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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
December 20, 1998
-----------------
(Date of earliest event reported)
ROHM AND HAAS COMPANY
---------------------
(Exact name of registrant as specified in charter)
Delaware 1-3507 23-1028370
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(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
100 Independence Mall West, Philadelphia, Pennsylvania 19106
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (215) 592-3000
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Item 5. Other Events
------------
On December 21, 1998, Rohm and Haas Company (the "Company"), announced that
it had entered into an Agreement and Plan of Merger (the "Merger Agreement"),
dated as of December 20, 1998, by and among the Company, Lightning Acquisition
Corp. ("Purchaser"), a wholly owned subsidiary of the Company and LeaRonal, Inc.
("LeaRonal"). Pursuant to the Merger Agreement, Purchaser has commenced a tender
offer (the "Offer") for all of the outstanding common shares of LeaRonal at
$34.00 in cash per share.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
shares representing at least two-thirds of the fully diluted shares and (ii) any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 having expired or been terminated.
Simultaneously with the execution and delivery of the Merger Agreement,
Parent and Purchaser, on the one hand, and certain stockholders of LeaRonal, on
the other hand (the "Certain Stockholders"), entered into a Tender and Option
Agreement dated as of December 20, 1998 (the "Tender and Option Agreement"). The
Tender and Option Agreement relates to the issued and outstanding LeaRonal
shares owned by the Certain Stockholders, representing approximately 29% of
LeaRonal's issued and outstanding shares, as well as shares in respect of
certain stock options owned by the Certain Stockholders. Pursuant to the Tender
and Option Agreement, each Certain Stockholder has agreed to tender, and has
granted Purchaser an option, exerciseable upon the occurrence of certain
triggering events, to purchase, the shares owned by such Certain Stockholder, as
well as any other shares acquired prior to the expiration of the Offer including
pursuant to the exercise of such stock options.
Further information regarding the Offer is contained in the Tender Offer
Statement on Schedule 14D-1 filed on December 23, 1998 by the Company and
Purchaser.
Copies of the Merger Agreement and the Tender and Option Agreement have
been filed as Exhibits 10.1 and 10.2 hereto and are incorporated by reference.
Copies of the Company's press releases, dated December 21, 1998 and December
23, 1998 have been filed as Exhibits 99.1 and 99.2 hereto and are incorporated
herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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Financial Statements.
None.
Pro Forma Financial Information.
None.
Exhibits.
10.1 Agreement and Plan of Merger, dated as of December 20, 1998, by
and among Rohm and Haas Company, Lightning Acquisition
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Corp. and LeaRonal, Inc.
10.2 Tender and Option Agreement, dated as of December 20,
1998, by and among Rohm and Haas Company, Lightning
Acquisition Corp., LeaRonal, Inc. and certain
stockholders of LeaRonal, Inc.
99.1 Press Release dated December 21, 1998.
99.2 Press Release dated December 23, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ROHM AND HAAS COMPANY
By: /s/ Robert P. Vogel
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Name: Robert P. Vogel
Title: Vice President and General Counsel
Date: December 23, 1998
EXHIBIT INDEX
Exhibit No. Exhibit
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10.1 Agreement and Plan of Merger, dated as of December 20, 1998, by and among
Rohm and Haas Company, Lightning Acquisition Corp. and LeaRonal, Inc.
10.2 Tender and Option Agreement, dated as of December 20, 1998, by and among
Rohm and Haas Company, Lightning Acquisition Corp. and LeaRonal, Inc.
99.1 Press Release dated December 21, 1998.
99.2 Press Release dated December 23, 1998.
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Exhibit 10.1
Agreement and Plan of Merger, dated as of December 20, 1998, by and among
Parent, Purchaser and the Company.
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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
AMONG
ROHM AND HAAS COMPANY,
LIGHTNING ACQUISITION CORP.
AND
LEARONAL, INC.
Dated as of December 20, 1998
=======================================
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Table of Contents
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ARTICLE I THE OFFER.............................................................................. 2
Section 1.1 The Offer............................................................ 2
Section 1.2 Company Actions...................................................... 3
Section 1.3 Stockholder Lists.................................................... 4
Section 1.4 Directors; Section 14(f)............................................. 5
ARTICLE II THE MERGER............................................................................. 6
Section 2.1 The Merger........................................................... 6
Section 2.2 Effective Time....................................................... 6
Section 2.3 Effects of the Merger................................................ 6
Section 2.4 Certificate of Incorporation; By-Laws................................ 7
Section 2.5 Directors and Officers............................................... 7
Section 2.6 Conversion of Securities............................................. 7
Section 2.7 Dissenting Shares.................................................... 7
Section 2.8 Surrender of Shares.................................................. 8
Section 2.9 No Further Transfer or Ownership Rights.............................. 9
Section 2.10 Treatment of Options................................................. 9
Section 2.11 Closing.............................................................. 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................... 11
Section 3.1 Organization and Qualification....................................... 11
Section 3.2 Capitalization....................................................... 12
Section 3.3 Authority Relative to this Agreement................................. 13
Section 3.4 Absence of Certain Changes........................................... 13
Section 3.5 Reports.............................................................. 14
Section 3.6 Proxy Statement...................................................... 15
Section 3.7 Consents and Approvals; No Violation................................. 15
Section 3.8 Brokerage Fees and Commissions....................................... 16
Section 3.9 Schedule 14D-9; Offer Documents...................................... 16
Section 3.10 Litigation........................................................... 17
Section 3.11 Insurance............................................................ 17
Section 3.12 ERISA Compliance..................................................... 17
Section 3.13 Taxes................................................................ 19
Section 3.14 Year 2000............................................................ 20
Section 3.15 Compliance with Applicable Laws...................................... 20
Section 3.16 State Takeover Statutes.............................................. 22
Section 3.17 Contracts............................................................ 23
Section 3.18 Labor Matters........................................................ 24
Section 3.19 Undisclosed Liabilities.............................................. 24
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Section 3.20 Opinion of Company Financial Advisor..................................... 24
Section 3.21 Intellectual Property.................................................... 24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER..................................... 25
Section 4.1 Organization and Qualification........................................... 25
Section 4.2 Authority Relative to this Agreement..................................... 25
Section 4.3 Proxy Statement.......................................................... 26
Section 4.4 Consents and Approvals; No Violation..................................... 26
Section 4.5 Financing................................................................ 27
Section 4.6 Brokerage Fees and Commissions........................................... 27
Section 4.7 Schedule 14D-1; Offer Documents.......................................... 27
Section 4.8 Operations of Purchaser.................................................. 27
Section 4.9 Ownership of Shares by Parent and Purchaser.............................. 27
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER..................................................... 28
Section 5.1 Conduct of Business of the Company Pending the Merger.................... 28
Section 5.2 Prohibited Actions by the Company........................................ 28
ARTICLE VI COVENANTS.................................................................................. 31
Section 6.1 No Solicitation.......................................................... 31
Section 6.2 Access to Information.................................................... 33
Section 6.3 Confidentiality Agreement................................................ 33
Section 6.4 Reasonable Best Efforts.................................................. 34
Section 6.5 Indemnification of Directors and Officers................................ 35
Section 6.6 Event Notices and Other Actions.......................................... 36
Section 6.7 Third Party Standstill Agreements........................................ 36
Section 6.8 Employee Stock Options; Employee Plans and Benefits and
Employment Contracts..................................................... 37
Section 6.9 Meeting of the Company's Shareholders.................................... 38
Section 6.10 Proxy Statement.......................................................... 39
Section 6.11 Public Announcements..................................................... 39
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER................................................... 39
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger................................................................... 39
Section 7.2 Conditions to Obligations of Parent and Purchaser to
Effect the Merger........................................................ 40
Section 7.3 Conditions to Obligations of the Company to Effect the
Merger................................................................... 40
ARTICLE VIII TERMINATION; AMENDMENT; WAIVER............................................................. 40
Section 8.1 Termination.............................................................. 40
Section 8.2 Effect of Termination.................................................... 41
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Section 8.3 Termination Fee and Expense Fee.......................................... 42
Section 8.4 Amendment................................................................ 43
Section 8.5 Extension; Waiver........................................................ 43
ARTICLE IX MISCELLANEOUS.............................................................................. 43
Section 9.1 Non-Survival of Representations and Warranties........................... 43
Section 9.2 Entire Agreement; Assignment............................................. 43
Section 9.3 Enforcement of the Agreement............................................. 44
Section 9.4 Severability............................................................. 44
Section 9.5 Notices.................................................................. 44
Section 9.6 Failure or Indulgence Not Waiver; Remedies Cumulative.................... 45
Section 9.7 Governing Law............................................................ 46
Section 9.8 Descriptive Headings..................................................... 46
Section 9.9 Parties in Interest...................................................... 46
Section 9.10 Counterparts............................................................. 46
Section 9.11 Certain Definitions...................................................... 46
Section 9.12 Interpretation........................................................... 48
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ANNEX A
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AGREEMENT AND PLAN OF MERGER
----------------------------
THIS IS AN AGREEMENT AND PLAN MERGER (this "Agreement"), dated as of
December 20, 1998, among Rohm and Haas Company, a Delaware corporation
("Parent"), Lighting Acquisition Corp., a New York corporation and wholly owned
subsidiary of Parent ("Purchaser"), and LeaRonal, Inc., a New York corporation
(the "Company").
Background
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WHEREAS, the Board of Directors of the Company has determined that it
is fair to, advisable and in the best interests of the Company and the
shareholders of the Company to enter into and consummate this Agreement with
Purchaser, providing for the merger (the "Merger") of Purchaser with and into
the Company, with the Company as the Surviving Corporation, in accordance with
the New York Business Corporation Law (the "NYBCL") and the other transactions
contemplated hereby, upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of Purchaser has approved the Merger
of Purchaser with and into the Company and such other transactions in accordance
with the NYBCL upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company and Purchaser have agreed that, upon the terms
and subject to the conditions contained herein, Purchaser shall commence an
offer (as amended or supplemented in accordance with this Agreement, the
"Offer") to purchase for cash all of the issued and outstanding shares of common
stock, par value $1.00 per share (referred to herein as either the "Shares" or
"Company Common Stock"), of the Company at a price per Share of $34.00, net to
the seller in cash (the "Offer Price").
WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the holders of such Shares and has resolved to recommend that the holders of
such Shares tender their Shares pursuant to the Offer and approve and adopt this
Agreement and the Merger upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger;
WHEREAS, simultaneously with the execution and delivery of this
Agreement and in order to induce Parent and Purchaser to enter into this
Agreement, certain stockholders of the Company (the "Certain Stockholders") have
executed and delivered to Parent and Purchaser an agreement (the "Tender and
Option Agreement") pursuant to which the Certain Stockholders have agreed to
take specified actions in furtherance of the transactions contemplated by this
Agreement, including tendering their Shares into the Offer and granting Parent
and Purchaser the
<PAGE>
Purchase Option (as defined in the Tender and Option Agreement) with respect to
such Shares; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement and in order to induce Parent and Purchaser to enter into this
Agreement, certain employees of the Company have entered into employment
agreements with the Company and certain stockholders of the Company's
subsidiaries have entered into shareholders agreements with the Company (the
"Other Agreements").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and
intending to be legally bound hereby, Parent, Purchaser and the Company hereby
agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
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(a) Subject to the provisions of this Agreement, and provided that
this Agreement shall not have been terminated in accordance with Section 8.1 and
so long as none of the events or circumstances set forth in Annex A hereto shall
have occurred and be existing, not later than the fifth business day from the
date of public announcement of the execution of this Agreement, Purchaser shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), the Offer at a price of $34.00 per Share
net to the seller in cash. The obligation of Purchaser to consummate the Offer,
to accept for payment and to pay for any Shares tendered pursuant to the Offer
shall be subject only to those conditions set forth in Annex A. Purchaser
expressly reserves the right, in its sole discretion, to waive any such
condition, provided that, without the consent of the Company, Purchaser shall
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not waive the Minimum Condition (as defined in Annex A), subject to Section
1.1(b). The initial expiration date of the Offer shall be the 20th business day
following the commencement of the Offer (determined using Rule 14d-1(c)(6) under
the Exchange Act).
(b) Purchaser expressly reserves the right, in its sole discretion,
to modify and make changes to the terms and conditions of the Offer, provided
--------
that without the prior consent of the Company, no modification or change may be
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made which (i) decreases the consideration payable in the Offer, (ii) changes
the form of consideration payable in the Offer (other than by adding
consideration), (iii) changes the Minimum Condition, provided that Purchaser may
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reduce the Minimum Condition to an amount of Shares which is not less than a
majority of the Fully Diluted Shares so long as the affirmative vote of such
amount of Shares would provide the requisite shareholder approval for an
amendment to the Company's Certificate of Incorporation reducing the vote
required to approve a merger to a majority of the outstanding Shares, (iv)
decreases the maximum number of Shares sought pursuant to the Offer, (v)
adversely changes any
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conditions to the Offer, or (vi) imposes additional conditions to the Offer.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer on one or more occasions for such period as may be
determined by Purchaser in its sole discretion (each such extension period not
to exceed 10 business days at a time), if at the then scheduled expiration date
of the Offer any of the conditions to Purchaser's obligations to accept for
payment and pay for Shares shall not be satisfied or waived, (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer, and (iii) extend the Offer on one occasion for
a period of not more than 10 business days if the Minimum Condition has been
satisfied but less than 90% of the Fully Diluted Shares have been validly
tendered and not properly withdrawn. Notwithstanding the foregoing, Purchaser
may not, without the Company's prior written consent, extend the Offer pursuant
to clause (i) of the preceding sentence if the events or circumstances set forth
in Annex A hereto shall have occurred as a result of Parent or Purchaser's
breach of this Agreement. It is agreed that the conditions to the Offer set
forth on Annex A are for the benefit of Purchaser and, except with respect to
the Minimum Condition as set forth in Section 1.1(a), may be waived by
Purchaser, in whole or in part at any time and from time to time, in its sole
discretion. On the terms and subject to the conditions of the Offer, Purchaser
shall pay for, and Parent shall cause Purchaser to pay for, all Shares validly
tendered and not withdrawn pursuant to the Offer promptly after the expiration
of the Offer.
(C) On the date of commencement of the Offer, Parent and Purchaser
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together
with all amendments and supplements thereto and including the exhibits thereto,
the "Schedule 14D-1") with respect to the Offer which will comply in all
material respects with the provisions of applicable federal securities laws, and
will contain the offer to purchase relating to the Offer (the "Offer to
Purchase") and forms of related letters of transmittal and summary advertisement
(which documents, together with any supplements or amendments thereto and
including the exhibits thereto, are referred to herein collectively as the
"Offer Documents"). Parent shall deliver copies of the proposed forms of the
Schedule 14D-1 and the Offer Documents to the Company within a reasonable time
prior to the commencement of the Offer for review and comment by the Company and
its counsel. Parent agrees to provide the Company and its counsel in writing any
comments that Purchaser, Parent or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after the receipt thereof.
The Company, Parent and Purchaser shall promptly correct any information
provided by it for use in the Schedule 14D-1 or the Offer Documents that shall
have become false or misleading in any material respect and Parent and Purchaser
further agree to take all steps necessary to cause such Schedule 14D-1 or Offer
Documents as so corrected to be filed with the SEC and disseminated to the
shareholders of the Company, as and to the extent required by applicable federal
securities laws.
Section 1.2 Company Actions.
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(a) The Company hereby consents to the Offer and represents that its
Board of Directors, at a meeting duly called and held on December 20, 1998, has
duly and by unanimous
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vote adopted resolutions approving the Offer, the Merger, this Agreement, the
Tender and Option Agreement and the Other Agreements and the other transactions
contemplated hereby and thereby (the "Transactions"), determining that the terms
of the Offer and the Merger are fair to, and in the best interests of, the
Company's shareholders and recommending acceptance of the Offer and adoption of
the Merger and this Agreement by the shareholders of the Company. The Company
hereby consents, subject to Section 6.1, to the inclusion in the Offer Documents
of the recommendations of the Company's Board of Directors described in this
Section 1.2. The Company has been advised that all of its directors and
executive officers intend either to tender their Shares pursuant to the Offer or
(solely in the case of directors and executive officers who would as a result of
the tender incur liability under Section 16(b) of the Exchange Act) to vote in
favor of the Merger.
(b) The Company shall file with the SEC on the date of the
commencement of the Offer a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall comply in all material
respects with the provisions of applicable federal securities laws, and will
contain such recommendations of the Board in favor of the Offer and the Merger,
and shall disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated
under the Exchange Act and shall mail such Schedule 14D-9 together with the
Offer Documents. The Company shall deliver the proposed forms of the Schedule
14D-9 and the exhibits thereto to Parent within a reasonable time prior to the
commencement of the Offer for review and comment by Parent and its counsel.
Parent and its counsel shall be given a reasonable opportunity to review any
amendments and supplements to the Schedule 14D-9 prior to their filing with the
SEC or dissemination to shareholders of the Company. The Company agrees to
provide Parent and its counsel in writing any comments that the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt thereof. Each of the Company, Parent and Purchaser shall
promptly correct any information provided by it for use in the Schedule 14D-9
that shall have become false or misleading in any material respect and the
Company further agrees to take all steps necessary to cause such Schedule 14D-9
as so corrected to be filed with the SEC and disseminated to the shareholders of
the Company, as and to the extent required by applicable federal securities
laws.
Section 1.3 Stockholder Lists. In connection with the Offer, the Company
-----------------
shall promptly furnish to, or cause to be furnished to, Parent and Purchaser
mailing labels, security position listings, any non-objecting beneficial owner
lists and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date and of those
Persons becoming record holders subsequent to such date (to the extent
available), together with all other information in the Company's possession or
control regarding the beneficial owners of Shares and shall furnish Parent and
Purchaser with such information and assistance as Parent, Purchaser or their
respective agents may reasonably request in communicating the Offer to the
record and beneficial holders of Shares. Subject to the requirements of law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Parent and Purchaser
shall, and shall cause each of their affiliates to,
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hold the information contained in any of such labels and lists in confidence,
use such information only in connection with the Offer and the Merger, and, if
this Agreement is terminated, deliver to the Company all copies of such
information or extracts therefrom then in their possession or under their
control.
Section 1.4 Directors; Section 14(f). Immediately upon the acceptance
------------------------
for payment of and payment for any Shares by Purchaser or any of its affiliates
pursuant to the Offer, Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as will give Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors of the Company equal to
the product of (i) the total number of directors on the Board of Directors of
the Company (giving effect to the increase in the size of such Board pursuant to
this Section 1.4) and (ii) the percentage that the number of votes represented
by Shares beneficially owned by Purchaser and its affiliates (including Shares
so accepted for payment and purchased) bears to the number of votes represented
by Shares then outstanding. In furtherance thereof, concurrently with such
acceptance for payment and payment for such Shares the Company shall, upon
request of Parent and compliance with Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder, use its best efforts promptly either to increase
the size of its Board of Directors or to secure the resignations of such number
of its incumbent directors, or both, as is necessary to enable such designees of
Parent to be so elected or appointed to the Company's Board of Directors, and
the Company shall take all actions available to the Company to cause such
designees of Parent to be so elected or appointed. At such time, the Company
shall, if requested by Parent, also use its reasonable best efforts to cause
persons designated by Parent to constitute at least the same percentage (rounded
up to the next whole number) as is on the Company's Board of Directors of (i)
each committee of the Company's Board of Directors, (ii) each board of directors
(or similar body) of each subsidiary of the Company and (iii) each committee (or
similar body) of each such board. Notwithstanding the foregoing, the Company
shall use its reasonable best efforts to ensure that, in the event that
Purchaser's designees are elected to the Board of Directors of the Company, such
Board of Directors shall have, at all times prior to the Effective Time, at
least three directors who are directors on the date of this Agreement and who
are not officers of the Company, Parent or any of their respective subsidiaries
(the "Independent Directors"); and provided further, that, in such event, if the
-------- -------
number of Independent Directors shall be reduced below three for any reason
whatsoever any remaining Independent Directors (or Independent Director, if
there shall be only one remaining) may designate persons to fill such vacancies
who shall be deemed to be Independent Directors for purposes of this Agreement
or, if no Independent Directors then remain, the other directors may designate
three persons to fill such vacancies who shall not be officers or affiliates of
the Company, Parent or any of their respective subsidiaries, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.
Subject to applicable law, the Company shall promptly take all action requested
by Parent necessary to effect any such election, including mailing to its
shareholders the information required by Section 14(f) of the Exchange Act and
Rule 14(f)-1 promulgated thereunder (or, at Parent's request, furnishing such
information to Parent for inclusion in the Offer Documents initially filed with
the SEC and distributed to the stockholders of the Company) as is necessary to
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enable Parent's designees to be elected to the Company's Board of Directors.
From and after the time, if any, that Parent's designees constitute a majority
of the Company's Board of Directors, any amendment of this Agreement, any
termination of this Agreement by the Company, any extension of time for
performance of any of the obligations of Parent or Purchaser hereunder, any
waiver of any condition to the Company's obligations hereunder or any of the
Company's rights hereunder or other action by the Company hereunder may be
effected only by the action of a majority of the Independent Directors of the
Company, which action shall be deemed to constitute the action of any committee
specifically designated by the Board of Directors of the Company to approve the
actions contemplated hereby and the full Board of Directors of the Company;
provided, that, if there shall be no Independent Directors, such actions may be
- -------- ----
effected by majority vote of the entire Board of Directors of the Company,
except that no such action shall amend the terms of this Agreement or modify the
terms of the Offer or the Merger in a manner materially adverse to the holders
of Shares.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
----------
hereof, and in accordance with the relevant provisions of the NYBCL, Purchaser
shall be merged with and into the Company as soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VII. Following the
Merger, the Company shall continue as the surviving corporation (the "Surviving
Corporation") under the name "LeaRonal, Inc." and shall continue its existence
under the laws of the State of New York, and the separate corporate existence of
Purchaser shall cease. At the election of Parent, any direct or indirect wholly
owned subsidiary of Parent may be substituted for Purchaser as a constituent
corporation in the Merger.
Section 2.2 Effective Time. As soon as practicable after the
--------------
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Department of State of the State
of New York (the "New York Department"), in such form as required by and
executed in accordance with the relevant provisions of the NYBCL (the date and
time of the filing of the Certificate of Merger with the New York Department (or
such later time as is specified in the Certificate of Merger) being the
"Effective Time").
Section 2.3 Effects of the Merger. The Merger shall have the effects set
---------------------
forth in the applicable provisions of the NYBCL. Without limiting the generality
of the foregoing and subject thereto, at the Effective Time all the property,
rights, privileges, immunities, powers and franchises of the Company and
Purchaser shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Purchaser shall become the debts, liabilities and
duties of the Surviving Corporation.
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Section 2.4 Certificate of Incorporation; By-Laws. (a) At the Effective
-------------------------------------
Time and without any further action on the part of the Company and Purchaser,
the Certificate of Incorporation of the Purchaser (the "Certificate of
Incorporation"), as in effect immediately prior to the Effective Time until
thereafter further amended as provided therein and under the NYBCL, shall be the
certificate of incorporation of the Surviving Corporation following the Merger.
(b) At the Effective Time and without any further action on the part
of the Company and Purchaser, the Bylaws of the Purchaser shall be the Bylaws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Certificate of Incorporation of the Surviving
Corporation and as provided by law.
Section 2.5 Directors and Officers. The directors of Purchaser
----------------------
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
Section 2.6 Conversion of Securities. At the Effective Time, by virtue
------------------------
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities:
(i) Each share of common stock of Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted into
one validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation.
(ii) Each Share held in the treasury of the Company and each
Share owned by Purchaser or any direct or indirect subsidiary of the
Company, in each case immediately prior to the Effective Time, shall be
cancelled and retired without any conversion thereof and no payment or
distribution shall be made with respect thereto.
(iii) Each issued and outstanding Share (other than Shares
cancelled pursuant to Section 2.6(ii) and any Dissenting Shares (as defined
in Section 2.7(a)) shall be converted into the right to receive $34.00 in
cash or any higher price that may be paid pursuant to the Offer (the
"Merger Consideration") payable to the holder thereof, without interest,
upon surrender of the certificate formerly representing such share in the
manner provided in Section 2.8, less any required withholding taxes.
Section 2.7 Dissenting Shares. (a) Notwithstanding anything in this
-----------------
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by shareholders who have not
voted such Shares in favor of the Merger (or consented thereto in writing), who
shall have delivered a written objection to the Merger and a demand for
appraisal of such Shares in accordance with Sections 623 and 910 of the NYBCL
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(insofar as such Sections are applicable to the Merger), and who shall not have
failed to perfect or shall not have effectively withdrawn or lost their rights
to appraisal and payment under the NYBCL (the "Dissenting Shares"), shall not be
converted into the right to receive the Merger Consideration, but shall instead
entitle the holder thereof to receive that consideration determined pursuant to
Sections 623 and 910 of the NYBCL; provided, however, that if such holder shall
have failed to perfect or shall have effectively withdrawn or lost such holder's
right to appraisal and payment under the NYBCL, such holder's Shares shall
thereupon be deemed to have been converted, at the Effective Time, into the
right to receive the Merger Consideration, without any interest thereon.
(b) The Company shall give Purchaser (i) prompt notice of any demands
for appraisal pursuant to the applicable provisions of the NYBCL received by the
Company, withdrawals of such demands, and any other instruments served pursuant
to the NYBCL and received by the Company and (ii) the opportunity to participate
in all negotiations and proceedings with respect to demands for appraisal under
the NYBCL. The Company shall not, except with the prior written consent of
Purchaser, make any payment with respect to any such demands for appraisal or
offer to settle or settle any such demands.
Section 2.8 Surrender of Shares. (a) Prior to the mailing of the Proxy
-------------------
Statement, Purchaser shall appoint a bank or trust company which is reasonably
satisfactory to the Company to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration. At the Effective Time, the Surviving
Corporation will deposit with the Paying Agent in separate trust for the benefit
of former holders of Shares sufficient funds to make all payments pursuant to
this Section 2.8. Such funds shall be invested by the Paying Agent as directed
by the Surviving Corporation. Any net profit resulting from, or interest or
income produced by, such investments will be payable to the Surviving
Corporation or as it directs.
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented Shares (the "Certificates"), a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Upon surrender to
the Paying Agent of a Certificate, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor the
aggregate amount of Merger Consideration into which the number of Shares
previously represented by such Certificate or Certificates surrendered shall
have been converted pursuant to this Agreement. If any Merger Consideration is
to be remitted to a person whose name is other than that in which the
Certificate for Shares surrendered for exchange is registered, it shall be a
condition of such exchange that the Certificate so surrendered shall be properly
endorsed, with signature guaranteed, or otherwise in proper form for transfer,
and that the person requesting such
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<PAGE>
exchange shall have paid any transfer and/or other taxes required by reason of
the remittance of Merger Consideration to a person whose name is other than that
of the registered holder of the Certificate surrendered, or the person
requesting such exchange shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
No interest shall be paid or accrued, upon the surrender of the Certificates,
for the benefit of holders of the Certificates on any Merger Consideration.
(c) At any time following twelve months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) which had
been deposited with the Paying Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
only to the Surviving Corporation (subject to abandoned property, escheat or
other similar laws) and only as general creditors thereof for payment of their
claim for Merger Consideration to which such holders may be entitled.
(d) Notwithstanding the provisions of Section 2.8(c), neither the
Surviving Corporation nor the Paying Agent shall be liable to any person in
respect of any Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(e) Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any former holder
of Shares such amounts as Parent (or any affiliate thereof) is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of any applicable state, local or foreign law, rule or
regulation. To the extent that amounts are so withheld by Parent and paid by
Parent to the applicable taxing authority, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the former
holder of Shares in respect of which such deduction and withholding was made by
Parent.
Section 2.9 No Further Transfer or Ownership Rights. After the Effective
---------------------------------------
Time, there shall be no further transfer on the records of the Company or its
transfer agent of certificates representing Shares which have been converted
pursuant to this Agreement into the right to receive Merger Consideration, and
if such certificates are presented to the Company for transfer, they shall be
cancelled against delivery of Merger Consideration. From and after the Effective
Time, the holders of Certificates evidencing ownership of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided for herein or by applicable
law. All Merger Consideration paid upon the surrender for exchange of
Certificates representing Shares in accordance with the terms of this Article II
shall be deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the Shares theretofore represented by such Certificates.
Section 2.10 Treatment of Options. Prior to the Effective Time, the
--------------------
Board of Directors of the Company (or, if appropriate, any committee thereof)
shall adopt appropriate
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resolutions and take all other actions necessary to provide that each
outstanding stock option (each "Option") heretofore granted under the Company's
1990 Nonqualified Stock Option Plan, dated June 1, 1990 (the "1990 Plan") and
the Company's 1996 Long-Term Incentive Plan (the "1996 Plan", and together with
the 1990 Plan, the "Company Stock Option Plans"), whether or not then vested or
exercisable, shall, at the Effective Time, be cancelled, and each holder thereof
shall be entitled to receive a payment in cash from the Company (subject to any
applicable withholding taxes, the "Cash Payment"), upon cancellation, equal to
the product of (x) the total number of Shares subject or related to such Option,
whether or not then vested or exercisable, and (y) the excess, if any, of the
Merger Consideration over the exercise price or purchase price, as the case may
be, per Share subject or related to such Option, each such Cash Payment to be
paid to each holder of an outstanding Option upon cancellation. Notwithstanding
the foregoing, if requested by Purchaser, the Board of Directors of the Company
(or, if appropriate, any committee thereof) shall adopt appropriate resolutions
providing for such cancellation and a cash payment equal to 101.8% of the Cash
Payment to occur, in respect of any or all Options held by certain employees of
the Company who have entered into employment agreements with the Company, on the
78th day after the date on which the Effective Time occurs. If Parent or
Purchaser and an Option holder mutually agree, such Option holder may receive in
lieu of such Cash Payment an option to acquire shares of common stock of Parent
on terms providing such Option holder with value substantially equivalent to the
value of such Cash Payment. The Company agrees that upon the exercise of any
Option it shall issue such Shares as such Option holder may be entitled to
receive upon such exercise and shall not exercise any rights it may have under
the Company Stock Option Plans or otherwise to settle such Option with a cash
payment without the written consent of Parent. As provided herein and subject to
the contractual rights of participants therein, the Company Stock Option Plans
and any Benefit Plan (or other plan, program or arrangement) providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary shall terminate as of the Effective Time. The Company
will take all steps necessary to ensure that none of the Company or any of its
subsidiaries is or will be bound by any Options, other options, warrants, rights
or agreements which would entitle any person, other than the current
shareholders of Purchaser or its affiliates, to acquire any capital stock of the
Surviving Corporation or any of its subsidiaries or, except as otherwise
provided in this Section 2.10, to receive any payment in respect thereof and to
cause such Options to be cancelled or cause the holders of the Options to agree
to such cancellation thereof as provided herein.
Section 2.11 Closing. Upon the terms and subject to the conditions
-------
hereof, as soon as practicable after consummation of the Offer, and to the
extent required by the NYBCL after the vote of the shareholders of the Company
in favor of the approval of the Merger and this Agreement has been obtained, the
Company and Purchaser (or Parent if appropriate) shall execute and file with the
New York Department of State the Certificate of Merger, and the parties shall
take all such other and further actions as may be required by law to make the
Merger effective. Prior to the filing referred to in this Section 2.11, a
closing (the "Closing") will be held at the offices of Dechert Price & Rhoads,
4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia, PA
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<PAGE>
19103-2793 (or such other place as the parties may agree) for the purpose of
confirming all of the foregoing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule where the
relevance of such disclosure to the applicable representation and warranty is
readily apparent from such disclosure, the Company hereby represents and
warrants to Parent and Purchaser as follows:
Section 3.1 Organization and Qualification.
------------------------------
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York and has the requisite
corporate power and authority necessary to enable it to own, lease and operate
its properties and assets and to carry on its business as it is now being
conducted. The Company is duly qualified as a foreign corporation or licensed to
do business, and is in good standing, in each jurisdiction where the character
of its properties owned or leased or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed and in good standing, individually or in the aggregate,
has not had and would not reasonably be expected to have a Material Adverse
Effect on the Company.
(b) The only subsidiaries of the Company are those named in Exhibit
21 to the Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1998 or set forth on Section 3.1(b) of the Company Disclosure
Schedule. Each Significant Subsidiary of the Company is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority necessary to enable it to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted. Each other
subsidiary of the Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has the
requisite power and authority necessary to enable it to own, lease and operate
its property and assets and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power and authority would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. Each subsidiary of the Company is duly qualified as a foreign
corporation or licensed to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or leased or the nature
of its activities makes such qualification or licensing necessary, except where
the failure to be so qualified or licensed or in good standing, individually or
in the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect on the Company. As used in this Agreement, "Significant
Subsidiary" shall have the meaning set forth in Rule 1-02 of Regulation S-X of
the SEC.
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<PAGE>
(c) All of the outstanding shares of capital stock of each such
subsidiary have been validly issued and are fully paid and non-assessable and,
except as set forth in Section 3.1(b) of the Company Disclosure Schedule, are
owned by the Company, by another wholly owned subsidiary of the Company or by
the Company and another such wholly owned subsidiary, free and clear of all
pledges, claims, equities, options, liens, charges, rights of first refusal,
"tag" or "drag" along rights, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens"). Except for the capital stock of its
subsidiaries, the Company does not own, directly or indirectly, any capital
stock or other ownership interest in any corporation, partnership, limited
liability company, joint venture or other entity. The Company has delivered to
Parent complete and correct copies of its Certificate of Incorporation and
Bylaws and the comparable charters and bylaws or other organizational documents
of its subsidiaries, in each case as amended to the date of this Agreement.
Section 3.2 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of
35,000,000 Shares. All of the issued and outstanding Shares have been duly
authorized and validly issued and are fully paid and nonassessable and are not
subject to preemptive rights. As of the date hereof, 12,544,682 Shares were
issued and outstanding, 1,313,364 Shares were reserved for issuance pursuant to
outstanding Options of a like number issued under the Company Stock Option
Plans. Such Shares reserved for issuance under the Company Stock Option Plans
have not been issued and will not be issued prior to the Effective Time, and no
commitment has been or will be made for their issuance, other than under the
Options described in the preceding sentence and issued and outstanding under the
Company Stock Option Plans as of the date of this Agreement.
(b) Except as otherwise provided in Section 2.10 of this Agreement,
at the Effective Time, each Option shall be cancelled and the holder thereof
shall not be entitled to receive any consideration therefor other than the cash
payments provided by Section 2.10 of this Agreement. Section 3.2(b) of the
Company Disclosure Schedule sets forth the exercise prices and number of Shares
in respect of outstanding Options under the Company Stock Option Plans. There
are no bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which shareholders of the Company may vote
("Voting Company Debt"). Except as set forth above, there are no outstanding
securities, options, warrants, calls, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights, stock-based
performance units, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its subsidiaries is a party or by which any
of them is bound obligating the Company or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
unit, commitment, agreement, arrangement or undertaking. There are not any
outstanding contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire, or providing preemptive or registration
-12-
<PAGE>
rights with respect to, any shares of, or any outstanding options, warrants or
rights of any kind to acquire any shares of, or any outstanding securities that
are convertible into or exchangeable for any shares of, capital stock of the
Company or any of its subsidiaries. The Company and its subsidiaries do not have
outstanding any loans to any person in respect of the purchase of securities
issued by the Company and its subsidiaries.
(c) There are no voting trusts, proxies or other agreements,
commitments or understandings of any character to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
is bound with respect to the voting of any shares of capital stock of the
Company or any of its subsidiaries or with respect to the registration of the
offering, sale or delivery of any shares of capital stock of the Company or any
of its subsidiaries under the Securities Act of 1933, as amended (the
"Securities Act").
Section 3.3 Authority Relative to this Agreement. (a) The Company has
------------------------------------
all requisite corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder, and to consummate the
Transactions (subject to the Company Shareholder Approval (as hereinafter
defined) with respect to the Merger). The execution and delivery of this
Agreement and the performance of its obligations hereunder and the consummation
by the Company of the Transactions have been duly and validly authorized by the
Board of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
Transactions (other than the Company Shareholder Approval and the filing and
recordation of appropriate merger documents as required by the NYBCL). This
Agreement has been duly and validly executed and delivered by the Company, and,
assuming this Agreement constitutes a valid and binding obligation of Parent and
Purchaser, this Agreement constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(b) The only vote of holders of any class or series of capital stock
of the Company or any of its subsidiaries necessary to adopt or approve this
Agreement and the Merger is the adoption of this Agreement by the holders of
two-thirds of the outstanding Shares (the "Company Shareholder Approval"),
subject to Section 6.9(d). The affirmative vote of the holders of any capital
stock of the Company or any of its subsidiaries, or any of them, is not
necessary to consummate the Offer or any transaction contemplated by this
Agreement other than as set forth in the preceding sentence.
Section 3.4 Absence of Certain Changes. Except as disclosed in the
--------------------------
Company's filings and reports under the Exchange Act filed and publicly
available prior to the date of this Agreement (the "Filed Company SEC
Documents") or as set forth in Section 3.4 of the Company Disclosure Schedule,
since August 31, 1998, the Company and its subsidiaries have conducted their
business only in the ordinary course in all material respects, and during such
period there has not been any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect on the Company. Except as disclosed in the Filed
Company SEC Documents or as set forth in Section 3.4 of the Company
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<PAGE>
Disclosure Schedule, since August 31, 1998 there has not been (a) any
declaration, setting aside or payment of any dividend (other than the
declaration and payment of regular quarterly cash dividends in an amount not in
excess of $0.14 per Share) or other distribution in respect of the capital stock
of the Company or any redemption or other acquisition by the Company of any
capital stock of the Company; (b) any entry into any agreement, commitment or
transaction by the Company or any of its subsidiaries which is material to the
Company and its subsidiaries taken as a whole, except agreements, commitments or
transactions in the ordinary course of business; (c) any split, combination or
reclassification of the Company's capital stock or of any other equity interests
in the Company, or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or of any other equity interests in the Company; (d)(i) any
granting by the Company or any of its subsidiaries to any officer, director or
key employee of the Company or any of its subsidiaries of any increase in
compensation, except in the ordinary course of business or as was required under
employment agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents, (ii) any
granting by the Company or any of its subsidiaries to any such officer, director
or key employee of any increase in severance or termination pay, except as was
required under employment, severance or termination agreements in effect as of
the date of the most recent audited financial statements included in the Filed
Company SEC Documents or (iii) any entry by the Company or any of its
subsidiaries into any employment, severance or termination agreement with any
such officer, director or key employee; (e) any damage, destruction or loss,
whether or not covered by insurance, that, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect on the
Company; or (f) any change in accounting methods, principles or practices by the
Company or any subsidiary materially affecting the consolidated assets,
liabilities, results of operations or business of the Company, except insofar as
may have been required by a change in generally accepted accounting principles.
Section 3.5 Reports. Since March 1, 1996, the Company has timely filed
-------
all required forms, reports and documents with the SEC required to be filed by
it pursuant to the federal securities laws and the SEC rules and regulations
thereunder (collectively, the "Company SEC Documents"), all of which have
complied as of their respective filing dates in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, and the
rules promulgated thereunder. The Company has delivered copies of all such
forms, reports or documents to Parent. None of such forms, reports or documents
at the time filed (or at the time amended), contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated subsidiaries
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<PAGE>
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (and include, in the case of any unaudited
interim financial statements, reasonable accruals for normal year-end
adjustments). No subsidiaries of the Company are required to file periodic
reports with the SEC under the Exchange Act.
Section 3.6 Proxy Statement. If a Proxy Statement is required for the
---------------
consummation of the Merger under applicable law, the Proxy Statement will comply
in all material respects with the Exchange Act, except that no representation is
made by the Company with respect to information supplied by or on behalf of
Parent or any affiliate of Parent specifically for inclusion in the Proxy
Statement. None of the information supplied by the Company specifically for
inclusion in the Proxy Statement shall, at the time the Proxy Statement is
mailed or at the time of the Shareholder Meeting or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representation or
warranty as to any of the information relating to and supplied by or on behalf
of Parent and Purchaser specifically for inclusion in the Proxy Statement. The
letter to shareholders, notice of meeting, proxy statement and form of proxy, or
the information statement, as the case may be, to be distributed to shareholders
in connection with the Merger, or any schedule required to be filed with the SEC
in connection therewith, together with any amendments or supplements thereto,
are collectively referred to herein as the "Proxy Statement." If, at any time
prior to the Effective Time, any event relating to the Company or any of its
affiliates, officers or directors is discovered by the Company that shall be set
forth in a supplement to the Proxy Statement, the Company will promptly inform
Parent and Purchaser and prepare, file and disseminate such supplement as may be
required by applicable law.
Section 3.7 Consents and Approvals; No Violation. Subject to obtaining
------------------------------------
the Company Shareholder Approval (if required under the NYBCL) and the taking of
the actions described in the immediately succeeding sentence, the execution,
delivery and performance of this Agreement do not, and the consummation of the
Transactions (including the changes in ownership of Shares or the composition of
the Board of Directors of the Company) and compliance with the provisions of
this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse to time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under, or result in the creation of any Lien upon any
of the material properties or assets of the Company or any of its subsidiaries
under, or result in the termination of, or require that any consent be obtained
or any notice be given with respect to, (i) the Certificate of Incorporation or
Bylaws of the Company or the comparable charter or organizational documents of
any of its subsidiaries, (ii) any loan or credit agreement note, bond, mortgage,
indenture, lease, license or other agreement, instrument, Contract or Permit
applicable to the Company or any of its subsidiaries or their respective
properties or assets, (iii) any judgment, order, writ, injunction, decree, law,
statute, ordinance, rule or regulation applicable to the Company or any of its
subsidiaries
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<PAGE>
is a party, other than, in the case of clauses (ii), (iii) or (iv), any such
conflicts, violations, defaults, rights, Liens, losses of a material benefit,
consents or notices that, individually or in the aggregate, have not and would
not reasonably be expected to have a Material Adverse Effect on the Company. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity") is required by the Company or any
of its subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the Transactions,
except for (i) the filing of a premerger notification and report form by the
Company under the HSR Act (as hereinafter defined), the filing of a notice with
the German Federal Cartel Office under the German Act Against Restraints of
Competition (the "GWB Act") or in connection with any other foreign antitrust or
competition laws, (ii) the filing with the SEC of (x) the Schedule 14D-9, (y) if
required, the Proxy Statement relating to the approval by the Company's
shareholders of this Agreement and (z) such reports under Section 13(a) of the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the filing of the Certificate
of Merger pursuant to the NYBCL and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect on the Company or where
the requirement to obtain such consent, approval, authorization or permit, or to
make such filing or notification arises solely from the regulatory status of
Parent or Purchaser.
Section 3.8 Brokerage Fees and Commissions. Except for those fees and
------------------------------
expenses payable to The Beacon Group Capital Services LLC (the "Company
Financial Advisor") and Eugene Nadel pursuant to the letter agreement, dated
September 24, 1998, no person is entitled to receive any investment banking,
brokerage or finder's fee or commission in connection with this Agreement or the
Transactions based upon arrangements made by or on behalf of the Company or any
of its subsidiaries or by any affiliate of the Company or any of its
subsidiaries. A copy of the above agreement has previously been delivered to
Parent.
Section 3.9 Schedule 14D-9; Offer Documents. Neither the Schedule 14D-9,
-------------------------------
any other document required to be filed by the Company with the SEC in
connection with the Transactions, nor any information supplied by the Company in
writing specifically for inclusion in the Offer Documents or the Schedule 14D-1
shall, at the respective times the Schedule 14D-9, any such of other filings by
the Company, the Schedule 14D-1, the Offer Documents or any amendments or
supplements thereto are filed with the SEC or are first published, sent or given
to stockholders of the Company, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Schedule 14D-9 and
any other document required to be filed by the Company with the SEC in
connection with the Transactions will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the
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foregoing, no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by or on behalf of Parent or Purchaser specifically for inclusion or
incorporation by reference therein.
Section 3.10 Litigation. Except as disclosed in the Company SEC
----------
Documents, there is no claim, suit, action or proceeding (including arbitration
proceedings) pending or, to the knowledge of the Company, threatened against the
Company or any of its subsidiaries that, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect on the
Company, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
subsidiaries which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect on the Company.
Section 3.11 Insurance. The Company and its subsidiaries maintain
---------
policies of fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and against such risks and losses as are, in the
Company's judgment, reasonable for the assets and properties of the Company and
its subsidiaries and customary in the Company's industry. As of the date of this
Agreement, except as set forth in Section 3.11 of the Company's Disclosure
Schedule, all material insurance policies are in full force and effect, all
premiums due and payable thereon have been paid, and no notice of cancellation
or termination has been received with respect to any such policy.
Section 3.12 ERISA Compliance. (a) Section 3.12(a) of the Company
----------------
Disclosure Schedule sets forth a complete list of all "employee benefit plans"
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), and each material employment contract, bonus,
pension, profit sharing, deferred compensation, incentive compensation, excess
benefit, stock, stock option, severance, termination pay, change in control or
other material employee benefit plan, program or arrangement, whether written or
unwritten, qualified or unqualified, funded or unfunded, foreign or domestic
currently maintained, or contributed to, or required to be maintained or
contributed to, by the Company or any subsidiary for the benefit of any current
or former employees, officers or directors of the Company or any of its
subsidiaries or with respect to which the Company or any of its subsidiaries has
any liability (collectively, the "Benefit Plans"), except for Benefit Plans that
are maintained or contributed to by a subsidiary other than a Specified
Subsidiary and which the executive officers of the Company located at the
Company's headquarters do not have actual knowledge of as of the date of this
Agreement. For purposes of the preceding sentence, an employment agreement shall
be deemed material if the Company or a subsidiary may not terminate the contract
or the employment of the individual who is a party to the contract without
incurring a liability in excess of $100,000, and an employee benefit plan,
program or arrangement will be material if the aggregate annual cost associated
therewith exceeds $250,000. As used herein, "Specified Subsidiary" shall mean
LeaRonal (UK) plc, LeaRonal AG and LeaRonal (S.E. Asia) Ltd.
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(b) Each Benefit Plan has been maintained, operated and administered
in all material respects in accordance with its terms. The Company, each
subsidiary and all the Benefit Plans are all in compliance in all material
respects with the applicable provisions of ERISA, the Internal Revenue Code of
1986, as amended (the "Code") and any other applicable law, rule or regulation,
domestic or foreign.
(c) No event has occurred and, to the knowledge of the Company, there
exists no condition or set of circumstances in connection with which the Company
or any subsidiary could be subject to any liability under the terms of any
Benefit Plan, or under ERISA, or, with respect to any Benefit Plan, under ERISA,
the Code or any other applicable law, rule or regulation, domestic or foreign,
other than any condition or set of circumstances that, individually or in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect on the Company. Neither the Company nor any subsidiary has
incurred or would reasonably be expected to incur any liability in respect of
any employee benefit plan maintained by any person other than the Company or a
subsidiary which would be treated as a single employer with the Company or a
subsidiary under Section 414(b) or (c) of the Code.
(d) The Benefit Plans which are "employee pension benefit plans"
within the meaning of Section 3(2) of ERISA and which are intended to meet the
qualification requirements of Section 401(a) of the Code (each a "Pension Plan")
now meet, and at all times since their inception have met the requirements for
such qualification, and the related trusts are now, and at all times since their
inception have been, exempt from taxation under Section 501(a) of the Code. All
Pension Plans have received determination letters from the IRS to the effect
that such Pension Plans are qualified and the related trust are exempt from
federal income taxes and no determination letter with respect to any Pension
Plan has been revoked nor, to the best knowledge of the Company is there any
reason for such revocation, nor has any Pension Plan been amended since the date
of its most recent determination letter in any respect which would adversely
affect its qualification.
(e) No Benefit Plan is now or at any time has been subject to Part 3,
Subtitle B of Title I of ERISA or Title IV of ERISA.
(f) There are no investigations, audits, actions, suits or claims
pending (other than routine claims for benefits) or, to the knowledge of the
Company, threatened against, or with respect to, any Benefit Plan or its assets,
any fiduciary thereof or service provider thereto nor to the knowledge of the
Company is there any reasonable basis for any such claim, suit or proceeding
that, individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect on the Company.
(g) To the knowledge of the Company, there is no matter pending
(other than routine qualification determination filings) with respect to any
Benefit Plan before the IRS, the Department of Labor or the Pension Benefit
Guaranty Corporation ("PBGC").
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(h) All contributions to, and payments from, any Benefit Plan, except
those to be made from a trust qualified under Section 401(a) of the Code, for
any period ending before the Effective Time that are not yet, but will be,
required are properly accrued and reflected on the most recent financial
statements contained in the Filed Company SEC Documents.
(i) Except as set forth on Section 3.12(i) of the Company Disclosure
Schedule or as otherwise contemplated by this Agreement, and except for Benefit
Plans maintained or contributed to by a subsidiary other than a Specified
Subsidiary which the executive officers of the Company located at the Company's
headquarters do not have actual knowledge of as of the date of this Agreement,
the execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not (i) require the Company or any of its
subsidiaries to pay greater compensation or make a larger contribution to, or
pay greater benefits or accelerate payment or vesting of a benefit under, any
Benefit Plan or any other program, agreement, policy or arrangement or (ii)
create or give rise to any additional vested rights or service credits under any
Benefit Plan or any other program, agreement, policy or arrangement.
(j) Except as set forth in Section 3.12(j) of the Company Disclosure
Schedule, and except for Benefit Plans maintained or contributed to by a
subsidiary other than a Specified Subsidiary which the executive officers of the
Company located at the Company's headquarters do not have actual knowledge of as
of the date of this Agreement, no Benefit Plan provides benefits, including
without limitation, death or medical benefits, beyond termination of employment
or retirement other than (A) coverage mandated by law or (B) death or retirement
benefits under a Benefit Plan qualified under Section 401(a) of the Code.
Neither the Company nor any of its subsidiaries is contractually or otherwise
obligated (whether or not in writing) to provide any person with life, medical,
dental or disability benefits for any period of time beyond retirement or
termination of employment, other than as required by the provisions of Sections
601 through 608 of ERISA and Section 4980B of the Code.
(k) With respect to any Benefit Plan that is an employee welfare
benefit plan (as defined in Section 3(1) of ERISA), (i) no such Benefit Plan in
funded through a "welfare benefit fund", as such term is defined in Section
419(e) of the Code, (ii) each such Benefit Plan that is a "group health plan",
as such term is defined in Section 5000(b)(l) of the Code, complies in all
material respects with the applicable requirements of Sections 601 through 608
of ERISA and Section 4980B(f) of the Code, and (iii) each such Benefit Plan
(including any such Plan covering retirees or other former employees) may be
amended or terminated without material liability to the Company or any of its
subsidiaries on or at any time after the consummation of the Offer.
Section 3.13 Taxes. The Company and each of its subsidiaries has timely
-----
filed all material Tax Returns required to be filed by any of them. All such Tax
Returns are true, correct and complete, except for such instances which
individually or in the aggregate would not have a Material Adverse Effect on the
Company. All material Taxes of the Company and its subsidiaries which are due on
or before the Effective Time, have been paid, except for those Taxes which are
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being contested in good faith for which adequate reserves have been established
in the financial statements included in the Company SEC Documents in accordance
with generally accepted accounting principles and which are described in Section
3.13 of the Company Disclosure Statement. The Company does not know of any
proposed or threatened Tax claims or assessments which, if upheld, would
individually or in the aggregate have a Material Adverse Effect on the Company.
The Company and each subsidiary has withheld and paid over to the relevant
Taxing authority all Taxes required to have been withheld and paid in connection
with payments to employees, independent contractors, creditors, stockholders or
other third parties, except for such Taxes which individually or in the
aggregate would not have a Material Adverse Effect on the Company.
As used herein, "Tax Returns" shall mean all returns and reports of
or with respect to any Tax which are required to be filed by or with respect to
the Company or any of its subsidiaries, and "Taxes" shall mean all taxes,
charges, imposts, tariffs, fees, levies or other similar assessments or
liabilities, including income taxes, ad valorem taxes, excise taxes, withholding
taxes, stamp taxes or other taxes of or with respect to gross receipts,
premiums, real property, personal property, windfall profits, sales, use,
transfers, licensing, employment, payroll and franchises imposed by or under any
statute, law, rule or regulation, and such terms shall include any interest,
fines, penalties, assessments or additions to tax resulting from, attributable
to or incurred in connection with any such tax or any contest or dispute
thereof.
Section 3.14 Year 2000. The software, operations, systems and processes
---------
(including, to the knowledge of the Company, software, operations, systems and
processes obtained from third parties) which, in whole or in part, are used,
operated, relied upon, or integral to, the Company's or any of its subsidiaries'
conduct of their business, are Year 2000 Compliant (as hereinafter defined),
except where the failure to be Year 2000 Compliant would not, individually or in
the aggregate, have a Material Adverse Effect on the Company, and the Company
has delivered to Parent true and correct copies of any consultant or other
third-party reports prepared on behalf of the Company with respect to such
compliance. For purposes of this Agreement, "Year 2000 Compliant" means the
ability to process (including calculate, compare, sequence, display or store),
transmit or receive data or data/time data from, into and between the twentieth
and twenty-first centuries, and the years 1999 and 2000, and leap year
calculations without error or malfunction.
Section 3.15 Compliance with Applicable Laws. Except as would not
-------------------------------
reasonably be expected to have a Material Adverse Effect on the Company: (a) the
Company and its subsidiaries have in effect all Federal, state, local and
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits (including Environmental Permits (as
hereinafter defined)) and rights ("Permits") required under applicable
Environmental Laws and necessary for it to own, lease or operate its properties
and assets and to carry on its business as now conducted, and there has occurred
no default under any such Permit, and (b) each of the Company and its
subsidiaries is in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity, including in respect
of
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<PAGE>
unlawful expenditures in violation of Section 30A of the Exchange Act.
"Environmental Permit" means any permit, license, approval or other
authorization under any applicable law, regulation and other requirement of any
country, state, municipality or other subdivision thereof relating to pollution
or protection of health or the environment, including laws, regulations or other
requirements relating to emissions, discharges, releases of pollutants,
contaminants, hazardous substances, toxic materials, or wastes into ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment storage, disposal, transport, or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
materials or wastes.
(b) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company, (i) each of the Company and its subsidiaries and
their respective properties, assets, businesses and operations is, and has been,
and (ii) each of the Company's former subsidiaries, while subsidiaries of the
Company and their respective properties, assets, businesses and operations, was,
in compliance with all applicable Environmental Laws (as hereinafter defined)
and Environmental Permits. The term "Environmental Laws" means any federal,
state, local or foreign statute, code, ordinance, rule, regulation, permit,
consent, approval, license, judgment, order, writ, decree, injunction or other
authorization, including the requirement to register underground storage tanks,
relating to: (i) emissions, discharges, releases or threatened releases of
Hazardous Material (as hereinafter defined) into the environment, including,
without limitation, into ambient air, soil, sediments, land surface or
subsurface, buildings or facilities, surface water, groundwater, publicly-owned
treatment works, septic systems or land; or (ii) the generation, treatment,
storage, disposal, use, handling, manufacturing, transportation or shipment of
Hazardous Material.
(c) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company, (i) during the period of ownership or operation
by the Company and its subsidiaries of any of their respective current or
previously-owned properties, there have been no Releases (as hereinafter
defined) of Hazardous Material in, on, under, from such properties, or to its
knowledge any surrounding site or any off-site location, and (ii) to its
knowledge prior to the period of ownership by the Company and its subsidiaries
of any of their respective current or previously-owned properties there were no
releases of Hazardous Material in, on, under or affecting any such property, any
surrounding site or any off-site location. The term "Hazardous Material" means
(1) hazardous materials, pollutants or contaminants, medical, hazardous or
infectious wastes, hazardous waste constituents, hazardous chemicals, hazardous
or toxic pollutants, and hazardous or toxic substances as those terms are
defined in or regulated by any applicable Environmental Law, including without
limitation, the following statutes and their implementing regulations: the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq., the
-- ---
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the
-- ---
Comprehensive Environmental Response, Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act, 42 U.S.C. Section 9601 et
--
seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the
- --- -- ---
Clean Water Act, 33 U.S.C. Section 1251 et seq. and the Clean Air Act, 42 U.S.C.
-- ---
Section 7401 et seq., (2) petroleum, including
-- ---
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<PAGE>
crude oil and any fractions thereof, (3) natural gas, synthetic gas and any
mixtures thereof, (4) radioactive materials including, without limitation,
source byproduct or special nuclear materials and (5) pesticides. "Releases"
means spills, leaks, discharges, disposal, pumping, pouring, emissions,
injection, emptying, leaching, dumping or allowing to escape.
(d) Except as would not reasonably be expected to have a Material
Adverse Effect on the Company, (i) the Company and its subsidiaries and their
respective properties, assets, businesses and operations are not subject to any
Environmental Claims (direct or contingent, and whether known or unknown) or
Environmental Liabilities (as such terms are hereinafter defined) arising from
or based upon any act, omission, event, condition or circumstance occurring or
existing on or prior to the date hereof or for which the Company and its
subsidiaries are responsible, including without limitation, any such
Environmental Claims or Environmental Liabilities arising from or based upon the
ownership or operation of assets, businesses or properties of the Company or any
subsidiary or their respective predecessors, and (ii) neither the Company nor
any of its subsidiaries has received any notice of any violation of any
Environmental Law or Environmental Permit or any Environmental Claim in
connection with their respective assets, properties, businesses or operations,
or, in each case, those of their respective predecessors. The Company has
provided to Purchaser and has disclosed on Section 3.15(d) of the Company
Disclosure Schedule all material environmental site assessment reports prepared
by, on behalf of or, to the extent in the Company's or any subsidiary's
possession, relating to the Company or any subsidiary since January 1, 1996
regarding the environmental condition of the Company's properties or the
environmental compliance of the Company or any subsidiary. The term
"Environmental Claim" means any third party (including governmental agencies,
regulatory agencies and employees) action, lawsuit, claim, proceeding (including
claims or proceedings under the Occupational Safety and Health Act or similar
laws relating to safety of employees) which seeks to impose liability for (i)
noise; (ii) pollution or contamination of the air, surface water, ground water
or land; (iii) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation; (iv) exposure to hazardous or toxic
substances; (v) the safety or health of employees; or (vi) the manufacture,
processing, distribution in commerce, use, or storage of chemical or other
hazardous substances. An "Environmental Claim" includes, but is not limited to,
a common law action, as well as a proceeding to issue, modify or terminate an
Environmental Permit of the Company or any of its subsidiaries. The term
"Environmental Liabilities" includes all costs arising from any Environmental
Claim or violation or alleged violation or circumstance or condition which would
give rise to a violation or liability under any Environmental Permit or
Environmental Law under any theory of recovery, at law or in equity, and whether
based on negligence, strict liability or otherwise, including but not limited
to: remedial, removal, response, abatement, investigative, monitoring, personal
injury and damage to property, and any other related costs, expenses, losses,
damages, penalties, fines, liabilities and obligations, including attorneys'
fees and court costs.
Section 3.16 State Takeover Statutes. The Company has taken all action
-----------------------
necessary to render Section 912 of the NYBCL inapplicable to Parent and
Purchaser, the Offer, the Merger, the Tender and Option Agreement and this
Agreement and the other Transactions. No other "fair
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<PAGE>
price," "moratorium," "control share acquisition" or other state takeover
statute or similar statute or regulation applies or purports to apply to the
Company, Parent, Purchaser, the Offer, the Merger, the Tender and Option
Agreement, this Agreement or any of the other Transactions. As a result of the
foregoing actions, the only action required to authorize the Merger is the
Company Shareholder Approval and no further action is required to authorize the
other Transactions.
Section 3.17 Contracts. Except for Benefit Plans, Contracts disclosed on
---------
Section 3.11 to the Company Disclosure Schedule and any Contracts filed as an
exhibit to any Filed Company SEC Document, Section 3.17 to the Company
Disclosure Schedule lists, under the relevant heading, all oral or written
contracts, agreements, arrangements, guarantees, leases and executory
commitments (each a "Contract") that exist as of the date hereof to which the
Company or any of its subsidiaries is a party or by which it is bound and which
fall within any of the following categories: (a) Contracts not entered into in
the ordinary course of the Company's and its subsidiaries' businesses other than
those that individually are not material to the business of the Company and its
subsidiaries, taken as a whole, (b) joint venture and partnership agreements,
(c) Contracts containing covenants purporting to limit the freedom of the
Company or any of its subsidiaries to compete in any line of business in any
geographic area, (d) Contracts which after the consummation of any of the
Transactions would have the effect of limiting the freedom of Parent or any of
its subsidiaries to compete in any line of business in any geographic area, (e)
Contracts providing for "earn-outs" or other contingent payments by the Company
involving more than $1,000,000 in the aggregate over the terms of all such
Contracts, (f) Contracts associated with off balance sheet financing in excess
of $1,000,000 in the aggregate, including but not limited to arrangements for
the sale of receivables, (g) stock purchase agreements, asset purchase
agreements or other acquisition or divestiture agreements where the
consideration in any individual transaction exceeds $1,000,000 since January 1,
1995, or (h) Contracts with respect to which a change in the ownership (whether
directly or indirectly) of the Shares or the composition of the Board of
Directors of the Company may result in a violation of or default under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of benefits under such Contract which termination, cancellation,
acceleration or loss of benefit would be material to the Company, except in the
case of clauses (a), (b) and (e) through (h) above for Contracts to which a
subsidiary other than a Specified Subsidiary is a party or by which it is bound
and which the executive officers of the Company located at the Company's
headquarters do not have actual knowledge of as of the date of this Agreement.
All Contracts (including those described in clauses (a) through (h) above) to
which the Company or any subsidiary is a party or by which it is bound are valid
and binding obligations of the Company or such subsidiary and, to the knowledge
of the Company, the valid and binding obligation of each other party thereto
except such Contracts which if not so valid and binding would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company. Neither the Company or such subsidiary nor, to the knowledge of the
Company, any other party thereto is in violation of or in default in respect of,
nor has there occurred an event or condition which with the passage of time or
giving of notice (or both) would constitute a default under or permit the
termination of, any such Contract except such violations or defaults under or
terminations which, individually or in the aggregate, would not reasonably be
expected to have a
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<PAGE>
Material Adverse Effect on the Company. Set forth in Section 3.17(i) to the
Company Disclosure Schedule is the amount of the annual premium currently paid
by the Company for its directors' and officers' liability insurance. The Company
has provided to Parent and Purchaser true and complete copies of each of the
Other Agreements.
Section 3.18 Labor Matters. Except to the extent set forth in Section
-------------
3.18 of the Company Disclosure Schedule, (a) no employee of the Company or any
of its subsidiaries is represented by any union or other labor organization; (b)
the Company and all of its subsidiaries are in compliance with applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and are not engaged in any unfair labor
practice; (c) there is no unfair labor practice complaint against the Company or
any of its subsidiaries pending or, to the knowledge of the Company, threatened
by or before the National Labor Relations Board or any other Governmental
Entity; (d) there is no labor strike, dispute, slowdown, representation campaign
or work stoppage pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its subsidiaries; (e) no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending and no claim therefor has been asserted against the Company or its
subsidiaries; and (f) neither the Company or any of its subsidiaries has
experienced any material work stoppage since August 31, 1996. The Company and
its subsidiaries are in material compliance with all applicable federal, state,
local or foreign labor laws, rule and regulations.
Section 3.19 Undisclosed Liabilities. Except as and to the extent
-----------------------
disclosed in the Filed Company SEC Documents, or as set forth in Section 3.19 of
the Company Disclosure Schedule, and except for liabilities incurred in the
ordinary course of business and otherwise not in contravention of this Agreement
which individually and in the aggregate are not material, the Company does not
have any liabilities or obligations of any nature (whether absolute, contingent
or otherwise) that would be required to be reflected or reserved against in a
consolidated balance sheet of the Company and its subsidiaries prepared in
accordance with United States generally accepted accounting principles.
Section 3.20 Opinion of Company Financial Advisor. The Company has
------------------------------------
received the opinion of the Company Financial Advisor, dated the date of this
Agreement, to the effect that, as of such date, the consideration to be received
in the Offer and the Merger by the Company's stockholders is fair to the
Company's stockholders from a financial point of view, a signed copy of which
opinion has been delivered to Parent, and such opinion has not been amended,
modified or revoked in a manner adverse to Parent or Purchaser. The Company has
been authorized by the Company Financial Advisor to permit the inclusion of such
fairness opinion (and, subject to prior review and consent by such Company
Financial Advisor, a reference thereto) in the Offer Documents and in the
Schedule 14D-9 and the Proxy Statement.
Section 3.21 Intellectual Property. Except to the extent the failure of
---------------------
any of the following would not, individually or in the aggregate, have a
Material Adverse Effect on the Company: (i) the Company and each of its
subsidiaries owns and/or is licensed to use (in each
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<PAGE>
case, free and clear of any Liens, claims or similar encumbrances) all patents,
patent applications, trademarks, trademark registrations and applications,
tradenames, service marks, copyright registrations and applications, technology,
inventions, know-how, trade secrets, processes and all agreements and other
rights with respect to intellectual property and computer programs
("Intellectual Property") used in or necessary for the conduct of its business
as currently conducted; (ii) all such patents, trademarks and copyrights owned
by the Company and each of its subsidiaries are valid and enforceable; (iii) the
use of such Intellectual Property by the Company and its subsidiaries and their
agents does not infringe on the rights of any person; (iv) to the knowledge of
the Company, no person is infringing on any right of the Company or any of its
subsidiaries with respect to any such Intellectual Property; (v) the Company and
its subsidiaries are not, and the consummation of the Transactions will not
cause them to be, in breach or violation of any agreement relating to the use of
any of its Intellectual Property, and they have not received any notification,
written or oral, from any third party that there is any such violation, breach
or inability to perform under any such agreement; and (vi) there are no
agreements, written or oral, which materially limit any rights by the Company or
its subsidiaries to use any of their Intellectual Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser jointly and severally represent and warrant to
the Company as follows:
Section 4.1 Organization and Qualification. Each of Parent and Purchaser
------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to carry on its business as it is now being conducted. Each
of Parent and Purchaser is duly qualified as a foreign corporation or licensed
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed and in good standing would not reasonably be expected
to prevent or materially delay the consummation of the Offer or the Merger.
Section 4.2 Authority Relative to this Agreement. Each of Parent and
------------------------------------
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder, and to consummate the
Transactions. The execution and delivery by Parent and Purchaser of this
Agreement and the performance of their respective obligations hereunder, and the
consummation by Parent and Purchaser of the Transactions have been duly and
validly authorized by the respective Boards of Directors of Parent and
Purchaser, and the shareholder of Purchaser, and no other corporate proceedings
on the part of Parent or Purchaser are necessary to authorize this Agreement, or
commence the Offer or to consummate the Transactions (including the Offer) other
than filing and recordation of appropriate merger
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<PAGE>
documents as required by the NYBCL. This Agreement has been duly and validly
executed and delivered by each of Parent and Purchaser and, assuming this
Agreement constitutes a valid and binding obligation of the Company, this
Agreement constitutes a valid and binding agreement of each of Parent and
Purchaser, enforceable against each of Parent and Purchaser in accordance with
its terms.
Section 4.3 Proxy Statement. None of the information supplied in writing
---------------
by Parent, Purchaser and their respective affiliates specifically for inclusion
in the Proxy Statement, if required, shall, at the time the Proxy Statement is
mailed, at the time of the Shareholder Meeting or at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that Parent and Purchaser make no representation
or warranty as to any of the information supplied by or on behalf of the Company
specifically for inclusion in the Proxy Statement. If, at any time prior to the
Effective Time, any event relating to Parent or any of its affiliates, officers
or directors is discovered by Parent that should be set forth in a supplement to
the Proxy Statement, Parent will promptly inform the Company.
Section 4.4 Consents and Approvals; No Violation. Subject to the taking
------------------------------------
of the actions described in the immediately succeeding sentence, the execution
and delivery of this Agreement do not, and the consummation of the Transactions
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
material properties or assets of Parent under (i) the certificate of
incorporation or bylaws of Parent or Purchaser, (ii) any loan or credit
agreement, note, bond, indenture, lease or other agreement, instrument or Permit
applicable to Parent or Purchaser or their respective properties or assets,
(iii) any judgment, order, writ, injunction, decree, law, statute, ordinance,
rule or regulation applicable to Parent or Purchaser or their respective
properties or assets, other than, in the case of clause (ii) and (iii), any such
conflicts, violations, defaults, rights or Liens that individually or in the
aggregate would not (x) impair in any material respect the ability of Parent and
Purchaser to perform their respective obligation under this Agreement or (y)
prevent or impede the consummation of any of the Transactions. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity or any other person is required by Parent or
Purchaser in connection with the execution and delivery of this Agreement or the
consummation by Parent or Purchaser, as the case may be, of any of the
Transactions, except (A) in connection with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") or in connection with the
GWB Act or any other foreign antitrust or competition laws, (B) pursuant to the
Securities Act and the Exchange Act, (C) the filing of the Certificate of Merger
pursuant to the NYBCL, (D) such consents, approvals, orders, authorizations,
registrations and declarations as may be required under the law of any foreign
country in which the Parent or any of its subsidiaries conducts any business or
owns any assets, (E) such filings and approvals as may be required under the
"blue sky", takeover or securities laws of various states, or (F) where the
failure to obtain any
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such consent, approval, authorization or permit, or to make any such filing or
notification, would not prevent or delay consummation of the Offer or the Merger
or would not otherwise prevent Parent from performing its obligations under this
Agreement or where the requirement to obtain such consent, approval,
authorization or permit, or to make such filing or notification arises from the
regulatory status of the Company or its subsidiaries.
Section 4.5 Financing. Parent will have at each of (i) the time of
---------
acceptance for purchase by Purchaser of Shares pursuant to the Offer and (ii)
the Effective Time, and will make available to Purchaser, the funds necessary to
consummate the Offer and the Merger.
Section 4.6 Brokerage Fees and Commissions. Except for those fees and
------------------------------
expenses payable to Deutsche Bank Securities Inc. no person is entitled to
receive any investment banking brokerage or finder's fee or commission in
connection with this Agreement or the Transactions based upon arrangements may
by or on behalf of Parent or Purchaser.
Section 4.7 Schedule 14D-1; Offer Documents. Neither the Schedule 14D-1,
-------------------------------
the Offer Documents nor any information supplied by or on behalf of Parent or
Purchaser in writing for inclusion in the Schedule 14D-9 shall, at the
respective times the Schedule 14D-9, the Schedule 14D-1, the Offer Documents or
any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Schedule 14D-1 and the Offer Documents will comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder. Notwithstanding the foregoing, no representation or
warranty is made by Parent or Purchaser with respect to statements made or
incorporated by reference therein based on information supplied by the Company
specifically for inclusion or incorporation by reference therein.
Section 4.8 Operations of Purchaser. Purchaser (and any other wholly
-----------------------
owned subsidiary of Parent which may be used to effect the Offer and the Merger
pursuant to Section 2.1) was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business
activities and has conducted its operations only as contemplated by this
Agreement.
Section 4.9 Ownership of Shares by Parent and Purchaser. As of the date
-------------------------------------------
hereof and excluding Shares subject to the Tender and Option Agreements, Parent
and Purchaser beneficially own 100 Shares.
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business of the Company Pending the Merger. The
-----------------------------------------------------
Company hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing by
Parent, it will and will cause each of its subsidiaries to:
(a) operate its business in the usual and ordinary course
substantially consistent with past practices;
(b) use its commercially reasonable efforts to preserve intact its
business organization, maintain its rights and franchises, retain the services
of its respective key employees and maintain its relationships with its
respective customers and suppliers and others having business dealings with it
to the end that its goodwill and ongoing business shall be unimpaired at the
Effective Time; and
(c) use its commercially reasonable efforts to keep in full force
and effect insurance and bonds comparable in amount and scope of coverage to
that currently maintained.
Section 5.2 Prohibited Actions by the Company. Without limiting the
---------------------------------
generality of Section 5.1, except as set forth in Section 5.2 of the Company
Disclosure Schedule, the Company covenants and agrees that, except as expressly
contemplated by this Agreement or otherwise consented to in writing by Parent,
from the date of this Agreement until the Effective Time, it will not do, and
will not permit any of its subsidiaries to do, any of the following:
(a) (i) increase the compensation (or benefits) payable to or to
become payable to any director or employee, except for increases in salary or
wages of employees in the ordinary course of business and consistent with past
practice; (ii) grant any severance or termination pay (other than pursuant to
the normal severance policy or practice of the Company or its subsidiaries as
disclosed in Section 3.12 of the Company Disclosure Schedule and in effect on
the date of this Agreement) to, or enter into or amend in any material respect
any employment or severance agreement with, any employee; (iii) establish,
adopt, enter into or amend any collective bargaining agreement or Benefit Plan
of the Company or any subsidiary; or (iv) take any action to accelerate any
rights or benefits, or make any determinations not in the ordinary course of
business consistent with past practice, under any collective bargaining
agreement or Benefit Plan of the Company or any subsidiary;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property), outstanding
shares of capital stock, except for (i) dividends by a wholly owned subsidiary
of the Company to the Company or another wholly owned subsidiary of the Company
and (ii) regular quarterly cash dividends by the Company
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consistent with past practices (including as to declaration, record and payment
dates) in no event to exceed $0.14 per Share per fiscal quarter; provided that
-------- ----
the Company may declare and pay, prior to the expiration date of the Offer, its
regular quarterly cash dividend of $0.14 per Share scheduled to be declared and
paid in February, 1999;
(c) redeem, purchase or otherwise acquire, or offer or propose to
redeem, purchase or otherwise acquire, any outstanding shares of capital stock
of, or other equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
or any outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, the Company or any of its
subsidiaries (other than (i) any such acquisition by the Company or any of its
wholly owned subsidiaries directly from any wholly owned subsidiary of the
Company in exchange for capital contributions or loans to such subsidiary, or
(ii) any purchase, forfeiture or retirement of shares of Company Common Stock or
the Options occurring pursuant to the terms (as in effect on the date of this
Agreement) of any existing Benefit Plan of the Company or any of its
subsidiaries, in a manner otherwise consistent with the terms of this Agreement;
(d) effect any reorganization or recapitalization; or split, combine
or reclassify any of the capital stock of, or other equity interests in, the
Company or any of its subsidiaries or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in substitution for, shares
of such capital stock or such equity interests;
(e) offer, sell, issue or grant, or authorize or propose the
offering, sale, issuance or grant of, any shares of capital stock of, or other
equity interests in, any securities convertible into or exchangeable for (or
accelerate any right to convert or exchange securities for) any shares of
capital stock of, or other equity interest in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other equity
interests in, or any Voting Company Debt or other voting securities of, the
Company or any of its subsidiaries, or any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock-based performance units, other than
issuances of shares of Company Common Stock upon the exercise of the Options
outstanding at the date of this Agreement in accordance with the terms thereof
(as in effect on the date of this Agreement);
(f) acquire or agree to acquire, by merging or consolidating with,
by purchasing an equity interest in or a portion of the assets of, or in any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire any assets of any
other person if the aggregate consideration is in excess of $500,000 for any
individual transaction, and $5,000,000 for all such transactions (other than the
purchase of assets from suppliers or vendors in the ordinary course of
business);
(g) sell, lease, exchange or otherwise dispose of, or grant any Lien
with respect to, any of the properties or assets of the Company or any of its
subsidiaries that are, individually or in the aggregate, material to the
business of the Company and its subsidiaries, except for (i)
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dispositions of excess or obsolete assets and sales of inventories in the
ordinary course of business, and (ii) dispositions of properties or assets with
a value not in excess of $500,000 for any individual transaction and $5,000,000
for all such transactions;
(h) propose or adopt any amendments to its certificate of
incorporation or bylaws or other organizational documents;
(i) effect any change in any accounting methods, principles or
practices in effect as of February 28, 1998 affecting the reported consolidated
assets, liabilities or results of operations of the Company, except as may be
required by a change in generally accepted accounting principles;
(j) (i) incur any indebtedness for borrowed money in excess of an
aggregate of $5,000,000, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any of its subsidiaries,
guarantee any such indebtedness or debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, or (ii) make any loans, advances (other than to employees
of the Company and its subsidiaries in the ordinary course of business) or
capital contributions to, or investments in, any other person, other than to or
in the Company or any subsidiary of the Company;
(k) enter into any Contract described in clauses (a) through (f) of
Section 3.17 or, in the case of any Contract described in Section 3.17(h), enter
into such Contract if the termination, cancellation, acceleration or loss of
benefits described in Section 3.17(h) would have a Material Adverse Effect on
the Company;
(l) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business or in accordance with their terms, of
liabilities reflected or reserved against in the most recent consolidated
financial statements (or the notes thereto) of the Company included in the Filed
Company SEC Documents or incurred since the date of such financial statements in
the ordinary course of business;
(m) take any of the actions set forth in Section 3.4 not otherwise
specified herein;
(n) settle the terms of any material litigation affecting the
Company or any of its subsidiaries;
(o) make any material Tax election (unless required by law or unless
consistent with prior practice) or settle or compromise any material Tax
liability except, in each case, if Parent is given reasonable prior notice
thereof; or
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<PAGE>
(p) make or agree to make any new capital expenditures except for
capital expenditures which are consistent with the capital expenditure budget
previously provided to Parent and which do not individually exceed $500,000 and
do not, in the aggregate, exceed $5,000,000.
ARTICLE VI
COVENANTS
Section 6.1 No Solicitation.
---------------
(a) From and after the date hereof until the Effective Time or the
termination of this Agreement in accordance with Section 8.1, neither the
Company or any of its subsidiaries, nor any of their respective officers,
directors, employees, representatives, agents or affiliates (including, without
limitation, any investment banker, attorney or accountant retained by the
Company or any of its subsidiaries) will directly or indirectly initiate,
solicit or encourage (including by way of furnishing non-public information or
assistance), or take any other action to facilitate, any inquiries or the making
or submission of any Acquisition Proposal (as hereinafter defined), or enter
into or maintain or continue discussions or negotiate with any person or group
in furtherance of such inquiries or to obtain or induce any person or group to
make or submit an Acquisition Proposal or agree to or endorse any Acquisition
Proposal or assist or participate in, facilitate or encourage, any effort or
attempt by any other person or group to do or seek any of the foregoing or
authorize or permit any of its officers, directors or employees or any of its
subsidiaries or affiliates or any investment banker, financial advisor,
attorney, accountant or other representative or agent retained by it or any of
its subsidiaries to take any such action; provided, however, that nothing
-------- -------
contained in this Agreement shall prohibit the Board of Directors of the Company
from, prior to the earlier to occur of acceptance for payment of Shares pursuant
to the Offer or adoption of this Agreement by the requisite vote of the
stockholders of the Company, furnishing information to or entering into
discussions or negotiations with any person or entity that makes an unsolicited
written, bona fide Acquisition Proposal that constitutes, or may reasonably be
expected to lead to, any Superior Proposal (as hereinafter defined) if, and only
to the extent that (i) the Board of Directors of the Company, after consultation
with independent legal counsel, reasonably determines in good faith that the
failure to do so would be reasonably likely to result in a breach of the
fiduciary duty of the Board of Directors of the Company under applicable law and
(ii) prior to taking such action the Company (x) delivers to Parent and
Purchaser the notice required pursuant to Section 6.1(c) stating that it is
taking such action and (y) receives from such person or group an executed
confidentiality agreement that contains customary confidentiality and standstill
restrictions. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in this Section 6.1 by any officer,
director, employee or affiliate of the Company or any of its subsidiaries or any
investment banker, attorney, accountant or other advisor, agent or
representative of the Company or any of its subsidiaries, whether or not such
person is purporting to act on behalf of the Company or any of its subsidiaries
or otherwise, shall be deemed to be a breach of this Section 6.1 by the Company.
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<PAGE>
(b) Except as expressly permitted by this Section 6.1, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw,
modify or fail to make, or propose to withdraw, modify or fail to make its
approval or recommendation of the Offer or the Merger or of the Tender and
Option Agreement and the other Transactions, (ii) approve or recommend, or
propose to approve or recommend, any Acquisition Proposal, (iii) take any action
to render the provisions of any anti-takeover statute, rule or regulation
(including Section 912 of the NYBCL) inapplicable to any person (other than
Parent, Purchaser or their affiliates) or group or to any Acquisition Proposal
or (iv) cause the Company or any of its subsidiaries to accept such Acquisition
Proposal and/or enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Acquisition Proposal; provided however, that prior to
-------- -------
the earlier to occur of acceptance for payment of Shares pursuant to the Offer
or adoption of this Agreement by the requisite vote of the stockholders of the
Company, the Board of Directors of the Company may terminate this Agreement if,
and only to the extent that (A) such Acquisition Proposal is a Superior
Proposal, (B) the Board of Directors of the Company, after consultation with
independent legal counsel, reasonably determines in good faith that the failure
to do so would be reasonably likely to result in a breach of the fiduciary duty
of the Board of Directors of the Company under applicable law, (C) the Company
shall, prior to or simultaneously with the taking of such action, have paid or
pay to Parent or Purchaser or their designee the Termination Fee and the
Expenses referred to in Section 8.3, (D) the Company is not in breach of this
Section 6.1, (E) the Company shall have complied with its obligations under
Section 8.1(d)(ii) and (F) concurrently with such termination, the Company
enters into an Acquisition Agreement with respect to such Superior Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) above, the Company shall promptly (and in any event,
within 24 hours) advise Parent orally and in writing of any request for
information or the submission or receipt of any Acquisition Proposal, the
material terms and conditions of such Acquisition Proposal, and the identity of
the person making any such Acquisition Proposal. The Company will keep Parent
fully informed of the material developments with respect to any such Acquisition
Proposal. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
(d) "Acquisition Proposal" means an inquiry, offer or proposal
regarding any of the following (other than the Transactions contemplated by this
Agreement) involving the Company: (i) any merger, consolidation, share exchange,
recapitalization, liquidation, dissolution, business combination or other
similar transaction; (ii) any sale, lease, exchange, or other disposition of 20%
or more of the assets of the Company and its subsidiaries, taken as a whole, or
of any Material Business (as hereinafter defined) or of any subsidiary or
subsidiaries responsible for a Material Business in a single transaction or
series of related transactions; (iii) any tender offer (including a self tender
offer) or exchange offer that, if consummated, would result in any person or
group beneficially owning more than 20% of the outstanding shares of any class
of equity securities of the Company; (iv) any acquisition of 20% or more of the
outstanding shares of capital stock of the Company; or (v) any public
announcement by the Company or any third party
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<PAGE>
of a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing. "Superior Proposal" means any proposal made by a
third party to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or other similar
transaction, all the shares of Company Common Stock then outstanding or all or
substantially all of the assets of the Company and its subsidiaries which the
Board of Directors of the Company reasonably determines in good faith (after
consultation with its independent financial advisor and after taking into
account any changes to the terms of this Agreement and the Offer that have been
proposed by Parent in response to such proposal) to be more favorable to the
Company and the Company's stockholders. "Material Business" means any business
(or the assets needed to carry out such business) that contributed or
represented 20% or more of the net sales, the net income or the assets
(including equity securities) of the Company and its subsidiaries taken as a
whole.
(e) Nothing contained in this Section 6.1 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if the Board of Directors of the
Company, after consultation with independent legal counsel, reasonably
determines in good faith that the failure to take such action would be
reasonably likely to result in a breach of the fiduciary duty of the Board of
Directors under applicable law; provided that neither the Board of Directors of
-------- ----
the Company nor any committee thereof withdraws or modifies, or proposes to
withdraw or modify, the approval or recommendation of the Board of Directors of
the Company of the Offer or the Merger or approves or recommends, or publicly
proposes to approve or recommend, an Acquisition Proposal unless the Company and
the Board of Directors of the Company have complied with all the provisions of
this Section 6.1.
Section 6.2 Access to Information. Between the date of this Agreement
---------------------
and the Effective Time, the Company shall, and shall cause its subsidiaries to
(a) afford to Parent and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives full access during
normal business hours and at all other reasonable times to the officers,
employees, agents, properties, offices and other facilities of the Company and
its subsidiaries and to their books and records (including all Tax Returns and
all books and records related to Taxes and such returns), (b) permit Parent to
make such inspections as it may require (and the Company shall cooperate with
Parent in any inspections, including, without limitation, environmental due
diligence), and (c) furnish promptly to Parent and its representatives a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or state securities
laws and such other information concerning the business, properties, contracts,
records and personnel of the Company and its subsidiaries (including financial,
operating and other data and information) as may be reasonably requested, from
time to time, by or on behalf of Parent.
Section 6.3 Confidentiality Agreement. The parties agree that the
-------------------------
provisions of the Confidentiality Agreement dated October 21, 1998 between
Parent and the Company shall remain binding and in full force and effect;
provided, however, that any consents from the Company
- -------- -------
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<PAGE>
necessary under the Confidentiality Agreement for Parent and Purchaser to
consummate the transactions contemplated by this Agreement and the Tender and
Option Agreement shall be deemed to have been made and provided that the
provisions of the twelfth paragraph of the Confidentiality Agreement shall
terminate and be of no further force and effect after the date of this
Agreement. The parties shall comply with, and shall cause their respective
Representatives (as defined in the Confidentiality Agreement) to comply with,
all of their respective obligations under the Confidentiality Agreement until
the Effective Time, at which time the Confidentiality Agreement shall terminate
and be of no further force and effect.
Section 6.4 Reasonable Best Efforts. (a) Subject to the terms and
-----------------------
conditions herein, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective as soon as reasonably
practicable the transactions contemplated by this Agreement. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall take all such necessary action. Such reasonable
best efforts shall include, without limitation, (i) the obtaining of all
necessary consents, approvals or waivers from third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement and (ii) opposing vigorously any litigation or administrative
proceeding relating to this Agreement or the transactions contemplated hereby,
including, without limitation, promptly appealing any adverse court or agency
order. Notwithstanding the foregoing or any other provisions contained in this
Agreement to the contrary, neither Parent or the Company nor any of their
respective affiliates shall be under any obligation of any kind to (i) litigate
against any Governmental Entity, including but not limited to any governmental
or regulatory authority with jurisdiction over the enforcement of any applicable
federal, state, local and foreign antitrust, competition or other similar laws
or (ii) otherwise agree with any Governmental Entity or any other party to sell
or otherwise dispose of, agree to any material limitations on the ownership or
control of, or hold separate (through the establishment of a trust or otherwise)
a material portion of the assets or businesses of any of the Company, its
subsidiaries, Parent or any of Parent's affiliates.
(b) The Company shall give and make all required notices and
reports to the appropriate persons with respect to the Permits and Environmental
Permits that may be necessary for the sale and purchase of the business and the
ownership, operation and use of the assets of Surviving Corporation by Parent
and Purchaser after the Effective Time. Subject to the other terms of this
Agreement, each of the Company, Parent and Purchaser shall cooperate and use
their respective reasonable best efforts to make all filings, to obtain all
actions or nonactions, waivers, Permits and orders of Governmental Entities
necessary to consummate the transactions contemplated by this Agreement and to
take all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity. Each of
the parties hereto will furnish to the other parties such necessary information
and reasonable assistance as such other parties may reasonably request in
connection with the foregoing.
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(c) The Company and its Board of Directors shall (i) take all
action necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, this Agreement,
the Tender and Option Agreement or any of the other transactions contemplated by
the foregoing and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Offer, the Merger, this Agreement, the
Tender and Option Agreement or any other Transactions, take all action necessary
to ensure that the Offer, the Merger and the other Transactions, including the
Transactions contemplated by this Agreement and the Tender and Option Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and the Tender and Option Agreement and otherwise to minimize the
effect of such statute or regulation on the Offer, the Merger and the other
Transactions, including the Transactions contemplated by this Agreement and the
Tender and Option Agreement.
Section 6.5 Indemnification of Directors and Officers.
-----------------------------------------
(a) Purchaser agrees that all rights to indemnification for acts or
omissions occurring prior to the Effective Time existing as of the date hereof
in favor of the current or former directors or officers of the Company and its
subsidiaries as provided in their respective certificates of incorporation or
bylaws shall survive the Merger and shall continue in full force and effect in
accordance with their terms for a period of six years from the Effective Time.
Parent shall cause to be maintained, if available, for a period of six years
from the Effective Time the Company's current directors' and officers' insurance
and indemnification policy (the "D&O Insurance") (provided that Parent may
substitute therefor policies or financial guarantees with the same carriers or
other obligors as insure Parent's directors and officers of at least the same
coverage and amounts containing terms and conditions which are substantially
similar to the existing D&O Insurance) to the extent that such insurance
policies provide coverage for events occurring prior to the Effective Time for
all persons who are directors and officers of the Company on the date of this
Agreement, so long as the annual premium to be paid by the Company after the
date of this Agreement for such D&O Insurance during such six-year period would
not exceed 200% of the current annual premium therefor. If, during such six-year
period, such insurance coverage cannot be obtained at all or can only be
obtained for an amount in excess of 200% of the current annual premium therefor,
Parent shall use all reasonable efforts to cause to be obtained as much D&O
Insurance as can be obtained for an amount equal to 200% of the current annual
premium therefor, on terms and conditions substantially similar to the existing
D&O Insurance.
(b) If any claim or claims shall, subsequent to the Effective Time
and within six years thereafter, be made in writing against any present or
former director or officer of the Company based on or arising out of the
services of such person prior to the Effective Time in the capacity of such
person as a director or officer of the Company (and such director or officer
shall have given Parent written notice of such claim or claims within such six
year period), the provisions of subsection (a) of this Section respecting the
rights to indemnify the current or
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former directors or officers under the certificate of incorporation and bylaws
of the Company and its subsidiaries shall continue in effect until the final
disposition of all such claims.
(c) The provisions of this Section 6.5 are intended to be for the
benefit of, and shall be enforceable by, each person entitled to indemnification
hereunder and the heirs and representatives of such person.
Section 6.6 Event Notices and Other Actions. (a) From and after the date
-------------------------------
of this Agreement until the Effective Time, each party hereto shall promptly
notify the other parties hereto of (i) the occurrence or nonoccurrence of any
event, the occurrence or nonoccurrence of which has resulted in, or would
reasonably be expected to result in, any condition to the Offer set forth in
Annex A, or any condition to the Merger set forth in Article VII, not being
satisfied, (ii) the failure of such party to comply with any covenant or
agreement to be complied with by it pursuant to this Agreement which has
resulted in, or would reasonably be expected to result in, any condition to the
Offer set forth in Annex A, or any condition to the Merger set forth in Article
VII, not being satisfied and (iii) any breach of any representation or warranty
made by it contained in this Agreement (excluding for this purpose any
materiality qualifications contained therein) that would be reasonably likely to
have a Material Adverse Effect on the breaching party. No delivery of any notice
pursuant to this Section 6.6(a) shall cure any breach of any representation or
warranty of such party contained in this Agreement or otherwise limit or affect
the remedies available hereunder to the party or parties receiving such notice.
(b) The Company and Parent shall not, and shall not permit any of
their respective subsidiaries to, take any action or nonaction that will, or
that would reasonably be expected to, result in (i) any breach of the
representations and warranties of such party (excluding for this purpose any
materiality qualifications contained therein) set forth in this Agreement that
would be reasonably likely to have a Material Adverse Effect on such party or
(ii) except as otherwise permitted by Section 6.1 and subject to Section 6.4(a),
any condition to the Offer set forth in Annex A, or any condition to the Merger
set forth in Article VII, not being satisfied.
Section 6.7 Third Party Standstill Agreements. During the period from
---------------------------------
the date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill or similar agreement to which the Company or any of its subsidiaries
is a party (other than any involving Parent). Subject to the foregoing, during
such period, the Company agrees to enforce, to the fullest extent permitted
under applicable law, the provisions of any such agreements, including obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court or other tribunal
having jurisdiction. Notwithstanding the foregoing, nothing in this Section 6.7
is intended to prevent the Company from exercising its rights under Section 6.1
in accordance with the provisions of such Section.
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Section 6.8 Employee Stock Options; Employee Plans and Benefits and
-------------------------------------------------------
Employment Contracts.
- --------------------
(a) Simultaneously with the execution of this Agreement, the Board
of Directors of the Company (or, if appropriate, any committee administering the
Company Stock Option Plans) shall adopt such resolutions or take such other
actions as are required to effect the transactions contemplated by the first
sentence of Section 2.10 in respect of all outstanding Options and thereafter
the Board of Directors of the Company (or any such committee) shall adopt any
such additional resolutions and take such additional actions as are required in
furtherance of the foregoing.
(b) All amounts payable pursuant to Section 2.10 and Section 6.8(a)
shall be subject to any required withholding of taxes and shall be paid without
interest.
(c) The Company Stock Option Plans shall terminate as of the
Effective Time, and the provision in any other Benefit Plan providing for the
potential issuance, transfer or grant of any capital stock of the Company or any
of its subsidiaries or any interest, or release of restrictions in respect of
any capital stock of the Company or any of its subsidiaries shall be deleted as
of the Effective Time, and the Company shall use its commercially reasonable
best efforts to ensure that following the Effective Time no holder of an
Employee Stock Option, stock appreciation right, restricted stock or derivative
security or any participant in the Company Stock Option Plans or other Benefit
Plan shall have any right thereunder to acquire any capital stock of the Company
or any of its subsidiaries or the Surviving Corporation, except as provided in
Section 2.10 in respect of the Company Stock Option Plans. No participant in the
Company Stock Option Plans shall be entitled to receive any other payment or
benefit thereunder except as provided in Section 2.10.
(d) From and after the Effective Time, the Surviving Corporation
agrees to honor in accordance with their terms all existing employment,
severance, consulting or other compensation agreements or benefit contracts
between the Company or any of its subsidiaries and any officer, director or
employee of the Company or any of its subsidiaries, as the same may be modified
by the Other Agreements, and all benefits or other amounts earned or accrued
through the Effective Time, under the Benefit Plans disclosed in Schedule
3.12(a) of the Company Disclosure Schedule.
(e) No benefits shall be accrued or otherwise earned under an
incentive compensation or bonus plan or arrangement sponsored by the Company or
any of its subsidiaries after the Effective Time.
(f) At, or as soon as practicable, but in any event within 90 days,
after the Effective Time, any bonuses or other incentive compensation accrued
under any plan or arrangement sponsored by the Company or any subsidiary shall
be paid to any officer, director or employee of the Company or any subsidiary
entitled thereto in accordance with the terms of such
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<PAGE>
plan or arrangement, provided that in the event that a relevant calculation
-------- ----
period has not closed as of the Effective Time, the amount to be paid shall be a
pro rata portion of the otherwise payable amount (determined, where performance
criteria are applicable, at target levels of award).
(g) For a period of not less than two years from the Effective
Time, Parent shall, or shall cause the Surviving Corporation to, maintain
employee benefit plans, programs and arrangements for former employees of the
Company and its subsidiaries who remain employees of the Surviving Corporation
after the Effective Time that are, in the aggregate, no less favorable than
those provided by the Company and its subsidiaries immediately prior to the
Effective Time. From and after the Effective Time, for purposes of determining
eligibility and vesting (but not for purposes of benefit accrual) under any
severance, compensation, welfare, pension, or other benefit plan or arrangement
of Parent or any of its subsidiaries which, at the election of Parent, employees
of the Company or any of its subsidiaries become eligible to participate in,
service with the Company or any of its subsidiaries (whether before or after the
Effective Time) shall be credited as if such services had been rendered to
Parent or such subsidiary; provided that Parent and Purchaser shall have no
-------- ----
obligation to (i) employ any individual, (ii) include any individual in any
stock option or other equity based compensation or benefit plan or arrangement
or (iii) include any such employees of the Company and its subsidiaries in any
benefit plan of Parent or its subsidiaries.
Section 6.9 Meeting of the Company's Shareholders.
-------------------------------------
(a) To the extent required by applicable law, the Company shall
promptly take all action necessary in accordance with the NYBCL and its
Certificate of Incorporation and Bylaws to convene a meeting of the Company's
shareholders (the "Shareholder Meeting") to consider and vote on the Merger and
this Agreement. At the Shareholder Meeting, all of the Shares then owned by
Parent, Purchaser or any other subsidiary of Parent shall be voted to approve
the Merger and this Agreement. The Board of Directors of the Company shall
recommend that the Company's shareholders vote to approve the Merger and this
Agreement if such vote is sought, shall use its best efforts to solicit from
shareholders of the Company proxies in favor of the Merger and shall take all
other action in its judgment necessary and appropriate to secure the vote of
shareholders required by the NYBCL to effect the Merger.
(b) Parent and Purchaser shall not, and they shall cause their
subsidiaries not to, sell, transfer, assign, encumber or otherwise dispose of
the Shares acquired pursuant to the Offer or otherwise prior to the Shareholder
Meeting; provided, however, that this Section 6.9(b) shall not apply to the
-------- -------
sale, transfer, assignment, encumbrance or other disposition of any or all such
Shares in transactions involving solely Parent, Purchaser and/or one or more of
their wholly owned subsidiaries.
(c) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the then outstanding Shares, the parties hereto
agree, at the request of Purchaser, to take all necessary and appropriate action
to cause the Merger to become effective, in accordance
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<PAGE>
with Section 905 of the NYBCL, as soon as reasonably practicable after such
acquisition, without a meeting of the shareholders of the Company.
(d) In the event that Purchaser reduces the Minimum Condition as
permitted by Section 1.1(b) and accepts for payment Shares tendered pursuant to
the Offer, which Shares are less than two-thirds of the Fully Diluted Shares,
the Company shall convene a meeting of its shareholders, or take or permit
Purchaser to take such action as may be necessary or desirable, to amend the
Certificate of Incorporation to provide that the requisite vote of the Company's
shareholders on any merger or consolidation (including the Merger) shall be a
majority of the Shares outstanding. At such meeting, all of the Shares then
owned by Parent, Purchaser or any other subsidiary of Parent shall be voted to
approve such amendment.
Section 6.10 Proxy Statement. If required under applicable law, the
---------------
Company and Parent shall prepare the Proxy Statement, file it with the SEC under
the Exchange Act as promptly as practicable after Purchaser purchases Shares
pursuant to the Offer, and use all reasonable efforts to have it cleared by the
SEC. As promptly as practicable after the Proxy Statement has been cleared by
the SEC, the Company shall mail the Proxy Statement to the shareholders of the
Company as of the record date for the Shareholder Meeting.
Section 6.11 Public Announcements. Parent and the Company shall to the
--------------------
fullest extent practicable consult with each other before issuing any press
release or otherwise making any public statement with respect to the Offer, the
Merger and the other Transactions and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by law.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) if required by the NYBCL, this Agreement shall have been
approved by the affirmative vote of the shareholders of the Company by the
requisite vote in accordance with applicable law;
(b) no statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated, or enforced by any
court or Governmental Entity which is in effect and has the effect of
prohibiting the consummation of the Merger; and
(c) the waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act, if any, shall have expired or
been terminated.
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<PAGE>
Section 7.2 Conditions to Obligations of Parent and Purchaser to Effect
-----------------------------------------------------------
the Merger. The obligations of Parent and Purchaser to effect the Merger are
- ----------
further subject to the satisfaction or waiver, prior to the Effective Time, of
the following conditions:
(a) Purchaser shall have accepted for payment and paid for Shares
tendered pursuant to the Offer; provided, however, that neither Parent nor
Purchaser shall be entitled to assert the failure of this condition if the
failure of such condition results from a breach by Parent or Purchaser of any of
their obligations under this Agreement.
Section 7.3 Conditions to Obligations of the Company to Effect the
------------------------------------------------------
Merger. The obligation of the Company to effect the Merger is further subject
- ------
to the satisfaction or waiver, prior to the Effective Time, of the following
conditions:
(a) Purchaser shall have accepted for payment and paid for Shares
tendered pursuant to the Offer; provided, however, that the Company shall not be
entitled to assert the failure of this condition if the failure of such
condition results from a breach by the Company of any of its obligations under
this Agreement.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
-----------
Merger contemplated hereby may be abandoned at any time (notwithstanding
approval thereof by the shareholders of the Company) prior to the Effective
Time:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Company, Parent and Purchaser;
(b) by Parent, Purchaser or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued a final order,
decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the consummation of the Offer or the Merger and such
order, decree or ruling or other action is or shall have become nonappealable;
(c) by Parent or Purchaser if due to an occurrence or circumstance
which would result in the occurrence and continued existence of any of the
conditions set forth in Annex A hereto, Purchaser shall have (i) failed to
commence the Offer within the time required by Regulation 14D under the Exchange
Act, (ii) terminated the Offer without purchasing any Shares pursuant to the
Offer or (iii) failed to accept for payment Shares pursuant to the Offer prior
to April 30, 1999; provided, however, that the right to terminate this Agreement
-------- -------
under this Section 8.1(c) shall not be available to Parent or Purchaser if the
occurrence and continued existence of any of the conditions set forth in Annex A
hereto results from the breach by Parent or Purchaser of any of their respective
obligations under this Agreement;
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<PAGE>
(d) by the Company (i) if Purchaser shall have (A) failed to
commence the Offer within the time required by Regulation 14D under the Exchange
Act, (B) terminated the Offer without purchasing any Shares pursuant to the
Offer or (C) failed to accept for payment Shares pursuant to the Offer prior to
April 30, 1999; provided, however, that the right to terminate this Agreement
-------- -------
under this Section 8.1(d)(i) shall not be available to the Company if such
failure results from the breach by the Company of any of its obligations under
this Agreement or if there shall have occurred any of the events set forth in
paragraph (g) of Annex A, and the right to terminate this Agreement under this
Section 8.1(d)(i) shall not be available to the Company prior to April 30, 1999
if there shall have occurred any of the events set forth in paragraph (i) of
Annex A, or (ii) prior to the purchase of Shares pursuant to the Offer,
concurrently with the execution of an Acquisition Agreement under the
circumstances permitted by Section 6.1 provided, that such termination under
-------- ----
this clause (ii) shall not be effective unless (x) the Company and its Board of
Directors shall have also complied with all their obligations under Section 6.1
and shall have paid the Termination Fee and the Expenses pursuant to Section 8.3
and (y) the Company provides Purchaser with at least five business days' prior
written notice prior to terminating this Agreement, which notice shall be
accompanied by (1) a copy of the proposed Acquisition Agreement with respect to
the Superior Proposal that the Company proposes to accept and (2) the Company's
written certification that it has made the determinations with respect to such
Superior Proposal set forth in clauses (A) and (B) of the proviso in Section
6.1(b) and representation that the Company will, in the absence of any other
superior Acquisition Proposal, execute such Acquisition Agreement unless Parent
or Purchaser modify the Offer or this Agreement such that the Company's Board of
Directors reasonably believes in good faith after consultation with its
independent legal counsel and financial advisors that the Offer and the Merger
(as so modified) are at least as favorable as such Superior Proposal; or
(e) by the Company prior to the purchase of Shares pursuant to the
Offer if (i) there shall have been a material breach of any representation or
warranty in this Agreement on the part of Parent or Purchaser which materially
adversely affects (or materially delays) the consummation of the Offer or (ii)
Parent or Purchaser shall not have performed or complied with, in all material
respects (without reference to any materiality qualifications therein), each
covenant or agreement contained in this Agreement and required to be performed
or complied with by them, and such breach materially adversely affects (or
materially delays) the consummation of the Offer, and which breach, in the case
of clause (i) and clause (ii) above, shall not have been cured prior to the
earlier of (A) 10 days following notice of such breach and (B) two business days
prior to the date on which the Offer expires; provided, however, that Parent and
-------- -------
Purchaser shall have no right to cure such breach and the Company may
immediately terminate this Agreement in the event that such breach by Parent or
Purchaser was willful or intentional.
Section 8.2 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 8.1, this Agreement, except
for the provisions of Sections 6.3, 8.2, 8.3, 9.3, 9.4 and 9.7, shall forthwith
become void and have no effect, without any liability on the part of any party
or its affiliates, directors, officers or shareholders. Nothing in this Section
8.2 shall relieve any party to this Agreement of liability for breach of this
Agreement.
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<PAGE>
Section 8.3 Termination Fee and Expense Fee.
-------------------------------
(a) Except as provided in Section 8.3(b) of this Agreement, all
fees and expenses incurred by the parties hereto shall be borne solely and
entirely by the party which has incurred such fees and expenses.
(b) If:
(i) Parent or Purchaser terminate this Agreement pursuant
to Section 8.1(c) (in circumstances other than those described in clause
(ii) below) or the Company terminates this Agreement pursuant to Section
8.1(d)(i), in either case, in circumstances when, prior to such termination
any third party shall have acquired beneficial ownership of 20% or more of
the outstanding Shares or shall have consummated an Acquisition Proposal
(or with respect to any proposal that may be existing on the date hereof
and which becomes publicly known prior to such termination, not withdrawn
such Acquisition Proposal), or such third party has publicly made or
announced an intention to make or consummate an Acquisition Proposal (or
the making of such Acquisition Proposal or such intention has otherwise
become publicly known), and, in any such case, within 12 months of such
termination thereafter (x) the Company or any of its subsidiaries enters
into an Acquisition Agreement with respect to an Acquisition Proposal with
such party, or (y) such party or any other party otherwise consummates an
Acquisition Proposal;
(ii) Parent or Purchaser terminates this Agreement pursuant
to Section 8.1(c) and (x) the Company shall have willfully and
intentionally breached its obligations under Section 6.1, or (y) there
shall have occurred any of the events set forth in paragraph (g) of Annex A
of this Agreement; or
(iii) the Company terminates this Agreement pursuant to
Section 8.1(d)(ii).
then, in each case, the Company (A) shall pay to Parent, within one business day
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with such termination pursuant to Section
8.1(d)(ii), a fee, in cash, of $11 million (a "Termination Fee"); provided that
-------- ----
the Company in no event shall be obligated to pay more than one such Termination
Fee with respect to all such agreements and occurrences and such termination and
(B) shall reimburse Parent and Purchaser for all their out-of-pocket fees and
expenses actually incurred by Parent, Purchaser or their respective affiliates
in connection with this Agreement, the Offer, the Merger, the Tender and Option
Agreement and the other transactions contemplated by this Agreement, including
all fees and expenses of counsel, accountants, investment bankers, experts and
consultants to each of Parent or Purchaser and their respective affiliates and
the expenses of the preparation, printing, filing and mailing of the Offer
Documents, such fees and expenses not to exceed $2 million (the "Expenses"). Any
payment required to be made pursuant to this subsection (b) shall be made to
Parent by wire transfer of
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<PAGE>
immediately available funds to an account designated by Parent. The provisions
of this Section 8.3 shall not derogate from any other rights or remedies which
Parent or Purchaser may possess under this Agreement (including as provided in
Section 9.3) or under applicable law.
Section 8.4 Amendment. To the extent permitted by applicable law, this
---------
Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, Parent and Purchaser at any time before or after
approval of this Agreement by the shareholders of the Company but, after any
such shareholder approval, no amendment shall be made that by law requires the
further approval of such shareholders without the approval of such shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties.
Section 8.5 Extension; Waiver. At any time prior to the Effective Time,
-----------------
a party may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties of the other parties contained herein or in any
documents, certificate or writing delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions of the other parties hereto
contained herein; provided that (i) from and after the consummation of the
-------- ----
Offer, no extensions or waivers shall be made which materially adversely affect
the rights of the Company's shareholders hereunder without the approval of a
majority of the Independent Directors if at the time there shall be any
Independent Directors and (ii) after the approval of the Merger by the
shareholders of the Company, no extensions or waivers shall be made that by law
require further approval by such shareholders without the approval of such
shareholders. Any agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Non-Survival of Representations and Warranties. None of the
----------------------------------------------
representations and warranties made in this Agreement shall survive after the
Effective Time. This Section 9.1 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time.
Section 9.2 Entire Agreement; Assignment. This Agreement (including the
----------------------------
Company Disclosure Schedule), the Tender and Option Agreement, the Other
Agreements and, to the extent contemplated in Section 6.3, the Confidentiality
Agreement, (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise, provided that Parent or Purchaser may assign any of their
rights and obligations to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent
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<PAGE>
or Purchaser of its obligations hereunder. Any of Parent, Purchaser or any
direct or indirect wholly owned subsidiary of Parent may purchase Shares under
the Offer. Any attempted assignment in violation of this Section 9.2 shall be
void. Subject to the preceding sentences, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
Section 9.3 Enforcement of the Agreement. The parties agree that
----------------------------
irreparable damage would occur to the other parties hereto in the event that any
of the provisions of this Agreement were not performed by the parties hereto in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that each party shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any federal or state court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity including those set forth
in Section 8.3 of this Agreement. Each party further agrees to waive any
requirement for the securing or posting of any bond in connection with the
obtaining of any such injunctive or other equitable relief.
Section 9.4 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic and legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement,
which shall remain in full force and effect.
Section 9.5 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given upon receipt if
delivered personally, mailed by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
or sent by electronic transmission to the telecopier number specified below (or
at such other address or telecopy number of a party as shall be specified by
like notice):
if to Parent or Purchaser:
Rohm and Haas Company
100 Independence Mall West
Philadelphia, PA 19106
Attention: John S. Stroebel
Telecopy: 215-592-3227
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<PAGE>
Lightning Acquisition Corp.
Suite 104 - Rodney Building
3411 Silverside Road
Wilmington, DE 19810
Attention: John S. Stroebel
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: William G. Lawlor
Telecopy: 215-994-2222
if to the Company:
LeaRonal, Inc.
272 Buffalo Avenue
Freeport, NY 11520
Attention: Ronald F. Ostrow
Telecopy: 516-867-5917
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: Robert F. Quaintance, Jr.
Telecopy: 212-909-6836
Notice given by telecopier shall be deemed received on the day the sender
receives telecopier confirmation that such notice was received at the telecopier
number of the addressee. Notice given by mail as set out above shall be deemed
received three days after the date the same is postmarked.
Section 9.6 Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right.
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Section 9.7 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the substantive laws of the State of New York
regardless of the laws that might otherwise govern under principles of conflicts
of laws applicable thereto.
Section 9.8 Descriptive Headings. The descriptive headings herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 9.9 Parties in Interest. This Agreement shall be binding upon
-------------------
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Agreement
except for Section 6.5 (which is intended to be for the benefit of the persons
entitled to therein, and may be enforced by such persons).
Section 9.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 9.11 Certain Definitions. For purposes of this Agreement
-------------------
(including Annex A hereto), the following terms shall have the meanings ascribed
to them below:
(a) "affiliate" of a person shall mean (i) a person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first-mentioned person and (ii) an
"associate", as that term is defined in Rule 12b-2 promulgated under the
Exchange Act as in effect on the date of this Agreement.
(b) "beneficial owner" (including the term "beneficially own" or
correlative terms) shall have the meaning ascribed to such term under Rule 13d-
3(a) under the Exchange Act.
(c) "business day" shall have the meaning ascribed to such term
under Rule 14d-1 of the Exchange Act.
(d) "Company Disclosure Schedule" shall mean a letter dated the
date of the Agreement delivered by the Company to Parent and Purchaser
concurrently with the execution of the Agreement, which, among other things,
shall identify exceptions to the Company's representations and warranties
contained in Article III and covenants contained in Article V.
(e) "control" (including the terms "controlling," "controlled by"
and "under common control with" or correlative terms) shall mean the possession,
directly or indirectly or as trustee or executor, of the power to direct or
cause the direction of the management and policies of a person, whether through
ownership of voting securities or as trustee or executor, by contract or credit
arrangement, or otherwise.
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<PAGE>
(f) "Fully Diluted Shares" means all outstanding securities
entitled generally to vote in the election of directors of the Company on a
fully diluted basis, after giving effect to the exercise or conversion of all
options (including the Options), warrants, rights and securities exercisable or
convertible into such voting securities; provided that Parent may, at its option
exercisable in its sole discretion, exclude from the calculation of Fully
Diluted Shares any Options which are not exercisable at the time such
calculation is made and which will not become exercisable by their terms prior
to April 30, 1999.
(g) "group" shall have the meaning ascribed to such term under
Section 13(d)(3) of the Exchange Act.
(h) "Material Adverse Effect" shall mean (i) any adverse change or
effect in the financial condition, assets, liabilities, business, properties or
results of operations of a specified person or its subsidiaries (other than
changes or effects relating to general economic, financial or industry
conditions), which change or effect is material, individually or in the
aggregate, to the specified person and its subsidiaries taken as a whole, or
(ii) any event, matter, condition or effect which prevents or materially delays
consummation of the Transactions.
(i) "person" shall mean a natural person, company, corporation,
partnership, association, trust or any unincorporated organization.
(j) "subsidiary" shall mean, when used with reference to a person
means a corporation the majority of the outstanding voting securities of which
are owned directly or indirectly by such person.
Each of the following terms is defined as set forth in the following
sections of this Agreement:
<TABLE>
<CAPTION>
Term Section Term Section
- ---- ------- ---- -------
<S> <C> <C> <C>
1990 Plan 2.10 Liens 3.1(c)
1996 Plan 2.10 Material Business 6.1(d)
Acquisition Agreement 6.1(b) Merger Background
Acquisition Proposal 6.1(d) Merger Consideration 2.6(iii)
Agreement Preamble New York Department 2.2
Benefit Plans 3.12(a) NYBCL Background
Cash Payment 2.10 Offer Background
Certain Stockholders Background Offer Documents 1.1(c)
Certificate of Incorporation 2.4(a) Offer Price Background
Certificate of Merger 2.2 Offer to Purchase 1.1(c)
Certificates 2.8(b) Option 2.10
Closing 2.11 Other Agreements Background
Code 3.12(b) Parent Preamble
Company Preamble Paying Agent 2.8(a)
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
Company Common Stock Background PBGC 3.12(g)
Company Financial Advisor 3.8 Pension Plan 3.12(d)
Company SEC Documents 3.5 Permits 3.15(a)
Company Shareholder Approval 3.3(b) Proxy Statement 3.6
Company Stock Option Plans 2.10 Purchaser Preamble
Contract 3.17 Releases 3.15(c)
D&O Insurance 6.5(a) Schedule 14D-1 1.1(c)
Dissenting Shares 2.7(a) Schedule 14D-9 1.2(b)
Effective Time 2.2 SEC 1.1(b)
Environmental Claim 3.15(d) Securities Act 3.2(c)
Environmental Laws 3.15(b) Shareholder Meeting 6.9(a)
Environmental Liabilities 3.15(d) Shares Background
Environmental Permit 3.15(a) Significant Subsidiary 3.1(b)
ERISA 3.12(a) Specified Subsidiary 3.12(a)
Exchange Act 1.1(a) Superior Proposal 6.1(d)
Expenses 8.3(b)(iii) Surviving Corporation 2.1
Filed Company SEC Documents 3.4 Taxes 3.13
Governmental Entity 3.7 Tax Returns 3.13
GWB Act 3.7 Tender and Option Agreement Background
Hazardous Material 3.15(c) Termination Fee 8.3(b)
HSR Act 4.4 Transactions 1.2(a)
Independent Director 1.4 Voting Company Debt 3.2(b)
Intellectual Property 3.21 Year 2000 Compliant 3.14
</TABLE>
Section 9.12 Interpretation. The words "hereof," "herein" and "herewith"
--------------
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, paragraph, exhibit and schedule references are
to the articles, sections, paragraphs, exhibits and schedules of this Agreement
unless otherwise specified. Whenever the words "include," "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." All terms defined in this Agreement shall have
the defined meanings contained herein when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements and
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and all attachments thereto and instruments
incorporated therein. References to a person are also to its permitted
successors and assigns.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, on the day
and year first above written.
ROHM AND HAAS COMPANY
ATTEST:
/s/ John S. Stroebel By /s/ Rajiv L. Gupta
- --------------------------------- ---------------------------------
Vice President
LIGHTNING ACQUISITION CORP.
ATTEST:
/s/ John S. Stroebel By /s/ Bradley J. Bell
- --------------------------------- ---------------------------------
Vice President
LEARONAL, INC.
ATTEST:
/s/ Richard Kessler By /s/ Ronald F. Ostrow
- --------------------------------- ---------------------------------
President
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<PAGE>
ANNEX A
to
Agreement and Plan of Merger
----------------------------
Conditions to the Offer. Notwithstanding any other provision of the
Offer but subject to the terms and conditions of the Merger Agreement, in
addition to (and not in limitation of) Purchaser's rights pursuant to the
Agreement to extend and amend the Offer in accordance with the Merger Agreement,
Purchaser shall not be required to accept for payment or, subject to Rule 14e-
1(c) of the Exchange Act, pay for and may delay the acceptance for payment of
or, subject to Rule 14e-1(c) of the Exchange Act, the payment for, any Shares
not theretofore accepted for payment or paid for, and may terminate or amend the
Offer if (i) a number of Shares representing at least two thirds of the Fully
Diluted Shares shall not have been validly tendered and not withdrawn
immediately prior to the expiration of the Offer (the "Minimum Condition"), (ii)
any applicable waiting period under the HSR Act shall not have expired or been
terminated or (iii) at any time on or after the date of the Merger Agreement and
prior to the time of acceptance of such Shares for payment or the payment
therefor, any of the following conditions has occurred and continues to exist
(and in the case of the conditions set forth in paragraph (c), continue to exist
as of the scheduled expiration date of the Offer or have continued to exist for
at least the previous 10 business days), other than as a result of a breach by
Parent or Purchaser of its obligations under the Merger Agreement (including,
without limitation, Section 6.4 thereof):
(a) the representation and warranty set forth in Section 3.2(a) shall
not be true and correct in all material respects or any other representations
and warranties of the Company in the Agreement (without regard to any
materiality qualifiers contained therein) shall not be true and correct as of
such time (other than to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall not be true and correct as of such date) except where the
failure of such representations and warranties to be true and correct would not
be reasonably likely to have a Material Adverse Effect on the Company and except
where such failure shall have been cured prior to the earlier of (i) 10 business
days following notice of such breach and (ii) two business days prior to the
date on which the Offer expires; provided, however, that the Company shall have
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no right to cure such breach in the event that such breach by the Company was
willful or intentional);
(b) the Company shall not have performed and complied with, in all
material respects (without reference to any materiality qualifications therein),
all material covenants or agreements contained in the Agreement and required to
be performed or complied with by it and which breach shall not have been cured
prior to the earlier of (i) 10 business days following notice of such breach and
(ii) two business days prior to the date on which the Offer expires; provided,
--------
however, that the Company shall have no right to cure such breach in the event
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that such breach by the Company was willful or intentional or if such breach
involves a breach of Section 6.1 of the Agreement;
<PAGE>
(c) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange (excluding any coordinated trading halt triggered as a
result of a specified decrease in a market index), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States by any Governmental Entity, (iii) any mandatory limitation by any
Governmental Entity on, or other event that materially and adversely affects,
the extension of credit by banks or other lending institutions, (iv) a
commencement of a war, armed hostilities or other national or international
calamity directly or indirectly involving the United States, (v) any material
adverse change in United States currency exchange rates or a suspension of, or
limitation on, the markets therefor or (vi) in the case of any of the foregoing
existing on the date of the Agreement, a material acceleration or worsening
thereof;
(d) there shall have been instituted or pending any suit, action,
investigation or proceeding ("Actions") by any Governmental Entity, or Parent,
Purchaser or the Company shall have been notified by any Governmental Entity (or
a representative thereof) of its present intention to commence, or recommend the
commencement of, such an Action, (i) challenging the acquisition by Parent or
Purchaser of any Shares, seeking to make illegal, materially delay, make
materially more costly or otherwise directly or indirectly restrain or prohibit
the making or consummation of the Offer and the Merger or any of the other
Transactions, or seeking to obtain from the Company, Parent or Purchaser any
damages that are material in relation to the Company and its subsidiaries taken
as whole, (ii) seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of their respective subsidiaries or
affiliates of a material portion of the businesses or assets of the Company and
its subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, or to compel the Company, Parent or any of their respective subsidiaries
or affiliates to dispose of or hold separate a material portion of the
businesses or assets of the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, or any of their respective
subsidiaries or affiliates, as a result of the Offer, the Merger or any of the
other Transactions, (iii) seeking to impose material limitations on the ability
of Parent or Purchaser to acquire or hold, or exercise full rights of ownership
of, any Shares accepted for payment pursuant to the Offer including, without
limitation, the right to vote the Shares accepted for payment by it on all
matters properly presented to the shareholders of the Company, (iv) seeking to
prohibit Parent or any of its subsidiaries or affiliates from effectively
controlling in any material respect a material portion of the business or
operations of the Company and its subsidiaries, taken as a whole, (v) requiring
divestiture by Purchaser or any of its affiliates of any Shares or (vi) which
otherwise is reasonably likely to have a Material Adverse Effect on the Company
or Parent;
(e) there shall be any statute, rule, regulation, judgment, order or
injunction (including with respect to competition or antitrust matters) enacted,
entered, enforced, promulgated or issued with respect to or deemed applicable
to, or any consent or approval withheld, or any other action shall be taken with
respect to (i) Parent, the Company or any of their respective subsidiaries or
affiliates or (ii) the Offer or the Merger or any of the other Transactions by
any Governmental Entity or court, including without limitation any required
approvals or waiting periods under the GWB Act, other than the application to
the Offer or the Merger or any of the other Transactions of applicable waiting
periods under the HSR Act, that has resulted or is
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<PAGE>
reasonably likely to result, directly or indirectly, in any of the consequences
referred to in clauses (i) though (v) of paragraph (d) above;
(f) since the date of the Agreement there shall have occurred any
event, change, effect or development that, individually or in the aggregate, has
had or is reasonably likely to have, a Material Adverse Effect on the Company;
(g) the Board of Directors of the Company or any committee thereof
shall have (i) withdrawn, or modified, amended or changed (including by
amendment of the Schedule 14D-9), in a manner adverse to Parent or Purchaser,
its approval or recommendation of the Offer, the Merger Agreement and the Merger
or any of the other Transactions, (ii) approved or recommended to the Company's
stockholders an Acquisition Proposal or any other acquisition of Shares other
than the Offer and the Merger or (iii) adopted any resolution to effect any of
the foregoing;
(h) the Merger Agreement shall have been terminated in accordance
with its terms; or
(i) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Purchaser, any of their
affiliates, or any group of which any of them is a member, shall have acquired
beneficial ownership of more than 20 percent of the Shares or shall have
consummated or entered into a definitive agreement or an agreement in principle
to consummate an Acquisition Proposal;
which, in the sole judgment of Purchaser, in any such case, makes it
inadvisable to proceed with the Offer or with such acceptance for payment,
purchase of, or payment for Shares.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may, subject to the terms of the Merger Agreement, be waived by Purchaser or
Parent, in whole or in part, at any time and from time to time, in the sole
discretion of Purchaser or Parent. The failure by Purchaser or Parent or any of
their respective affiliates at any time to exercise any of the foregoing rights
will not be deemed a waiver of any right, the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a waiver with
respect to any other facts and circumstances and each right will be deemed an
ongoing right which may be asserted at any time and from time to time.
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<PAGE>
Exhibit 10.2
Tender and Option Agreement, dated as of December 20, 1998, by and among Parent,
Purchaser and certain stockholders of the Company.
<PAGE>
TENDER AND OPTION AGREEMENT
---------------------------
TENDER AND OPTION AGREEMENT, dated as of December 20, 1998 (the
"Agreement"), among Rohm and Haas Company, a Delaware corporation ("Parent"),
Lightning Acquisition Corp., a New York corporation and a wholly owned
subsidiary of Parent ("Purchaser"), LeaRonal, Inc., a New York corporation (the
"Company") and each of the persons listed on Schedule A hereto (each a
"Stockholder" and, collectively, the "Stockholders").
WHEREAS, Parent, Purchaser and the Company propose to enter into an
Agreement and Plan of Merger dated as of the date hereof (as the same may be
amended or supplemented, the "Merger Agreement") providing for, among other
things, the making of a cash tender offer (as such offer may be amended from
time to time as permitted under the Merger Agreement, the "Offer") by Purchaser
for all of the issued and outstanding shares of common stock, par value $1.00
per share, of the Company (referred to herein as either the "Shares" or "Company
Common Stock") and the merger of the Company and Purchaser on the terms and
conditions set forth in the Merger Agreement (the "Merger");
WHEREAS, each Stockholder is the beneficial owner of the Shares set
forth opposite such Stockholder's name on Schedule A hereto; such Shares, as
such Shares may be adjusted by stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company, together with Shares issuable
upon the exercise of options (including the Options set forth in Schedule A) (as
the same may be adjusted as aforesaid), being collectively referred to herein as
the "Shares" of such Stockholder; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholders enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
Section 1. Certain Definitions. Capitalized terms used but not
-------------------
otherwise defined herein have the meanings ascribed to such terms in the Merger
Agreement.
Section 2. Representations and Warranties of the Stockholders. Each
--------------------------------------------------
Stockholder, severally and not jointly, represents and warrants to Parent and
Purchaser, as of the date hereof and as of the Closing (as defined below), as
follows:
(a) The Stockholder is the beneficial owner (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which meaning will apply for all purposes of this Agreement) of, and has
good title to, all of the Shares (including the Options), free and clear of any
mortgage, pledge, hypothecation, rights of others, claim, security
<PAGE>
interest, charge, encumbrance, title defect, title retention agreement, voting
trust agreement, interest, option, lien, charge or similar restriction or
limitation, including any restriction on the right to vote, sell or otherwise
dispose of the Shares (each, a "Lien"), except as set forth in this Agreement.
(b) The Shares (including the Options) constitute all of the
securities (as defined in Section 3(a)(10) of the Exchange Act, which definition
will apply for all purposes of this Agreement) of the Company beneficially
owned, directly or indirectly, by the Stockholder.
(c) Except for the Shares (including the Options), the
Stockholder does not, directly or indirectly, beneficially own or have any
option, warrant or other right to acquire any securities of the Company that are
or may by their terms become entitled to vote or any securities that are
convertible or exchangeable into or exercisable for any securities of the
Company that are or may by their terms become entitled to vote, nor is the
Stockholder subject to any Contract, commitment, arrangement, understanding,
restriction or relationship (whether or not legally enforceable), other than
this Agreement, that provides for such Stockholder to vote or acquire any
securities of the Company. The Stockholder holds exclusive power to vote the
Shares and has not granted a proxy to any other person (as defined in the Merger
Agreement, which meaning will apply for all purposes of this Agreement) to vote
the Shares, subject to the limitations set forth in this Agreement.
(d) This Agreement has been duly executed and delivered by the
Stockholder and, assuming due authorization, execution and delivery of this
Agreement by Parent and Purchaser, is a valid and binding obligation of the
Stockholder enforceable against the Stockholder in accordance with its terms.
(e) Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the Stockholder's obligations hereunder
will conflict with, result in a violation or breach of, or constitute a default
(or an event that, with notice or lapse of time or both, would result in a
default) or give rise to any right of termination, amendment, cancellation, or
acceleration or result in the creation of any Lien on any Shares under, (i) any
Contract, commitment, agreement, understanding, arrangement or restriction of
any kind to which the Stockholder is a party or by which the Stockholder is
bound or (ii) any injunction, judgment, writ, decree, order or ruling applicable
to the Stockholder; except for conflicts, violations, breaches, defaults,
terminations, amendments, cancellations, accelerations or Liens that would not
individually or in the aggregate be reasonably expected to prevent or materially
impair or delay the consummation by such Stockholder of the transactions
contemplated hereby.
(f) Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the Stockholder's obligations hereunder
will violate any law, decree, statute, rule or regulation applicable to the
Stockholder or require any order, consent, authorization or approval of, filing
or registration with, or declaration or notice to, any court, administrative
agency or other governmental body or authority, other than any required notices
or filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder (the "HSR
Act"), foreign antitrust or competition laws or the federal securities laws.
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<PAGE>
(g) The Stockholder understands and acknowledges that Parent is
entering into, and causing Purchaser to enter into, the Merger Agreement in
reliance upon the Stockholder's execution and delivery of this Agreement.
Section 3. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to Parent and Purchaser, as of the date hereof and as of
the Closing, as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement.
(b) This Agreement has been duly executed and delivered by the
Company and, assuming due authorization, execution and delivery of this
Agreement by the Stockholders, Parent and Purchaser, is a valid and binding
obligation of the Company, enforceable against it in accordance with its terms.
(c) Neither the execution and delivery of this Agreement nor
the performance by the Company of its obligations hereunder will conflict with,
result in a violation or breach of, or constitute a default (or an event that,
with notice or lapse of time or both, would result in a default) or give rise to
any right of termination, amendment, cancellation, or acceleration or result in
the creation of any Lien on the assets or properties of the Company under, (i)
its certificate of incorporation or bylaws, (ii) any Contract, commitment,
agreement, understanding, arrangement or restriction of any kind to which the
Company is a party or by which the Company is bound or (iii) any judgment, writ,
decree, order or ruling applicable to the Company; except in the case of clauses
(ii) and (iii) for conflicts, violations, breaches, defaults, terminations,
amendments, cancellations, accelerations or Liens that would not individually or
in the aggregate be reasonably expected to prevent or materially impair or delay
the consummation by the Company of the transactions contemplated hereby.
(d) Neither the execution and delivery of this Agreement nor
the performance by the Company of its obligations hereunder will violate any
law, decree, statute, rule or regulation applicable to the Company or require
any order, consent, authorization or approval of, filing or registration with,
or declaration or notice to, any court, administrative agency or other
governmental body or authority, other than any required notices or filings
pursuant to the HSR Act, foreign antitrust or competition laws or the federal
securities laws.
(e) The Company has taken all necessary corporate or other
action (including approval by the Board of Directors of the Company) to render
inapplicable to this Agreement and the Merger Agreement and the transactions
contemplated hereby and thereby Section 912 of the NYBCL.
Section 4. Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
Parent and Purchaser represent and warrant to the Stockholders, as of the date
hereof and as of the Closing, as follows:
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<PAGE>
(a) Each of Parent and Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of their
respective jurisdiction of incorporation, has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement.
(b) This Agreement has been duly executed and delivered by
Parent and Purchaser and, assuming the due authorization, execution and delivery
of this Agreement by the Company and the Stockholders, is a valid and binding
obligation of each of Parent and Purchaser, enforceable against each of them in
accordance with its terms.
(c) Neither the execution and delivery of this Agreement nor
the performance by Parent and Purchaser of their respective obligations
hereunder will conflict with, result in a violation or breach of, or constitute
a default (or an event that, with notice or lapse of time or both, would result
in a default) or give rise to any right of termination, amendment, cancellation,
or acceleration under, (i) their respective certificates of incorporation or
bylaws, (ii) any contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which Parent or Purchaser is a party or by which
Parent or Purchaser is bound or (iii) any judgment, writ, decree, order or
ruling applicable to Parent or Purchaser; except in the case of clauses (ii) and
(iii) for conflicts, violations, breaches or defaults that would not
individually or in the aggregate be reasonably expected to prevent or materially
impair or delay the consummation by Parent or Purchaser of the transactions
contemplated hereby.
(d) Neither the execution and delivery of this Agreement nor
the performance by Parent and Purchaser of their respective obligations
hereunder will violate any law, decree, statute, rule or regulation applicable
to Parent or Purchaser or require any order, consent, authorization or approval
of, filing or registration with, or declaration or notice to, any court,
administrative agency or other governmental body or authority, other than any
required notices or filings pursuant to the HSR Act or the federal securities
laws.
(e) Any Shares acquired upon exercise of the Purchase Option
(as defined below) will be acquired for Parent's or Purchaser's own account, for
investment purposes only and will not be, and the Purchase Option is not being,
acquired by Parent and Purchaser with a view to public distribution thereof in
violation of any applicable provisions of the Securities Act of 1933, as amended
(the "Securities Act").
Section 5. Transfer of the Shares. During the term of this Agreement,
----------------------
except as otherwise expressly provided herein, each Stockholder agrees that such
Stockholder will not (a) tender into any tender or exchange offer or otherwise
sell, transfer, pledge, assign, hypothecate or otherwise dispose of, or encumber
with any Lien, any of the Shares, except for (i) transfers to any spouse or
descendant (including by adoption) of such Stockholder, or any trust or
retirement plan or account for the benefit of such Stockholder, spouse or
descendant; provided any such transferee agrees in writing to be bound by the
terms of this Agreement and (ii) transfers by operation of law provided that any
such transferee shall be bound by the terms of this Agreement, (b) acquire any
shares of Company Common Stock or other securities of the Company (otherwise
than in connection with a transaction of the type described in Section 6 or by
exercising any of the
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<PAGE>
Options), (c) deposit the Shares into a voting trust, enter into a voting
agreement or arrangement with respect to the Shares or grant any proxy or power
of attorney with respect to the Shares, (d) enter into any Contract, option or
other arrangement (including any profit sharing arrangement) or undertaking with
respect to the direct or indirect acquisition or sale, transfer, pledge,
assignment, hypothecation or other disposition of any interest in or the voting
of any Shares or any other securities of the Company or (e) take any other
action that would in any way restrict, limit or interfere with the performance
of such Stockholder's obligations hereunder or the transactions contemplated
hereby or which would otherwise diminish the benefits of this Agreement to
Parent or Purchaser.
Section 6. Adjustments.
-----------
(a) In the event (i) of any stock dividend, stock split,
recapitalization, reclassification, combination or exchange of shares of capital
stock or other securities of the Company on, of or affecting the Shares or the
like or any other action that would have the effect of changing a Stockholder's
ownership of the Company's capital stock or other securities or (ii) a
Stockholder becomes the beneficial owner of any additional Shares of or other
securities of the Company, then the terms of this Agreement will apply to the
shares of capital stock held by such Stockholder immediately following the
effectiveness of the events described in clause (i) or such Stockholder becoming
the beneficial owner thereof, as described in clause (ii), as though they were
Shares hereunder.
(b) Each Stockholder hereby agrees, while this Agreement is in
effect, to promptly notify Parent and Purchaser of the number of any new Shares
acquired by such Stockholder, if any, after the date hereof.
Section 7. Tender of Shares. Each Stockholder hereby agrees that such
----------------
Stockholder will validly tender (or cause the record owner of such shares to
validly tender) and sell (and not withdraw, except in the event the Purchase
Option is exercised, in which case such withdrawal shall be for the limited
purpose of consummating the Purchase Option) pursuant to and in accordance with
the terms of the Offer not later than the fifth business day after commencement
of the Offer (or the earlier of the expiration date of the Offer and the fifth
business day after such Shares are acquired by such Stockholder if the
Stockholder acquires Shares after the date hereof), or, if the Stockholder has
not received the Offer Documents by such time, within two business days
following receipt of such documents, all of the then outstanding shares of
Company Common Stock beneficially owned by such Stockholder (including the
shares of Company Common Stock outstanding as of the date hereof and set forth
on Schedule A hereto opposite such Stockholder's name). Upon the purchase by
Purchaser of all of such then outstanding shares of Company Common Stock
beneficially owned by such Stockholder pursuant to the Offer in accordance with
this Section 7, this Agreement will terminate as it relates to such Stockholder.
In the event, notwithstanding the provisions of the first sentence of this
Section 7, any Shares beneficially owned by a Stockholder are for any reason
withdrawn from the Offer or are not purchased pursuant to the Offer, such Shares
will remain subject to the terms of this Agreement. Each Stockholder
acknowledges that Purchaser's obligation to accept for payment and pay for the
shares of Company Common Stock tendered in the Offer is subject to all the terms
and conditions of the Offer.
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<PAGE>
Section 8. Voting Agreement. Each Stockholder, by this Agreement,
----------------
does hereby (a) agree to appear (or not appear, if requested by Parent or
Purchaser) at any annual, special, postponed or adjourned meeting of the
stockholders of the Company or otherwise cause the Shares such Stockholder
beneficially owns to be counted as present (or absent, if requested by Parent or
Purchaser) thereat for purposes of establishing a quorum and to vote or consent,
and (b) constitute and appoint Parent and Purchaser, or any nominee thereof,
with full power of substitution, during and for the term of this Agreement, as
his true and lawful attorney and proxy for and in his name, place and stead, to
vote all the Shares such Stockholder beneficially owns at the time of such vote,
at any annual, special, postponed or adjourned meeting of the stockholders of
the Company (and this appointment will include the right to sign his or its name
(as stockholder) to any consent, certificate or other document relating to the
Company that laws of the State of New York may require or permit), in the case
of both (a) and (b) above, (x) in favor of approval and adoption of the Merger
Agreement and approval and adoption of the Merger and the other transactions
contemplated thereby and (y) against (1) any Acquisition Proposal, (2) any
action or agreement that would result in a breach in any respect of any
covenant, agreement, representation or warranty of the Company under the Merger
Agreement and (3) the following actions (other than the Merger and the other
transactions contemplated by the Merger Agreement): (i) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or any of its subsidiaries; (ii) a sale, lease
or transfer of a material amount of assets of the Company or any of its
subsidiaries, or a reorganization, recapitalization, dissolution or liquidation
of the Company or any of its subsidiaries; (iii) (A) any change in a majority of
the persons who constitute the board of directors of the Company or any of its
subsidiaries as of the date hereof; (B) any change in the present capitalization
of the Company or any amendment of the Company's or any of its subsidiaries'
certificate of incorporation or bylaws, as amended to date; (C) any other
material change in the Company's or any of its subsidiaries' corporate structure
or business; or (D) any other action that is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, or adversely affect the
Offer, the Merger and the other transactions contemplated by this Agreement and
the Merger Agreement. This proxy and power of attorney is a proxy and power
coupled with an interest, and each Stockholder declares that it is irrevocable
until this Agreement shall terminate in accordance with its terms. Each
Stockholder hereby revokes all and any other proxies with respect to the Shares
that such Stockholder may have heretofore made or granted. For Shares as to
which a Stockholder is the beneficial but not the record owner, such Stockholder
shall use his or its best efforts to cause any record owner of such Shares to
grant to Parent a proxy to the same effect as that contained herein. Each
Stockholder hereby agrees to permit Parent and Purchaser to publish and disclose
in the Offer Documents and the Proxy Statement and related filings under the
securities laws such Stockholder's identity and ownership of Shares and the
nature of his or its commitments, arrangements and understandings under this
Agreement. Notwithstanding the foregoing, Alonna Ostad, Sharone N. Ostrow and
Jonathan Ostrow are not bound by the terms of this Section 8.
Section 9. No Solicitation. Each Shareholder agrees that neither such
---------------
Stockholder nor any of such Stockholder's officers, directors, employees,
trustees, representatives, agents or affiliates (including, without limitation,
any investment banker, attorney or accountant retained by any of them) will
directly or indirectly initiate, solicit or encourage (including by way of
furnishing
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<PAGE>
non-public information or assistance), or take any other action to facilitate,
any inquiries or the making or submission of any Acquisition Proposal, or enter
into or maintain or continue discussions or negotiate with any person or entity
in furtherance of such inquiries or to obtain or induce any person to make or
submit an Acquisition Proposal or agree to or endorse any Acquisition Proposal
or assist or participate in, facilitate or encourage, any effort or attempt by
any other person or entity to do or seek any of the foregoing or authorize or
permit any of its officers, directors, employees, trustees or any of its
affiliates or any investment banker, financial advisor, attorney, accountant or
other representative or agent retained by any of them to take any such action.
Each Stockholder shall immediately advise Parent in writing of the receipt of
request for information or any inquiries or proposals relating to an Acquisition
Proposal.
Section 10. Grant of Purchase Option. The Stockholder hereby grants
------------------------
to Parent and Purchaser an irrevocable option (the "Purchase Option") to
purchase for cash, in a manner set forth below, any or all of the Shares (and
including Shares acquired after the date hereof by such Stockholder)
beneficially owned by the Stockholder at a price (the "Exercise Price") per
Share equal to $34.00 (the "Offer Price"). In the event of any stock dividends,
stock splits, recapitalizations, combinations, exchanges of shares or the like,
the Offer Price will be appropriately adjusted for the purpose of this Section
10.
Section 11. Exercise of Purchase Option.
---------------------------
(a) Subject to the conditions set forth in Section 13 hereof,
the Purchase Option may be exercised by Parent or Purchaser, in whole or in
part, at any time or from time to time after the occurrence of any Trigger Event
(as defined below). The Company and each Stockholder shall notify Parent
promptly in writing of the occurrence of any Trigger Event, it being understood
that the giving of such notice by the Company or the Stockholder is not a
condition to the right of Parent or Purchaser to exercise the Purchase Option.
In the event Parent or Purchaser wishes to exercise the Purchase Option, Parent
shall deliver to each Stockholder a written notice (an "Exercise Notice")
specifying the total number of Shares it wishes to purchase from such
Stockholder. Each closing of a purchase of Shares (a "Closing") will occur at a
place, on a date and at a time designated by Parent or Purchaser in an Exercise
Notice delivered at least two business days prior to the date of the Closing.
(b) A "Trigger Event" means any one of the following: (i) the
Merger Agreement becomes terminable under circumstances that entitle Parent or
Purchaser to receive the Termination Fee or the Expenses under Section 8.3(b) of
the Merger Agreement (regardless of whether the Merger Agreement is actually
terminated and whether such Termination Fee or Expenses are then actually paid),
(ii) the Offer is consummated but, due to the failure of the Stockholder to
validly tender and not withdraw all of the then outstanding shares of Company
Common Stock beneficially owned by such Stockholder, the Purchaser has not
accepted for payment or paid for all of such shares of Company Common Stock,
(iii) a tender or exchange offer for at least 20% of the shares of Company
Common Stock shall have been publicly proposed to be made or shall have been
made by another person, or (iv) it shall have been publicly disclosed or Parent
or Purchaser shall have otherwise learned that (A) any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act) (other than Parent or
Purchaser) shall have acquired or proposed to acquire beneficial ownership of
more than 20% of any class or series of capital stock
-7-
<PAGE>
of the Company (including the Company Common Stock), through the acquisition of
stock, the formation of a group or otherwise, or shall have been granted any
option, right or warrant, conditional or otherwise, to acquire beneficial
ownership of more than 20% of any class or series of capital stock of the
Company or any of its subsidiaries, or (B) any person or group (other than
Parent and Purchaser) shall have entered into or publicly offered to enter into
a definitive agreement or an agreement in principle with respect to a merger,
consolidation or other business combination with the Company or any of its
subsidiaries.
(c) If requested by Parent and Purchaser in the Exercise
Notice, such Stockholder shall exercise all Options (to the extent exercisable)
and other rights (including conversion or exchange rights) beneficially owned by
such Stockholder and shall sell or, if directed by Parent and Purchaser, tender
the Shares acquired pursuant to such exercise to Parent or Purchaser as provided
in this Agreement.
(d) In the event (i) Parent or Purchaser exercises the Purchase
Option and purchases Shares pursuant to this Section 11 representing at least
20% of the then outstanding shares of Company Common Stock on a fully diluted
basis (the "Purchase Event"), (ii) no Acquisition Proposal shall have been
consummated and (iii) the Merger Agreement shall have terminated and the Company
shall not have been in material breach of the Merger Agreement at the time of
such termination, upon the written request of the Company made within five
business days after the Purchase Event, Parent shall cause Purchaser or another
subsidiary of Parent to commence, as soon as reasonably practicable, a tender
offer for all shares of Company Common Stock at a cash price equal to the Offer
Price, on terms and subject to conditions substantially similar to those
contained in the Merger Agreement.
(e) If, within twelve months following the exercise of the
Purchase Option by Parent or Purchaser, Parent or Purchaser sells any or all of
the Shares acquired upon exercise of the Purchase Option to an unaffiliated
third party (a "Subsequent Sale") at a per Share price in excess of the Offer
Price (the "Subsequent Sale Price"), then Parent or Purchaser will pay to each
Stockholder, within five days of receipt of payment by Parent or Purchaser, an
amount equal to such Stockholder's pro rata share of 50% of the excess of the
Subsequent Sale Price over the Offer Price multiplied by the number of shares
sold in the Subsequent Sale.
Section 12. Termination of Purchase Option. The Purchase Option will
------------------------------
terminate (a) if this Agreement terminates pursuant to Section 7 or (b) upon the
earliest of: (i) the Effective Time; (ii) termination of the Merger Agreement
other than upon, during the continuance of or after a Trigger Event; or (iii) 90
days following any termination of the Merger Agreement upon, during the
continuance of or after a Trigger Event (or if, at the expiration of such 90 day
period the Purchase Option cannot be exercised by reason of any applicable
judgment, decree, order, injunction, law or regulation, 10 business days after
such impediment to exercise has been removed or has become final and not subject
to appeal). Upon the giving by Parent or Purchaser to the Stockholder of the
Exercise Notice and the tender of the aggregate Exercise Price, Parent or
Purchaser, as the case may be, will be deemed to be the holder of record of the
Shares transferable upon such exercise, notwithstanding that the stock transfer
books of the Company are then closed or that certificates representing such
Shares have not been actually delivered to Parent.
-8-
<PAGE>
Section 13. Conditions To Closing. The obligation of each
---------------------
Stockholder to sell such Stockholder's Shares to Parent or Purchaser hereunder
is subject to the conditions that (i) all waiting periods, if any, under the HSR
Act, applicable to the sale of the Shares or the acquisition of the Shares by
Parent or Purchaser, as the case may be, hereunder have expired or have been
terminated; (ii) all consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any court, administrative agency or
other Governmental Entity, if any, required in connection with sale of the
Shares or the acquisition of the Shares by Parent or Purchaser hereunder have
been obtained or made; and (iii) no preliminary or permanent injunction or other
order by any court of competent jurisdiction prohibiting or otherwise
restraining such sale or acquisition is in effect.
Section 14. Closing. At any Closing with respect to Shares
-------
beneficially owned by a Stockholder, (a) such Stockholder will deliver to
Parent, Purchaser or their respective designee a certificate or certificates in
definitive form representing the number of the Shares designated by Parent or
Purchaser, as the case may be, in its Exercise Notice, such certificate to be
registered in the name of Parent, Purchaser or their respective designee and (b)
Parent or Purchaser, as the case may be, will deliver to the Stockholder the
aggregate Exercise Price for the Shares so designated and being purchased by
wire transfer of immediately available funds.
Section 15. Registration Rights.
-------------------
(a) Following termination of the Merger Agreement, Parent or
Purchaser may in its sole discretion (but shall not be required) by written
notice (the "Registration Notice") to the Company request the Company to
register under the Securities Act all or any part of the shares of Company
Common Stock acquired under the Purchase Option (the "Registrable Securities").
(b) The Company shall use commercially reasonable efforts to
effect, as promptly as practicable, the registration under the Securities Act of
the Registrable Securities; provided, however, that (i) Parent and Purchaser
will be entitled to no more than one effective registration statement hereunder
and (ii) the Company will not be required to file any such registration
statement during any period of time (not to exceed 40 days after such request in
the case of clause (A) below or 90 days in the case of clauses (B) and (C)
below) when (A) the Company is in possession of material non-public information
that it reasonably believes would be detrimental to be disclosed at such time
and that such information would have to be disclosed if a registration statement
were filed at that time; (B) the Company is required under the Securities Act to
include audited financial statements for any period in such registration
statement and such financial statements are not yet available for inclusion in
such registration statement; or (C) the Company determines, in its reasonable
judgment, that such registration would interfere with any proposed financing,
acquisition or other material transaction involving the Company or any of its
affiliates. The Company shall use its reasonable best efforts to cause any
Registrable Securities registered pursuant to this Section 15 to be qualified
for sale under the securities or blue-sky laws of such jurisdictions as Parent
or Purchaser may reasonably request and shall continue such registration or
qualification in effect in such jurisdiction; provided, however, that the
Company will not be required to qualify to do business in, or to consent to
general service of process in, any jurisdiction by reason of this provision.
-9-
<PAGE>
(c) The registration rights set forth in this Section 15 are
subject to the condition that Parent and Purchaser shall provide the Company
with such information with respect to their Registrable Securities, the plans
for the distribution thereof, and such other information with respect to such
holder as, in the reasonable judgment of counsel for the Company, is necessary
to enable the Company to include in such registration statement all material
facts required to be disclosed with respect to a registration thereunder.
(d) A registration effected under this Section 15 will be
effected at the Company's expense, except for underwriting discounts and
commissions and the fees and the expenses of counsel to Parent and Purchaser
(which will be paid by Parent and Purchaser, and the Company shall provide to
the underwriters (in connection with an underwritten offering) such
documentation (including certificates, opinions of counsel and "comfort" letters
from auditors) as are customary in connection with underwritten offerings as
such underwriters may reasonably require. In connection with any such
registration, the parties agree (i) to indemnify each other and the underwriters
in the customary manner, (ii) to enter into an underwriting agreement in form
and substance customary for transactions of such type with the underwriters
participating in such offering and (iii) to take all further actions that will
be reasonably necessary to effect such registration and sale (including, if the
underwriters deem it necessary, participating in road-show presentations).
Section 16. Termination. This Agreement will terminate (a) as to any
-----------
Stockholder upon the purchase of all the Shares beneficially owned by such
Stockholder pursuant to the Offer in accordance with Section 7, (b) except for
Sections 10, 11, 12, 13, 14 and 15 hereof, which will only terminate as and when
provided therein, on the earlier to occur of (i) the Effective Time or (ii) the
date the Merger Agreement is terminated in accordance with its terms, or (c) by
the mutual consent of each Stockholder as to its rights and obligations
hereunder, the Board of Directors of the Company and the Board of Directors of
Parent.
Section 17. Expenses. Except as otherwise expressly provided herein
--------
or in the Merger Agreement, all costs and expenses incurred by any of the
parties hereto will be borne by the party incurring such costs and expenses.
Section 18. Further Assurances. Each party hereto will execute and
------------------
deliver all such further documents and instruments and take all such further
action as may be reasonably necessary in order to consummate the transactions
contemplated hereby. The Company covenants to Parent and Purchaser that it and
its Board of Directors shall (i) take all action necessary to ensure that no
state takeover statute or similar statute or regulation is or becomes applicable
to the Purchase Option, the Offer, the Merger, this Agreement, the Merger
Agreement or any of the other transactions contemplated by the foregoing (the
"Transactions") and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to any of the Transactions, take all action
necessary to ensure that the Purchase Option and the other Transactions may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and the Merger Agreement and otherwise to minimize the effect of such
statute or regulation on the Purchase Option and the other Transactions.
-10-
<PAGE>
Section 19. Publicity. A Stockholder shall not issue any press
---------
release or otherwise make any public statements with respect to this Agreement
or the Merger Agreement or the other transactions contemplated hereby or thereby
without the consent of Parent and Purchaser, except as may be required by law or
applicable stock exchange rules.
Section 20. Stop Transfer Order; Legend. The Company agrees with, and
---------------------------
covenants to, Parent and Purchaser that the Company shall not register the
transfer of any certificate representing any Stockholder's Shares unless such
transfer is made in accordance with the terms of this Agreement. Each
Stockholder agrees to place the following legend on any and all certificates
evidencing the Shares:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER PURSUANT TO THAT CERTAIN TENDER AND OPTION
AGREEMENT, DATED AS OF DECEMBER 20, 1998, BY AND AMONG ROHM AND HAAS COMPANY,
LIGHTNING ACQUISITION CORP., LEARONAL, INC. AND CERTAIN STOCKHOLDERS OF
LEARONAL, INC. ANY TRANSFER OF SUCH SHARES OF COMMON STOCK IN VIOLATION OF THE
TERMS OF SUCH AGREEMENT SHALL BE NULL AND VOID AND OF NO EFFECT WHATSOEVER.
Section 21. Stockholder Capacity. No person executing this Agreement
--------------------
makes any agreement or understanding herein in such Stockholder's capacity as a
director or officer of the Company or any subsidiary of the Company. Each
Stockholder signs solely in such Stockholder's capacity as the beneficial owner
of such Stockholder's Shares and nothing herein shall limit or affect any
actions taken by a Stockholder in such Stockholder's capacity as an officer or
director of the Company or any subsidiary of the Company to the extent
specifically permitted by the Merger Agreement.
Section 22. Enforcement. Each Stockholder and the Company acknowledge
-----------
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that Parent and Purchaser will
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
Each Stockholder and the Company further agree to waive any requirement for the
securing or posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief. The provisions of this paragraph are
without prejudice to any other rights that any party hereto may have against
another party hereto for any failure to perform its obligations under this
Agreement. In addition, each Stockholder (i) consents to submit to the personal
jurisdiction of any Federal court located in the State of New York or any New
York state court in the event any dispute arises out of this Agreement or any of
the transactions contemplated hereby, (ii) agrees not to attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, (iii) agrees not to bring any action relating to this Agreement or
any of the transactions contemplated hereby in any court other than a Federal
court located in the State of New York or a New York state court and (iv) waives
any right to trial by jury with respect to any claim or proceeding related to or
arising out
-11-
<PAGE>
of this Agreement or any of the transactions contemplated hereby. Each
Stockholder hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in the courts of the State of New York
or of the United States of America located in the State of New York, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
Section 23. Miscellaneous.
-------------
(a) All representations and warranties contained herein will
survive for twelve months after the termination hereof. The covenants and
agreements made herein will survive in accordance with their respective terms.
(b) Any provision of this Agreement may be waived at any time
by the party that is entitled to the benefits thereof. No such waiver, amendment
or supplement will be effective unless in writing and signed by the party or
parties sought to be bound thereby. Any waiver by any party of a breach of any
provision of this Agreement will not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement or one or more sections hereof will not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
(c) This Agreement, the Merger Agreement, the Other Agreements
and the Confidentiality Agreement constitute the entire agreement among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements among the parties with respect to such matters. This Agreement
may not be amended, changed, supplemented, waived or otherwise modified, except
upon the delivery of a written agreement executed by the parties hereto.
(d) This Agreement will be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws principles thereof.
(e) The descriptive headings contained herein are for
convenience and reference only and will not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Words in the singular include the plural, and
words in the plural include the singular.
(f) All notices and other communications hereunder will be in
writing and will be given (and will be deemed to have been duly given upon
receipt) by delivery in person, by telecopy, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
-12-
<PAGE>
If to the Company to:
LeaRonal, Inc.
272 Buffalo Avenue
Freeport, NY 11520
Attention: Ronald F. Ostrow
Telecopy: 516-867-5917
With a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: Robert F. Quaintance, Jr.
Telecopy: 212-909-6836
If to Parent or Purchaser to:
Rohm and Haas Company
100 Independence Mall West
Philadelphia, PA 19106
Attention: John S. Stroebel
Telecopy: 215-592-3227
Lightning Acquisition Corp.
Suite 104 - Rodney Building
3411 Silverside Road
Wilmington, DE 19810
Attention: John S. Stroebel
with copies to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: William G. Lawlor
Telecopy: 215-994-2222
If to a Stockholder, at the address set forth on Schedule A hereto.
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
-13-
<PAGE>
(g) This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one agreement.
(h) This Agreement is binding upon and is solely for the
benefit of the parties hereto and their respective successors, legal
representatives and assigns. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement will be assigned by any of the
parties hereto without the prior written consent of the other parties, except
that Parent and Purchaser will have the right to assign to any direct or
indirect wholly owned subsidiary of Parent or Purchaser any and all rights and
obligations of Parent or Purchaser under this Agreement, provided that any such
assignment will not relieve either Parent or Purchaser from any of its
obligations hereunder.
(i) In the event any term or provision of this Agreement is
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect. Upon any such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto will negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated by this
Agreement are consummated to the fullest extent possible.
(j) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity will be
cumulative and not alternative, and the exercise of any thereof by either party
will not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party.
-14-
<PAGE>
IN WITNESS WHEREOF, each of the Company, Parent and Purchaser has
caused this Agreement to be signed by its officer or director thereunto duly
authorized and each Stockholder has signed this Agreement, all as of the date
first written above.
ROHM AND HAAS COMPANY
By: /s/ Rajiv L. Gupta
_______________________________________________
Name: Rajiv L. Gupta
Title: Vice President
LIGHTNING ACQUISITION CORP.
By: /s/ Bradley J. Bell
_______________________________________________
Name: Bradley J. Bell
Title: Vice President
LEARONAL, INC.
By: /s/ Ronald F. Ostrow
_______________________________________________
Name: Ronald F. Ostrow
Title: President
STOCKHOLDERS:
/s/ Barnet D. Ostrow
__________________________________________________
Barnet D. Ostrow, individually, as Trustee and
General Partner of Ostrow Properties Limited
Partnership #1
/s/ Annette Ostrow
_________________________________________________
Annette Ostrow, individually, as Trustee and
General Partner of Ostrow Properties Limited
Partnership #2
[signatures continue on next page]
-15-
<PAGE>
/s/ Fred I. Nobel
_________________________________________________
Fred I. Nobel, individually and as General Partner
of Nobel Limited Partnership
/s/ Ronald F. Ostrow
_________________________________________________
Ronald F. Ostrow, as Trustee and individually
/s/ Michael Katz
_________________________________________________
Michael Katz, as Trustee
/s/ Kenneth L. Stein
_________________________________________________
Kenneth L. Stein, as Trustee
/s/ Richard Kessler
_________________________________________________
Richard Kessler
/s/ Sol Berg
_________________________________________________
Sol Berg
/s/ Donald Thomson
_________________________________________________
Donald Thomson
/s/ David L. Rosenthal
_________________________________________________
David L. Rosenthal
/s/ Alonna Ostad
_________________________________________________
Alonna Ostad
/s/ Sharone N. Ostrow
_________________________________________________
Sharone N. Ostrow
/s/ Jonathan Ostrow
_________________________________________________
Jonathan Ostrow
-16-
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number Number
of of
Stockholder Address Shares Options
----------- ------- ------ -------
<S> <C> <C> <C>
Barnet D. Ostrow and (1) 420,928
Michael Katz, as
Trustees of Revocable
Trust f/b/o Barnet D.
Ostrow
Annette Ostrow and (1) 351,354
Michael Katz, as
Trustees of Revocable
Trust f/b/o Annette
Ostrow
Fred I. Nobel, individually (1) 1,217,660
and as general partner (1) 5,917
on behalf of Nobel
Limited Partnership
Ronald F. Ostrow (1) 284,018
Ronald F. Ostrow and (1) 263,671
Kenneth L. Stein, as
Trustees f/b/o Ronald
Ostrow
Michael Katz, as Trustee (1) 50,000
f/b/o Ronald Ostrow
Barnet D. Ostrow as (1) 242,500
General Partner on
behalf of Ostrow
Properties Limited
Partnership #1
Annette Ostrow as (1) 15,000
General Partner on
behalf of Ostrow
Properties Limited
Partnership #2
Richard Kessler (1) 76,715 217,382
Donald Thomson (1) 53,942 106,096
David L. Rosenthal (1) 19,731 171,400
Sol Berg 1453 Landings Circle 754,519
Sarasota, FL 34231
Alonna Ostad (1) 48,566
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number Number
of of
Stockholder Address Shares Options
----------- ------- ------ -------
<S> <C> <C> <C>
Sharone N. Ostrow (1) 50,596
Jonathan Ostrow (1) 48,565
__________ ---------
Totals 3,619,664 778,896
========== =========
</TABLE>
(1) c/o LeaRonal Inc., 272 Buffalo Avenue, Freeport, NY 11520
<PAGE>
Exhibit 99.1
Press Release dated December 21, 1998
<PAGE>
[LETTERHEAD OF ROHM AND HAAS COMPANY APPEARS HERE]
ROHM AND HAAS TO ACQUIRE LEARONAL;
WILL BE COMBINED WITH SHIPLEY OPERATIONS
Philadelphia, PA, December 21, 1998: Rohm and Haas Company (NYSE: ROH) and
LeaRonal, Inc. (NYSE: LRI) of Freeport, New York, announced today they have
signed a definitive merger agreement for Rohm and Haas to acquire all of the
outstanding shares of LeaRonal, a maker of specialty chemicals for the
electronics industry, for $34 per share. The value of the transaction is
approximately $460 million. LeaRonal will be combined with Shipley Company, the
cornerstone of Rohm and Haas's $400 million Electronic Materials business group.
LeaRonal, which reported $242 million in fiscal 1998 sales, is a rapidly growing
firm that develops and makes specialty chemical processes for the manufacture of
printed circuit boards, semiconductor packaging and for electronic connector
plating. LeaRonal also provides processes for metal-finishing applications.
Under the merger agreement, Rohm and Haas soon will commence a cash tender offer
for all the outstanding common shares of LeaRonal. Following the consummation of
the tender offer, Rohm and Haas will acquire through a merger all shares not
purchased in the tender offer at the same price.
"This is an excellent opportunity for LeaRonal because it will accelerate the
growth of our patented technologies into new markets around the world," said
Ronald Ostrow, President and CEO of LeaRonal. Added Rajiv L. Gupta, Vice
Chairman elect of Rohm and Haas and leader of the Electronic Materials business
group, "This is a wonderful marriage of complementary technologies, geographic
presence and cultures that share a strong entrepreneurial spirit. We are
fortunate LeaRonal wants to join forces with us, for they are our partner of
choice." Gupta continued, "We look forward to having LeaRonal and Shipley
management working side by side to create a new organization that will bring
cutting-edge technology and products to the electronics market faster and more
efficiently."
The boards of directors of both firms have approved the transaction. In
addition, holders
--more--
<PAGE>
of approximately 30 percent of outstanding LeaRonal shares have agreed to tender
their shares and have granted Rohm and Haas an option to purchase those shares.
The tender offer is contingent upon at least two-thirds of LeaRonal
fully-diluted shares being tendered and receipt of normal regulatory approvals.
The offer will expire 20 business days after it is begun, unless extended or
withdrawn.
# # #
Contacts: Laura L. Hadden Mr. Ronald F. Ostrow
Rohm and Haas Company President and CEO, LeaRonal, Inc.
215-592-3054 516-868-8800 x202
or [email protected]
Editor's Notes: Rohm and Haas is a Fortune 400 specialty chemical company with
nearly $4 billion in annual sales. The company's specialty products are found in
many of the items that improve the quality of life, including decorative and
industrial paints, semiconductors, shampoos and other personal care products,
and water purification systems. Shipley Company is the cornerstone of Rohm and
Haas's Electronic Materials division, which reported sales of $400 million in
1997. This business, which became wholly owned by Rohm and Haas in 1992, has
reported revenue growth at approximately 11 percent per year during the past
five years.
For more than 40 years, LeaRonal, Inc. has been a leader in the development and
marketing of specialty chemical additives used by the worldwide electronics and
metal finishing industries. The company has developed a number of patented
precious metal electoplating processes that are used in the production of
semiconductors, printed circuit boards and electrical contacts used in guidance
systems, telecommunications equipment, computers, consumer appliances,
electronic games, and so on. This technology also is used to make decorative
items including watches, spectacle frames and jewelry. The company reported $242
million in sales for its fiscal year 1998, which ended on February 28, 1998.
During the past five years, LeaRonal has reported average annual sales increases
of 12 percent per year, and earnings increases of 19 percent per year.
This press release contains statements that are forward looking, and that are
subject to certain risks and uncertainties. Actual results may vary because of
changing economic conditions in key geographic or product markets, fluctuating
currency exchange rates, acquisitions or divestitures, customer demand, product
mix, competitive products and pricing, technological innovation, litigation and
other factors. Details can be found in Rohm and Haas's March 27, 1998, 10-K
filing and LeaRonal's October 15, 1998, 10-Q filing with the Securities and
Exchange Commission.
This press release is neither an offer to purchase, nor a solicitation of an
offer to sell securities. The tender offer will be made only through an offer to
purchase and related letter of transmittal, which will be distributed to
LeaRonal shareholders.
<PAGE>
Contacts: For D.F. King & Company, Inc.
Robert Fraina: (212) 493-6941
For Deutsche Bank Securities
Naushad Madon: (212) 469-5764
For Rohm and Haas
Eric Norris: (215) 592-2664
<PAGE>
Exhibit 99.2
Press Release dated December 23, 1998.
<PAGE>
- --------------------------------------------------------------------------------
[LETTERHEAD OF ROHM AND HAAS COMPANY APPEARS HERE]
NEWS
RELEASE
- --------------------------------------------------------------------------------
PRESS CONTACT: Eric Norris FOR RELEASE: Immediately
215-592-2664
- --------------------------------------------------------------------------------
ROHM AND HAAS COMMENCES TENDER OFFER
FOR LEARONAL, INC.
Philadelphia, PA, December 23, 1998 - Rohm and Haas Company (NYSE:ROH) announced
today that a wholly owned subsidiary, Lightning Acquisition Corp., has commenced
a tender offer to acquire all of the outstanding shares of common stock of
LeaRonal, Inc. (NYSE:LRI) for $34.00 per share in cash.
On December 21st, Rohm and Haas announced it had signed a definitive merger
agreement with LeaRonal to acquire all of the outstanding shares of that
company, a maker of specialty chemicals for the electronics industry. The total
value of the transaction is approximately $460 million. Under the agreement,
LeaRonal will be combined with Shipley Company, the cornerstone of Rohm and
Haas's $400 million Electronic Materials business group.
The tender offer is being made pursuant to the merger agreement among Rohm and
Haas Company, Lightning Acquisition Corp. and LeaRonal, Inc. The offer is
subject to the terms and conditions set forth in that agreement.
Among other things, this offer is conditioned upon the valid tender of shares
representing at least two-thirds of LeaRonal fully diluted shares, and
expiration or termination of the waiting period applicable to the merger under
the Hart-Scott-Rodino Antitrust Improvements Act. The tender offer and
withdrawal rights will expire at 12:00 midnight New York City time on Friday,
January 22, 1999, unless the offer is extended.
Deutsche Bank Securities Inc. is the dealer manager for the offer. D.F. King &
Company, Inc., is the information agent.
# # #
Note: This press release is neither an offer to purchase, nor a solicitation of
an offer to sell securities. The tender offer is made only through the Offer to
Purchase and the related Letter of Transmittal which is being mailed to LeaRonal
stockholders today. Copies of the offering document may be obtained by
contacting D.F. King at 1-800-829-6554 or Deutsche Bank Securities Inc. at
1-800-334-1898, ext. 8998.
Contacts: For D.F. King & Company, Inc.
Robert Fraina: (212) 493-6941
<PAGE>
For Deutsche Bank Securities
Naushad Madon: (212) 469-5764
For Rohm and Haas
Eric Norris: (215) 592-2664
