Corporation shall not be obligated
pursuant to this Section to pay the fees and disbursements of more than one
counsel for all Indemnified Parties in any single Action except to the extent
that, in the opinion of counsel for the Indemnified Parties, to do so would be
inappropriate due to actual or potential differing interests between or among
such parties.
(b) For a period of six years after the Effective Time, the Surviving
Corporation shall not amend the provisions of its Certificate of Incorporation
and By-laws providing for exculpation of director and officer liability and
indemnification, except as required by applicable law.
(c) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation agrees to, maintain in effect for the Indemnified Parties for not
less than three years the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by the Company
and the Company's subsidiaries with respect to matters occurring at or prior to
the Effective Time; provided, that Parent may substitute therefor policies of
substantially the same coverage containing terms and conditions which are no
less advantageous, in any material respect, to the Indemnified Parties.
(d) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation agrees to, pay all expenses, including attorneys' fees, that may be
incurred by any Indemnified Parties in enforcing the indemnity and other
obligations provided for in this Section 6.9.
(e) The rights of each Indemnified Party hereunder shall be in addition to
any other rights such Indemnified Party has under the Certificate of
Incorporation or By-laws of the Company, under the BCL or otherwise. This
Section 6.9 is intended to benefit each of the Indemnified Parties and shall be
binding on all successors and assigns of Newco, the Company and the Surviving
Corporation.
6.10 Additional Agreements. 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 to consummate and make effective as
promptly as practicable
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the transactions contemplated by this Agreement, and to cooperate with each
other in connection with the foregoing.
7. CONDITIONS PRECEDENT TO THE PARENT'S OBLIGATIONS.
The obligations of the Parent and Newco are subject to the satisfaction, at
or before the Closing, of the conditions set forth below.
7.1 Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company set forth herein are true and
correct in all material respects as of the date hereof and as of the Closing
Date. Any matter which would otherwise constitute a failure to comply with or
conform to a representation or warranty by the Company hereunder shall not be
deemed to be such a failure if the Parent has consented to the same in writing.
7.2 Performance by the Company. The Company shall have performed, satisfied
and complied with all covenants, agreements, and conditions required to be
performed by it.
7.3 Deliveries By the Companies at Closing. At the Closing, the Company shall
have delivered to the Parent (or, in the case of clauses (h) and (i) below,
have made available to the Parent at the offices of the Company or its
Subsidiaries) all of the following:
(a) a certificate of the Company, executed by the President and the Chief
Financial Officer of the Company, to the effect that each of the conditions
specified in Sections 7.1, 7.2, 7.4, 7.5, 7.7 and 7.10 has been satisfied;
(b) evidence of the filing with the office of the Secretary of State of
the State of New York of the Certificate of Merger, pursuant to Section 904
of the BCL, with respect to the Merger of Newco with and into the Company,
in the form annexed hereto as Exhibit A;
(c) resolutions duly adopted by the Company Board authorizing the
transactions which are the subject of this Agreement, certified by the
Secretary of the Company;
(d) certificates issued by appropriate Governmental Authorities
evidencing, as of a recent date, the good standing and franchise tax status
of the Company and each of its Subsidiaries in the jurisdiction in which
such Company or Subsidiary is incorporated and in those jurisdictions in
which such Company or Subsidiary is qualified to do business and, as of the
most recent practicable date, telegrams, if available, issued by the
appropriate Governmental Authorities with respect to the good standing and
franchise tax status of such Company or Subsidiary in the jurisdiction in
which such Company or Subsidiary is incorporated;
(e) a copy of the Articles of Incorporation or other applicable charter
instruments and all amendments thereto of the Company and each of its
Subsidiaries, certified by the appropriate Governmental Authorities;
(f) certificates executed by the Secretary of the Company to the effect
that there have been no amendments to the charter documents referred to in
Section 7.3(e) hereof since the date of this Agreement;
(g) the original books of account, minute books, minutes and other
records of all meetings of the Company and each of its Subsidiaries, and
the stock books and stock transfer ledgers of each of the Subsidiaries of
the Company;
(h) the corporate seal of the Company and each of its Subsidiaries and
such other documents, records, and other items as shall be necessary for
the operation of the businesses of the Company and each of its
Subsidiaries;
(i) a statement upon which the Parent and the Exchange Agent shall rely
in tendering the Per Share Price pursuant to Section 3.6 and which (i)
shall provide the name of each shareholder of record of
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Shares and the number of Shares held by such shareholder and (ii) shall be
issued by the Company's transfer agent, Continental Stock Transfer & Trust
Company.
7.4 Consents. The Company shall have obtained and delivered to the Parent all
Consents set forth in Schedule 4.5 annexed hereto, except where the failure to
obtain such Consents would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
7.5 Changes in the Business. From and after the date hereof, there shall have
occurred or be threatened no event relative to the Assets or business of the
Company and its Subsidiaries which is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
7.6 Dissenting Shares. The number of Dissenting Shares (if any) with respect
to which the holders thereof shall have properly demanded appraisal in
accordance with the BCL before the taking of a vote on the Merger at the
Special Meeting or any adjournment thereof, the holders of which shall not have
withdrawn such demand as of the Closing Date, shall not exceed ten percent
(10%) of the issued and outstanding Shares entitled to vote thereon.
7.7 Shareholder Approval. This Agreement and the transactions contemplated
hereby shall have been adopted and approved by the holders of sixty-six and
two-thirds percent (66 2/3%) of the Shares.
7.8 Simultaneous Closing. Simultaneously with the Closing, the Parent shall
have closed the Financing.
7.9 Opinion of the Company's Counsel. The Parent shall have received the
favorable opinion, dated the date of the Closing, of the Company's Counsel,
reasonably acceptable in substance and form to the Parent.
7.10 Absence of Litigation. There shall not be pending or threatened before
any Governmental Authority any action, suit or proceeding which, if adversely
determined, would (i) make the purchase by the Parent of the Shares illegal,
(ii) require the divestiture by the Parent of all or a material portion of the
business or Assets of the Surviving Corporation or any of its Subsidiaries as a
result of the transactions contemplated hereby, (iii) impose limitations which
adversely affect to a significant extent the ability of the Surviving
Corporation to exercise full rights of ownership of the Assets or business of
the Company and its Subsidiaries, as currently conducted by the Company, as a
result of the transactions contemplated hereby, (iv) prevent the consummation
of the Merger or (v) cause the Merger to be rescinded following consummation of
the Merger, and no Judgment with respect to any of the foregoing shall be in
effect.
7.11 Proceedings and Documents. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be in
form and substance reasonably satisfactory to the Parent and the Parent's
Counsel, and the Parent shall have received all such counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions as the Parent reasonably requests.
7.12 Current Assets; Inventory. Parent shall have received from the Company
an audited balance sheet dated as of September 30, 1995, certified by the
Company's Accounting Officer and Deloitte & Touche, showing that the Company
has (i) at least $27,750,000 in net current assets (consisting of total current
assets plus restricted cash and marketable securities plus common stock notes
receivable, less current liabilities (other than the current portion of long-
term debt)) less an amount, not to exceed $100,000, equal to the out-of-pocket
expenses incurred in connection with the completion of a physical inventory and
(ii) inventory recorded on the books and records of the Company in accordance
with GAAP of not more than $14,150,000. In connection with the audit, a
physical inventory shall be taken.
7.13 Officer's Certificate. Parent shall have received from the Company's
Chief Accounting Officer a certificate stating that there has been (i) no
change in the Company's balance sheet which is reasonably likely to
individually, or in the aggregate with all other such changes, have a Material
Adverse Effect, since
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September 30, 1995, and (ii) no change in the inventory since September 30,
1995 other than changes in the ordinary course of business.
8. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS.
The obligations of the Company are subject to the satisfaction, at or before
the Closing, of the conditions set forth below. The benefit of these conditions
is for the Company only and may be waived by the Company in writing at any time
in its sole discretion.
8.1 Accuracy of the Parent's Representations and Warranties. The
representations and warranties of the Parent and Newco set forth herein are
true and correct in all material respects as of the date hereof and the Closing
Date.
8.2 Performance by the Parent. The Parent and Newco shall have performed,
satisfied and complied with all covenants, agreements and conditions required
to be performed by each of them.
8.3 Deliveries by the Parent at Closing. At the Closing, the Parent shall
deliver to the Company the following:
(a) a certificate of each of the Parent and Newco executed by the
President, Chief Executive Officer or Chief Financial Officer of each of
the Parent and Newco to the effect that each of the conditions specified in
Sections 8.1, 8.2, 8.4 and 8.7 has been satisfied;
(b) evidence of the filing with the Office of the Secretary of State of
the State of New York of the Certificate of Merger, pursuant to Section 904
of the BCL, with respect to the Merger of Newco with and into the Company,
in the form annexed hereto as Exhibit A;
(c) resolutions adopted by the Board of Directors of each of the Parent
and Newco authorizing the transactions contemplated hereby, certified by
the Secretary of each of the Parent and Newco;
(d) certificates issued by appropriate Governmental Authorities
evidencing, as of the most recent practicable date, the good standing and
franchise tax status of Newco in its state of incorporation and, as of a
date not more than two Business Days prior thereto, telegrams, if
available, issued by the appropriate Governmental Authorities with respect
to the good standing and franchise tax status of Newco in its state of
incorporation;
(e) copies of the Articles of Incorporation or other applicable charter
instruments and all amendments thereto of Newco, certified by the
applicable Governmental Authorities;
(f) certificates executed by the Secretary of Newco to the effect that
there have been no amendments to the charter documents referred to in
Section 8.3(e) hereof since the date of the certifications referred to in
such subsection; and
(g) copies of the By-laws or comparable documents, including all
amendments thereto, of Newco, certified by the Secretary of Newco.
8.4 Consents. The Parent and Newco shall have obtained and delivered to the
Company all Consents set forth in Schedule 5.4 annexed hereto.
8.5 Opinion of the Parent's Counsel. The Seller shall have received the
favorable opinion, dated the date of the Closing, of Parent's Counsel,
reasonably acceptable in substance and form to the Company.
8.6 Fairness Opinion. The Company shall have received from Goldman, Sachs &
Co. a favorable opinion (the "Fairness Opinion") as to the fairness of the
consideration to be received by the shareholders (other than Parent and its
Affiliates) in the Merger.
8.7 Absence of Litigation. There shall not be pending or threatened before
any Governmental Authority any action, suit or proceeding which, if adversely
determined, would (i) make the purchase by the
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Parent of the Shares illegal, (ii) prevent the consummation of the Merger, or
(iii) cause the Merger to be rescinded following consummation of the Merger,
and no Judgment with respect to any of the foregoing shall be in effect.
8.8 Simultaneous Closing. Simultaneously with the Closing, the Parent shall
have closed the Financing and deposited the proceeds with the Exchange Agent in
accordance with Section 3.11(b).
8.9 Shareholder Approval. This Agreement and the transactions contemplated
hereby shall have been adopted and approved by holders of sixty-six and two-
thirds percent (66 2/3%) of the Shares.
8.10 Proceedings and Documents. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be in
form and substance reasonably satisfactory to the Company and the Company's
Counsel, and the Company shall have received all such counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions as the Company reasonably requests.
9. TERMINATION.
9.1 Termination. This Agreement may be terminated and the Merger abandoned at
any time before the Effective Time, whether before or after adoption by the
shareholders of the Company or the Parent:
(a) By mutual consent of the Parent and the Company.
(b) By the Parent giving written notice to Company if, without fault on
the part of the Parent or its Affiliates, the Closing does not occur prior
to November 30, 1995, unless the Proxy Statement has not been mailed prior
to November 10, 1995 in which case such date shall be extended to a date 20
days after the date of mailing of the Proxy Statement but not later than
December 31, 1995.
(c) By the Parent or the Company, if any Governmental Authority shall
have enacted, issued, promulgated, enforced or entered any Law or Judgment
which has the effect of prohibiting consummation of the transactions
contemplated hereby.
(d) By the Parent, if without fault on the part of the Parent or its
Affiliates, any of the conditions to the Parent's obligations contained in
Section 7 of this Agreement required to have been met (i) are not met
within 5 days of adoption and approval by the shareholders of the Company
of the transactions contemplated hereby, or (ii) at any time prior to the
time in clause (i) hereof become incapable of being met, and such failure
has not been waived by the Parent or cured by the Company.
(e) By the Parent or the Company, if prior to the Closing (i) the Company
Board votes to recommend to the shareholders of the Company a Superior
Offer rather than recommending shareholder adoption and approval of the
Merger, (ii) the Company Board fails to recommend the Merger to the
shareholders of the Company in the Proxy Statement or (iii) the
shareholders of the Company fail to adopt and approve the Merger at the
Special Meeting.
(f) By the Company giving written notice to Parent if, without fault on
the part of the Company or its officers or Affiliates, the Closing does not
occur prior to November 30, 1995, unless the Proxy Statement has not been
mailed prior to November 10, 1995 in which case such date shall be extended
to a date 20 days after the date of mailing of the Proxy Statement but not
later than December 31, 1995.
(g) By the Company, if without fault on the part of the Company or its
Affiliates, any of the conditions to the Company's obligations contained in
Section 8 of this Agreement required to have been met (i) are not met
within 5 days of adoption and approval by the shareholders of the Company
of the transactions contemplated hereby, or (ii) at any time prior to the
time in clause (i) hereof become incapable of being met, and such breach or
failure has not been waived by the Company or cured by the Parent.
(h) By the Company, if it does not obtain from Goldman, Sachs & Co. the
Fairness Opinion.
(i) By the Parent, if a Change-in-Control shall have occurred.
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9.2 Effect of Termination. Upon the termination of this Agreement, this
Agreement shall forthwith become null and void, other than the agreements set
forth in this Section 9.2 and Sections 2.2 (to the extent that such Section
relates to the parties' respective responsibilities for the Proxy Statement and
the Other Filings), 2.4, 6.2(b), 9.3 and 11 hereof. In the event of termination
of this Agreement under any of the circumstances that constitute a Payment
Event (as defined below), the sole and exclusive right of the Parent and its
Affiliates shall be as provided in Section 9.3(a). In the event that the
transactions contemplated by this Agreement do not occur for any reason or if
the Agreement is terminated for any reason, except as otherwise set forth in
this Section 9.2, the parties will have no remedies against, and will have no
liability to, each other or their respective officers, directors, shareholders,
partners, representatives or Affiliates.
9.3 Termination Payments and Expenses.
(a) Promptly after the occurrence of a Payment Event, the Company shall pay
immediately to an account designated by the Parent, in immediately available
funds, a cancellation fee as provided in this Section 9.3.
(b) A "Payment Event" shall mean the termination of this Agreement as a
result of any of the following:
(i) any Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Law or Judgment which has the effect of prohibiting
consummation of the transactions contemplated hereby as a result of an
action or inaction by the Company not directly related to the Parent, Newco
or their respective Affiliates;
(ii) the Financing is not closed solely as a result of the Rowe
litigation;
(iii) the representations and warranties contained in Sections 4.8(g)-(l)
or 4.21 shall not be true and correct as of the Closing Date;
(iv) the representations and warranties contained in Sections 4.6, 4.7
(with respect to the Quarterly Report on Form 10-Q for the quarter ended
July 1, 1995) or 4.8(d) shall not be true and correct as of the Closing
Date;
(v) any of the conditions to the Parent's obligations contained in
Sections 7.6 or 7.12 of this Agreement not being met or becoming incapable
of being met, and such failure has not been waived by the Parent or cannot
be cured by the Company;
(vi) the shareholders of the Company fail to adopt and approve the Merger
at the Special Meeting;
(vii) the Company Board votes to recommend to the shareholders of the
Company a Superior Offer rather than recommending shareholder adoption and
approval of the Merger, or the Company Board fails to recommend the Merger
to the shareholders of the Company in the Proxy Statement; or
(viii) the Company does not obtain from Goldman, Sachs & Co. the Fairness
Opinion;
(c) If the Agreement is terminated as a result of (i) Sections 9.3(b)(i)
through (b)(iii) the Company shall pay immediately to an account designated by
the Parent in immediately available funds an amount equal to $250,000, (ii)
Sections 9.3(b)(iv) through (b)(vi) the Company shall pay immediately to an
account designated by the Parent in immediately available funds an amount equal
to $600,000, and (iii) Sections 9.3(b)(vii) or (b)(viii) the Company shall pay
immediately to an account designated by the Parent in immediately available
funds an amount equal to $1,250,000.
(d) The Company acknowledges that the agreements contained in this Section
9.3 are an integral part of the transactions contemplated by this Agreement and
that, without these agreements, the Parent and Newco would not enter into this
Agreement. The Company's obligations under this Section 9.3 shall survive any
termination of this Agreement.
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations, warranties and covenants (other than the covenants set
forth in Sections 6.3(b) and 6.9) contained in this Agreement shall not survive
beyond the earlier of (i) termination of this Agreement or (ii) the Effective
Time. This Section 10 shall not limit any covenant or agreement of the parties
hereto which by its terms contemplates performance after the Effective Time.
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11. MISCELLANEOUS.
The parties will consult with each other and will mutually agree upon any
press releases or public announcements pertaining to the Merger and shall not
issue any such press releases or make any such public announcements prior to
such consultation and agreement, except as may be required by applicable law or
by obligations pursuant to any listing agreement with any national securities
exchange, or association, in which case the party proposing to issue such press
release or make such public announcement shall use its reasonable efforts to
consult in good faith with the other party before issuing any such press
releases or making any such public announcements.
11.1 Headings. Section headings contained in this Agreement are included for
convenience only and shall not affect the interpretation of any provisions of
this Agreement.
11.2 Notices. Any notice, demand, request, waiver, or other communication
under this Agreement shall be in writing (including facsimile or similar
writing) and shall be deemed to have been duly given (i) on the date of service
if personally served, (ii) on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid or (iii) on the date sent if sent by
facsimile, to the parties at the following addresses or facsimile numbers with
a copy sent by mail as aforesaid on the same date (or at such other address or
facsimile number for a party as shall be specified by like notice):
If to the Company, to:
Marietta Corporation
37 Huntington Street
Cortland, New York 13045
Attention: Chief Executive Officer
Fax No.: (607) 756-0657
with a copy to:
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza, 29th Floor
New York, New York 10112
Attention: Barry A. Adelman, Esq.
Fax No.: (212) 698-7825
If to the Parent or Newco, to:
BFMA Holding Corporation
701 S.E. 6th Street, Suite 204
Delray Beach, Florida 33483
Attention: Barry W. Florescue
Fax No.: (407) 278-3578
with a copy to:
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
Attention: Charles I. Weissman, Esq.
Fax No.: (212) 758-9526
11.3 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. None of the parties hereto shall assign any rights
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or delegate any duties hereunder without the prior written consent of the
Company and the Parent, and any assignment made without such consent shall be
void and constitute a default hereunder.
11.4 Governing Law. This Agreement shall be construed in accordance with, and
governed by, the internal laws of the State of New York, without giving effect
to the principles of conflict of laws thereof. Any legal action, suit or
proceeding arising out of or relating to this Agreement may be instituted in
any state or federal court located within the County of New York, State of New
York, and each party hereto agrees not to assert, by way of motion, as a
defense, or otherwise, in any such action, suit or proceeding, any claim that
it is not subject personally to the jurisdiction of such court in an
inconvenient forum, that the venue of the action, suit or proceeding is
improper or that this Agreement or the subject matter hereof may not be
enforced in or by such court. Each party hereto further irrevocably submits to
the jurisdiction of any such court in any such action, suit or proceeding.
11.5 Entire Agreement. This Agreement, including the Exhibits and the
Schedules sets forth the entire understanding and agreement of the parties with
respect to their subject matter and supersedes any and all prior
understandings, negotiations or agreements among the parties hereto, both
written and oral, with respect to such subject matter (except any and all prior
agreements relating to the protection of confidential information of the
Company and its Subsidiaries).
11.6 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and all of which together shall constitute a
single agreement.
11.7 Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, in whole or in part, the validity of the
remaining provisions shall not be affected and the remaining portion of any
provision held to be invalid, illegal or unenforceable shall in no way be
affected, prejudiced or disturbed thereby.
11.8 No Prejudice. This Agreement has been jointly prepared and negotiated by
the parties hereto and the terms hereof shall not be construed in favor of or
against any party on account of its participation in such preparation.
11.9 No Third Party Beneficiaries. This Agreement shall not confer any rights
or remedies upon any Person other than the parties hereto and their respective
successors and permitted assigns.
11.10 Amendment and Modification. This Agreement, including the Schedules
hereto, may be amended or modified only by written agreement executed by all
parties hereto; provided, however, that after adoption and approval of this
Agreement by the shareholders of the Company, no amendment shall be made which
changes the consideration payable in the Merger or adversely affects the rights
of the Company's shareholders hereunder without the approval of such
shareholders.
11.11 Waiver. At any time prior to the Closing, each of the parties hereto
may (i) extend the time for the performance of any of the obligations or other
acts of any other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (iii) waive compliance with any of the covenants,
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 by the party granting such waiver. Such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or future failure.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.
BFMA HOLDING CORPORATION
By: /s/ Barry W. Florescue
--------------------------------
Barry W. Florescue, President
BFMA ACQUISITION CORPORATION
By: /s/ Barry W. Florescue
--------------------------------
Barry W. Florescue, President
MARIETTA CORPORATION
By: /s/ Stephen D. Tannen
--------------------------------
Stephen D. Tannen, President
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<PAGE>
NEW YORK BUSINESS CORPORATION LAW
(S) 623. PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR SHARES
(a) A shareholder intending to enforce his right under a section of this
chapter to receive payment for his shares if the proposed corporate action
referred to therein is taken shall file with the corporation, before the
meeting of shareholders at which the action is submitted to a vote, or at such
meeting but before the vote, written objection to the action. The objection
shall include a notice of his election to dissent, his name and residence
address, the number and classes of shares as to which he dissents and a demand
for payment of the fair value of his shares if the action is taken. Such
objection is not required from any shareholder to whom the corporation did not
give notice of such meeting in accordance with this chapter or where the
proposed action is authorized by written consent of shareholders without a
meeting.
(b) Within ten days after the shareholders' authorization date, which term as
used in this section means the date on which the shareholders' vote authorizing
such action was taken, or the date on which such consent without a meeting was
obtained from the requisite shareholders, the corporation shall give written
notice of such authorization or consent by registered mail to each shareholder
who filed written objection or from whom written objection was not required,
excepting any shareholder who voted for or consented in writing to the proposed
action and who thereby is deemed to have elected not to enforce his right to
receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any shareholder
from whom written objection was not required and who elects to dissent shall
file with the corporation a written notice of such election, stating his name
and residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares. Any shareholder who
elects to dissent from a merger under section 905 (Merger of subsidiary
corporation) or paragraph (c) of section 907 (Merger or consolidation of
domestic and foreign corporations) or from a share exchange under paragraph (g)
of section 913 (Share exchanges) shall file a written notice of such election
to dissent within twenty days after the giving to him of a copy of the plan of
merger or exchange or an outline of the material features thereof under section
905 or 913.
(d) A shareholder may not dissent as to less than all of the shares, as to
which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any
beneficial owner as to less than all of the shares of such owner, as to which
such nominee or fiduciary has a right to dissent, held of record by such
nominee or fiduciary.
(e) Upon consummation of the corporate action, the shareholder shall cease to
have any of the rights of a shareholder except the right to be paid the fair
value of his shares and any other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior to his
acceptance in writing of an offer made by the corporation, as provided in
paragraph (g), but in no case later than sixty days from the date of
consummation of the corporate action except that if the corporation fails to
make a timely offer, as provided in paragraph (g), the time for withdrawing a
notice of election shall be extended until sixty days from the date an offer is
made. Upon expiration of such time, withdrawal of a notice of election shall
require the written consent of the corporation. In order to be effective,
withdrawal of a notice of election must be accompanied by the return to the
corporation of any advance payment made to the shareholder as provided in
paragraph (g). If a notice of election is withdrawn, or the corporate action is
rescinded, or a court shall determine that the shareholder is not entitled to
receive payment for his shares or the shareholder shall otherwise lose his
dissenter's rights, he shall not have the right to receive payment for his
shares and he shall be reinstated to all his rights as a shareholder as of the
consummation of the corporate action, including any intervening preemptive
rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by
the board as of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceedings that may have been taken in
the interim.
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(f) At the time of filing the notice of election to dissent or within one
month thereafter the shareholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or to its
transfer agent, which shall forthwith note conspicuously thereon that a notice
of election has been filed and shall return the certificates to the shareholder
or other person who submitted them on his behalf. Any shareholder of shares
represented by certificates who fails to submit his certificates for such
notation as herein specified shall, at the option of the corporation exercised
by written notice to him within forty-five days from the date of filing of such
notice of election to dissent, lose his dissenter's rights unless a court, for
good cause shown, shall otherwise direct. Upon transfer of a certificate
bearing such notation, each new certificate issued therefor shall bear a
similar notation together with the name of the original dissenting holder of
the shares and a transferee shall acquire no rights in the corporation except
those which the original dissenting shareholder had at the time of transfer.
(g) Within fifteen days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within fifteen
days after the proposed corporate action is consummated, whichever is later
(but in no case later than ninety days from the shareholders' authorization
date), the corporation or, in the case of a merger or consolidation, the
surviving or new corporation, shall make a written offer by registered mail to
each shareholder who has filed such notice of election to pay for his shares at
a specified price which the corporation considers to be their fair value. Such
offer shall be accompanied by a statement setting forth the aggregate number of
shares with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares. If the corporate action has
been consummated, such offer shall also be accompanied by (1) advance payment
to each such shareholder who has submitted the certificates representing his
shares to the corporation, as provided in paragraph (f), of an amount equal to
eighty percent of the amount of such offer, or (2) as to each shareholder who
has not yet submitted his certificates a statement that advance payment to him
of an amount equal to eighty percent of the amount of such offer will be made
by the corporation promptly upon submission of his certificates. If the
corporate action has not been consummated at the time of the making of the
offer, such advance payment or statement as to advance payment shall be sent to
each shareholder entitled thereto forthwith upon consummation of the corporate
action. Every advance payment or statement as to advance payment shall include
advice to the shareholder to the effect that acceptance of such payment does
not constitute a waiver of any dissenters' rights. If the corporate action has
not been consummated upon the expiration of the ninety day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the making
of such offer, and a profit and loss statement or statements for not less than
a twelve month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such twelve month period, for the
portion thereof during which it was in existence. Notwithstanding the
foregoing, the corporation shall not be required to furnish a balance sheet or
profit and loss statement or statements to any shareholder to whom such balance
sheet or profit and loss statement or statement were previously furnished, nor
if in connection with obtaining the shareholders' authorization for or consent
to the proposed corporate action the shareholders were furnished with a proxy
or information statement, which included financial statements, pursuant to
Regulation 14A or Regulation 14C of the United States Securities and Exchange
Commission. If within thirty days after the making of such offer, the
corporation making the offer and any shareholder agree upon the price to be
paid for his shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate action,
whichever is later, upon the surrender of the certificates for any such shares
represented by certificates.
(h) The following procedure shall apply if the corporation fails to make such
offer within such period of fifteen days, or if it makes the offer and any
dissenting shareholder or shareholders fail to agree with it within the period
of thirty days thereafter upon the price to be paid for their shares:
(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a
special proceeding in the supreme court in the judicial district in
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<PAGE>
which the office of the corporation is located to determine the rights of
dissenting shareholders and to fix the fair value of their shares. If, in
the case of merger or consolidation, the surviving or new corporation is a
foreign corporation without an office in this state, such proceeding shall
be brought in the county where the office of the domestic corporation,
whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not instituted
within such thirty day period, all dissenter's rights shall be lost unless
the supreme court, for good cause shown, shall otherwise direct.
(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be paid
for their shares, shall be made parties to such proceeding, which shall
have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in such proceeding upon each
dissenting shareholder who is a resident of this state in the manner
provided by law for the service of a summons, and upon each nonresident
dissenting shareholder either by registered mail and publication, or in
such other manner as is permitted by law. The jurisdiction of the court
shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder, as to
whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation does not
request any such determination or if the court finds that any dissenting
shareholder is so entitled, it shall proceed to fix the value of the
shares, which, for the purposes of this section, shall be the fair value as
of the close of business on the day prior to the shareholders'
authorization date. In fixing the fair value of the shares, the court shall
consider the nature of the transaction giving rise to the shareholder's
right to receive payment for shares and its effects on the corporation and
its shareholders, the concepts and methods then customary in the relevant
securities and financial markets for determining fair value of shares of a
corporation engaging in a similar transaction under comparable
circumstances and all other relevant factors. The court shall determine the
fair value of the shares without a jury and without referral to an
appraiser or referee. Upon application by the corporation or by any
shareholder who is a party to the proceeding, the court may, in its
discretion, permit pretrial disclosure, including, but not limited to,
disclosure of any expert's reports relating to the fair value of the shares
whether or not intended for use at the trial in the proceeding and
notwithstanding subdivision (d) of section 3101 of the civil practice law
and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to the
proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at such rate
as the court finds to be equitable, from the date the corporate action was
consummated to the date of payment. In determining the rate of interest,
the court shall consider all relevant factors, including the rate of
interest which the corporation would have had to pay to borrow money during
the pendency of the proceeding. If the court finds that the refusal of any
shareholder to accept the corporate offer of payment for his shares was
arbitrary, vexatious or otherwise not in good faith, no interest shall be
allowed to him.
(7) Each party to such proceeding shall bear its own costs and expenses,
including the fees and expenses of its counsel and of any experts employed
by it. Notwithstanding the foregoing, the court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by the corporation against any or all of the dissenting
shareholders who are parties to the proceeding, including any who have
withdrawn their notices of election as provided in paragraph (e), if the
court finds that their refusal to accept the corporate offer was arbitrary,
vexatious or otherwise not in good faith. The court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees
incurred by any or all of the dissenting shareholders who are parties to
the proceeding against the corporation if
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<PAGE>
the court finds any of the following: (A) that the fair value of the shares
as determined materially exceeds the amount which the corporation offered
to pay; (B) that no offer or required advance payment was made by the
corporation; (C) that the corporation failed to institute the special
proceeding within the period specified therefor; or (D) that the action of
the corporation in complying with its obligations as provided in this
section was arbitrary, vexatious or otherwise not in good faith. In making
any determination as provided in clause (A), the court may consider the
dollar amount or the percentage or both, by which the fair value of the
shares as determined exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to be
due him, upon surrender of the certificates for any such shares represented
by certificates.
(i) Shares acquired by the corporation upon the payment of the agreed value
therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be cancelled as provided in section
515 (Reacquired shares), except that, in the case of a merger or consolidation,
they may be held and disposed of as the plan of merger or consolidation may
otherwise provide.
(j) No payment shall be made to a dissenting shareholder under this section
at a time when the corporation is insolvent or when such payment would make it
insolvent. In such event, the dissenting shareholder shall, at his option:
(1) Withdraw his notice of election, which shall in such event be deemed
withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if it is
liquidated, be subordinated to the rights of creditors of the corporation,
but have rights superior to the non-dissenting shareholders, and if it is
not liquidated, retain his right to be paid for his shares, which right the
corporation shall be obliged to satisfy when the restrictions of this
paragraph do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation within
thirty days after the corporation has given him written notice that payment
for his shares cannot be made because of the restrictions of this
paragraph. If the dissenting shareholder fails to exercise such option as
provided, the corporation shall exercise the option by written notice given
to him within twenty days after the expiration of such period of thirty
days.
(k) The enforcement by a shareholder of his right to receive payment for his
shares in the manner provided herein shall exclude the enforcement by such
shareholder of any other right to which he might otherwise be entitled by
virtue of share ownership, except as provided in paragraph (e), and except that
this section shall not exclude the right of such shareholder to bring or
maintain an appropriate action to obtain relief on the ground that such
corporate action will be or is unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice to be
given by a corporation to a shareholder under this section shall be given in
the manner provided in section 605 (Notice of meetings of shareholders).
(m) This section shall not apply to foreign corporations except as provided
in subparagraph (e)(2) of section 907 (Merger or consolidation of domestic and
foreign corporations).
(S) 910. RIGHT OF SHAREHOLDER TO RECEIVE PAYMENT FOR SHARES UPON MERGER OR
CONSOLIDATION, OR SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF ASSETS,
OR SHARE EXCHANGE.
(a) A shareholder of a domestic corporation shall, subject to and by
complying with section 623 (Procedure to enforce shareholder's right to receive
payment for shares), have the right to receive payment of the fair value of his
shares and the other rights and benefits provided by such section, in the
following cases:
(1) Any shareholder entitled to vote who does not assent to the taking of
an action specified in subparagraphs (A), (B) and (C).
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<PAGE>
(A) Any plan of merger or consolidation to which the corporation is a
party; except that the right to receive payment of the fair value of
his shares shall not be available:
(i) To a shareholder of the parent corporation in a merger
authorized by section 905 (Merger of parent and subsidiary
corporations), or paragraph (c) of section 907 (Merger or
consolidation of domestic and foreign corporations); and
(ii) To a shareholder of the surviving corporation in a merger
authorized by this article, other than a merger specified in
subparagraph (i), unless such merger effects one or more of the
changes specified in subparagraph (b)(6) of section 806 (Provisions
as to certain proceedings) in the rights of the shares held by such
shareholder.
(B) Any sale, lease, exchange or other disposition of all or
substantially all of the assets of a corporation which requires
shareholder approval under section 909 (Sale, lease, exchange or other
disposition of assets) other than a transaction wholly for cash where
the shareholders' approval thereof is conditioned upon the dissolution
of the corporation and the distribution of substantially all of its net
assets to the shareholders in accordance with their respective
interests within one year after the date of such transaction.
(C) Any share exchange authorized by section 913 in which the
corporation is participating as a subject corporation; except that the
right to receive payment of the fair value of his shares shall not be
available to a shareholder whose shares have not been acquired in the
exchange.
(2) Any shareholder of the subsidiary corporation in a merger authorized
by section 905 or paragraph (c) of section 907, or in a share exchange
authorized by paragraph (g) of section 913, who files with the corporation
a written notice of election to dissent as provided in paragraph (c) of
section 623.
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<PAGE>
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
-----------------------------------------------
This Amendment No. 1 to Agreement and Plan of Merger (the "Amendment") is
effective as of November 30, 1995, by and among BFMA Holding Corporation, a
Delaware corporation ("Parent"), BFMA Acquisition Corporation, a New York
corporation and a wholly-owned subsidiary of the Parent ("Newco"), and Marietta
Corporation, a New York corporation (the "Company"), and amends the Agreement
and Plan of Merger (the "Agreement"), dated as of August 26, 1995, by and among
Parent, Newco and the Company.
W I T N E S S E T H :
--------------------
WHEREAS, Parent, Newco and the Company wish to amend the Agreement in the
manner set forth herein.
NOW, THEREFORE, for and in consideration of the covenants and agreements
set forth herein and in the Agreement, it is mutually agreed as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized terms used
-------------
herein shall have the meanings ascribed to them in the Agreement.
2. Amendments.
----------
a. Section 9.1(b) of the Agreement is hereby amended and restated in its
entirety as follows:
(b) By the Parent giving written notice to the Company if, without
fault on the part of the Parent or its Affiliates, the Closing does not
occur prior to January 31, 1996, unless the Proxy Statement has not been
mailed prior to January 11, 1996 in which case such date shall be extended
to a date 20 days after the date of mailing of the Proxy Statement but not
later than February 15, 1996.
b. Section 9.1(f) of the Agreement is hereby amended and restated in its
entirety as follows:
(f) By the Company giving written notice to the Parent if, without
fault on the part of the Company or its officers or Affiliates, the Closing
does not occur prior to January 31, 1996, unless the Proxy Statement has
not been mailed prior to January 11, 1996 in which case such date shall be
extended to a date 20 days after the date of mailing of the Proxy Statement
but not later than February 15, 1996.
<PAGE>
c. Section 9.3(b)(ii) of the Agreement is hereby deleted.
d. Section 9.3(c) of the Agreement is hereby amended and restated in its
entirety as follows:
(c) If the Agreement is terminated as a result of (i) Sections
9.3(b)(i) or (b)(iii), the Company shall pay immediately to an account
designated by the Parent in immediately available funds an amount equal to
$250,000, (ii) Sections 9.3(b)(iv) through (b)(vi), the Company shall pay
immediately to an account designated by the Parent in immediately available
funds an amount equal to $600,000, and (iii) Sections 9.3(b)(vii) or
(b)(viii), the Company shall pay immediately to an account designated by
the Parent in immediately available funds an amount equal to $1,250,000.
3. Continuing Effect of the Agreement. Except as expressly modified herein,
----------------------------------
the terms and provisions in the Agreement shall remain in full force and effect
and are hereby ratified and confirmed.
4. Fees and Expenses. Each party hereto shall pay its own fees and expenses
-----------------
relating to the negotiation, preparation and consummation of this Amendment.
5. Counterparts. This Amendment may be executed by all parties hereto in one
------------
or more counterparts, each of which shall be deemed to be an original and all of
which, when taken together, shall constitute one and the same instrument.
6. Governing Law. This Amendment shall be construed in accordance with, and
-------------
governed by, the internal laws of the State of New York, without giving effect
to the principles of conflict of laws thereof. Any legal action, suit or
proceeding arising out of or relating to this Amendment may be instituted in any
state or federal court located within the County of New York, State of New York,
and each party hereto agrees not to assert, by way of motion, as a defense, or
otherwise, in any such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of such court in an inconvenient forum,
that the venue of the action, suit or proceeding is improper or that this
Amendment or the subject matter hereof may not be enforced in or by such court.
Each party hereto further irrevocably submits to the jurisdiction of any such
court in any such action, suit or proceeding.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
set forth above.
BFMA HOLDING CORPORATION
/s/ Barry W. Florescue
By:____________________________
Barry W. Florescue, President
BFMA ACQUISITION CORPORATION
/s/ Barry W. Florescue
By:____________________________
Barry W. Florescue, President
MARIETTA CORPORATION
/s/ Stephen D. Tannen
By:____________________________
Stephen D. Tannen, President
3
<PAGE>
ANNEX II
NEW YORK BUSINESS CORPORATION LAW
(Section) 623. PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR
SHARES
(a) A shareholder intending to enforce his right under a section of
this chapter to receive payment for his shares if the proposed corporate action
referred to therein is taken shall file with the corporation, before the meeting
of shareholders at which the action is submitted to a vote, or at such meeting
but before the vote, written objection to the action. The objection shall
include a notice of his election to dissent, his name and residence address, the
number and classes of shares as to which he dissents and a demand for payment of
the fair value of his shares if the action is taken. Such objection is not
required from any shareholder to whom the corporation did not give notice of
such meeting in accordance with this chapter or where the proposed action is
authorized by written consent of shareholders without a meeting.
(b) Within ten days after the shareholders' authorization date, which
term as used in this section means the date on which the shareholders' vote
authorizing such action was taken, or the date on which such consent without a
meeting was obtained from the requisite shareholders, the corporation shall give
written notice of such authorization or consent by registered mail to each
shareholder who filed written objection or from whom written objection was not
required, excepting any shareholder who voted for or consented in writing to the
proposed action and who thereby is deemed to have elected not to enforce his
right to receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any
shareholder from whom written objection was not required and who elects to
dissent shall file with the corporation a written notice of such election,
stating his name and residence address, the number and classes of shares as to
which he dissents and a demand for payment of the fair value of his shares. Any
shareholder who elects to dissent from a merger under section 905 (Merger of
subsidiary corporation) or paragraph (c) of section 907 (Merger or consolidation
of domestic and foreign corporations) or from a share exchange under paragraph
(g) of section 913 (Share exchanges) shall file a written notice of such
election to dissent within twenty days after the giving to him of a copy of the
plan of merger or exchange or an outline of the material features thereof under
section 905 or 913
(d) A shareholder may not dissent as to less than all of the shares, as
to which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any beneficial
owner as to less than all of the shares of such owner, as to which such nominee
or fiduciary has a right to dissent, held of record by such nominee or
fiduciary.
(e) Upon consummation of the corporate action, the shareholder shall
cease to have any of the rights of a shareholder except the right to be paid the
fair value of his shares and any other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior to his acceptance
in writing of an offer made by the corporation, as provided in paragraph (g),
but in no case later than sixty days from the date of consummation of the
corporate action except that if the corporation fails to make a timely offer, as
provided in paragraph (g), the time for withdrawing a notice of election shall
be extended until sixty days from the date an offer is made. Upon expiration of
such time, withdrawal of a notice of election shall require the written consent
of the corporation. In order to be effective, withdrawal of a notice of election
must be accompanied by the return to the corporation of any advance payment made
to the shareholder as provided in paragraph (g). If a notice of election is
withdrawn, or the corporate action is rescinded, or a court shall determine that
the shareholder is not entitled to receive payment for his shares or the
shareholder shall otherwise lose his dissenter's rights, he shall not have the
right to receive payment for his shares and he shall be reinstated to all his
rights as a shareholder as of the consummation of the corporate action,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have expired
or any such dividend or distribution other than in cash has been completed, in
lieu thereof, at the election of the corporation, the fair value thereof in
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<PAGE>
cash as determined by the board as of the time of such expiration or completion,
but without prejudice otherwise to any corporate proceedings that may have been
taken in the interim.
(f) At the time of filing the notice of election to dissent or within
one month thereafter the shareholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or to its
transfer agent, which shall forthwith note conspicuously thereon that a notice
of election has been filed and shall return the certificates to the shareholder
or other person who submitted them on his behalf. Any shareholder of shares
represented by certificates who fails to submit his certificates for such
notation as herein specified shall, at the option of the corporation exercised
by written notice to him within forty-five days from the date of filing of such
notice of election to dissent, lose his dissenter's rights unless a court, for
good cause shown, shall otherwise direct. Upon transfer of a certificate bearing
such notation, each new certificate issued therefor shall bear a similar
notation together with the name of the original dissenting holder of the shares
and a transferee shall acquire no rights in the corporation except those which
the original dissenting shareholder had at the time of transfer.
(g) Within fifteen days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within fifteen
days after the proposed corporate action is consummated, whichever is later (but
in no case later than ninety days from the shareholders' authorization date),
the corporation or, in the case of a merger or consolidation, the surviving or
new corporation, shall make a written offer by registered mail to each
shareholder who has filed such notice of election to pay for his shares at a
specified price which the corporation considers to be their fair value. Such
offer shall be accompanied by a statement setting forth the aggregate number of
shares with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares. If the corporate action has
been consummated, such offer shall also be accompanied by (1) advance payment to
each such shareholder who has submitted the certificates representing his shares
to the corporation, as provided in paragraph (f), of an amount equal to eighty
percent of the amount of such offer, or (2) as to each shareholder who has not
yet submitted his certificates a statement that advance payment to him of an
amount equal to eighty percent of the amount of such offer will be made by the
corporation promptly upon submission of his certificates. If the corporate
action has not been consummated at the time of the making of the offer, such
advance payment or statement as to advance payment shall be sent to each
shareholder entitled thereto forthwith upon consummation of the corporate
action. Every advance payment or statement as to advance payment shall include
advice to the shareholder to the effect that acceptance of such payment does not
constitute a waiver of any dissenters' rights. If the corporate action has not
been consummated upon the expiration of the ninety day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the making
of such offer, and a profit and loss statement or statements for not less than a
twelve month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such twelve month period, for the
portion thereof during which it was in existence. Notwithstanding the foregoing,
the corporation shall not be required to furnish a balance sheet or profit and
loss statement or statements to any shareholder to whom such balance sheet or
profit and loss statement or statement were previously furnished, nor if in
connection with obtaining the shareholders' authorization for or consent to the
proposed corporate action the shareholders were furnished with a proxy or
information statement, which included financial statements, pursuant to
Regulation 14A or Regulation 14C of the United States Securities and Exchange
Commission. If within thirty days after the making of such offer, the
corporation making the offer and any shareholder agree upon the price to be paid
for his shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate action,
whichever is later, upon the surrender of the certificates for any such shares
represented by certificates
(h) The following procedure shall apply if the corporation fails to
make such offer within such period of fifteen days, or if it makes the offer and
any dissenting shareholder or shareholders fail to agree with it within the
period of thirty days thereafter upon the price to be paid for their shares:
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<PAGE>
(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a special
proceeding in the supreme court in the judicial district in which the office of
the corporation is located to determine the rights of dissenting shareholders
and to fix the fair value of their shares. If, in the case of merger or
consolidation, the surviving or new corporation is a foreign corporation without
an office in this state, such proceeding shall be brought in the county where
the office of the domestic corporation, whose shares are to be valued, was
located.
(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such proceeding
for the same purpose not later than thirty days after the expiration of such
twenty day period. If such proceeding is not instituted within such thirty day
period, all dissenter's rights shall be lost unless the supreme court, for good
cause shown, shall otherwise direct.
(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be paid for
their shares, shall be made parties to such proceeding, which shall have the
effect of an action quasi in rem against their shares. The corporation shall
serve a copy of the petition in such proceeding upon each dissenting shareholder
who is a resident of this state in the manner provided by law for the service of
a summons, and upon each nonresident dissenting shareholder either by registered
mail and publication, or in such other manner as is permitted by law. The
jurisdiction of the court shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder, as
to whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation does not request
any such determination or if the court finds that any dissenting shareholder is
so entitled, it shall proceed to fix the value of the shares, which, for the
purposes of this section, shall be the fair value as of the close of business on
the day prior to the shareholders' authorization date. In fixing the fair value
of the shares, the court shall consider the nature of the transaction giving
rise to the shareholder's right to receive payment for shares and its effects on
the corporation and its shareholders, the concepts and methods then customary in
the relevant securities and financial markets for determining fair value of
shares of a corporation engaging in a similar transaction under comparable
circumstances and all other relevant factors. The court shall determine the fair
value of the shares without a jury and without referral to an appraiser or
referee. Upon application by the corporation or by any shareholder who is a
party to the proceeding, the court may, in its discretion, permit pretrial
disclosure, including, but not limited to, disclosure of any expert's reports
relating to the fair value of the shares whether or not intended for use at the
trial in the proceeding and notwithstanding subdivision (d) of section 3101 of
the civil practice law and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to the
proceeding and is entitled thereto for the value of his shares so determined.
(6) The final order shall include an allowance for interest at such
rate as the court finds to be equitable, from the date the corporate action was
consummated to the date of payment. In determining the rate of interest, the
court shall consider all relevant factors, including the rate of interest which
the corporation would have had to pay to borrow money during the pendency of the
proceeding. If the court finds that the refusal of any shareholder to accept the
corporate offer of payment for his shares was arbitrary, vexatious or otherwise
not in good faith, no interest shall be allowed to him.
(7) Each party to such proceeding shall bear its own costs and
expenses, including the fees and expenses of its counsel and of any experts
employed by it. Notwithstanding the foregoing, the court may, in its discretion,
apportion and assess all or any part of the costs, expenses and fees incurred by
the corporation against any or all of the dissenting shareholders who are
parties to the proceeding, including any who have withdrawn their notices of
election as provided in paragraph (e), if the court finds that their refusal to
accept the corporate offer was
3
<PAGE>
arbitrary, vexatious or otherwise not in good faith. The court may, in its
discretion, apportion and assess all or any part of the costs, expenses and fees
incurred by any or all of the dissenting shareholders who are parties to the
proceeding against the corporation if the court finds any of the following: (A)
that the fair value of the shares as determined materially exceeds the amount
which the corporation offered to pay; (B) that no offer or required advance
payment was made by the corporation; (C) that the corporation failed to
institute the special proceeding within the period specified therefor; or (D)
that the action of the corporation in complying with its obligations as provided
in this section was arbitrary, vexatious or otherwise not in good faith. In
making any determination as provided in clause (A), the court may consider the
dollar amount or the percentage or both, by which the fair value of the shares
as determined exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to be due
him, upon surrender of the certificates for any such shares represented by
certificates.
(i) Shares acquired by the corporation upon the payment of the agreed
value therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be cancelled as provided in section 515
(Reacquired shares), except that, in the case of a merger or consolidation, they
may be held and disposed of as the plan of merger or consolidation may otherwise
provide.
(j) No payment shall be made to a dissenting shareholder under this
section at a time when the corporation is insolvent or when such payment would
make it insolvent. In such event, the dissenting shareholder shall, at his
option:
(1) Withdraw his notice of election, which shall in such event be
deemed withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if it
is liquidated, be subordinated to the rights of creditors of the corporation,
but have rights superior to the non-dissenting shareholders, and if it is not
liquidated, retain his right to be paid for his shares, which right the
corporation shall be obliged to satisfy when the restrictions of this paragraph
do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation within
thirty days after the corporation has given him written notice that payment for
his shares cannot be made because of the restrictions of this paragraph. If the
dissenting shareholder fails to exercise such option as provided, the
corporation shall exercise the option by written notice given to him within
twenty days after the expiration of such period of thirty days.
(k) The enforcement by a shareholder of his right to receive payment
for his shares in the manner provided herein shall exclude the enforcement by
such shareholder of any other right to which he might otherwise be entitled by
virtue of share ownership, except as provided in paragraph (e), and except that
this section shall not exclude the right of such shareholder to bring or
maintain an appropriate action to obtain relief on the ground that such
corporate action will be or is unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice
to be given by a corporation to a shareholder under this section shall be given
in the manner provided in section 605 (Notice of meetings of shareholders).
(m) This section shall not apply to foreign corporations except as
provided in subparagraph (e)(2) of section 907 (Merger or consolidation of
domestic and foreign corporations).
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<PAGE>
(Section) 910. RIGHT OF SHAREHOLDER TO RECEIVE PAYMENT FOR SHARES UPON MERGER OR
CONSOLIDATION, OR SALE, LEASE, EXCHANGE OR OTHER DISPOSITION OF
ASSETS, OR SHARE EXCHANGE.
(a) A shareholder of a domestic corporation shall, subject to and by
complying with section 623 (Procedure to enforce shareholder's right to receive
payment for shares), have the right to receive payment of the fair value of his
shares and the other rights and benefits provided by such section, in the
following cases:
(1) Any shareholder entitled to vote who does not assent to the taking
of an action specified in subparagraphs (A), (B) and (C).
(A) Any plan of merger or consolidation to which the corporation
is a party; except that the right to receive payment of the fair value of his
shares shall not be available:
(i) To a shareholder of the parent corporation in a merger
authorized by section 905 (Merger of parent and subsidiary corporations), or
paragraph (c) of section 907 (Merger or consolidation of domestic and foreign
corporations); and
(ii) To a shareholder of the surviving corporation in a
merger authorized by this article, other than a merger specified in subparagraph
(i), unless such merger effects one or more of the changes specified in
subparagraph (b)(6) of section 806 (Provisions as to certain proceedings) in the
rights of the shares held by such shareholder.
(B) Any sale, lease, exchange or other disposition of all or
substantially all of the assets of a corporation which requires shareholder
approval under section 909 (Sale, lease, exchange or other disposition of
assets) other than a transaction wholly for cash where the shareholders'
approval thereof is conditioned upon the dissolution of the corporation and the
distribution of substantially all of its net assets to the shareholders in
accordance with their respective interests within one year after the date of
such transaction.
(C) Any share exchange authorized by section 913 in which the
corporation is participating as a subject corporation; except that the right to
receive payment of the fair value of his shares shall not be available to a
shareholder whose shares have not been acquired in the exchange.
(2) Any shareholder of the subsidiary corporation in a merger
authorized by section 905 or paragraph (c) of section 907, or in a share
exchange authorized by paragraph (g) of section 913, who files with the
corporation a written notice of election to dissent as provided in paragraph (c)
of section 623.
5
<PAGE>
ANNEX III
FAIRNESS OPINION OF GOLDMAN SACHS & CO.
[TO BE PROVIDED]
<PAGE>
MARIETTA CORPORATION
37 Huntington Street
Cortland, New York 13045
PROXY SOLICITED FOR SPECIAL MEETING OF SHAREHOLDERS, __________________
P The undersigned hereby appoints ___________ and ___________ and each of
R them, the proxy and attorney-in-fact for the undersigned, with full power
O of substitution in each, to vote on behalf of the undersigned at the
X Special Meeting of Shareholders of MARIETTA CORPORATION to be held at
Y __________________ on ______________ at _________ a.m., local time, and at
any adjournment or postponement of such meeting, all Common Stock, par
value $.01 per share of MARIETTA CORPORATION standing in the name of the
undersigned or which the undersigned may be entitled to vote on the matters
described on the reverse side.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MARIETTA
CORPORATION. PLEASE MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND
RETURN IT PROMPTLY USING THE ENCLOSED ENVELOPE.
THIS PROXY MAY BE REVOKED BY A PROXY EXECUTED AT A LATER DATE OR OTHERWISE, AS
SET FORTH IN THE MARIETTA CORPORATION PROXY STATEMENT WHICH ACCOMPANIED THIS
CARD.
[_] PLEASE MARK YOUR
VOTE AS IN THIS
EXAMPLE.
THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BELOW BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT (AS DESCRIBED IN MARIETTA
CORPORATION'S PROXY STATEMENT DATED ______________, 199_).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT
THE MERGER AGREEMENT (AS DESCRIBED IN MARIETTA CORPORATION'S PROXY STATEMENT
DATED ____________, 199_).
1. THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT (as the same is
described in Marietta Corporation's Proxy Statement dated _____________).
For [_] Against [_] Abstain [_]
2. In their discretion, the parties are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
Please sign exactly as names appears
herein. When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please in full corporate
name by President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
_____________________________________
(Signature)
Dated__________________________, 1996
========================================
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
========================================
35
