<PAGE>
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OMB APPROVAL
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OMB NUMBER: 3235-0145
EXPIRES: OCTOBER 31, 1997
ESTIMATED AVERAGE BURDEN
HOURS PER RESPONSE.........14.90
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
CELADON GROUP, INC.
- --------------------------------------------------------------------------------
(NAME OF ISSUER)
Common Stock, par value $.033 per Share
- --------------------------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
150838 10 0
------------------------------
(CUSIP NUMBER)
Laredo Acquisition Corp.
Odyssey Investment Partners Fund, LP
c/o Odyssey Investment Partners, LLC
280 Park Avenue
West Tower, 38th Floor
New York, New York 10017
with a copy to:
Richard Trobman
Latham & Watkins
885 Third Avenue
New York, NY 10022
Telephone Number (212) 906-1200
--------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 23, 1998
-----------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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Page 2 of 10 pages
SCHEDULE 13D
- ----------------------------------
CUSIP NO. 150838 10 0
- ----------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
LAREDO ACQUISITION CORP.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY None.
OWNED BY --------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 1,859,036
WITH --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None.
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None.
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,859,036
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
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Page 3 of 10 pages
SCHEDULE 13D
- ----------------------------------
CUSIP NO. 150838 10 0
- ----------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ODYSSEY INVESTMENT PARTNERS FUND, LP
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY None.
OWNED BY --------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 1,859,036
WITH --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None.
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None.
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,859,036
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
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Page 4 of 10 pages
ITEM 1. SECURITY AND ISSUER
This statement relates to the shares of common stock, $0.033 par value
per share (the "Common Stock"), of Celadon Group, Inc., a Delaware corporation
(the "Company" or "Issuer"). The principal executive offices of the Company are
located at One Celadon Drive, Indianapolis, IN 46236-4207.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(c) and (f) This statement is filed jointly by Laredo Acquisition Corp., a
Delaware corporation ("Laredo") and Odyssey Investment Partners Fund, LP, a
Delaware limited partnership ("Odyssey"). The foregoing entities are hereinafter
referred to collectively as the "Reporting Entities."
Laredo is a Delaware corporation formed solely for the purpose of
consummating the transactions contemplated by the Merger Agreement (as defined
and described in Item 4). All of the interests in Laredo are owned by Odyssey.
However, Laredo may issue additional equity interests to third persons. It is
not anticipated that Laredo will have any significant assets or liabilities
other than those arising under the Merger Agreement or in connection with the
Merger, or engage in any activities other than those incident to its formation
and capitalization and the Merger. The principal office of Laredo is c/o Odyssey
Investment Partners, LLC, 280 Park Avenue, West Tower, 38th Floor, New York, New
York 10017.
Odyssey is a newly formed buyout fund which pursues majority stake,
private equity investments in middle market companies. The principal office of
Odyssey is c/o Odyssey Investment Partners, LLC, 280 Park Avenue, West Tower,
38th Floor, New York, New York 10017.
Schedule I to this statement contains information concerning the
Reporting Entities and other persons and entities as to which such information
is required to be disclosed in response to Item 2 and General Instruction C to
Schedule 13D.
(d) and (e) During the last five years, none of the Reporting Entities nor any
of the persons or entities referred to in Schedule I has (a) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(b) been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree, or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Reporting Persons acquired beneficial ownership of 1,859,036 shares
of the Common Stock pursuant to the Voting Agreement (as defined and described
in Item 6) representing approximately 24.1% of the issued and outstanding shares
of Common Stock. Laredo requested that certain stockholders of the Issuer (the
"Stockholders") enter into the Voting Agreement as a condition to Laredo's
willingness to enter into the Merger Agreement (as defined and described in Item
4). The Voting Agreement will apply to shares of Common Stock that may be
acquired after the date of the agreement by such Stockholders, including shares
of Common Stock issuable upon exercise of options and warrants to
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Page 5 of 10 pages
purchase Common Stock (including 12,121 shares of Common Stock issuable upon
exercise of a warrant held by a Stockholder). No additional consideration was
given in exchange for the Voting Agreement.
ITEM 4. PURPOSE OF TRANSACTION
On June 23, 1998, Laredo entered into an Agreement and Plan of Merger
(the "Merger Agreement") with the Issuer. Subject to the satisfaction or waiver
of certain terms and conditions of the Merger Agreement, Laredo will merge (the
"Merger") with and into the Issuer and, as a result of the Merger, the
stockholders of Laredo will own approximately 90% of the issued and outstanding
shares of Surviving Corporation Common Stock (as defined in the Merger
Agreement). In connection with the Merger Agreement, Laredo entered into a
Voting Agreement dated as of June 23, 1998 (the "Voting Agreement") with the
Stockholders who own approximately 24.1% of the issued and outstanding Shares
(as defined therein). The purpose of the Voting Agreement and the transactions
contemplated thereby is to ensure approval of the Merger.
At the Effective Time (as defined in the Merger Agreement), Laredo will
be merged with and into the Company, with the Company continuing as the
Surviving Corporation (as defined in the Merger Agreement) and the directors of
Laredo continuing as the directors of the Surviving Corporation.
At the Effective Time (as defined in the Merger Agreement), each share
of Common Stock held by the Company's stockholders (other than the Common Stock
held by certain officers and directors of the Company representing approximately
10% of the total outstanding shares of Surviving Corporation Common Stock) will
be converted into the right to receive $20.00 in cash.
Upon the consummation of the Merger, the issued and outstanding shares
of Laredo will be converted into approximately 90% of the total outstanding
shares of Surviving Corporation Common Stock.
The transactions contemplated in the Merger Agreement will result in the
Common Stock ceasing to be quoted on the Nasdaq Stock Market and becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Act.
The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the text of such
agreement, which is filed as an exhibit to this Schedule 13D and is incorporated
by reference herein.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) and (b) Pursuant to the proxy granted in the Voting Agreement, the Reporting
Entities have the shared power to vote, or to direct the vote of, an aggregate
of 1,859,036 shares of Common Stock, representing approximately 24.1% of the
issued and outstanding shares of Common Stock. The Voting Agreement will apply
to shares of Common Stock that may be acquired after the date of the agreement
by the Stockholders, including shares of Common Stock issuable upon exercise of
options and warrants to purchase Common Stock (including 12,121 shares of Common
Stock issuable upon exercise of a warrant held by a Stockholder).
(c) The responses set forth in Item 4 are incorporated herein.
<PAGE>
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Page 6 of 10 pages
(d) The Stockholders, based on their respective percentage ownership of the
Shares, shall have the right to receive, or the power to direct the receipt of,
dividends from or the proceeds from any sale of the Common Stock. The identity
of the Stockholders is set forth in Schedule I to the Voting Agreement, a copy
of which is filed as an exhibit to this Schedule 13D and is incorporated herein
by reference.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
The responses set forth in Item 4 and Item 5 are incorporated herein.
Pursuant to a Voting Agreement dated June 23, 1998 between the Company
and the Stockholders (the "Voting Agreement"), each Stockholder has agreed (and
the Voting Agreement includes an irrevocable proxy provision for the benefit of
Laredo with respect to the Shares owned by each Stockholder), to vote (or cause
to be voted) all Shares (as defined in the Voting Agreement) held of record or
beneficially by such person (i) in favor of the Merger and adoption of the
Merger Agreement, the execution and delivery by the Company of the Merger
Agreement and the approval of the terms thereof and in favor of each of the
other actions contemplated by the Merger Agreement and the Voting Agreement and
any actions required in furtherance thereof; (ii) against any action or
agreement that would (or would be reasonably likely to) result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or the Voting Agreement; and (iii) except
as specifically requested in writing by Laredo in advance, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (1) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any of its
subsidiaries; (2) a sale, lease or transfer (whether by merger, consolidation,
operation of law or otherwise) 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; (3) (a) any change in the
majority of the board of directors of the Company; (b) any change in the present
capitalization of the Company or any amendment of the Company's certificate of
incorporation or by-laws; (c) any other material change in the Company's
corporate structure or business; or (d) any other action which is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone,
discourage or materially adversely affect the Merger or the transactions
contemplated by the Merger Agreement or the Voting Agreement or the contemplated
economic benefits of any of the foregoing. In addition, each Stockholder agreed
not to enter into any agreement or understanding with any person or entity in
any manner inconsistent with clauses (i), (ii) or (iii) of the preceding
sentence.
Each Stockholder has also agreed, until the termination of the Voting
Agreement, among other things, not to: (i) except pursuant to the terms of the
Merger Agreement and to Laredo pursuant to the Voting Agreement, offer for sale,
sell, transfer (whether by merger, consolidation, operation of law or
otherwise), tender, pledge, encumber, assign or otherwise dispose of, enforce or
permit the execution of the provisions of any redemption agreement with the
Company or enter into any contract, option or other arrangement or understanding
with respect to or consent to the offer for sale, sale, transfer (whether by
merger, consolidation, operation of law or otherwise), tender, pledge,
encumbrance, assignment or other disposition of, or exercise any discretionary
powers to distribute, any or all of such Stockholder's Shares or any interest
therein, (ii) except contemplated by the Voting Agreement, grant any proxies or
powers of attorney with respect to any Shares, deposit any Shares into a voting
trust or enter into a voting agreement with respect to any Shares; or (iii) take
any action that would make any
<PAGE>
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Page 7 of 10 pages
representation or warranty of such Stockholder contained in the Voting Agreement
untrue or incorrect or have the effect of preventing or disabling such
Stockholder from performing such Stockholder's obligations under the Voting
Agreement.
The foregoing description of the Voting Agreement does not purport to be
complete and is qualified in its entirety by reference to the text of such
agreement, which is filed as an exhibit to this Schedule 13D and is incorporated
by reference herein.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
(a) Voting Agreement dated as of June 23, 1998, by and among Laredo and the
Stockholders.
(b) Agreement and Plan of Merger dated as of June 23, 1998, by and between
Laredo and the Company.
<PAGE>
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Page 8 of 10 pages
Signatures
After reasonable inquiry and to the best of its knowledge and belief,
each of the undersigned hereby certifies that the information set forth in this
statement is true, complete and correct. In addition, by signing below, each of
the undersigned agrees that this Schedule 13D may be filed jointly on behalf of
each of Laredo Acquisition Corp. and Odyssey Investment Partners Fund, LP.
Dated: July 2, 1998
LAREDO ACQUISITION CORP.
By: /s/ Brian Kwait
-------------------------------
Name: Brian Kwait
-------------------------------
Title: President
-------------------------------
ODYSSEY INVESTMENT PARTNERS FUND, LP
By: ODYSSEY CAPITAL PARTNERS, LLC,
its general partner
By: /s/ Brian Kwait
-------------------------------
Name: Brian Kwait
-------------------------------
Title: Managing Member
-------------------------------
<PAGE>
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Page 9 of 10 pages
SCHEDULE 1
The following sets forth information with respect to the general partner
and each person controlling such partner and the executive officers, directors
and principal shareholders of each of the Reporting Entities, as applicable.
Except as otherwise indicated in this Schedule I or in the Schedule 13D to which
this Schedule I relates, the principal business address of each person or entity
set forth below is c/o Odyssey Investment Partners, LLC, 280 Park Avenue West
Tower, 38th Floor, New York, New York 10017 and each such person or entity is a
citizen of the United States of America.
Odyssey
The general partner of Odyssey is Odyssey Capital Partners, LLC, a
Delaware limited liability company (the "General Partner"). The manager of
Odyssey is Odyssey Investment Partners, LLC, a Delaware limited liability
company (the "Manager"). The managing members of the General Partner and the
Manager are Stephen Berger (Senior Managing Member), Brian Kwait, Muzzi Mirza,
Paul D. Barnett, William Hopkins and Brian F. Wruble. The principal occupation
of each of Messrs. Berger, Kwait, Mirza, Barnett, Hopkins and Wruble is to act
as a managing member of the General Partner and the Manager.
Laredo
All of the capital stock of Laredo is owned by Odyssey. The directors of
Laredo are Brian Kwait, Muzzi Mirza and Douglas Hitchner. Brian Kwait is the
president of Laredo, Muzzi Mirza is a vice president of Laredo, Douglas Hitchner
is a vice president and the treasurer of Laredo and Andrew Lapham is the
secretary of Laredo. The principal occupation of Mr. Hitchner is to act as a
principal of the Manager. The principal occupation of Mr. Lapham is to act as an
associate of the Manager.
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Page 10 of 10 pages
EXHIBIT INDEX
Exhibit A -- Merger Agreement
Exhibit B -- Voting Agreement
<PAGE>
<PAGE>
EXHIBIT A
EXECUTION COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
by and between
CELADON GROUP, INC.
a Delaware corporation
and
LAREDO ACQUISITION CORP.,
a Delaware corporation
Dated: June 23, 1998
================================================================================
<PAGE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated
June 23, 1998, is by and between CELADON GROUP, INC., a Delaware corporation
(the "Company"), and LAREDO ACQUISITION CORP., a Delaware corporation ("Sub").
RECITALS
A. This Agreement provides for the merger (the "Merger") of Sub
with and into the Company, with the Company as the surviving corporation in such
merger, all in accordance with the provisions of this Agreement.
B. The respective Boards of Directors of Sub and the Company have
approved this Agreement, and deemed it advisable and in the best interests of
their respective companies and stockholders to consummate the Merger. The
Company intends promptly to submit to its Stockholders the approval of the
Merger and the approval and adoption of this Agreement.
C. Sub is unwilling to enter into this Agreement unless,
contemporaneously with the execution and delivery of this Agreement, the Company
and certain beneficial and record stockholders of the Company enter into an
agreement (the "Voting Agreement") providing for certain actions relating to the
shares of Company Common Stock owned by them; and the Board of Directors of the
Company has approved the entering into by the Company and such stockholders of
the Voting Agreement, and such stockholders have agreed to enter into, execute
and deliver the Voting Agreement.
D. The parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
E. It is intended that the Merger be recorded as a
recapitalization for financial reporting purposes.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
<PAGE>
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ARTICLE I.
DEFINITIONS
1.1. Defined Terms.
As used herein, the terms below shall have the following
meanings:
"Affiliate" shall mean, with respect to any person or entity (the
"referent person"), any person or entity which controls the referent person, any
person or entity which the referent person controls, or any person or entity
which is under common control with the referent person. For purposes of the
preceding sentence, the term "control" shall mean the power, direct or indirect,
to direct or cause the direction of the management and policies of a person or
entity through voting securities, by contract or otherwise.
"Assets" shall mean all of the Company's and its Subsidiaries'
right, title and interest in and to all properties, assets and rights of any
kind, whether tangible or intangible, real or personal, owned by the Company or
its Subsidiaries or in which the Company or any of its Subsidiaries has any
interest whatsoever.
"Benefit Arrangement" shall mean any employment, consulting,
severance or other similar contract, arrangement or policy (written or oral) and
each plan, arrangement, program, agreement or commitment (written or oral)
providing for insurance coverage (including, without limitation, any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health or accident benefits (including, without limitation, any "voluntary
employees' beneficiary association" as defined in Section 501(c)(9) of the Code
providing for the same or other benefits) or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation or post-retirement insurance,
compensation or benefits which (a) is not a Welfare Plan, Pension Plan or
Multiemployer Plan, (b) is entered into, maintained, contributed to or required
to be contributed to, as the case may be, by the Company, its Subsidiaries or
any ERISA Affiliate or under which the Company, its Subsidiaries or any ERISA
Affiliate may incur any liability, and (c) covers any employee or former
employee of the Company, its Subsidiaries or any ERISA Affiliate (with respect
to their relationship with such any entity).
"Code" shall mean the Internal Revenue Code of 1986, as amended
and any successor statute.
"Company Common Stock" shall mean the Common Stock having a par
value of $0.033 per share of the Company.
"Contract" shall mean any agreement, contract, lease, note, loan,
evidence of indebtedness, purchase order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license, instrument,
obligation, commitment, purchase and sales order, quotation and other executory
commitment to which the Company or its Subsidiaries is a party or which relates
to the Company's or its Subsidiaries' businesses or any of the Assets, whether
oral or written, express or implied, and which pursuant to its terms has not
expired, terminated or been fully performed by the parties thereto.
2
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"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"Dissenting Stockholders" shall mean those Stockholders who hold
Dissenting Shares.
"Dissenting Shares" shall mean any shares held by Stockholders
who are entitled to an appraisal of their shares under the DGCL, and who have
properly exercised, perfected and not subsequently withdrawn or lost their
appraisal rights with respect to their Company Common Stock in accordance with
the DGCL.
"Employee Plans" shall mean all Benefit Arrangements,
Multiemployer Plans, Pension Plans, and Welfare Plans.
"Encumbrance" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, encumbrance or other right of third
parties, whether voluntarily incurred or arising by operation of law, and
includes, without limitation, any agreement to give any of the foregoing in the
future, and any contingent or conditional sale agreement or other title
retention agreement or lease in the nature thereof.
"Environmental Claims" shall mean all accusations, allegations,
notices of violation, liens, claims, demands, suits, or causes of action for any
damage, including, without limitation, personal injury, property damage
(including, without limitation, any depreciation or diminution of property
values), lost use of property or consequential damages, arising directly or
indirectly out of Environmental Conditions or Environmental Laws. By way of
example only (and not by way of limitation), Environmental Claims include (i)
violations of or obligations under any contract related to Environmental Laws or
Environmental Conditions between the Company or its Subsidiaries and any other
person, (ii) actual or threatened damages to natural resources, (iii) claims for
nuisance or its statutory equivalent, (iv) claims for the recovery of response
costs, or administrative or judicial orders directing the performance of
investigations, responses or remedial actions under any Environmental Laws, (v)
requirements to implement "corrective action" pursuant to any order or permit
issued pursuant to the Resource Conservation and Recovery Act, as amended, or
similar provisions of applicable state law, (vi) claims related to Environmental
Laws or Environmental Conditions for restitution, contribution, or indemnity,
(vii) fines, penalties or liens of any kind against property related to
Environmental Laws or Environmental Conditions, (viii) claims related to
Environmental Laws or Environmental Conditions for injunctive relief or other
orders or notices of violation from federal, state or local agencies or courts,
and (ix) with regard to any present or former employees, claims relating to
exposure to or injury from Environmental Conditions.
"Environmental Conditions" shall mean the state of the
environment, including natural resources (e.g., flora and fauna), soil, surface
water, ground water, any present or potential drinking water supply, subsurface
strata or ambient air.
"Environmental Laws" shall mean all applicable foreign, federal,
state, district and local laws, all rules or regulations promulgated thereunder,
and all orders, consent orders, judgments, notices, permits or demand letters
issued, promulgated or entered pursuant thereto, relating to pollution or
protection of the environment (including, without limitation, ambient air,
surface water, ground water, land surface, or subsurface strata), including,
without limitation, (i) laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals, industrial
materials, wastes or other substances into the environment and (ii) laws
relating to the identification, generation, manufacture, processing,
distribution, use, treatment, storage, disposal, recovery, transport or other
3
<PAGE>
<PAGE>
handling of pollutants, contaminants, chemicals, industrial materials, wastes or
other substances. Environmental Laws shall include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Toxic Substances Control Act, as amended, the Hazardous
Materials Transportation Act, as amended, the Resource Conservation and Recovery
Act, as amended ("RCRA"), the Clean Water Act, as amended, the Safe Drinking
Water Act, as amended, the Clean Air Act, as amended, the Occupational Safety
and Health Act, as amended, and all analogous laws promulgated or issued by any
state or other governmental authority.
"Environmental Reports" shall mean any and all written analyses,
summaries or explanations, in the possession or control of the Company or its
Subsidiaries, of (a) any Environmental Conditions in, on or about the properties
of the Company or its Subsidiaries or (b) the Company's or its Subsidiaries'
compliance with Environmental Laws.
"Equity Securities" shall mean (i) shares of capital stock or
other equity securities, (ii) subscriptions, calls, warrants, options or
commitments of any kind or character relating to, or entitling any person or
entity to purchase or otherwise acquire, any capital stock or other equity
securities and (iii) securities convertible into or exercisable or exchangeable
for shares of capital stock or other equity securities.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any entity which is (or at any
relevant time was) a member of a "controlled group of corporations" with, under
"common control" with, or a member of an "affiliated service group" with, or
otherwise required to be aggregated with, the Company or its Subsidiaries as set
forth in Section 414(b), (c), (m) or (o) of the Code.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Facilities" shall mean all plants, offices, manufacturing
facilities, stores, warehouses, administration buildings and all real property
and related facilities owned or leased by the Company or its Subsidiaries.
"Fixtures and Equipment" shall mean all of the furniture,
fixtures, furnishings, machinery, equipment, spare parts, appliances and
vehicles owned by the Company or its Subsidiaries, wherever located, including
all warranty rights with respect thereto.
"GAAP" shall mean, with respect to any person, generally accepted
accounting principles in the United States of America, as in effect from time to
time, consistently applied.
"Hazardous Substances" shall mean all pollutants, contaminants,
chemicals, wastes, and any other carcinogenic, ignitable, corrosive, reactive,
toxic or otherwise hazardous substances or materials (whether solids, liquids or
gases) subject to regulation, control or remediation under Environmental Laws.
By way of example only, the term Hazardous Substances includes petroleum, urea
formaldehyde, flammable, explosive and radioactive materials, PCBs, pesticides,
herbicides, asbestos, sludge, slag, acids, metals, solvents and waste waters.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
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"Leases" shall mean all of the leases or subleases for personal
or real property to which the Company or its Subsidiaries is a party or by which
the Company or its Subsidiaries is bound.
"Material Adverse Effect" or "Material Adverse Change" or a
similar phrase shall mean, with respect to any person, any material adverse
effect on or change with respect to (i) the business, operations, assets (taken
as a whole), liabilities (taken as a whole), condition (financial or otherwise),
results of operations or prospects of such person and its Subsidiaries, taken as
a whole, (ii) the relations with customers, suppliers, distributor or employees
of such person and its Subsidiaries, taken as a whole, or (iii) the right or
ability of such person or its Subsidiaries to consummate any of the transactions
contemplated hereby.
"Multiemployer Plan" shall mean any "multiemployer plan," as
defined in Section 4001(a)(3) or 3(37) of ERISA, which (a) the Company, its
Subsidiaries or any ERISA Affiliate maintains, administers, contributes to or is
required to contribute to, or, after September 25, 1980, maintained,
administered, contributed to or was required to contribute to, or under which
the Company, its Subsidiaries or any ERISA Affiliate may incur any liability and
(b) covers any employee or former employee of the Company, its Subsidiaries or
any ERISA Affiliate (with respect to their relationship with any such entity).
"Options" shall mean the options to purchase in the aggregate
444,675 shares of Company Common Stock issued to certain executive employees and
non-employee directors of the Company pursuant to the Stock Option Plans.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any "employee pension benefit plan" as
defined in Section 3(2) of ERISA (other than a Multiemployer Plan) (a) which the
Company, its Subsidiaries or any ERISA Affiliate maintains, administers,
contributes to or is required to contribute to, or, within the five years prior
to the Closing Date, maintained, administered, contributed to or was required to
contribute to, or under which the Company, its Subsidiaries or any ERISA
Affiliate may incur any liability (including, without limitation, any contingent
liability) and (b) which covers any employee or former employee of the Company,
its Subsidiaries or any ERISA Affiliate (with respect to their relationship with
any such entity).
"Permits" shall mean all licenses, permits, franchises,
approvals, authorizations, consents or orders of, or filings with, or
notifications to, any governmental authority, whether foreign, federal, state or
local, or any other person, necessary or desirable for the past, present or
currently anticipated conduct of, or relating to the operation of the business
of, the Company or its Subsidiaries.
"Permitted Encumbrances" shall mean (a) liens for Taxes or
governmental charges or claims (i) not yet due and payable or (ii) being
contested in good faith, if a reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor, (b) statutory liens of
landlords, liens of carriers, warehouse persons, mechanics and material persons
and other liens imposed by law incurred in the ordinary course of business for
sums (i) not yet due and payable or (ii) being contested in good faith, if a
reserve or other appropriate provision, if any, as shall be required by GAAP
shall have been made therefor, (c) liens incurred or deposits made in connection
with workers' compensation, unemployment insurance and other similar types of
social security programs or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return of money bonds and similar obligations, in each case in
the ordinary
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course of business, consistent with past practice, (d) purchase money liens
incurred in the ordinary course of business, consistent with past practice, and
(e) easements, rights-of-way, restrictions and other similar charges or
encumbrances, in each case, which do not interfere with the ordinary conduct of
business of the Company or its Subsidiaries and do not materially detract from
the value of the property to which such encumbrance relates.
"Personnel" shall mean all directors, officers and employees of
the Company or its Subsidiaries.
"Returns" shall mean any and all returns, reports, declarations
and information statements with respect to Taxes required to be filed by or on
behalf of the Company or its Subsidiaries with any governmental authority or Tax
authority or agency, whether domestic or foreign, including, without limitation,
consolidated, combined and unitary returns and all amendments thereto or
thereof.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Stock Option Plans" shall mean the 1994 Celadon Stock Option
Plan and the 1996 Non-Employee Director Stock Option Plan.
"Stockholders" shall mean the record holders of Company Common
Stock.
"Subsidiary" shall mean, with respect to any of the parties of
this Agreement, any corporation or other business entity, whether or not
incorporated, of which at least 50% of the securities or interests having, by
their terms, ordinary voting power to elect members of the board of directors,
or other persons performing similar functions with respect to such entity, are
held, directly or indirectly, by such party.
"Tax(es)" shall mean all taxes, estimated taxes, withholding
taxes, assessments, levies, imposts, fees and other charges, including, without
limitation, any interest, penalties, additions to tax or additional amounts that
may become payable in respect thereof, imposed by any foreign, federal, state or
local government or taxing authority, which taxes shall include, without
limitation, all income taxes, payroll and employee withholding taxes,
unemployment insurance, social security, sales and use taxes, value-added taxes,
excise taxes, franchise taxes, gross receipts taxes, occupation taxes, real and
personal property taxes, stamp taxes, transfer taxes, workers' compensation and
other obligations of the same or of a similar nature.
"Treasury Securities" shall mean Company Common Stock, Options
and Warrants owned by Sub, the Company and/or any Subsidiary of Sub or the
Company.
"Warrant Agreement" shall mean that certain Warrant Agreement,
dated October 8, 1992, between the Company and Deltec Asset Management Corp. as
a custodian for Hanseatic Corp.
"Warrants" shall mean the warrants held by Hanseatic Corp.
pursuant to which the holders are entitled to purchase for $10.82 per share an
aggregate of 12,121 shares of Company Common Stock.
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"Welfare Plan" shall mean any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA, (a) which the Company, its Subsidiaries or any
ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or under which the Company, its Subsidiaries or any ERISA
Affiliate may incur any liability and (b) which covers any employee or former
employee of the Company, its Subsidiaries or any ERISA Affiliate (with respect
to their relationship with any such entity).
1.2. Other Defined Terms. In addition to the terms defined in the
Recitals to this Agreement and Section 1.1, the following terms shall have the
meanings defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
"Acquisition Proposal"..............................6.4(a)
"Actions"...........................................4.12
"Closing"...........................................2.3
"Closing Date"......................................2.3
"Company Reports"...................................4.10
"Company Restricted Stock"..........................3.3(b)
"Confidentiality Letter"............................6.2
"Disclosure Schedule" ..............................Article IV Preamble
"Effective Time"....................................2.2
"Exchange Fund".....................................3.5(f)
"Financing".........................................5.6
"Financing Letters".................................5.6
"Jaguar"............................................4.6
"Laws"..............................................4.14
"Leased Property"...................................4.5(b)(ii)
"Merger"............................................Recitals
"Merger Consideration"..............................3.1(a)
"Paying Agent.......................................3.5(a)
"Permitted Party"...................................6.4(b)
"Proxy Statement"...................................6.6a)
"Roll-Over Share"...................................3.1(b)
"Roll-Over Share Consideration".....................3.1(b)
"Schedule 13E-3"....................................6.7
"Servicios".........................................4.6
"Special Meeting"...................................4.27
"Subject Litigation"................................6.8
"Surviving Corporation".............................2.1
"Surviving Corporation Common Stock"................3.2
"Third Party".......................................6.4
</TABLE>
ARTICLE II.
THE MERGER
2.1. The Merger. Upon the terms and subject to the satisfaction
or waiver, if permissible, of the conditions hereof, and in accordance with the
DGCL, at the Effective Time, Sub shall
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be merged with and into the Company. Upon the effectiveness of the Merger, the
separate corporate existence of Sub shall cease and the Company, under the name
Celadon Group, Inc., shall continue as the surviving corporation (the "Surviving
Corporation"). The Merger shall have the effects specified under the DGCL.
2.2. Effective Time. On the Closing Date, the parties shall cause
the Merger to be consummated by causing a certificate of merger with respect to
the Merger to be executed and filed in accordance with the relevant provisions
of the DGCL and shall make all other filings or recordings required under the
DGCL. The Merger shall become effective at the time of filing of the certificate
of merger or at such later time as is specified therein (the "Effective Time").
2.3. Closing. Upon the terms and subject to the conditions of
this Agreement, the closing of the Merger (the "Closing") shall take place (a)
at the offices of Latham & Watkins, 885 Third Avenue, New York, New York at
10:00 a.m., local time, on the first business day immediately following the day
on which the last to be satisfied or waived of the conditions set forth in
Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions) shall be satisfied or waived in accordance herewith or (b) at such
other time, date or place as Sub and the Company may agree. The date on which
the Closing occurs is herein referred to as the "Closing Date."
2.4. Certificate of Incorporation and By-Laws.
(a) At the Effective Time, and without any further action on
the part of the Company or Sub, the certificate of incorporation of the Company,
as in effect immediately prior to the Effective Time, shall be amended so as to
read in its entirety in the form set forth as Exhibit A hereto, and, as so
amended, until thereafter further amended as provided therein and under the
DGCL, it 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 or Sub, the by-laws of Sub as in effect immediately
prior to the Effective Time shall be the by-laws of the Surviving Corporation
following the Merger until thereafter changed or amended as provided therein or
by applicable law.
2.5. Directors. The directors of Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation and
shall hold such positions until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
2.6. Officers. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
ARTICLE III.
EFFECT OF MERGER ON SECURITIES OF SUB AND THE COMPANY
3.1. Conversion of Sub Common Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof,
the shares of common stock, par value $0.01 per share, of Sub issued and
outstanding immediately prior to the Effective Time shall automatically be
converted into and thereafter represent 2,880,000 validly issued, fully paid and
non-
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assessable share(s) of common stock, par value $0.033 per share, of the
Surviving Corporation (the "Surviving Corporation Common Stock").
3.2. Conversion of Company Common Stock.
(a) At the Effective Time, by virtue of the Merger and
without any action on the part of the holder thereof, each share of Company
Common Stock outstanding immediately prior to the Effective Time (other than
Roll-Over Shares, Treasury Securities and Dissenting Shares, if any) shall
automatically be converted into the right to receive, and each certificate which
immediately prior to the Effective Time represented a share of Company Common
Stock shall evidence solely the right to receive, $20.00 in cash (the "Merger
Consideration") upon surrender of the certificate formerly representing Company
Common Stock as provided in Section 3.5.
(b) At the Effective Time, by virtue of the Merger and
without any action on the part of the holder thereof, each share of Company
Common Stock held by certain officers and key employees of the Company as set
forth on Schedule A hereto (each, a "Roll-Over Share") shall be converted into
the right to receive one share of Surviving Corporation Common Stock (the
"Roll-Over Share Consideration").
(c) All Treasury Securities shall, by virtue of the Merger
and without any action on the part of the holder thereof, automatically be
canceled and cease to exist at and after the Effective Time and no consideration
shall be paid with respect thereto.
(d) Immediately prior to the Effective Time, at Sub's
election, the Company shall effect a recapitalization, to be effective as of the
Effective Time, of the securities of the Surviving Corporation, and the number
of outstanding shares and options of the Surviving Corporation shall be
appropriately adjusted.
3.3. Options.
(a) Except as otherwise agreed to in writing between the
Company and the holder of any Option, and as consented to by Sub, immediately
prior to the Effective Time, each outstanding Option granted under the Stock
Option Plans whether or not then exercisable, shall be canceled by the Company,
and at the Effective Time, or as soon as practicable thereafter, the former
holder thereof shall be entitled to receive from the Company in consideration
for such cancellation an amount in cash equal to the product of (i) the number
of shares of Company Common Stock previously subject to such Option and (ii) the
excess, if any, of the Merger Consideration per share over the exercise price
per share, if any, previously subject to such Option, reduced by the amount of
withholding or other taxes required by law to be withheld.
(b) Except as provided herein or as otherwise agreed by the
parties, the Stock Option Plans and any 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, and the Company shall exercise its best efforts to ensure that
following the Effective Time, no current or former employee or director shall
have any Option to purchase shares of the Company Common Stock or any other
equity interest in the Company under any Stock Option Plan.
(c) Prior to the Effective Time, the Board of Directors (or,
if appropriate, any committee administering the Stock Option Plans) shall adopt
such resolutions or take such actions as
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are necessary, subject if necessary, to obtaining consents of the holders
thereof, to carry out the terms of this Section 3.3.
3.4. Warrants.
(a) Immediately prior to the Effective Time, each
outstanding Warrant granted under the Warrant Agreement whether or not then
exercisable, shall be canceled by the Company, and at the Effective Time or as
soon as practicable thereafter, the former holder thereof shall be entitled to
receive from the Company in consideration for such cancellation an amount in
cash equal to (i) the product of (A) the Merger Consideration, multiplied by (B)
the aggregate number of shares of Company Common Stock issuable upon exercise in
full of all Warrants held by such holder immediately prior to the Effective
Time, minus (ii) the aggregate cash exercise price payable upon exercise of all
Warrants held by such holder.
(b) The Warrant Agreement shall terminate as of the
Effective Time. Prior to the Effective Time, the Board of Directors shall adopt
such resolutions or take such actions as are necessary, subject if necessary, to
obtaining consents of the holders thereof, to carry out the terms of this
Section 3.4.
3.5. Exchange of Certificates.
(a) As of or promptly after the Effective Time, the Company
shall deposit with a paying agent to be selected by Sub (the "Paying Agent"), as
necessary, for the benefit of the holders of shares of Company Common Stock, for
payment in accordance with this Article III, the funds necessary to pay the
Merger Consideration for each share.
(b) As soon as practicable after the Effective Time, (i)
each holder of an outstanding certificate or certificates which pursuant to
Section 3.2 represent the right to receive shares of the Surviving Corporation,
upon surrender to the Paying Agent of such certificate or certificates and
acceptance thereof by the Paying Agent, shall be entitled to a certificate or
certificates representing the Roll-Over Share Consideration into which the
number of Roll-Over Shares previously represented by such certificate or
certificates surrendered shall have been converted pursuant to this Agreement
and (ii) each other holder of an outstanding certificate or certificates which
immediately prior to the Effective Time represented shares of the Company Common
Stock (other than Roll-Over Shares), upon surrender to the Paying Agent of such
certificate or certificates and acceptance thereof by the Paying Agent, shall be
entitled to receive in exchange therefor the Merger Consideration multiplied by
the number of shares of Company Common Stock formerly represented by such
certificate. No interest will be paid on or accrue on the Merger Consideration.
The Paying Agent shall accept such certificates upon compliance with such
reasonable terms and conditions as the Paying Agent may impose to effect an
orderly exchange thereof in accordance with customary exchange practices. After
the Effective Time, there shall be no further transfer on the records of the
Company or its transfer agent of certificates formerly representing shares of
Company Common Stock which have been converted, in whole or in part, pursuant to
this Agreement, into the right to receive cash, and if such certificates are
presented to the Company for transfer, they shall be canceled against delivery
of such cash. Until surrendered as contemplated by this Section 3.5(b), (i) each
certificate formerly representing Roll-Over Shares shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender a new certificate or certificates representing Surviving Corporation
Common Stock, as contemplated by Section 3.2(b), and (ii) each certificate
formerly representing shares of Company Common Stock (other than the Roll-Over
Shares) shall be deemed at any time after the Effective Time to represent only
the
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right to receive upon such surrender the Merger Consideration for each share
of Company Common Stock.
(c) No dividends or other distributions with respect to
Surviving Corporation Common Stock with a record date after the Effective Time
shall be paid to the holder of any certificate formerly representing shares of
Company Common Stock not surrendered with respect to the Roll-Over Shares
formerly represented thereby. Subject to applicable law, following surrender of
any such certificate, there shall be paid to the holder of the certificate or
certificates representing shares issued for the Roll-Over Share Consideration
without interest, at the appropriate payment date, the proportionate amount of
dividends or other distributions with a record date after the Effective Time but
prior to such surrender and a payment date subsequent to such surrender payable
with respect to such shares representing the Roll-Over Share Consideration.
(d) All cash paid upon the surrender for exchange of
certificates formerly representing shares of Company Common Stock in accordance
with the terms of this Article III shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares exchanged for cash
theretofore represented by such certificates.
(e) Any cash deposited with the Paying Agent pursuant to
this Section 3.5 (the "Exchange Fund") which remains undistributed to the
holders of the certificates formerly representing shares of Company Common Stock
one year after the Effective Time shall be delivered to the Surviving
Corporation at such time and any former holders of shares of Company Common
Stock (other than Roll-Over Shares) prior to the Merger who have not theretofore
complied with this Article III shall thereafter look only to the Surviving
Corporation and only as general unsecured creditors thereof for payment of their
claim for cash, if any.
(f) None of Sub, the Company or the Paying Agent shall be
liable to any person in respect of any cash from the Exchange Fund delivered to
a public office pursuant to any applicable abandoned property, escheat or
similar law. If any certificates representing shares of Company Common Stock
shall not have been surrendered prior to one year after the Effective Time (or
immediately prior to such earlier date on which any cash in respect of such
certificate would otherwise escheat to or become the property of any federal,
state, local, or municipal, foreign or other government or subdivision, branch,
department or agency thereof and any governmental or quasi-governmental
authority of any nature, including any court or other tribunal), any such cash
in respect of such certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
(g) In the event any certificate formerly representing
Company Common Stock shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such certificate to be lost,
stolen or destroyed and, if required by Surviving Corporation, the posting by
such person of a bond in such reasonable amount as Surviving Corporation may
direct as indemnity against any claim that may be made against it with respect
to such certificate, the Paying Agent will issue in exchange for such lost,
stolen or destroyed certificate the shares representing the Roll-Over Share
Consideration, and unpaid dividends and distributions on shares representing the
Roll-Over Share Consideration deliverable in respect thereof pursuant to this
Agreement, or the Merger Consideration, as the case may be.
3.6. Dissenting Shares. Notwithstanding Section 3.2 hereof,
Dissenting Shares shall not be converted into a right to receive the Merger
Consideration. The holders thereof shall be entitled
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only to such rights as are granted by Section 262 of the DGCL. Each holder of
Dissenting Shares who becomes entitled to payment for such shares pursuant to
Section 262 of the DGCL shall receive payment therefor from the Surviving
Corporation in accordance with the DGCL; provided, however, that (i) if any such
holder of Dissenting Shares shall have failed to establish his entitlement to
appraisal rights as provided in Section 262 of the DGCL, (ii) if any such holder
of Dissenting Shares shall have effectively withdrawn his demand for appraisal
of such shares or lost his right to appraisal and payment for his shares under
Section 262 of the DGCL, or (iii) if neither any holder of Dissenting Shares nor
the Surviving Corporation shall have filed a petition demanding a determination
of the value of all Dissenting Shares within the time provided in Section 262 of
the DGCL, such holder shall forfeit the right to appraisal of such shares and
each such share shall be treated as if it had been converted, as of the
Effective Time, into a right to receive the Merger Consideration, without
interest thereon, from the Surviving Corporation as provided in Section 3.2
hereof. The Company shall give Sub prompt notice of any demands received by the
Company for appraisal of shares, and Sub shall have the right to participate in
all negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Sub, make any payment with respect
to, or settle or offer to settle, any such demands.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Sub to enter into this Agreement, the Company
hereby makes, as of the date hereof and as of the Closing Date, the following
representations and warranties to Sub, except as otherwise set forth in a
written disclosure schedule (the "Disclosure Schedule") delivered by the Company
to Sub prior to the date hereof, a copy of which is attached hereto. Unless
otherwise specified, (1) each reference in this Agreement to any numbered
schedule is a reference to that numbered schedule which is included in the
Disclosure Schedule and (2) no disclosure made in any particular numbered
schedule of the Disclosure Schedule shall be deemed made in any other numbered
schedule of the Disclosure Schedule unless expressly made therein (by
cross-reference or otherwise) or unless, and only to the extent that, it is
apparent on the face of such disclosure that such disclosure contains
information which also modifies another representation and warranty therein.
4.1. Organization and Capitalization.
(a) Organization. The Company is duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to conduct its business as it is presently
being conducted and to own and lease its Assets. The Company is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is necessary under applicable law
except where the failure to be so qualified and in good standing would not
reasonably be expected to have a Material Adverse Effect on the Company. The
Company has delivered to Sub true, correct and complete copies of its
certificate of incorporation and by-laws (in each case, as amended to date). The
Company is not in default under or in violation of any provision of its
certificate of incorporation or by-laws.
(b) Capitalization. The authorized capital stock of the
Company consists of 12,000,000 shares of Company Common Stock. As of June 23,
1998, there were 7,721,989 shares of Company Common Stock issued and
outstanding. Since such date, no additional shares of capital stock of the
Company have been issued, except shares of Company Common Stock issued upon the
exercise of
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Options outstanding under any Stock Option Plan. As of June 23, 1998, options to
acquire 444,675 shares of Company Common Stock pursuant to the Stock Option
Plans were outstanding. Schedule 4.1(b) includes a complete and correct list of
outstanding Options under such Stock Option Plans (including the number of
Options and exercise price of each such Option) held by each employee or
director. As of June 23, 1998, warrants to acquire 12,121 shares of Company
Common Stock pursuant to the Warrant Agreement were outstanding. Schedule 4.1(b)
includes a complete and correct list of outstanding Warrants under such Warrant
Agreement. The Company has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter. All issued and outstanding shares
of Company Common Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. After the Effective Time, the
Surviving Corporation will have no obligation to issue, transfer or sell any
shares of capital stock or other securities of the Company or the Surviving
Corporation. Schedule 4.1(b) sets forth the total amount of indebtedness for
borrowed money and the total amount of cash on hand of the Company and its
Subsidiaries on a consolidated basis as of June 23, 1998. Except as provided in
Schedule 4.1(b), all such indebtedness is prepayable without more than two
business days notice and without the payment of any penalty. Except as set forth
in this Section 4.1(b), there are no (i) outstanding Equity Securities of the
Company or (ii) commitments or obligations of any kind or character for (A) the
issuance of Equity Securities of the Company or (B) the repurchase, redemption
or other acquisition of any Equity Securities of the Company.
(c) Voting Trusts, Proxies, Etc. There are no stockholder
agreements, voting trusts, proxies or other agreements or understandings with
respect to or concerning the purchase, sale or voting of the Equity Securities
of the Company.
4.2. Authorization. The Company has all necessary corporate power
and authority to execute and deliver this Agreement and all agreements and
documents contemplated hereby. Subject only to the approval of this Agreement
and the transactions contemplated hereby by the majority of all the votes
entitled to be cast on the Merger by the holders of the Company Common Stock,
the consummation by the Company of the transactions contemplated hereby has been
duly authorized by all requisite corporate action. This Agreement has been duly
authorized, executed and delivered by the Company and is a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as the enforceability thereof may be limited by (a)
applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or similar laws in effect which affect the enforcement of creditors'
rights generally or (b) general principles of equity, whether considered in a
proceeding at law or in equity.
4.3. Subsidiaries.
(a) Ownership; Capitalization. The Company owns, directly or
indirectly, each of the outstanding capital stock (or other ownership interests)
of each of the Company's Subsidiaries as set forth on Schedule 4.3(a), and the
Company has no investments (whether through the acquisition of an equity
interest, the making of a loan or advance or otherwise) in any other person,
corporation, partnership, joint venture, business, or trust or entity. The
Company is the beneficial owner of all of the outstanding shares of capital
stock of each Subsidiary, free and clear of any and all Encumbrances. The
authorized, issued and outstanding capital stock, and the record ownership of
all such shares of capital stock, of each Subsidiary is as set forth on part (a)
of Schedule 4.3. All of the shares of capital stock of each Subsidiary have been
duly authorized and validly issued and are fully paid and non-assessable, were
issued and sold in accordance with federal and applicable state securities laws
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and were not issued in violation of any preemptive or other similar rights.
Except as set forth in this Section 4.3(a), there are no (i) outstanding Equity
Securities of its Subsidiaries or (ii) commitments or obligations of any kind or
character for (A) the issuance of Equity Securities of its Subsidiaries or (B)
the repurchase, redemption or other acquisition of any Equity Securities of its
Subsidiaries. There are no stockholder agreements, voting trusts, proxies or
other agreements or understandings with respect to or concerning the purchase,
sale or voting of the Equity Securities of its Subsidiaries.
(b) Organization. Each of the Company's Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has full corporate power and authority to
conduct its business as it is presently being conducted and to own and lease its
Assets. Each of the Company's Subsidiaries is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which such
qualification is necessary under applicable law except whether the failure to be
so qualified and in good standing would not reasonably be expected to have a
Material Adverse Effect on the Company. The Company has delivered to Sub true,
correct and complete copies of each of its Subsidiaries' certificate of
incorporation and by-laws (in each case, as amended to date). None of the
Company's Subsidiaries is in default under or in violation of any provision of
its certificate of incorporation or by-laws.
4.4. Absence of Certain Changes or Events. Since March 31, 1998,
(x) the Company and its Subsidiaries have been operated in the ordinary course
of business, consistent with past practice, (iii) there has been no Material
Adverse Change in or with respect to the Company or its Subsidiaries and (z) to
the best knowledge of the Company, (i) there has been no threatened Material
Adverse Change, and (ii) no events or developments have occurred that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Change, with respect to the Company. Without limiting the
generality of the foregoing, since March 31, 1998, neither the Company nor its
Subsidiaries has (i) taken any action of the type contemplated by Section 6.1(c)
and (f) - (p) hereof or (ii) failed to take any action of the type contemplated
by Section 6.1(a) and (b) hereof.
4.5. Title to Assets; Absence of Liens and Encumbrances, etc.
(a) General. Each of the Company and its Subsidiaries owns
or leases all Assets necessary for the conduct of its business as presently
conducted, and the Assets in the aggregate are in such operating condition and
repair (subject to normal wear and tear) as is necessary for the conduct of its
business as presently conducted.
(b) Real Property
(i) Owned Real Property. Schedule 4.5(b) hereto sets forth
all Facilities owned by the Company and its Subsidiaries. With respect to each
parcel of owned real property (A) the Company or its Subsidiaries has good and
marketable fee simple title to such parcel of real property, free and clear of
any and all Encumbrances other than Permitted Encumbrances, (B) there are no
leases, subleases, licenses, options, rights, concessions or other agreements,
written or oral, granting to any party or parties the right of use or occupancy
of any portion of such parcel of real property, (C) there are no outstanding
options or rights of first refusal in favor of any other party to purchase any
such parcel of real property or any portion thereof or interest therein, (D)
there are no parties (other than the Company and its Subsidiaries) who are in
possession of or who are using any such parcel of real property and (E) there is
no (1) pending or, to the best knowledge of the Company, threatened condemnation
proceeding relating to such parcel of real property (2) pending or, to the best
knowledge of the Company, threatened Action
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relating to such parcel of real property, or (3) other matter affecting the
current or currently proposed use, occupancy or value of, such parcel of real
property in any material respect.
(ii) Leased Real Property. Schedule 4.5 sets forth all
leases pursuant to which Facilities are leased by the Company or its
Subsidiaries (as lessee), true and correct copies of which have been delivered
to Sub. Schedule 4.5(b) indicates with respect to each such Lease a general
description of the leased items, term, annual rent, renewal options and number
of square feet leased, as applicable. Such leases constitute all leases,
subleases or other occupancy agreements pursuant to which the Company or its
Subsidiaries occupies or uses Facilities. The Company and its Subsidiaries have
good and valid leasehold title to, and enjoy peaceful and undisturbed possession
of, all leased property described in such leases (the "Leased Property"), free
and clear of any and all Encumbrances other than any Permitted Encumbrances
which would not permit the termination of the Lease therefor by the lessor. With
respect to each such parcel of Leased Property (A) there are no pending or, to
the best knowledge of the Company, threatened condemnation proceedings relating
to, or any pending or, to the best knowledge of the Company, threatened Actions
relating to, such Leased Property or any portion thereof, (B) none of the
Company or its Subsidiaries or, to the best knowledge of the Company, any third
party has entered into any sublease, license, option, right, concession or other
agreement or arrangement, written or oral, granting to any person the right to
use or occupy such Leased Property or any portion thereof or interest therein
and (C) neither the Company nor its Subsidiaries have received notice of any
pending or threatened special assessment relating to such Leased Property or
otherwise have any knowledge of any pending or threatened special assessment
relating thereto. Each leased Facility is supplied with utilities necessary for
the operation of such Facility.
(c) Personal Property. Schedule 4.5(c) identifies all
Fixtures and Equipment, vehicles and other similar tangible personal property
Assets with a book value or replacement cost of at least $50,000 owned or leased
by the Company or its Subsidiaries as of June 23, 1998.
(i) Owned Personal Property. Each of the Company and its
Subsidiaries has good and marketable title to all such personal property owned
by it, free and clear of any and all Encumbrances other than Permitted
Encumbrances. With respect to each such items of personal property (A) there are
no leases, subleases, licenses, options, rights, concessions or other
agreements, written or oral, granting to any party or parties the right of use
of any portion of such item of personal property, (B) there are no outstanding
options or rights of first refusal in favor of any other party to purchase any
such item of personal property or any portion thereof or interest therein and
(C) there are no parties (other than the Company and its Subsidiaries) who are
in possession of or who are using any such item of personal property;
(ii) Leased Personal Property. Each of the Company and its
Subsidiaries has good and valid leasehold title to all of such Fixtures and
Equipment, vehicles and other tangible personal property Assets leased by it
from third parties, free and clear of any and all Encumbrances other than
Permitted Encumbrances which would not permit the termination of the lease
therefor by the lessor. Schedule 4.5(c) sets forth all Leases for personal
property involving annual payments in excess of $50,000 and includes a general
description of the leased items, term and annual rent, true and correct copies
of which have been delivered or made available to Sub.
(d) With respect to each Lease listed on Schedule 4.5(b) and
Schedule 4.5(c) and each Lease for tractors and trailers, (A) there has been no
material default under any such Lease by the Company or its Subsidiaries, to the
best knowledge of the Company, by any other party, (B) such
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Lease is a valid and binding obligation of the Company and/or its Subsidiaries,
is in full force and effect with respect to the Company and/or its Subsidiaries
and is enforceable against the Company and/or its Subsidiaries in accordance
with its terms, except as the enforceability thereof may be limited by (1)
applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or similar laws in effect which affect the enforcement of creditors'
rights generally or (2) general principles of equity, whether considered in a
proceeding at law or in equity, and (C) no action has been taken by the Company
and no event has occurred which, with notice or lapse of time or both, would
permit termination, modification or acceleration by a party thereto other than
the Company and/or its Subsidiaries, without the consent of the Company and/or
its Subsidiaries, under any such Lease that is material to the Company and/or
its Subsidiaries.
4.6. Contracts and Commitments.
(a) Schedule 4.6 sets forth a complete and accurate list of
all Contracts in the following categories as of the date hereof (except to the
extent that any such category specifies a different date, in which case such
corresponding list is made as of such specified date):
(i) each Contract (or group of related Contracts) for the
furnishing of services by the Company and/or its Subsidiaries involving annual
revenues of more than $100,000 to the Company and its Subsidiaries;
(ii) each Contract (or group of related Contracts)
concerning a partnership or joint venture with, or any other investment in
(whether through the acquisition of an equity interest, the making of a loan or
advance or otherwise), any other person;
(iii) each Contract (or group of related Contracts) (A)
under which the Company or its Subsidiaries has created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) indebtedness for borrowed
money, (B) constituting capital lease obligations, (C) under which the Company
or its Subsidiaries has granted (or may grant) a security interest or lien on
any of the Assets or (D) under which the Company or its Subsidiaries has
incurred any obligations for any performance bonds, payment bonds, bid bonds,
surety bonds, letters of credit, guarantees or similar instruments;
(iv) each Contract (or group of related Contracts) with any
of the Personnel, any Affiliate of the Company or any member of any such
person's immediate family, including, without limitation, Contracts (A) to
employ or terminate executive officers or other Personnel and other Contracts
with present or former officers, directors or stockholders or other corporate
Personnel or (B) that will result in the payment by, or the creation of any
commitment or obligation (absolute or contingent, matured or unmatured) to pay
on behalf of the Company or its Subsidiaries or any Affiliate of the Company or
its Subsidiaries, any severance, termination, "golden parachute" or other
similar payments to any present or former Personnel following termination of
employment or otherwise as a result of the consummation of the transactions
contemplated hereby;
(v) each Contract (or group of related Contracts), other
than Contracts covered by clause (vii) of this Section 4.6, providing for
payments in excess of $100,000 over the life of such Contract (or group of
related Contracts), except for such Contracts that are cancelable on not more
than 30 days' notice by the Company or its Subsidiaries without penalty or
increased cost;
(vi) each distribution, franchise, license, sales,
commission, consulting agency or advertising Contract related to the Assets or
the business, except for such Contracts that are
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cancelable on not more than 30 days' notice by the Company or its Subsidiaries
without penalty or increased cost;
(vii) each Contract (or group of related Contracts)
containing covenants restraining or limiting the freedom of the Company or its
Subsidiaries or any officer, director, stockholder or Affiliate thereof to
engage in any line of business or compete with any person including, without
limitation, by restraining or limiting the right to solicit customers;
(viii) each Contract (or group of related Contracts) with
the United States, state or local government or any agency or department
thereof;
(ix) each Contract (or group of related Contracts) relating
to the arrangements (A) between the Company or its Subsidiaries, on the one
hand, and Servicio de Transportacion Jaguar, S.A. de C.V. ("Jaguar") and the
persons owning any Equity Interest in Jaguar, on the other hand and (B) the
Company or its Subsidiaries, on the one hand, and Servicio Corporativos, S.A. de
C.V. ("Servicios") and the persons owning any Equity Interest in Servicios, on
the other hand;
(x) each Contract (or group of related Contracts) pursuant
to which the Company or its Subsidiaries have sold any Assets and have created
any obligation to indemnify anyone with respect thereto; and
(xi) any other material Contract.
The Company and its Subsidiaries have delivered to Sub a true and
correct copy of each written Contract listed in Schedule 4.6 and has included as
part of Schedule 4.6 a brief summary of the material terms of each oral
Contract.
(b) Absence of Breaches or Defaults in General. With respect
to each Contract set forth on or described in Schedule 4.6, (i) there is no
material default by the Company or its Subsidiaries or, to the knowledge of the
Company, any other party to any Contract, (ii) the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby will not cause a material default hereunder or
thereunder; (iii) such Contract is a legal, valid and binding obligation of the
Company or its Subsidiaries party thereto, is in full force and effect and is
enforceable against the Company or its Subsidiaries and, to the knowledge of the
Company, against each other party thereto in accordance with its terms, except
as the enforceability thereof may be limited by (A) applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance or similar laws in
effect which affect the enforcement of creditors' rights generally or (B)
general principles of equity, whether considered in a proceeding at law or in
equity; and (iv) no action has been taken by the Company or its Subsidiaries and
no event has occurred which, with notice or lapse of time or both and/or the
occurrence, nonoccurrence, or existence or nonexistence of any other event or
condition would permit termination, modification or acceleration by a party
thereto other than the Company or its Subsidiaries under any such Contract.
4.7. Permits. The Company and its Subsidiaries have all material
Permits required to own and lease their properties, the Assets and the
Facilities and to conduct their business as currently being conducted. All such
Permits are valid and in full force and effect and are listed on Schedule 4.7.
The Company and its Subsidiaries have not violated any such Permits in any
material respect, and each is in compliance with all such Permits in all
material respects. Neither the Company nor its Subsidiaries has received any
notice to the effect that, or otherwise has any knowledge that, (a) the Company
and its
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Subsidiaries are not currently in compliance with, or are in violation of, any
such Permits in any material respect or (b) any currently existing circumstances
are likely to result in a failure of the Company and its Subsidiaries to comply
with, or in a violation by the Company and its Subsidiaries of, any such Permits
in any material respect. No representation or warranty is made in this Section
4.7 with respect to the matters covered in Section 4.21 (Compliance with
Environmental Laws).
4.8. No Conflict or Violation. Neither the execution, delivery
and performance of this Agreement, nor the consummation of the transactions
contemplated hereby, by the Company or its Subsidiaries will result in (a) a
violation of or a conflict with any provision of the certificate of
incorporation or by-laws of the Company or its Subsidiaries, (b) a breach of, or
a default under, or the creation of any right of any party to accelerate,
terminate or cancel pursuant to (including, without limitation, by reason of the
failure to obtain a consent or approval under any such Contract), any term or
provision of any Contract, indebtedness, Lease, Encumbrance, Permit,
authorization or concession to which the Company or its Subsidiaries is a party
or by which any of the Assets are bound, (c) a violation by the Company or its
Subsidiaries of any statute, rule, regulation, ordinance, code, order, judgment,
writ, injunction, decree or award applicable to the Company or its Subsidiaries,
(d) an impairment of any right of the Company or its Subsidiaries under any
Contract to which it is a party or by which its Assets are bound or under any
Permit relating to the operation of its business, or (e) an imposition of any
Encumbrance (other than Permitted Encumbrances), restriction or charge on the
business of the Company or its Subsidiaries or on any of the Assets, except in
the case of clauses (b), (d) and (e), where such breach, default, creation of
any right, impairment or imposition would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
4.9. Consents and Approvals. No consent, waiver, agreement,
approval, Permit or authorization of, or declaration, filing, notice or
registration to or with, any federal, state, local or foreign governmental or
regulatory authority or body or other person or entity is required to be made or
obtained by the Company or its Subsidiaries in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby other than (a) filings required in connection
with or in compliance with the provisions of the HSR Act, the Securities Act,
the Exchange Act or applicable state securities and "Blue Sky" laws
(collectively, the "Regulatory Filings"), (b) the filing of the Merger
Certificate under the DGCL, or (c) those consents, waivers, agreements,
approvals, authorizations, declarations, filings, notices or registrations, that
have been, or will be prior to the Closing Date, obtained or made, as set forth
on Schedule 4.9.
4.10. SEC Documents; Financial Statements, etc. The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since June 30, 1994 through the date of this Agreement (collectively, the
"Company Reports"). As of their respective dates, the Company Reports (i)
complied in all material respects with the applicable requirements of the
Securities Act, the Exchange Act, and the rules and regulations thereunder and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in or
incorporated by reference in the Company Reports (the "Financial Statements")
(i) comply as to form in all material respects with applicable accounts
requirements and the published rules and regulations of the SEC with respect
thereto; (ii) have been prepared in accordance with GAAP, consistently applied
throughout the periods covered thereby, and sound bookkeeping practices and
(iii) present fairly in accordance with GAAP, consistently applied throughout
the periods covered, the financial condition of the Company and its Subsidiaries
as of the respective dates thereof and the results of operations, stockholders'
equity and cash flows for the periods covered thereby. The accounting and
financial records of the Company and its
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Subsidiaries have been prepared and maintained in accordance with GAAP,
consistently applied throughout the periods indicated, and sound bookkeeping
practices.
4.11. Undisclosed Liabilities. Neither the Company nor its
Subsidiaries has any liabilities, obligations or commitments of any nature
(whether direct or indirect, known or unknown, absolute or contingent,
liquidated or unliquidated, due or to become due, accrued or unaccrued, matured
or unmatured) and, to the knowledge of the Company, there is no basis for any
present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand against the Company or its Subsidiaries giving
rise to any such liability, other than (a) liabilities which are reflected and
reserved against on the most recent balance sheet contained in the Financial
Statements (including, without limitation, in the notes thereto) which have not
been paid or discharged since the date thereof, (b) liabilities which arose
prior to the date of the most recent balance sheet contained in the Financial
Statements and not required under GAAP to be reflected thereon, (c) liabilities
and obligations disclosed on the Disclosure Schedule and liabilities and
obligations which are not required to be disclosed on the Disclosure Schedule
and (d) liabilities incurred since March 31, 1998 in the ordinary course of
business, consistent with past practice (none of which liabilities incurred
since March 31, 1998 relates to any material breach of Contract, breach of
warranty, tort, infringement or violation of law or which arose out of any
Action). None of the liabilities described in clauses (b), (c) and (d) of the
preceding sentence has or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company.
4.12. Litigation. Except as set forth on Schedule 4.12 and other
than Actions which are reflected and reserved against on the face of the most
recent balance sheet contained in the Financial Statements (including, without
limitation, in the notes thereto), there are no outstanding actions, orders,
writs, injunctions, judgments or decrees or any claims, suits, charges,
proceedings, labor disputes, arbitrations, governmental audits or investigations
(collectively, "Actions") pending or, to the knowledge of the Company and its
Subsidiaries, threatened or anticipated, (a) against, related to or affecting
(i) the Company and its Subsidiaries, their business or operations or the
Assets, (ii) any officers or directors of the Company and its Subsidiaries, as
such, (iii) any stockholder of the Company and its Subsidiaries, as such, or
(iv) other than routine claims for benefits, any Employee Plan of the Company
and its Subsidiaries or any trust or funding instrument, fiduciary or
administrator thereof; (b) relating to the transactions contemplated hereby; or
(c) in which Company or its Subsidiaries is a plaintiff, including, without
limitation, any derivative suits brought by or on behalf of the Company or its
Subsidiaries, except for those Actions under clauses (a), (b) or (c) that would
not have, individually or in the aggregate, a Material Adverse Effect on the
Company.
4.13. Labor Matters. Neither the Company nor its Subsidiaries is
a party to, or a participant in any negotiation of, any labor agreement with
respect to any of their employees with any labor organization, union, group or
association and there are no employee unions (nor any other similar labor or
employee organizations) under local statutes, custom or practice. In the past
five years, neither the Company nor its Subsidiaries has been approached by
organized labor or its representatives making an effort to cause the Company or
its Subsidiaries to conform to demands of organized labor relating to any of
their employees or to enter into a binding agreement with organized labor that
would cover any of their employees. There is no labor strike, slow-down or other
work stoppage or labor disturbance pending or, to the knowledge of the Company,
threatened against the Company or its Subsidiaries nor is any grievance
currently being asserted, and in the past five years the Company and its
Subsidiaries have not experienced a strike, slow-down or other work stoppage or
other labor disturbance or difficulty. The Company and its Subsidiaries are in
compliance in all material respects with all applicable laws respecting
employment practices, employee documentation, terms and conditions of employment
and
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wages and hours and are not and have not engaged in any unfair labor practice.
There is no unfair labor practice charge or complaint against the Company and
its Subsidiaries pending before or, to the knowledge of the Company, threatened
by the National Labor Relations Board or any other domestic or foreign
governmental agency arising out of the conduct of their businesses, and, to the
knowledge of the Company, there are no facts or information which would give
rise thereto, and in the past five years there have not been any unfair labor
practice charges or complaints against the Company or its Subsidiaries which
could have a Material Adverse Effect on the Company.
4.14. Compliance with Law. The Company and its Subsidiaries have
not violated and are in compliance with (a) all applicable laws, statutes,
ordinances, regulations, rules and orders of every federal, state, local or
foreign government and every federal, state, local or foreign court or other
governmental or regulatory agency, department, authority, body or
instrumentality and (b) any judgment, decision, decree or order of any court or
governmental or regulatory agency, department, authority, body or
instrumentality (collectively, "Laws"), relating to the Assets, business or
operations of the Company or its Subsidiaries, except to the extent that any
such violation or failure to comply is not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on the Company. Neither the
Company nor its Subsidiaries has received any written notice to the effect that,
or otherwise has any knowledge that, (i) the Company is not currently in
compliance with, or is in violation of, any applicable Laws or (ii) any
currently existing circumstances are likely to result in a failure of the
Company to comply with, or a violation by the Company of, any Laws, in either
case which such failure to comply or violation would be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on the
Company. No representation or warranty is made in this Section 4.14 with respect
to compliance with Laws relating to the matters covered in Sections 4.13 (Labor
Matters), 4.17 (Employee Plans), 4.18 (Tax Matters) and 4.21 (Compliance with
Environmental Laws).
4.15. No Brokers. Other than Wasserstein Perella & Co., the
arrangements with which have been disclosed in writing to Sub prior to the date
hereof, none of the Company, its Subsidiaries or any of their officers,
directors, employees, stockholders or other Affiliates has employed or made any
agreement with any broker, finder or similar agent or any person or firm to pay
any finder's fee, brokerage fee or commission or similar payment in connection
with the transactions contemplated hereby.
4.16. Proprietary Rights. Schedule 4.16 lists all federal, state
and foreign registrations of patents, trademarks, trade names, servicemarks or
other trade rights and copyrights and all pending applications for any such
registrations that are owned by the Company or its Subsidiaries, or that are
being or have been used in connection with, or relate to, the Assets, the
business or operations, products or processes of the Company or its Subsidiaries
(whether or not presently used in connection with the Assets, business or
operations of the Company or its Subsidiaries) or in which the Company or its
Subsidiaries have any interest (collectively, the "Proprietary Rights"). No
person has a right to receive a royalty or similar payment in respect of any
Proprietary Rights whether or not pursuant to any contractual arrangements
entered into by the Company or its Subsidiaries. Neither the Company nor its
Subsidiaries has any licenses granted, sold or otherwise transferred by or to it
or other agreements to which it is a party, relating in whole or in part to any
of the Proprietary Rights. Each of the Company and its Subsidiaries owns, or
possesses valid and enforceable licenses or other rights to use, all Proprietary
Rights used in or necessary for its business as it is currently conducted, and
such ownership and licenses will not cease to be valid and in full force and
effect by reason of the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby, except where the
failure to own or possess such licenses or rights would not be reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
the Company. No other firm, corporation,
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association or person (a) has notified the Company or its Subsidiaries that it
is claiming any ownership of or right to use such Proprietary Rights or (b) to
the best of the Company's and its Subsidiaries' knowledge, has interfered with,
infringed upon or otherwise come into conflict with any such Proprietary Rights
in any material respect.
4.17. Employee Plans.
(a) Schedule 4.17 contains a complete list of Employee
Plans. With respect to each such Employee Plan, the Company has provided to Sub
true and complete copies of (i) all plan documents and related trust agreements,
annuity contracts or other funding instruments, (ii) all summary plan
descriptions, summary of material modifications, all material employee
communications, the number of and a general description of the level of
employees covered by each Benefit Arrangement and a complete description of any
Employee Plan which is not in writing, (iii) the most recent determination
letter issued by the Internal Revenue Service and any opinion letter issued by
the Department of Labor with respect to each Pension Plan and each voluntary
employees' beneficiary association as defined under Section 501(c)(9) of the
Code (other than a Multiemployer Plan), (iv) for the three most recent plan
years, the Internal Revenue Service Form 5500 including all schedules and
attachments thereto for each Pension Plan and Welfare Plan, (v) all actuarial
reports prepared for the last three plan years for each Pension Plan, and (vi) a
description setting forth the amount of any liability of the Company and its
Subsidiaries as of the Closing Date for payments more than thirty (30) calendar
days past due with respect to any Welfare Plan.
(b) (i) Each Employee Plan including any related trust
agreement, annuity contract or other funding instrument is legal, valid and
binding and in full force and effect. (ii)Each Pension Plan and each related
trust agreement, annuity contract or other funding instrument which has been
operated as a qualified plan has received a favorable determination letter from
the Internal Revenue Service stating that such Pension Plan and each related
trust is qualified and tax-exempt under the provisions of Code Sections 401(a)
and 501(a) and has been so qualified during the period from its adoption to the
date of such determination letter. (iii) Each Employee Plan is subject only to
the laws of the United States or a political subdivision thereof. (iv) Each
Employee Plan has been maintained in compliance in all material respect to its
terms and operation, with the requirements prescribed by any and all statutes,
orders, rules and regulations which are applicable to such Employment Plan,
including, without limitation, ERISA and the Code. (v)Except as provided by law
or in any employment agreement set forth on Schedule 4.17, the employment of all
persons presently employed or retained by the Company or its Subsidiaries is
terminable at will.
(c) (i) None of the Employee Plans is a plan that is or has
ever been subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of
the Code. (ii) None of the Employee Plans is a plan or arrangement described
under Section 4(b)(5) or 401(a)(1) of ERISA, or a plan maintained in connection
with a trust described in Section 501(c)(9) of the Code. (iii) Neither the
Company nor any ERISA affiliate has, at any time, maintained, contributed to or
had any obligation to maintain or contribute to any Multiemployer Plan.
(d) (i) Neither the Company nor any ERISA Affiliate has
engaged in, or is a successor or parent corporation to an entity that has
engaged in, a transaction described in Section 4212(c) of ERISA. (ii) None of
the Company, or its Subsidiaries or any plan fiduciary of any Employee Plan has
engaged in, or has any liability in respect of, any transaction in violation of
Sections 404 or 406 of ERISA or any "prohibited transaction," as defined in
Section 4975(c)(1) of the Code, for which no exemption exists under Section 408
of ERISA or Section 4975(c)(2) or (d) of the Code, or has otherwise
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materially violated or participated in a violation of the provisions of Part 4
of Title I, Subtitle B of ERISA. (iii)The Company and its Subsidiaries have not
been assessed any civil penalty under Section 502(l) of ERISA. (iv)No Employee
Plan (or trust or other funding vehicle pursuant thereto) has incurred any
liability under Code Section 511.
(e) Except as required by Section 4980B of the Code or Part
6 of Title 1, Subtitle B of ERISA, neither the Company nor any ERISA Affiliate
or any Welfare Plan has any present or future obligation to make any payment to,
or with respect to any present or former employee of the Company or any ERISA
Affiliate pursuant to any retiree medical benefit plan, or other retiree Welfare
Plan, and no condition exists which would prevent the Company or an ERISA
affiliate from amending or terminating any such benefit plan or such Welfare
Plan.
(f) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Company or its Subsidiaries
that, individually or collectively, requires the payment by the Company or its
Subsidiaries of any amount (i) that is not deductible under Section 162(a)(1) or
404 of the Code or (ii) that is an "excess parachute payment" pursuant to
Section 280G of the Code.
(g) Neither the Company nor any ERISA Affiliate has
announced to employees, former employees or directors an intention to create, or
has otherwise created, a legally binding commitment to adopt any additional
Employee Plans which are intended to cover employees or former employees of the
Company or any subsidiary or to amend or modify any existing Employee Plan which
covers or has covered employees or former employees of the Company or any
subsidiary.
(h) Neither the Company nor any Employee Plan holds as an
asset any interest in any annuity contract, guaranteed investment contract or
any other investment or insurance contract issued by an insurance company that
is the subject of bankruptcy, conservatorship or rehabilitation proceedings. The
insurance policies or other funding instruments, if any, for each Welfare Plan
provide coverage for each employee, consultant, independent contractor or
retiree of the Company or its Subsidiaries (and, if applicable, their respective
dependents) who has been advised by the Company or its Subsidiaries, whether
through an Employee Plan or otherwise, that he or she is covered by such Welfare
Plan.
(i) Neither the execution and delivery of this Agreement or
other related agreements by the Company nor the consummation of the transactions
contemplated hereby or the related transactions will result in the acceleration
or creation of any rights of any person to benefits under any Employee Plan
(including, without limitation, the acceleration of the vesting or
exercisability of any share options, the acceleration of the vesting of any
restricted stock, the acceleration of the accrual or vesting of any benefits
under any Pension Plan or the acceleration or creation of any rights under any
severance, parachute or change in control agreement).
(j) No event has occurred in connection with which the
Company or any Employee Plan, directly or indirectly, could be subject to any
material liability (A) under any statute, regulation or governmental order
relating to any Employee Plan or (B) pursuant to any obligation of the Company
to indemnify any person against liability incurred under any such statute,
regulation or order as they relate to the Employee Plans.
(k) The Company is not a party to any severance or similar
arrangement in respect of any of the Personnel that will result in any
obligation (absolute or contingent) of the Company
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or Sub after the Closing to make any payment to any of such Personnel following
termination of employment.
4.18. Tax Matters.
(a) Filing of Tax Returns. The Company and its Subsidiaries
have timely filed with the appropriate taxing authorities all Returns
(including, without limitation, information returns and other material
information) in respect of Taxes required to be filed through the date hereof
and will timely file any such returns required to be filed on or prior to the
Closing Date. All Returns and other information filed are complete and accurate
in all material respects. The Company and its Subsidiaries have not requested
any extension of time within which to file Returns (including, without
limitation, information Returns) in respect of any Taxes. The Company and its
Subsidiaries have delivered to Sub complete and accurate copies of the federal,
state and local income tax Returns for the years 1995, 1996 and 1997.
(b) Payment of Taxes. All Taxes for which the Company and
its Subsidiaries are or may be liable, in respect of periods (or portions
thereof) ending on or before the Closing Date, have been timely paid, or an
adequate reserve (in conformity with GAAP) has been established therefor, as set
forth in the Financial Statements. There are no Taxes for which the Company and
its Subsidiaries are or may become liable that will apply in a period or a
portion thereof beginning on or after the Closing Date and that are attributable
to income earned or activities of the Company and its Subsidiaries occurring
before the Closing Date.
(c) Audits, Investigations or Claims. No deficiencies for
Taxes have been claimed, proposed or assessed in writing by any taxing or other
governmental authority against the Company or its Subsidiaries which have not
been paid or reserved on the Financial Statements. There are no pending or, to
the Company's knowledge, threatened audits, investigations or claims for or
relating to any liability in respect of Taxes that in the reasonable judgment of
the Company or its counsel are likely to result in an additional amount of
Taxes, and there is no matter under discussion with any taxing or other
governmental authority with respect to Taxes that in the reasonable judgment of
the Company or its counsel is likely to result in an additional liability for
Taxes with respect to the Company or its Subsidiaries. Audits of federal, state,
and local returns for Taxes by the relevant taxing or other governmental
authorities have been completed for the periods set forth on Schedule 4.18(c)
and none of the Company or its Subsidiaries has been notified that any taxing or
other governmental authority intends to audit any other Return for any period.
No extension of any statute of limitations relating to Taxes is in effect with
respect to the Company or its Subsidiaries. No power of attorney has been
executed by the Company or its Subsidiaries with respect to any matters relating
to Taxes which is currently in force.
(d) Liens. There are no liens for Taxes (other than for
current Taxes not yet due and payable) on the Assets.
(e) Safe Harbor Lease Property. None of the Assets is
property that is required to be treated as being owned by any other person
pursuant to the so-called safe harbor lease provisions of former Section
168(f)(8) of the Code.
(f) Security for Tax-Exempt Obligations. None of the Assets
directly or indirectly secures any debt the interest on which is tax-exempt
under Section 103(a) of the Code.
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(g) Tax-Exempt Use Property. None of the Assets is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(h) No Withholding. The transaction contemplated herein is
not subject to the tax withholding provisions of Section 3406 of the Code, of
Subchapter A of Chapter 3 of the Code or of any other provision of law.
(i) Tax Election. All material elections with respect to
Taxes affecting the Company or its Subsidiaries as of the date hereof are set
forth on Schedule 4.18(i). Neither the Company nor its Subsidiaries has
consented at any time under Section 341(f)(1) of the Code to have the provisions
of Section 341(f)(2) of the Code (or similar provisions under state or local
law) apply to any disposition of the Assets. The Company and its Subsidiaries
have not agreed to make, or are not required to make, any adjustment under
Section 481(a) of the Code (or similar provisions under state or local law) by
reason of a change in accounting method or otherwise.
(j) Tax Sharing Agreements. There are no tax sharing
agreements or similar arrangements (whether written or unwritten) with respect
to or involving the Company or its Subsidiaries.
(k) Partnerships. The Company and its Subsidiaries are not a
party to any joint venture, partnership or other arrangement or contract which
is treated as a partnership for federal income tax purposes.
(l) Parachute Payments. The Company and its Subsidiaries are
not a party to any agreement or arrangement that would result, separately or in
the aggregate, in the payment of any "excess parachute payment" within the
meaning of Section 280G of the Code, including, without limitation, as a result
of any event connected with the Merger or any other transaction contemplated
herein.
(m) Affiliated Group. The Company and its Subsidiaries have
not been a member of an affiliated group that has filed a consolidated return or
any group that has filed a combined, consolidated or unitary state or local
return, other than the group of which the Company is currently the parent.
4.19. Insurance. Schedule 4.19 contains a complete and accurate
list of all policies or binders for business interruption, fire, liability,
title, worker's compensation, product liability, errors and omissions and other
forms of insurance (showing as to each policy or binder the carrier, policy
number, coverage limits, expiration date, annual premium and a general
description of the type of coverage provided) maintained by the Company and its
Subsidiaries. Such insurance provides, and during its term has provided,
coverage to the extent and in the manner (a) adequate for the Company and its
Subsidiaries and their Assets, businesses and operations and the risks insured
against in connection therewith and (b) as may be or may have been required by
law and by any and all Contracts to which the Company and/or its Subsidiaries
are or have been a party. The Company and its Subsidiaries are not in any
material default under any of such policies or binders, and the Company and its
Subsidiaries have not failed to give any notice or to present any material claim
under any such policy or binder in a due and timely fashion. No insurer has
refused, denied or disputed coverage of any material claim made thereunder. No
insurer has advised the Company and/or its Subsidiaries that it intends to
reduce coverage, materially increase any premium or fail to renew any existing
policy or binder. All such policies and binders are in full force and effect on
the date hereof and shall be kept in full force and effect through the Closing
Date.
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4.20. Customers and Suppliers. Schedule 4.20 sets forth a true
and correct list of (a) the 25 largest customers of the Company and its
Subsidiaries, on a consolidated basis, in terms of sales during each of the
fiscal year ended June 30,1997 and the nine months ended March 31, 1998, setting
forth the total sales to each such customer during such period and (b) the 10
largest suppliers of the Company and its Subsidiaries, on a consolidated basis,
in terms of purchases during each of the fiscal year ended June 30, 1997 and the
nine months ended March 31, 1998, setting forth for each such supplier the total
purchases from each such supplier during such period. There has not been any
adverse change in the business relationship of the Company or its Subsidiaries
with any customer or supplier named in Schedule 4.20.
4.21. Compliance with Environmental Laws.
(a) The Company and its Subsidiaries are in material
compliance with all Environmental Laws, including, without limitation, all
Permits required thereunder to conduct their business as currently being
conducted or proposed to be conducted. All such Permits are listed on Schedule
4.21. Neither the Company nor its Subsidiaries has received any notice to the
effect that, or otherwise has knowledge that, (i) the Company and its
Subsidiaries are not currently in compliance in any material respect with, or
are in violation of, any such Environmental Laws or Permits required thereunder
or (ii) any currently existing circumstances are likely to result in a failure
of the Company or its Subsidiaries to comply with, or a violation by the Company
or its Subsidiaries of, any such Environmental Laws or Permits required
thereunder. The Company and its Subsidiaries at all times during the previous
five years have been in material compliance with all Environmental Laws.
(b) There are no existing or, to the knowledge of the
Company, potential Environmental Claims against the Company or its Subsidiaries,
nor have any of them received any written notification or otherwise has any
knowledge, of any allegation of any actual, or potential responsibility for, or
any inquiry or investigation regarding, any disposal, release or threatened
release at any location of any Hazardous Substance generated or transported by
the Company or its Subsidiaries.
(c) (i) No underground tank or other underground storage
receptacle for Hazardous Substances is currently located on the Facilities and
there have been no releases of any Hazardous Substances from any such
underground tank or related piping and (ii) there have been no releases (i.e.,
any past or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing, or dumping) of
Hazardous Substances on, upon or into the Facilities other than those authorized
by Environmental Laws including, without limitation, the Permits required
thereunder. In addition, to the best knowledge of the Company, there have been
no such releases by the Company's or its Subsidiaries' corporate predecessors
and no releases on, upon, or into any real property in the vicinity of any of
the real properties of the Company or its Subsidiaries other than those
authorized by Environmental Laws which, through soil or ground water
contamination, may have come to be located on the properties of the Company or
its Subsidiaries.
(d) Except as would not have a Material Adverse Effect on
the Company, there are no PCBs or asbestos-containing materials located at or on
the Facilities.
(e) The Company and its Subsidiaries are not a party,
whether as a direct signatory or as successor, assign or third-party
beneficiary, or otherwise bound, to any Lease or other Contract (excluding
insurance policies disclosed on the Disclosure Schedule) under which the Company
or its Subsidiaries are obligated by or entitled to the benefits of, directly or
indirectly, any representation,
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warranty, indemnification, covenant, restriction or other undertaking concerning
Environmental Conditions or compliance with Environmental Laws.
(f) The Company and its Subsidiaries have not released any
other person from any claim under any Environmental Law or waived any rights
concerning any Environmental Condition.
(g) There are no consent decrees, consent orders, judgments,
judicial or administrative orders or agreements (other than Permits) with or
liens by, any governmental authority or quasi-governmental entity relating to
any Environmental Law which regulate, obligate or bind the Company or its
Subsidiaries.
(h) True and correct copies of the Environmental Reports, as
well as all other written environmental reports, audits or assessments which
have been conducted, either by the Company or its Subsidiaries or any person
engaged by the Company or its Subsidiaries for such purpose, at any facility
owned or formerly owned by the Company or its Subsidiaries have been made
available to Sub and a list of all such reports, audits and assessments is set
forth on Schedule 4.21(h).
4.22. No Other Agreements to Sell the Assets or Shares of the
Company or its Subsidiaries. Other than sales of inventory or product in the
ordinary course of business, consistent with past practice, neither the Company
nor its Subsidiaries has any legal obligation, absolute or contingent, to any
other person or firm to (a) sell or effect a sale of any or all of the Assets,
(b) sell or effect a sale of any Equity Securities of the Company or its
Subsidiaries, (c) effect any merger, consolidation or other reorganization of
the Company or its Subsidiaries or (d) enter into any Contract or cause the
entering into a Contract with respect to any of the foregoing.
4.23. Prohibited Payments. The Company and its Subsidiaries have
not, directly or indirectly, (a) made or agreed to make any contribution,
payment or gift to any government official, employee or agent where either the
contribution, payment or gift or the purpose thereof was illegal under the laws
of any federal, state, local or foreign jurisdiction, (b) established or
maintained any unrecorded fund or asset for any purpose or made any false
entries on the books and records of the Company and its Subsidiaries for any
reason, (c) made or agreed to make any contribution, or reimbursed any political
gift or contribution made by any other person, to any candidate for federal,
state, local or foreign public office or (d) paid or delivered any fee,
commission or any other sum of money or item of property, however characterized,
to any finder, agent, government official or other party, in the United States
or any other country, which in any manner relates to the Assets, business or
operations of the Company or its Subsidiaries, which the Company or its
Subsidiaries knows or has reason to believe to have been illegal under any
federal, state or local laws (or any rules or regulations thereunder) of the
United States or any other country having jurisdiction.
4.24. Opinion of Financial Advisor. The Company has received the
opinion of Wasserstein Perella & Co., dated the date of this Agreement, to the
effect that, as of such date, the consideration to be received in the Merger by
the Company's stockholders is fair to such holders of the Company Common Stock
from a financial point of view, a signed copy of which opinion has been
delivered to Sub.
4.25. Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has by unanimous vote (i) determined
that this Agreement and the transactions contemplated hereby, including the
Merger, taken together are fair to and in the best interests of the
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stockholders of the Company and has taken all actions necessary on the part
of the Company to render the restrictions on business combinations contained in
Section 203 of the DGCL inapplicable to this Agreement, the Merger and the
Voting Agreement and (ii) resolved to recommend that the holders of the shares
of the Company Common Stock approve this Agreement and the transactions
contemplated herein, including the Merger.
4.26. Required Company Vote. The affirmative vote of a majority
of the outstanding shares of the Company Common Stock is the only vote of the
holders of any class or series of the Company's securities necessary to approve
this Agreement, the Merger and the other transactions contemplated hereby. There
is no vote of the holders of any class or series of the Company's securities
necessary to approve the Voting Agreement.
4.27. Proxy Statement; Schedule 13E-3. The Proxy Statement to be
mailed to the stockholders of the Company in connection with the special meeting
of the stockholders of the Company (the "Special Meeting") and the Schedule
13E-3, if filed, and any amendment thereof or supplement thereto, when, in the
case of the Proxy Statement, mailed and at the time of the Special Meeting, and
in the case of the Schedule 13E-3, when and if filed, shall not contain any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not false or misleading, and shall
comply with all requirements of the Securities Act and the Exchange Act.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information furnished in writing by Sub or its
representatives specifically for inclusion in any of the foregoing documents.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SUB
As an inducement to the Company to enter into this Agreement, Sub
hereby makes the following representations and warranties as of the date hereof
and as of the Closing Date to the Company:
5.1. Organization. Sub is duly organized, validly existing and in
good standing under the laws of the State of Delaware.
5.2. Authorization. Sub has all necessary corporate power and
authority to, and has taken all corporate action necessary on its part to,
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by Sub
and is a legal, valid and binding obligation of Sub, enforceable against Sub in
accordance with its terms, except as the enforceability thereof may be limited
by (a) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance or similar laws in effect which affect the enforcement of creditors'
rights generally or (b) general principles of equity, whether considered in a
proceeding at law or in equity.
5.3. Consents and Approvals. No consent, waiver, agreement,
approval, Permit or authorization of, or declaration, filing, notice or
registration to or with, any federal, state, local or foreign governmental or
regulatory authority or body is required to be made or obtained by Sub in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby other than any
Regulatory Filings and pursuant to the DGCL.
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5.4. No Conflict or Violation. Neither the execution, delivery
and performance of this Agreement, nor the consummation of the transactions
contemplated hereby, by Sub will result in (a) a violation of or a conflict with
any provision of the certificate of incorporation or by-laws of Sub, (b) a
breach of, or a default under, or the creation of any right of any party to
accelerate, terminate or cancel pursuant to (including, without limitation, by
reason of the failure to obtain a consent or approval under any such contract),
any term or provision of any contract, encumbrance or permit to which Sub is a
party or by which any of its assets are bound, which breach, default or creation
of any such right would reasonably be expected to have a Material Adverse Effect
on Sub.
5.5. Proxy Statement. The information concerning Sub, its
officers, directors, employees and shareholders furnished in writing to the
Company by Sub specifically for use in the Proxy Statement will not, when mailed
to the stockholders of the Company or at the time of the Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, Sub makes no representation or
warranty with respect to any information supplied by the Company or any of its
representatives which is contained in or incorporated by reference in any of the
foregoing documents or in the Schedule 13E-3.
5.6. Financing. Sub has delivered to the Company complete and
correct executed copies of letters (the "Financing Letters") issued in
connection with the financing of the transactions contemplated hereby (the
"Financing"). Assuming satisfaction of all applicable conditions set forth in
the Financing Letters and full funding thereunder, Sub at Closing shall be
capitalized with an equity contribution in an amount up to $60,000,000 and such
funds, together with the proceeds from the Financing, will provide sufficient
funds to consummate the transactions contemplated hereby.
ARTICLE VI.
COVENANTS OF THE COMPANY AND SUB
The Company and Sub covenant and agree with each other that from
the date hereof through the Closing:
6.1. Maintenance of Business Prior to Closing. Prior to the
Effective Time, except as set forth in the Disclosure Schedule or as
contemplated by any other provision of this Agreement, unless Sub has consented
in writing thereto, the Company:
(a) shall, and shall cause each of its Subsidiaries to,
conduct its operations and business according to their usual, regular and
ordinary course consistent with past practice;
(b) shall use its best efforts, and shall cause each of its
Subsidiaries to use its best efforts, to preserve intact their business
organizations and goodwill, keep available the services of their respective
officers and employees and maintain satisfactory relationships with those
persons having business relationships with them;
(c) shall not, and shall cause its Subsidiaries not to,
amend their respective certificates of incorporation or by-laws or comparable
governing instruments;
(d) shall promptly notify Sub of (i) any Material Adverse
Change, (ii) any material litigation or material governmental complaints,
investigations or hearings (or communications
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indicating that the same may be contemplated), or (iii) the breach of any
representation or warranty contained herein;
(e) shall promptly deliver to Sub correct and complete
copies of any report, statement or schedule filed with the SEC subsequent to the
date of this Agreement;
(f) shall not, and shall not permit any of its Subsidiaries
to, authorize, propose or announce an intention to authorize or propose, or
enter into an agreement with respect to, any merger, consolidation or business
combination (other than the Merger), release or relinquishment of any material
contract rights, or any acquisition or disposition of Assets or securities other
than in the ordinary course of business consistent with past practice;
(g) shall not, and shall not permit any of its Subsidiaries
to, (i) grant, confer or award any options, warrants, conversion rights or other
rights or Equity Securities, not existing on the date hereof, to acquire any
shares of its capital stock or other securities of the Company or its
Subsidiaries or (ii) accelerate, amend or change the period of exercisability of
options or restricted stock granted under any employee stock plan or, except as
contemplated by Section 3.3, authorize cash payments in exchange for any options
granted under any of such plans;
(h) shall not, and shall not permit any of its Subsidiaries
to, amend the terms of the Benefit Plans, including, without limitation, any
employment, severance or similar agreements or arrangements in existence on the
date hereof, or adopt any new employee benefit plans, programs or arrangements
or any employment, severance or similar agreements or arrangements;
(i) shall not, and shall not permit any of its Subsidiaries
to, (i) increase or agree to increase the compensation payable or to become
payable to its officers or, other than increases in accordance with past
practice which are not material, to its employees or (ii) enter into any
collective bargaining agreement;
(j) shall not, and shall not permit any of its Subsidiaries
to, (i) incur, create, assume or otherwise become liable for borrowed money or
assume, guarantee, endorse or otherwise become responsible or liable for the
obligations of any other individual, corporation or other entity or (ii) make
any loans or advances to any other person, except in the case of clause (i) for
borrowings under existing credit facilities in the ordinary course of business
and, except in the case of clause (ii) for advances consistent with past
practice which are not material;
(k) shall not, and shall not permit any of its Subsidiaries
to, (i) materially change any practice with respect to Taxes, (ii) make, change
or revoke any material Tax election, or (iii) settle or compromise any material
dispute involving a Tax liability;
(l) shall not, and shall not permit any of its Subsidiaries
to, (i) declare, set aside or pay any dividend or make any other distribution or
payment with respect to any shares of its capital stock or other ownership
interests or (ii) directly or indirectly redeem, purchase or otherwise acquire
any shares of its capital stock or capital stock of any of its Subsidiaries, or
make any commitment for any such action or (iii) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for share of its capital
stock;
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(m) shall not, and shall not permit any of its Subsidiaries
to, issue, deliver, sell, pledge or otherwise encumber any shares of its capital
stock, any other securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, securities or convertible
securities (other than the issuance or shares of Company Common Stock upon the
exercise of Options outstanding on the date hereof in accordance with their
present terms);
(n) shall not, and shall not permit any of its Subsidiaries
to, make or agree to make any capital expenditure except in accordance with the
Company's capital expenditure plan for fiscal years 1998 and 1999, a true,
correct and complete copy of which has been delivered to Sub;
(o) shall not, and shall not permit any of its Subsidiaries
to, change any accounting principles or practices;
(p) shall not, and shall not permit any of its Subsidiaries
to, pay, discharge, settle or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice 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 Company Reports
or incurred thereafter in the ordinary course of business consistent with past
practice, or waive any material benefits of, or agree to modify in any material
respect, any confidentiality, standstill, non-solicitation or similar agreement
to which the Company or any Subsidiary is a party; and
(q) shall not, and shall not permit any of its Subsidiaries
to take, or agree (in writing or otherwise) or resolve to take, any of the
foregoing actions.
6.2. Investigation by Sub. The Company shall allow Sub, its
counsel, accountants and other representatives and the financial institutions
(and their counsel and representatives) providing or proposed to provide
financing in connection with this Agreement and the transactions contemplated
hereby, during regular business hours upon reasonable notice, to make such
reasonable inspection of the Assets, Facilities, business and operations of the
Company and its Subsidiaries and to inspect and make copies of Contracts, books
and records and all other documents and information reasonably requested by Sub
and related to the operations and business of the Company and its Subsidiaries
including, without limitation, historical financial information concerning the
business of the Company and its Subsidiaries and to meet with designated
Personnel of the Company or its Subsidiaries and/or their representatives. The
Company and its Subsidiaries shall furnish to Sub promptly upon request (a) all
additional documents and information with respect to the affairs of the Company
and its Subsidiaries relating to their businesses and (b) access to the
Personnel and to the Company's and its Subsidiaries' accountants and counsel as
Sub, or its counsel or accountants, may from time to time reasonably request and
the Company and its Subsidiaries shall instruct their Personnel, accountants and
counsel to cooperate with Sub, and to provide such documents and information as
Sub and its representatives may request. Sub will hold, and will use its
reasonable best efforts to cause its counsel, accountants and other
representatives and the financial institutions (and their counsel and
representatives) providing or proposed to provide financing in connection
herewith, any nonpublic information in confidence to the extent required by, and
in accordance with, that certain confidentiality letter, dated April 9, 1998,
between Wasserstein Perella & Co., Inc. and Odyssey Investment Partners, LLC
(the "Confidentiality Letter").
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6.3. Consents and Efforts.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, each of the parties agrees to (A) promptly make its
respective filings under the HSR Act with respect to the Merger and (B) use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement. Sub and the Company will use their reasonable best efforts and
cooperate with one another (i) in promptly determining whether any filings are
required to be made or consents, approvals, waivers, licenses, permits or
authorizations are required to be obtained (or, which if not obtained, would
result in an event of default, termination or acceleration of any agreement or
any put right under any agreement) under any applicable law or regulation or
from any governmental authorities or third parties, including parties to loan
agreements or other debt instruments, in connection with the transactions
contemplated by this Agreement, including the Merger, and (ii) in promptly
making any such filings, in furnishing information required in connection
therewith and in timely seeking to obtain any such consents, approvals, permits
or authorizations.
(b) The Company shall cooperate with any reasonable requests
of Sub or the SEC related to the recording of the Merger as a recapitalization
for financial reporting purposes, including, without limitation, to assist Sub
and its Affiliates with any presentation to the SEC with regard to such
recording and to include appropriate disclosure with regard to such recording in
all filings with the SEC and all mailings to stockholders made in connection
with the Merger. In furtherance of the foregoing, the Company shall provide to
Sub for the prior review of Sub's advisors any description of the transactions
contemplated by this Agreement which is meant to be disseminated.
(c) The Company will provide, and will cause its
Subsidiaries and its and their respective officers, employees and advisors to
provide, all reasonable cooperation in connection with the arrangement of any
financing (including the Financing) to be consummated contemporaneous with or at
or after the Closing in respect of the transactions contemplated by this
Agreement, including without limitation, (x) participation in meetings, due
diligence sessions and road shows, (y) the preparation of offering memoranda,
private placement memoranda, prospectuses and similar documents, and (z) the
execution and delivery of any commitment letters, underwriting or placement
agreements, pledge and security documents, other definitive financing documents,
or other requested certificates or documents, including a certificate of the
chief financial officer of the Company with respect to solvency matters, comfort
letters of accountants and legal opinions as may be requested by Sub; provided
that the form and substance of any of the material documents referred to in
clause (y), and the terms and conditions of any of the material agreements and
other documents referred to in clause (z), shall be substantially consistent
with the terms and conditions of the financing required to satisfy the condition
precedent set forth in Section 7.3(f). In addition, in conjunction with the
obtaining of any such financing, the Company agrees, at the request of Sub, to
call for prepayment or redemption, as the case may be, any then existing
indebtedness of the Company; provided that such prepayment or redemption shall
only be made comteporaneously with or after the Effective Time.
(d) Sub shall use its reasonable best efforts to arrange the
Financing pursuant to the Financing Letters.
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6.4. Other Offers.
(a) Neither the Company nor any of its Subsidiaries shall
(whether directly or indirectly through advisors, agents or other
intermediaries), nor shall the Company or any of its Subsidiaries authorize or
permit any of its or their officers, directors, agents, representatives,
advisors or Subsidiaries to, (x) solicit, initiate or take any action knowingly
to facilitate the submission of inquiries, proposals or offers from any
corporation, partnership, person or other entity or group, other than Sub and
its representatives and affiliates, relating to (i) any acquisition or purchase
of 20% or more of the assets or of over 20% of any class of Equity Securities of
the Company and its Subsidiaries, (ii) any tender offer (including a self tender
offer) or exchange offer that if consummated would result in any person
beneficially owning 20% or more of any class of Equity Securities of the Company
or any of its Subsidiaries, (iii) any merger, consolidation, recapitalization,
sale of all or substantially all of the assets, liquidation, dissolution or
similar transaction involving the Company or any of its Subsidiaries whose
assets, individually or in the aggregate, constitute more than 20% of the assets
other than the transactions contemplated by this Agreement or (iv) any other
transaction the consummation of which could reasonably be expected to impede,
interfere with, prevent or materially delay the Merger or which could reasonably
be expected to materially dilute the benefits to Sub of the transactions
contemplated hereby (each such transaction being referred to herein as an
"Acquisition Proposal"), or agree to or endorse any Acquisition Proposal, (y)
enter into or participate in any discussions or negotiations regarding any of
the foregoing, or otherwise cooperate in any way with, or knowingly assist or
participate in, facilitate or encourage, any effort or attempt by any other
person (other than Sub and its representatives and affiliates) to do or seek any
of the foregoing, (z) grant any waiver or release under any standstill or
similar agreement with respect to any Equity Securities of the Company or any of
its Subsidiaries; provided, however, that the foregoing shall not prohibit the
Company (either directly or indirectly through advisors, agents or other
intermediaries) from (i) furnishing information pursuant to an appropriate
confidentiality letter (which letter shall not be less favorable to the Company
in any material respect than the Confidentiality Letter, and a copy of which
shall be provided for informational purposes only to Sub) concerning the Company
and its businesses, properties or Assets to any person, corporation, entity or
"group," as defined in Section 13(d) of the Exchange Act, other than Sub or any
of its Affiliates (a "Third Party") who has made a bona fide Acquisition
Proposal, (ii) engaging in discussions or negotiations with such a Third Party
who has made a bona fide Acquisition Proposal, (iii) following receipt of a bona
fide Acquisition Proposal, taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) under the Exchange Act or otherwise making
disclosure to its stockholders, (iv) following receipt of a bona fide
Acquisition Proposal, failing to make or withdrawing or modifying its
recommendation referred to in Section 4.25 hereof and/or (v) taking any
non-appealable, final action ordered to be taken by the Company by any court of
competent jurisdiction but in each case referred to in the foregoing clauses (i)
through (iv), only to the extent that (A) the Board of Directors of the Company
shall have concluded in good faith on the basis of written advice from outside
counsel that such action is required to prevent the Board of Directors of the
Company from breaching its fiduciary duties to the stockholders of the Company
under applicable law and (B) the Board of Directors of the Company shall have
concluded in good faith after consultation with its financial advisor that such
Acquisition Proposal, if accepted, is reasonably likely to be consummated,
taking into account all legal, financial and regulatory aspects of the proposal
and the person or entity making the proposal and would, if consummated, result
in a more favorable transaction than the transaction contemplated by this
Agreement; provided, further, that the Board of Directors of the Company shall
not take any of the foregoing actions referred to in clauses (i) through (iv)
until after giving reasonable notice to Sub with respect to its intent to take
such action and informing Sub of the terms and conditions of such proposal and
the identity of the person making it. The Company shall immediately cease and
cause its advisors,
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agents and other intermediaries to cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. The Company and its Subsidiaries hereby represent that
they are not now engaged in discussions or negotiations with any party other
than Sub with respect to any proposed Acquisition Transaction.
(b) If a Payment Event (as hereinafter defined) occurs, the
Company shall pay to Sub, within one business day following such event, a fee of
$6,500,000. "Payment Event" means (1) the termination of this Agreement pursuant
to Section 8.1(a)(v); (2) the termination of this Agreement pursuant to Section
8.1(a)(vi); (III) the termination of this Agreement by Sub pursuant to Section
8.1(a)(iii) but only if the failure of a condition arises from a breach of
obligation or untruth or incorrectness of any representation or warranty which
breach or untruth or incorrectness arises out of the bad faith or willful
misconduct of the Company; or (IV) the occurrence of any of the following events
if this Agreement shall have been terminated (1) by Sub pursuant to Section
8.1(a)(iii) due to a failure of any of the conditions set forth in Sections
7.1(a), 7.3(a), 7.3(e), 7.3(g) or 7.3(h) to be satisfied, or (2) pursuant to
Sections 8.1(a)(ii) or (vii), or (3) by the Company pursuant to Section
8.1(a)(iii) due to a failure of any of the conditions set forth in Section
7.1(a) to be satisfied: (A) any Third Party other than Sub or any of its
Affiliates or any party to the Voting Agreement (a "Permitted Party") (so long
as no such party to the Voting Agreement is a member of a "group" (as defined in
Section 13(d) of the Exchange Act) which includes any other person) shall have
become the beneficial owner of more than 20% of the outstanding shares of
Company Common Stock; or (B)(x) any Third Party (other than Sub or any of its
Affiliates) shall have made, or proposed, communicated or disclosed in a manner
which is or otherwise becomes public (including being known by stockholders of
the Company owning of record or beneficially in the aggregate 5% or more of the
outstanding shares of Company Common Stock) a bona fide intention to make an
Acquisition Proposal (including by making such an Acquisition Proposal) and (y)
on or prior to the date that is within 12 months of the termination of this
Agreement, the Company either consummates with a Third Party a transaction the
proposal of which would otherwise qualify as an Acquisition Proposal under
Section 6.4(a) or enters into a definitive agreement with a Third Party with
respect to a transaction the proposal of which would otherwise qualify as an
Acquisition Proposal under Section 6.4 (whether or not such Third Party is the
Third Party referred to in clause (x) above).
(c) Upon termination of this Agreement (I) by Sub pursuant
to Section 8.1(a)(iii) due to a failure of any of the conditions set forth in
Sections 7.1(a), 7.3(a), 7.3(e), 7.3(g) or 7.3(h) to be satisfied, or (II)
pursuant to Sections 8.1(a)(v), (vi) or (vii), or (III) by the Company pursuant
to Section 8.1(a)(iii) due to a failure of any of the conditions set forth in
Section 7.1(a) to be satisfied, the Company shall reimburse Sub and its
Affiliates not later than two business days after submission of reasonable
documentation thereof for all of their documented out-of-pocket fees and
expenses (including, without limitation, the reasonable fees and expenses for
their counsel (billed at standard billing rates for Sub) and investment banking
fees), actually incurred by any of them or on their behalf in connection with
this Agreement and the transactions contemplated hereby and the arrangement of,
obtaining the commitment to provide or obtaining the financing for transactions
contemplated by this Agreement (including any fees payable to the entities
providing for such financing and their respective counsel billed at standard
rates for Sub); provided that the aggregate amount payable pursuant to this
Section 6.4(c) shall not exceed $1,500,000.
(d) The Company acknowledges that the agreements contained
in this Section 6.4 are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Sub would not enter into
this Agreement; accordingly, if the Company fails to promptly pay any amount due
pursuant to this Section 6.4, and, in order to obtain such payment, the other
party commences a suit which results in a judgment against the Company for the
fee or fees and
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expenses set forth in this Section 6.4, the Company shall also pay to Sub its
costs and expenses incurred in connection with such litigation.
(e) The Company and its Subsidiaries shall (i) immediately
notify Sub (orally and in writing) if any offer is made, any discussions or
negotiations are sought to be initiated, any inquiry, proposal or contact is
made or any information is requested with respect to any Acquisition Proposal,
(ii) promptly notify Sub of the terms of any proposal which it may receive in
respect of any such Acquisition Proposal, including, without limitation, the
identity of the prospective purchaser or soliciting party, (iii) promptly
provide Sub with a copy of any such offer, if written, or a written summary (in
reasonable detail) of such offer, if not in writing, and (iv) keep Sub informed
of the status of such offer and the offeror's efforts and activities with
respect thereto.
(f) This Section 6.4 shall survive any termination of this
Agreement, however caused.
6.5. Meeting of Stockholders. The Company shall take all action
necessary in accordance with applicable law and its certificate of incorporation
and by-laws, including the timely mailing of the Proxy Statement, to convene the
Special Meeting of its stockholders as promptly as practicable to consider and
vote upon the approval of this Agreement and the transactions contemplated
hereby. The Board of Directors of the Company shall recommend such approval,
shall not withdraw or modify such recommendation and shall take all lawful
action to solicit such approval; provided that the Board of Directors of the
Company may fail to make or withdraw or modify such recommendation, but only to
the extent that the Board of Directors of the Company shall have concluded in
good faith on the basis of written advice from outside counsel that such action
is required to prevent the Board of Directors of the Company from breaching its
fiduciary duties to the stockholders of the Company under applicable law. The
Company will use its best efforts to hold such meeting as soon as practicable
after the date hereof.
6.6. Proxy Statement.
(a) Sub and the Company shall cooperate and prepare, and the
Company shall file with the SEC as soon as practicable, a proxy statement with
respect to the Special Meeting of the stockholders of the Company in connection
with the Merger (the "Proxy Statement"), respond to comments of the staff of the
SEC, clear the Proxy Statement with the staff of the SEC and promptly thereafter
mail the Proxy Statement to all holders of record of Company Common Stock. The
Company shall comply in all respect with the requirements of the Exchange Act
and the Securities Act and the rules and regulations of the SEC thereunder
applicable to the Proxy Statement and the solicitation of proxies for the
Special Meeting (including any requirement to amend or supplement the Proxy
Statement) and each party shall furnish to the other such information relating
to it and its Affiliates and the transactions contemplated by this Agreement and
such further and supplemental information as may be reasonably requested by the
other party. The Proxy Statement shall include the recommendation of the
Company's Board of Directors in favor of the Merger, unless otherwise required
by the fiduciary duties of the directors under applicable law as contemplated
hereby. The Company shall use all reasonable efforts, and Sub will cooperate
with the Company, to have all necessary state securities law or "Blue Sky"
permits or approvals required to carry out the transactions contemplated by this
Agreement and will pay all expenses incident thereto.
(b) No amendment or supplement to the Proxy Statement shall
be made by Sub or the Company without the approval of the other party. The
Company shall advise Sub of any
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request by the SEC for amendment of the Proxy Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
6.7. Schedule 13E-3. If, in the opinion of the Company's counsel
after consultation with counsel to Sub, the filing with the SEC of a Transaction
Statement on Schedule 13E-3 (the "Schedule 13E-3") in connection with the Merger
is required by Rule 13e-3 under the Exchange Act, the Company shall file the
Schedule 13E-3 with the SEC at the time of filing of the Proxy Statement. If the
Schedule 13E-3 is filed, at the time of any amendment to the Proxy Statement,
the parties shall cause to be file with the SEC an appropriate amendment to the
Schedule 13E-3.
6.8. Director and Officer Liability.
(a) For a period of 6 years after the Effective Time, Sub
will cause the Surviving Corporation to indemnify and hold harmless the present
and former officers and directors of the Company in respect of acts or omissions
occurring prior to the Effective Time to the extent provided under the Company's
certificate of incorporation and by-laws in effect on the date hereof; provided
that such indemnification shall be subject to any limitation imposed from time
to time under applicable law. To the maximum extent permitted by the DGCL, such
indemnification shall be mandatory rather than permissive and the Surviving
Corporation shall advance expenses in connection with such indemnification. The
by-laws of the Surviving Corporation shall contain provisions substantially
similar in terms of the rights granted to the provisions with respect to
indemnification and insurance set forth in the Company's certificate of
incorporation, which provisions shall not be amended in any manner that would
adversely affect the rights under those by-laws of the Company's employees,
agents, directors or officers for acts or omissions on or prior to the Effective
Time, except if such amendment is required by law. For a period of 6 years after
the Effective Time, Sub will cause the Surviving Corporation to use its best
efforts to provide officers' and directors' liability insurance in respect of
acts or omissions occurring prior to the Effective Time covering each such
person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date hereof, provided that in
satisfying its obligation under this Section 6.8, Sub shall not be obligated to
cause the Surviving Corporation to pay premiums in excess of 125% of the amount
per annum the Company paid in its last full fiscal year, which amount has been
disclosed to Sub.
(b) In furtherance of and not in limitation of the preceding
paragraph, Sub agrees that the officers and directors of the Company that are
defendants in all litigation commenced by stockholders of the Company with
respect to (x) the performance of their duties as such officers and/or directors
under federal or state law (including litigation under federal and state
securities laws) and (y) the Merger, including, without limitation, any and all
such litigation commenced on or after the date of this Agreement (the "Subject
Litigation") shall be entitled to be represented, at the reasonable expense of
the Company, in the Subject Litigation by one counsel (and Delaware counsel if
appropriate and one local counsel in each jurisdiction in which a case is
pending) each of which such counsel shall be selected by a plurality of such
director defendants; provided that the Company shall not be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld) and that a condition to the indemnification payments
provided in Section 6.8(a) shall be that such officer/director defendant not
have settled any Subject Litigation without the consent of the Company (such
consent not to be unreasonably withheld) and, prior to the Closing, Sub; and
provided further that neither Sub nor the Company shall have any obligation
hereunder to any officer/director defendant when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
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become final and non-appealable, that indemnification of such officer/director
defendant in the manner contemplated hereby is prohibited by applicable law.
(c) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation shall assume its obligations set forth in this Section 6.8.
6.9. Notices of Certain Events. The Company shall promptly notify
Sub of:
(a) any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any Actions commenced or, to the best of its knowledge
threatened against, relating to or involving or otherwise affecting the Company
or any Subsidiary which, if pending on the date of this Agreement, would have
been required to have been disclosed pursuant to Section 4.12 or which relate to
the consummation of the transactions contemplated by this Agreement.
6.10. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Sub, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of the Company or Sub, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all right,
title and interest in, to and under any of the rights, properties or assets of
the Company acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
6.11. Resignation of Directors. At the Closing, the Company shall
deliver to Sub evidence satisfactory to Sub of the resignation of all directors
of the Company, effective at the Effective Time.
6.12. Financial Statements, Etc. Within 30 days after the end of
each calendar month, the Company and its Subsidiaries shall provide Sub with the
interim financial statements relating to such calendar month. Such interim
financial statements shall (a) be in accordance with the books and records of
the Company and its Subsidiaries, (b) be prepared in accordance with GAAP
consistently applied throughout the periods covered thereby (except for the
absence of footnotes) and present fairly and accurately in accordance with GAAP
the Assets, liabilities (including, without limitation, all reserves) and
financial condition of the Company and its Subsidiaries as of the respective
dates thereof and the results of operations, stockholders' equity and cash flows
for the periods covered thereby.
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ARTICLE VII.
CONDITIONS TO THE MERGER
7.1. Conditions to the Obligations of Each Party. The obligations
of the Company and Sub to consummate the transactions contemplated hereby on the
Closing Date are subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions:
(a) This Agreement shall have been adopted by the
stockholders of the Company in accordance with the DGCL;
(b) Any applicable waiting period under the HSR Act relating
to the Merger shall have expired or been terminated; and
(c) No provision of any applicable law or regulation and no
judgment, order, decree or injunction shall prohibit or restrain the
consummation of the Merger; provided, however, that the Company and Sub shall
each use its reasonable best efforts to have any such judgment, order, decree or
injunction vacated.
7.2. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated hereby on
the Closing Date are subject, in the sole discretion of the Company, to the
satisfaction, on or prior to the Closing Date, of the following conditions,
which may be waived by the Company in accordance with Section 8.4: (a) all
representations and warranties of Sub contained in this Agreement shall be true
and correct in all material respects at and as of the Closing Date, as if such
representations and warranties were made at and as of the Closing Date (except
to the extent that any such representations and warranties were made as of a
specified date, which representations and warranties shall continue on the
Closing Date to be true as of such specified date), (b) Sub shall have performed
in all material respects all obligations arising under the agreements and
covenants required hereby to be performed by it prior to or on the Closing Date
and (c) the Company shall have received, at or prior to the Closing, a
certificate executed by the President of Sub certifying that, as of the Closing
Date, the conditions set forth in Section 7.2(a) and (b) have been satisfied.
7.3. Conditions to the Obligations of Sub. The obligations of Sub
to consummate the transactions contemplated hereby on the Closing Date are
subject, in the sole discretion of Sub, to the satisfaction, on or prior to the
Closing Date, of each of the following conditions, any of which may be waived by
Sub in accordance with Section 8.4:
(a) Representations, Warranties and Covenants.
(i) All representations and warranties of the Company
contained in this Agreement shall be true and correct at and as of the Closing
Date as if such representations and warranties were made at and as of the
Closing Date (except to the extent that any such representations and warranties
were made as of a specified date, such representations and warranties shall
continue on the Closing Date to have been true in all material respects as of
such specified date), except where the untruth or incorrectness of such
representations and warranties would not, singly or in the aggregate, have a
Material Adverse Effect on the Company. For purposes of this Section 7.3(a)(i),
the representations and warranties of the Company contained in this Agreement
shall be deemed to have been made without any qualification as to knowledge or
materiality and, accordingly, all references in such representations and
warranties to
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"material," "Material Adverse Effect," "in all material respects," "Material
Adverse Change," "knowledge," "best knowledge" and similar terms and phrases
(including, without limitation, references to the dollar thresholds therein)
shall be deemed to be deleted therefrom, provided that the foregoing clause
shall not apply solely for the purpose of determining the truth and correctness
of the lists set forth in certain informational representations and warranties
that require disclosure of lists of items of a material nature or above a
specified threshold.
(ii) The Company shall have performed in all material
respects all obligations arising under the agreements and covenants required
hereby to be performed by it prior to or on the Closing Date.
(iii) Sub shall have received, at or prior to the Closing, a
certificate executed by the President and the Chief Financial Officer of the
Company certifying that, as of the Closing Date, the conditions set forth in
Sections 7.3(a), (b) and (e) have been satisfied.
(b) No Proceedings or Litigation. No Actions by any
governmental authority or any other entity or person shall have been instituted
or threatened for the purpose of enjoining or preventing, or which question the
validity or legality of, the transactions contemplated hereby and which could
reasonably be expected to damage Sub or materially adversely affect the value of
the Company Common Stock or the Assets, business or operations of the Company
and its Subsidiaries or Sub's ability to own and operate the Assets, business or
operations of the Company and its Subsidiaries, if the transactions contemplated
hereby are consummated.
(c) Recapitalization. Sub shall be reasonably satisfied that
the Merger shall be recorded as a "recapitalization" for financial reporting
purposes.
(d) Consents.
(i) All consents, approvals and licenses of any governmental
or other regulatory body required in connection with the execution, delivery and
performance of this Agreement and for the Surviving Corporation to conduct the
business of the Company in substantially the manner now conducted, shall have
been obtained, unless the failure to obtain such consents, authorizations,
orders or approvals would not, individually or in the aggregate, have a Material
Adverse Effect on the Company after giving effect to the transactions
contemplated by this Agreement (including the Financing).
(ii) All consents listed on Schedule 4.9 of the Disclosure
Schedule shall have been obtained.
(e) Material Changes. Since March 31, 1998, there shall not
have been any Material Adverse Change with respect to the Company and, to the
knowledge of the Company, there shall have been no potential or threatened
Material Adverse Change with respect to the Company.
(f) Financing. The funding contemplated by the Financing
Letters shall have been obtained.
(g) Certain Other Agreements.
(i) The Persons listed in Schedule 7.3(g) shall have entered
into, as applicable, (a) the employment agreements and (b) one or more
agreements relating to their
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respective equity interests in the Company after the Effective Time, in each
case on the terms and conditions substantially consistent with the terms and
conditions of such agreements set forth on Schedule 7.3(g) hereto.
(ii) The Stockholders party to the Voting Agreement shall
have performed their obligations under the Voting Agreement in all material
respects.
(iii) That certain Stockholders Agreement, dated as of
October 8, 1992, and as amended as of July 3, 1996, by and among the Company,
Stephen Russell and Hanseatic Corp. shall be terminated and of no further force
or effect and any and all rights conferred to such parties therein shall have
been waived pending the consummation of the Merger.
(h) Financial Information. Ernst & Young LLP shall have
completed its audit, in accordance with generally accepted auditing standards,
of the Company's balance sheet as of June 30, 1998 and the corresponding
statement of income, change in stockholders' equity and cash flows for the
fiscal year ended June 30, 1998, and shall have issued an unqualified report
with respect thereto (including that such audited financial statements are in
accordance with GAAP).
ARTICLE VIII.
MISCELLANEOUS
8.1. Termination.
(a) Termination. This Agreement may be terminated prior to
the Effective Time as follows (notwithstanding any approval of the Merger by the
stockholders of the Company):
(i) by mutual written consent of Sub and the Company at any
time;
(ii) by Sub or the Company if the Closing shall not have
occurred on or before November 30, 1998, provided that the party seeking to
exercise such right is not then in breach in any material respect of any of its
obligations under this Agreement;
(iii) by either the Company or Sub, if any of the conditions
to such party's obligation to consummate the transactions contemplated in this
Agreement shall have become impossible to satisfy;
(iv) by either the Company or Sub, if there shall be any law
or regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining Sub or the
Company from consummating the Merger is entered and such judgment, injunction,
order or decree shall become final and non-appealable;
(v) by Sub if the Board of Directors of the Company shall
have (A) withdrawn or modified or amended, in a manner adverse to Sub, its
approval or recommendation of this Agreement and the Merger or its
recommendation that stockholders of the Company adopt and approve this Agreement
and the Merger, (B) approved, recommended or endorsed an Acquisition Proposal
(including a tender or exchange offer for Company Common Stock) or shall have
failed to reconfirm its recommendation of this Agreement and the Merger within
five business days of Sub's request that it do so,
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(C) failed to call the Stockholders Meeting or failed as promptly as practicable
to mail the Proxy Statement to its stockholders or failed to include in such
statement the recommendation referred to above, (D) in response to the
commencement of any tender offer of exchange offer for more then 20% of the
outstanding shares of Company Common Stock, not recommended rejection of such
tender offer or exchange offer; or (E) resolved to do any of the foregoing;
(vi) by the Company if prior to the Effective Time, in good
faith, based upon written advice from outside counsel and in order to prevent
the Board of Directors from breaching its fiduciary duty, the Board of Directors
of the Company shall have withdrawn or modified or amended, in a manner adverse
to Sub, its approval or recommendation of this Agreement and the Merger or its
recommendation that stockholders of the Company adopt and approve this Agreement
and the Merger in order to permit the Company to execute a definitive agreement
providing for the acquisition of the Company or in order to approve a tender or
exchange offer for any or all of the Company Common Stock, in either case, that
is determined, by the Board of Directors of the Company to be on financial terms
more favorable to the Company's stockholders than the Merger, provided that the
Company shall be in compliance with Section 6.4; or
(vii) by either the Company or Sub if, at a duly held
stockholders meeting of the Company or any adjournment thereof at which this
Agreement and the Merger is voted upon, the requisite stockholder adoption and
approval shall not have been obtained.
The party desiring to terminate this Agreement
pursuant to Sections 8.1(a)(ii)-(vii) shall give written notice of such
termination to the other party in accordance with Section 8.3.
(b) Effect of Termination. If this Agreement is terminated
pursuant to Section 8.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto or such party's officers,
directors, employees or representatives, except (i) that the agreements
contained in Sections 6.4, 8.8 and 8.13 hereof shall survive the termination
hereof and (ii) nothing herein shall relieve any party from liability for any
breach of this Agreement.
(c) Procedure Upon Termination. In the event of termination
of this Agreement pursuant to Section 8.1:
(i) Each party shall redeliver all documents, work papers
and other material of any other party and any and all copies thereof relating to
the transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same;
(ii) No confidential information received by any party with
respect to the business of any other party or its Affiliates shall be disclosed
to any third party, unless required by law; and
(iii) The Confidentiality Letter shall survive in accordance
with its terms.
8.2. Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned, in whole or in part, by operation of law
or otherwise by any party without the prior written consent of all other parties
to this Agreement. Subject to the foregoing, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and
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assigns, and, with respect to the provisions of Section 6.8
hereof, shall inure to the benefit of the persons or entities benefiting from
the provisions thereof who are intended to be third-party beneficiaries thereof,
and no other person shall have any right, benefit or obligation hereunder.
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8.3. Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received, if
personally delivered; when transmitted, if transmitted by telecopy, upon receipt
of telephonic or electronic confirmation; the day after it is sent, if sent for
next day delivery to a domestic address by recognized overnight delivery service
(e.g., Federal Express); and upon receipt, if sent by certified or registered
mail, return receipt requested. In each case notice shall be sent to:
If to the Company, addressed to:
Celadon Group, Inc.
One Celadon Drive
Indianapolis, IN 46236-4207
Attention: Stephen Russell
Telecopy: (317) 890-8099
With a copy to:
Proskauer Rose LLP
1585 Broadway
New York, NY 10037
Attention: Arnold Jacobs, Esq.
Telecopy: (212) 969-2900
If to Sub, addressed to:
Laredo Acquisition Corp.
c/o Odyssey Investment Partners, LLC
280 Park Avenue, 38th Floor
New York, NY 10017
Attention: Brian Kwait
Telecopy: (212) 351-7925
With a copy to:
Latham & Watkins
885 Third Avenue
Suite 1000
New York, NY 10022
Attention: Richard Trobman, Esq.
Telecopy: (212) 751-4864
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
8.4. Entire Agreement; Waivers. This Agreement, together with all
exhibits and schedules hereto (including, without limitation, the Disclosure
Schedule), and the other agreements referred to herein, constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. No waiver of any of the provisions of
this Agreement shall be deemed or shall
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constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided. The Confidentiality Letter shall terminate at the Effective Time.
8.5. Multiple Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.6. Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
8.7. Titles. The titles, captions or headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
8.8. Fees and Expenses. Except as provided in Section 6.4 hereof,
all costs and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense.
8.9. Cumulative Remedies. All rights and remedies of either party
hereto are cumulative of each other and of every other right or remedy such
party may otherwise have at law or in equity, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.
8.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF
LAWS.
8.11. Amendment. This Agreement may be amended by the parties
hereto at any time before or after approval of matters presented in connection
with the Merger by the stockholders of the Company, but after any such
stockholder approval, no amendment shall be made which by law requires the
further approval of stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto shall terminate at the Effective Time.
8.12. Public Announcements. Neither Sub, on the one hand, nor the
Company, on the other hand, will issue any press release or public statement
with respect to the transactions contemplated by this Agreement and the Voting
Agreement, including the Merger, without the other party's prior consent (such
consent not to be unreasonably withheld), except as may be required by
applicable law, court process or the quotation requirements of NASDAQ. In
addition to the foregoing, Sub and the Company will consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any such press release or other public statements with respect to such
transactions. The parties agree that the initial press release or releases to be
issued with respect to the transactions contemplated by this Agreement shall be
mutually agreed upon prior to the issuance thereof.
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8.13. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
8.14. Non-survival of Representations, Warranties. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall terminate at the Effective Time.
8.15. Interpretive Provisions.
(a) The words "hereof," "herein," "hereby" and "hereunder"
and words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision hereof.
(b) Accounting terms used but not otherwise defined herein
shall have the meanings given to such terms under GAAP.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed on their respective behalf, by their respective officers
thereunto duly authorized, all as of the day and year first above written.
LAREDO ACQUISITION CORP.
By: /s/ Brian Kwait /s/ Muzzi Mirza
-------------------------------
Name:
-----------------------------
Title:
----------------------------
CELADON GROUP, INC.
By: /s/ Robert Goldberg
-------------------------------
Name:
-----------------------------
Title:
----------------------------
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS..............................................................2
1.1. Defined Terms..........................................................2
1.2. Other Defined Terms....................................................7
ARTICLE II. THE MERGER..............................................................8
2.1. The Merger.............................................................8
2.2. Effective Time.........................................................8
2.3. Closing................................................................8
2.4. Certificate of Incorporation and By-Laws...............................8
2.5. Directors..............................................................9
2.6. Officers...............................................................9
ARTICLE III. EFFECT OF MERGER ON SECURITIES OF SUB AND THE
COMPANY.........................................................9
3.1. Conversion of Sub Common Stock.........................................9
3.2. Conversion of Company Common Stock.....................................9
3.3. Options...............................................................10
3.4. Warrants..............................................................10
3.5. Exchange of Certificates..............................................10
3.6. Dissenting Shares.....................................................12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY........................................................13
4.1. Organization and Capitalization.......................................13
4.2. Authorization.........................................................14
4.3. Subsidiaries..........................................................14
4.4. Absence of Certain Changes or Events..................................15
4.5. Title to Assets; Absence of Liens and Encumbrances, etc...............15
4.6. Contracts and Commitments.............................................17
4.7. Permits...............................................................18
4.8. No Conflict or Violation..............................................19
4.9. Consents and Approvals................................................19
4.10. SEC Documents; Financial Statements, etc.............................19
4.11. Undisclosed Liabilities..............................................20
4.12. Litigation...........................................................20
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4.13. Labor Matters........................................................20
4.14. Compliance with Law..................................................21
4.15. No Brokers...........................................................21
4.16. Proprietary Rights...................................................22
4.17. Employee Plans.......................................................22
4.18. Tax Matters..........................................................24
4.19. Insurance............................................................26
4.20. Customers and Suppliers..............................................26
4.21. Compliance with Environmental Laws...................................26
4.22. No Other Agreements to Sell the Assets or Shares of the Company
or its Subsidiaries.............................................28
4.23. Prohibited Payments..................................................28
4.24. Opinion of Financial Advisor.........................................28
4.25. Board Recommendation.................................................28
4.26. Required Company Vote................................................28
4.27. Proxy Statement; Schedule 13E-3......................................29
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF SUB...................................29
5.1. Organization..........................................................29
5.2. Authorization.........................................................29
5.3. Consents and Approvals................................................29
5.4. No Conflict or Violation..............................................30
5.5. Proxy Statement.......................................................30
5.6. Financing.............................................................30
ARTICLE VI. COVENANTS OF THE COMPANY AND SUB.......................................30
6.1. Maintenance of Business Prior to Closing..............................30
6.2. Investigation by Sub..................................................32
6.3. Consents and Efforts..................................................33
6.4. Other Offers..........................................................34
6.5. Meeting of Stockholders...............................................36
6.6. Proxy Statement.......................................................37
6.7. Schedule 13E-3........................................................37
6.8. Director and Officer Liability........................................37
6.9. Notices of Certain Events.............................................38
6.10. Further Assurances...................................................39
6.11. Resignation of Directors.............................................39
6.12. Financial Statements, Etc............................................39
</TABLE>
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ARTICLE VII. CONDITIONS TO THE MERGER..............................................39
7.1. Conditions to the Obligations of Each Party...........................39
7.2. Conditions to the Obligations of the Company..........................40
7.3. Conditions to the Obligations of Sub..................................40
ARTICLE VIII. MISCELLANEOUS........................................................42
8.1. Termination...........................................................42
8.2. Assignment............................................................44
8.3. Notices...............................................................45
8.4. Entire Agreement; Waivers.............................................45
8.5. Multiple Counterparts.................................................46
8.6. Invalidity............................................................46
8.7. Titles................................................................46
8.8. Fees and Expenses.....................................................46
8.9. Cumulative Remedies...................................................46
8.10. GOVERNING LAW........................................................46
8.11. Amendment............................................................46
8.12. Public Announcements.................................................47
8.13. Enforcement of Agreement.............................................47
8.14. Non-survival of Representations, Warranties..........................47
8.15. Interpretive Provisions..............................................47
</TABLE>
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EXHIBIT B
EXECUTION COPY
VOTING AGREEMENT
AGREEMENT dated as of June 23, 1998 by and between LAREDO
ACQUISITION CORP., a Delaware corporation ("Acquisition"), and the other parties
signatory hereto (each a "Stockholder").
RECITALS
A. Concurrently herewith, Acquisition, and Celadon Group, Inc.,
a Delaware corporation (the "Company"), are entering into an Agreement and Plan
of Merger of even date herewith (as such agreement may be amended from time to
time, the "Merger Agreement"; capitalized terms used but not defined herein
shall have the meanings set forth in the Merger Agreement) pursuant to which
(and subject to the terms and conditions specified therein) Acquisition will be
merged with and into the Company (the "Merger").
B. As a condition to Acquisition entering into the Merger
Agreement, Acquisition requires that each Stockholder enter into, and each such
Stockholder hereby agrees to enter into, this Agreement.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties hereby agree as follows:
1. Representations and Warranties of Stockholders. Each Stockholder hereby
severally and not jointly represents and warrants to Acquisition as follows:
(a) Ownership of Shares.
i. Such Stockholder is the record holder or beneficial owner of the
number of shares of Company Common Stock as is set forth opposite such
Stockholder's name on Schedule I hereto (such shares shall constitute the
"Existing Shares", and together with any shares of Company Common Stock
acquired of record or beneficially by such Stockholder in any capacity
after the date hereof and prior to the termination hereof, whether upon
exercise of options, conversion of convertible securities, purchase,
exchange or otherwise, shall constitute the "Shares").
ii. On the date hereof, the Existing Shares set forth opposite such
Stockholder's name on Schedule I hereto constitute all of the outstanding
shares of Company Common Stock owned of record or beneficially by such
Stockholder. Such Stockholder does not have record or beneficial ownership
of any Shares not set forth on Schedule I hereto.
iii. Such Stockholder has sole power of disposition with respect to all
of the Existing Shares set forth opposite such Stockholder's name on
Schedule I and sole voting power with respect to the matters set forth in
Section 2 hereof and sole power to demand appraisal
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rights, in each case with respect to all of the Existing Shares set forth
opposite such Stockholder's name on Schedule I, with no restrictions on
such rights, subject to applicable federal securities laws and the terms of
this Agreement.
iv. Such Stockholder will have sole power of disposition with respect
to Shares other than Existing Shares, if any, which become beneficially
owned by such Stockholder and will have sole voting power with respect to
the matters set forth in Section 2 hereof and sole power to demand
appraisal rights, in each case with respect to all Shares other than
Existing Shares, if any, which become beneficially owned by such
Stockholder with no restrictions on such rights, subject to applicable
federal securities laws and the terms of this Agreement.
(b) Organization; Power; Binding Agreement. If such Stockholder is a
corporation, such Stockholder is a corporation duly formed, validly existing and
in good standing under the laws of its jurisdiction of its organization. If such
Stockholder is a corporation, such Stockholder has the necessary corporate power
and authority to enter into and perform all of such Stockholder's obligations
under this Agreement and has taken all corporate action necessary to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to perform its obligations hereunder, and no other corporate proceedings on the
part of such Stockholder are necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby. If such Stockholder is an individual, such Stockholder has
the legal capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. This Agreement has been duly and
validly executed and delivered by such Stockholder and constitutes a valid and
binding agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms. If such Stockholder is married and such Stockholder's
Shares constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of,
such Stockholder's spouse, enforceable against such person in accordance with
its terms.
(c) No Conflicts. Except for filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), if applicable, and any
required amendments to any Schedule 13D filed by any such Stockholder, (A) no
filing with, and no permit, authorization, consent or approval of, any state or
federal public body or authority is necessary for the execution of this
Agreement by such Stockholder and the consummation by such Stockholder of the
transactions contemplated hereby and (B) neither the execution, delivery or
performance of this Agreement by such Stockholder nor the consummation by such
Stockholder of the transactions contemplated hereby nor compliance by such
Stockholder with any of the provisions hereof shall (x) conflict with or result
in any breach of any applicable certificate of incorporation, bylaws, trust,
partnership agreement or other agreements or organizational documents applicable
to such Stockholder, (y) result in a violation or breach of, or constitute (with
or without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which such Stockholder is a
party or by which such Stockholder or any of such Stockholder's properties or
assets may be bound or (z) violate any order, writ, injunction, decree,
judgment, law, statute, rule or regulation applicable to such Stockholder or any
of such Stockholder's properties or assets.
(d) No Transfer. Except as described on Schedule II, such Stockholder's
Shares and the certificates representing such Shares are now and at all times
during the term hereof will be held by such
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Stockholder, or by a nominee or custodian for the benefit of such Stockholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
(e) No Finders. No broker, investment banker, financial adviser or other
person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Stockholder in his
or her capacity as such.
(f) Acknowledgment. Such Stockholder understands and acknowledges that
Acquisition is entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
2. Agreement To Vote; Proxy.
2.1. Voting. Each Stockholder hereby severally and not jointly agrees that,
until the Termination Date (as defined in Section 7 hereof), at any meeting of
the stockholders of the Company, however called, or in connection with any
written consent of the stockholders of the Company, such Stockholder shall vote
(or cause to be voted) the Shares held of record or beneficially by such
Stockholder (i) in favor of the Merger and adoption of the Merger Agreement, the
execution and delivery by the Company of the Merger Agreement and the approval
of the terms thereof and in favor of each of the other actions contemplated by
the Merger Agreement and this Agreement and any actions required in furtherance
hereof and thereof; (ii) against any action or agreement that would (or would be
reasonably likely to) result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or this Agreement; and (iii) except as specifically requested in
writing by Acquisition in advance, against the following actions (other than the
Merger and the transactions contemplated by the Merger Agreement): (1) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or any of its subsidiaries; (2) a
sale, lease or transfer (whether by merger, consolidation, operation of law or
otherwise) 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; (3) (a) any change in the majority of
the board of directors of the Company; (b) any change in the present
capitalization of the Company or any amendment of the Company's certificate of
incorporation or by-laws; (c) any other material change in the Company's
corporate structure or business; or (d) any other action which is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone,
discourage or materially adversely affect the Merger or the transactions
contemplated by the Merger Agreement or this Agreement or the contemplated
economic benefits of any of the foregoing. Such Stockholder shall not enter into
any agreement or understanding with any person or entity prior to the
Termination Date to vote or give instructions after the Termination Date in any
manner inconsistent with clauses (i), (ii) or (iii) of the preceding sentence.
2.2. PROXY. EACH STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS, ACQUISITION AND
BRIAN KWAIT, PRESIDENT OF ACQUISITION, AND DOUGLAS HITCHNER, VICE PRESIDENT OF
ACQUISITION, IN THEIR RESPECTIVE CAPACITIES AS OFFICERS OF ACQUISITION, AND ANY
INDIVIDUAL WHO SHALL HEREAFTER SUCCEED TO ANY SUCH OFFICE OF ACQUISITION, AND
ANY OTHER DESIGNEE OF ACQUISITION, EACH OF THEM INDIVIDUALLY, SUCH STOCKHOLDER'S
IRREVOCABLE (UNTIL THE TERMINATION DATE)
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PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO VOTE THE SHARES
AS INDICATED IN SECTION 2.1 ABOVE. EACH STOCKHOLDER INTENDS THIS PROXY TO BE
IRREVOCABLE (UNTIL THE TERMINATION DATE) AND COUPLED WITH AN INTEREST AND WILL
TAKE SUCH FURTHER ACTION AND EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY
TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY PROXY PREVIOUSLY
GRANTED BY SUCH STOCKHOLDER WITH RESPECT TO SUCH STOCKHOLDER'S SHARES.
3. Certain Covenants of Stockholders. Except in accordance with the terms of
this Agreement, each Stockholder hereby severally covenants and agrees as
follows:
3.1. No Solicitation. Prior to the Termination Date, no Stockholder shall, in
its capacity as such, directly or indirectly (including through advisors, agents
or other intermediaries), solicit (including by way of furnishing information)
or respond to any inquiries or the making of any proposal by any person or
entity (other than Acquisition or any Affiliate thereof) with respect to the
Company that constitutes or could reasonably be expected to lead to an
Acquisition Proposal (as defined in Section 6.4 in the Merger Agreement). If any
Stockholder in its capacity as such receives any such inquiry or proposal, then
such Stockholder shall promptly inform Acquisition of the terms and conditions,
if any, of such inquiry or proposal and the identity of the person making it.
Each Stockholder, in its capacity as such, 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.
Notwithstanding the foregoing, nothing in this Section 3.1 shall restrict a
Stockholder who is also a director of the Company from taking actions in such
Stockholder's capacity as a director to the extent and in the circumstances
permitted by Section 6.4 of the Merger Agreement.
3.2. Restriction on Transfer, Proxies and Noninterference; Restriction on
Withdrawal. Prior to the Termination Date, no Stockholder shall, directly or
indirectly: (i) except pursuant to the terms of the Merger Agreement and to
Acquisition pursuant to this Agreement, offer for sale, sell, transfer (whether
by merger, consolidation, operation of law or otherwise), tender, pledge,
encumber, assign or otherwise dispose of, enforce or permit the execution of the
provisions of any redemption agreement with the Company or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer (whether by merger, consolidation,
operation of law or otherwise), tender, pledge, encumbrance, assignment or other
disposition of, or exercise any discretionary powers to distribute, any or all
of such Stockholder's Shares or any interest therein, (ii) except as
contemplated by this Agreement, grant any proxies or powers of attorney with
respect to any Shares, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares; or (iii) take any action that would
make any representation or warranty of such Stockholder contained herein untrue
or incorrect or have the effect of preventing or disabling such Stockholder from
performing such Stockholder's obligations under this Agreement. Acquisition
acknowledges the circumstances described on Schedule II which shall not be
construed as a breach of this covenant.
3.3. Waiver of Appraisal Rights. Each Stockholder hereby waives any rights of
appraisal from the Merger that such Stockholder may have.
3.4. Agreement to Roll-Over. Each Stockholder listed on Schedule A to the Merger
Agreement understands and acknowledges that Sub is entering into the Merger
Agreement in reliance upon the conversion of their shares into the right to
receive the Surviving Corporation Common Stock and agree
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to such conversion pursuant to Section 3.2 of the Merger Agreement. Each
Stockholder hereby agrees to rollover the number of shares of Company Common
Stock set forth opposite such Stockholder's name on Schedule A to the Merger
Agreement.
3.5. Confidentiality, No Hire.
(a) Each Stockholder agrees that for a period ending five years after the
Effective Time of the Merger, such Stockholder will not disclose to any other
party, unless required to do so by law, any Confidential Information relating to
the Company or to any subsidiary or affiliate thereof which information was
acquired during the course of such Stockholder's relationship with the Company.
As used in this Agreement, the term "Confidential Information" means information
that is not generally known or available to the public and that is used,
developed or obtained by the Company or its subsidiaries or affiliates in
connection with its businesses, including but not limited to, (i) products or
services; (ii) fees, costs and pricing structures; (iii) designs; (iv) computer
software, including operating systems, applications and program listings; (v)
flow charts, manuals and documentation; (vi) data bases; (vii) accounting and
business methods; (viii) inventions, devices, new developments, methods and
processes, whether patentable or unpatentable and whether or not reduced to
practice; (ix) customers or customer requirements, order levels or projections
and customer or client lists; (x) other copyrightable works; (xi) all technology
and trade secrets; and (xii) all similar and related information in whatever
form. Confidential Information will not include any information that has been
published in a form generally available to the public prior to the date the
Stockholder proposes to disclose or use such information.
(b) Each Stockholder agrees that for a period ending two years after the
Effective Time of the Merger, without the prior written consent of the Company,
neither such Stockholder nor any business or enterprise with which such
Stockholder is associated as an officer, director or controlling shareholder or
other investor (in each case, with the power to direct or cause the direction of
the management of such business or enterprise) will employ or attempt to employ
an employee of the Company or any of its Subsidiaries or joint ventures.
3.6. Hanseatic Agreement. Each Stockholder that is a party to that certain
Stockholders Agreement dated as of October 8, 1992 and as amended as of July 3,
1996 (the "Stockholders Agreement") by and among the Company, Stephen Russell,
and Hanseatic Corporation agrees that, from the date hereof until the date the
Merger Agreement is terminated in accordance with its terms, the Stockholders
Agreement shall be of no force or effect to the extent that the Stockholders
Agreement is inconsistent with this Agreement, the Merger Agreement or the
transactions contemplated hereby or thereby and that such Stockholder shall not,
and shall not attempt to, either directly or indirectly, exercise any of its
rights under the Stockholders Agreement in any manner inconsistent with this
Agreement, the Merger Agreement or the transactions contemplated hereby or
thereby (it being agreed that, without limitation, the exercise of any rights
under Article II of the Stockholders Agreement by any Stockholder in connection
with the transactions contemplated by the Merger Agreement would be inconsistent
with this Agreement, the Merger Agreement and the transactions contemplated
hereby and thereby). Each Stockholder that is party to the Stockholders
Agreement further agrees that the Stockholder Agreement shall terminate as of
the Closing and to execute such additional documents and agreements to effect
the foregoing. Acquisition acknowledges that Hanseatic Corporation's
representations and warranties set forth in Sections 1(a)(ii), 1(a)(iii) and
1(a)(iv) shall not be deemed to have been
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breached as a result of the existence of the Stockholders Agreement.
4. Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be necessary or
desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
5. Certain Events. Each Stockholder agrees that this Agreement and the
obligations thereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation such Stockholder's heirs, guardians, administrators or successors or
as a result of any divorce.
6. Stop Transfer. Each Stockholder agrees with, and covenants to, Acquisition
that such Stockholder shall not request that the Company register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of such Stockholder's Shares, unless such transfer is made in
compliance with this Agreement.
7. Termination. The obligations of the Stockholders under this Agreement shall
terminate upon the date the Merger Agreement is terminated in accordance with
its terms. The termination of this Agreement shall not relieve any party from
liability for any breach of this Agreement.
8. Miscellaneous.
8.1. Entire Agreement; Assignment. This Agreement (i) constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) shall not
be assigned by operation of law or otherwise without the prior written consent
of the other parties, provided that Acquisition may assign, in its sole
discretion, its rights and obligations hereunder to any affiliate of
Acquisition, but no such assignment shall relieve Acquisition of its obligations
hereunder if such assignee does not perform such obligations.
8.2. Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto; provided that Schedule I may be supplemented by
Acquisition by adding the name and other relevant information concerning any
stockholder of the Company who is or agrees to be bound by the terms of this
Agreement without the agreement of any other party hereto, and thereafter such
added stockholder shall be treated as a "Stockholder" for all purposes of this
Agreement.
8.3. Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly received if so given) by hand delivery, telegram, telex or telecopy,
or by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any courier service, such as Federal Express, providing proof
of delivery. All communications hereunder shall be delivered to the Stockholders
at the addresses set forth on Schedule I hereto. All communications hereunder
shall be delivered to Acquisition as follows:
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c/o Odyssey Investment Partners, LLC
280 Park Avenue
West Tower, 38th Floor
New York, New York 10017
Attn: Brian Kwait
copy to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Attn.: Richard Trobman
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
8.4. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
8.5. Enforcement. The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
8.6. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but both of which shall
constitute one and the same Agreement.
8.7. Descriptive Headings. The descriptive headings used 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.
8.8. Severability. Whenever possible, each provision or portion of any provision
of this Agreement will be interpreted in such manner as to be effective and
valid under applicable law but if any provision or portion of any provision of
this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion of
any provision in such jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.
8.9. Definitions; Construction. For purposes of this Agreement:
(a) "beneficially own" or "beneficial ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
beneficially owned by a Person shall include securities beneficially owned by
all other Persons with whom such
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Person would constitute a "group" as described in Section 13(d)(3) of the
Exchange Act.
(b) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
(c) In the event of a stock dividend or distribution, or any change in the
Company Common Stock by reason of any split-up, subdivision, recapitalization,
combination, exchange of shares or the like, the term "Shares" shall be deemed
to refer to and include the Shares as well as all stock distributed pursuant to
such stock dividends and distributions and any shares into which or for which
any or all of the Shares may be changed, exchanged, split, subdivided, combined
or recapitalized.
8.10. Stockholder Capacity. Notwithstanding anything herein to the contrary, no
person executing this Agreement who is, or becomes during the term hereof, a
director of the Company makes any agreement or understanding herein in his or
her capacity as such director, and the agreements set forth herein shall in no
way restrict any director in the exercise of his or her fiduciary duties as a
director of the Company. Each Stockholder has executed this Agreement solely in
his or her capacity as the record or beneficial holder of such Stockholder's
Shares.
[Signature Page Follows]
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<PAGE>
IN WITNESS WHEREOF, Acquisition and each Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
LAREDO ACQUISITION CORP.
By: /s/ Brian Kwait
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
By: /s/ Muzzi Mirza
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
STOCKHOLDERS:
Stephen Russell
/s/ Stephen Russell
-------------------------------
Hanseatic Corporation
By: /s/ Brian Biddleman
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
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Schedule I
<TABLE>
<CAPTION>
Name Number of Existing Shares
- ---- -------------------------
<S> <C>
Stephen Russell 924,804
Hanseatic Corporation 947,232*
</TABLE>
* Exclusive of 12,121 shares issuable upon exercise of warrants, which for
purposes of this Agreement shall be deemed Shares solely in the event of
exercise of such warrants.
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Schedule II
Hanseatic Americas LDC and certain clients of Hanseatic
Corporation have economic rights with respect to the Shares beneficially owned
by Hanseatic Corporation. However, such rights do not impair or limit Hanseatic
Corporation's record and beneficial ownership power of disposition, voting power
or power to demand appraisal rights with respect to its Shares.
11
