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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
June 23, 1998
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Date of Report (Date of earliest event reported)
CELADON GROUP, INC.
(exact name of registrant as specified in its charter)
DELAWARE 0-23192 13-3361050
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(State or other Commission File Number (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
One Celadon Drive, Indianapolis, Indiana 46236-4207
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(Address of Principal Executive Offices) (Zip Code)
(317) 972-7000
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name or former address, if changed since last report.)
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<PAGE>
ITEM 5. OTHER REPORTABLE EVENTS
On June 23, 1998, Celadon Group, Inc. ("Celadon") entered into the
Agreement and Plan of Merger, dated as of June 23, 1998, by and between Celadon
and Laredo Acquisition Corp. ("Laredo"), a newly-formed wholly-owned subsidiary
of Odyssey Investment Partners, pursuant to which Laredo will be merged with and
into Celadon (the "Merger"). Upon effectiveness of the Merger (the "Effective
Time"), the separate corporate existence of Laredo shall cease and Celadon shall
continue as the surviving corporation (the "Surviving Corporation"). At the
Effective Time, (i) the shares of common stock of Laredo issued and outstanding
immediately prior to the Effective Time shall be automatically converted into
and thereafter represent 2,880,000 shares of validly issued, fully paid and
nonassessable shares of common stock of the Surviving Corporation and (ii)
except as provided in the next sentence, each share of common stock, par value
$0.033, of Celadon issued and outstanding immediately prior to the consummation
of the Merger will be converted into the right to receive $20.00 (the "Merger
Consideration", subject to the right of a holder to exercise dissenter's rights.
Certain of Celadon's current officers and stockholders will, in lieu of
receiving the Merger Consideration, retain an aggregate of 320,000 shares of
Celadon's common stock currently held by them. These shares will, at the
Effective Time, be converted into the right to receive one share of common stock
of the Surviving Corporation in the Merger (the "Rollover Shares"). In
connection with the Merger, Celadon issued a press release dated June 23, 1998
which is attached hereto as Exhibit 99.1 and incorporated herein. The Agreement
and Plan of Merger is incorporated herein and is attached hereto as Exhibit 2.1.
The affirmative vote of a majority of the outstanding shares of Celadon's
common stock is required to consummate the Merger. Stockholders of Celadon
beneficially owning, in the aggregate approximately 1,872,036 shares of
Celadon's common stock have agreed, pursuant to a Voting Agreement dated June
23, 1998 (the "Voting Agreement"), to vote in favor of the Merger. Certain of
these stockholders will receive Rollover Shares in lieu of the Merger
Consideration. The Voting Agreement is attached hereto as Exhibit 10.1 and is
incorporated herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a)and (b)Not applicable.
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(c) The following documents are furnished as Exhibits to this Current
Report on Form 8-K pursuant to Item 601 of Regulation S-K:
2.1 Agreement and Plan of Merger dated as of June 23, 1998 by and
among Celadon Group, Inc. and Laredo Acquisition Corp.
10.1 Voting Agreement dated June 23, 1998 by and between Laredo
Acquisition Corp. and the Stockholders party thereto
99.1 Press release dated June 23, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 6, 1998
CELADON GROUP, INC.
By: /s/ Robert Goldberg
Name: Robert Goldberg
Title: Executive Vice President,
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
DOC. NO. DOCUMENT DESCRIPTION
2.1 Agreement and Plan of Merger by and Between Celadon Group, Inc. and
Laredo Acquisition Corp. dated as of June 23, 1998.
10.1 Voting Agreement by and among Larado Acquisition Corp., Stephen
Russell, Hanseatic Corporation and Hanseatic Americas LDC dated as of
June 23, 1998.
99.1 Press Release dated June 23, 1998.
<PAGE>
processed with L&W Heading Numbering by MFELDMAN (L&W) on Wednesday,
December 31, 1997 at 1:04 AM-Scheme 1
EXECUTION COPY
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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
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<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:
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ARTICLE
DEFINITIONS
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0. 0. 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.
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"Dissenting Stockholders" shall mean those Stockholders who hold
Dissenting Shares.
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"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
handling of pollutants,
<PAGE>
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,
<PAGE>
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.
"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.
<PAGE>
"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 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
<PAGE>
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.
"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).
0. 0. 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:
Term Section
---- -------
"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)
<PAGE>
"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
ARTICLE
I.
THE merger
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 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...................................................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").
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
<PAGE>
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."
4...................................................Certificate of
Incorporation and By-Laws.
I..........................................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.
II.........................................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.
1...................................................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...................................................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
I.
Effect of merger on securities of sub and the company
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-assessable share(s) of common stock, par value $0.033
per
<PAGE>
share, of the Surviving Corporation (the "Surviving Corporation Common Stock").
2...................................................Conversion of
Company Common Stock.
I..........................................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.
II.........................................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").
III........................................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.
IV.........................................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.
1...................................................Options.
I..........................................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.
II.........................................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
<PAGE>
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.
III........................................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 are
necessary, subject if necessary, to obtaining consents of the holders thereof,
to carry out the terms of this Section 3.3.
1...................................................Warrants.
I..........................................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.
II.........................................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.
1...................................................Exchange of
Certificates.
I..........................................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.
II.........................................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
<PAGE>
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 right to receive upon such surrender the Merger
Consideration for each share of Company Common Stock.
III........................................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.
IV.........................................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.
V..........................................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.
VI.........................................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
<PAGE>
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.
VII........................................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.
1...................................................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 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
I.
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
<PAGE>
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.
1...................................................Organization and
Capitalization.
I..........................................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.
II.........................................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 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.
III........................................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.
<PAGE>
1...................................................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.
2...................................................Subsidiaries.
I..........................................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 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.
II.........................................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.
<PAGE>
1...................................................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.
2...................................................Title to Assets;
Absence of Liens and Encumbrances, etc.
I..........................................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.
II.........................................Real Property
III........................................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 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.
IV.........................................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
<PAGE>
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.
V..........................................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.
VI.........................................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;
VII........................................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.
VIII.......................................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 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,
<PAGE>
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.
1...................................................Contracts and
Commitments.
I..........................................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):
II.........................................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;
III........................................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;
IV.........................................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;
V..........................................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;
VI.........................................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;
VII........................................each distribution,
franchise, license, sales, commission, consulting agency or advertising Contract
related to the Assets or the business, except for such Contracts that are
cancelable on not more than 30 days' notice by the Company or its Subsidiaries
without penalty
<PAGE>
or increased cost;
VIII.......................................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;
IX.........................................each Contract (or
group of related Contracts) with the United States, state or local government or
any agency or department thereof;
X..........................................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;
XI.........................................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
XII........................................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.
XIII.......................................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.
1...................................................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 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).
2...................................................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.
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 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,
<PAGE>
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...................................................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 Subsidiaries have been
prepared and maintained in accordance with GAAP, consistently applied throughout
the periods indicated, and sound bookkeeping practices.
5...................................................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.
<PAGE>
6...................................................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.
7...................................................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 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.
8...................................................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).
9...................................................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
10..................................................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
<PAGE>
other firm, corporation, 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.
11..................................................Employee Plans.
I..........................................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.
II.........................................(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.
III........................................(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.
IV.........................................(i) Neither the
Company nor any
<PAGE>
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 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.
V..........................................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.
VI.........................................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.
VII........................................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.
VIII.......................................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.
IX.........................................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
<PAGE>
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).
X..........................................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.
XI.........................................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 or
Sub after the Closing to make any payment to any of such Personnel following
termination of employment.
1...................................................Tax Matters.
I..........................................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.
II.........................................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.
III........................................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
<PAGE>
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.
IV.........................................Liens. There are no
liens for Taxes (other than for current Taxes not yet due and payable) on the
Assets.
V..........................................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.
VI.........................................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.
VII........................................Tax-Exempt Use
Property. None of the Assets is "tax-exempt use property" within the meaning of
Section 168(h) of the Code.
VIII.......................................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.
IX.........................................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.
X..........................................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.
XI.........................................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.
XII........................................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.
<PAGE>
XIII.......................................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.
1...................................................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.
2...................................................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.
3...................................................Compliance with
Environmental Laws.
I..........................................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
<PAGE>
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.
II.........................................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.
III........................................(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.
IV.........................................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.
V..........................................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, warranty,
indemnification, covenant, restriction or other undertaking concerning
Environmental Conditions or compliance with Environmental Laws.
VI.........................................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.
VII........................................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.
<PAGE>
VIII.......................................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).
1...................................................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.
2...................................................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.
3...................................................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...................................................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 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.
5...................................................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.
6...................................................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
I.
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:
1...................................................Organization.
Sub is duly organized, validly existing and in good standing under the
laws of the State of ------------ Delaware.
<PAGE>
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.
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.
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...................................................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.
<PAGE>
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
I. COVENANTS OF THE COMPANY and Sub
The Company and Sub covenant and agree with each other that from the
date hereof through the Closing:
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:
I..........................................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;
II.........................................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;
III........................................shall not, and shall
cause its Subsidiaries not to, amend their respective certificates of
incorporation or by-laws or comparable governing instruments;
IV.........................................shall promptly notify
Sub of (i) any Material Adverse Change, (ii) any material litigation or material
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or (iii) the breach of any
representation or warranty contained herein;
<PAGE>
V..........................................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;
VI.........................................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;
VII........................................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;
VIII.......................................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;
IX.........................................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;
X..........................................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;
XI.........................................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;
XII........................................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
<PAGE>
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for share of its capital stock;
XIII.......................................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);
XIV........................................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;
XV.........................................shall not, and shall
not permit any of its Subsidiaries to, change any accounting principles or
practices;
XVI........................................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
XVII.......................................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.
1...................................................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
<PAGE>
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").
2...................................................Consents and
Efforts.
I..........................................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.
II.........................................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.
III........................................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
<PAGE>
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.
IV.........................................Sub shall use its
reasonable best efforts to arrange the Financing pursuant to the Financing
Letters.
1...................................................Other Offers.
I..........................................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
<PAGE>
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, 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.
II.........................................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
<PAGE>
Party is the Third Party referred to in clause (x) above).
III........................................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.
IV.........................................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 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.
V..........................................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.
VI.........................................This Section 6.4 shall
survive any termination of this Agreement, however caused.
1...................................................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
<PAGE>
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.
2...................................................Proxy Statement.
I..........................................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.
II.........................................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 request by
the SEC for amendment of the Proxy Statement or comments thereon and responses
thereto or requests by the SEC for additional information.
1...................................................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.
2...................................................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 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
<PAGE>
shall be made so that the successors and assigns of the Surviving Corporation
shall assume its obligations set forth in this Section 6.8.
3...................................................Notices of Certain
Events.
The Company shall promptly notify Sub of:
I..........................................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;
II.........................................any notice or other
communication from any governmental or regulatory agency or authority in
connection with the transactions contemplated by this Agreement; and
III........................................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.
1...................................................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.
2 ...........................................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.
3 .........................................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
<PAGE>
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.
ARTICLE
I.
CONDITIONS TO THE MERGER
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:
I..........................................This Agreement shall
have been adopted by the stockholders of the Company in accordance with the
DGCL;
II.........................................Any applicable waiting
period under the HSR Act relating to the Merger shall have expired or been
terminated; and
III........................................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.
1...................................................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
<PAGE>
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.
2...................................................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:
I..........................................Representations,
Warranties and Covenants.
II.........................................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 "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.
III........................................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.
IV.........................................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.
V..........................................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
<PAGE>
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.
VI.........................................Recapitalization.
Sub shall be reasonably satisfied that the Merger shall be recorded as
a "recapitalization" for financial reporting purposes.
VII........................................Consents.
VIII.......................................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).
IX.........................................All consents listed on
Schedule 4.9 of the Disclosure Schedule shall have been obtained.
X..........................................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.
XI.........................................Financing.
The funding contemplated by the Financing Letters shall have been
obtained.
XII........................................Certain Other
Agreements.
XIII.......................................The Persons listed in
Schedule 7.3(g) shall have entered into, as applicable, (a) the employment
agreements and (b) one or more
<PAGE>
agreements relating to their 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.
XIV........................................The Stockholders party
to the Voting Agreement shall have performed their obligations under the Voting
Agreement in all material respects.
XV.........................................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.
XVI........................................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 XVII.
MISCELLANEOUS
1...................................................Termination.
I..........................................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):
II.........................................by mutual written
consent of Sub and the Company at any time;
III........................................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;
<PAGE>
IV.........................................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;
V..........................................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;
VI.........................................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, (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;
VII........................................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
VIII.......................................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.
IX.........................................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
<PAGE>
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.
X..........................................Procedure Upon
Termination.
In the event of termination of this Agreement pursuant to Section 8.1:
XI.........................................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;
XII........................................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
XIII.......................................The Confidentiality
Letter shall survive in accordance with its terms.
1...................................................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 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.
<PAGE>
2...................................................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.
<PAGE>
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.
3............................................................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 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.
4............................................................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.
5......................................................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.
6............................................................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.
7............................................................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.
<PAGE>
8.................................................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.
9..........................................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.
10................................................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.
11.....................................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.
12.......................................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
<PAGE>
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.
13............................................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.
14...........................................Interpretive Provisions.
I...................................................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.
II..................................................Accounting
terms used but not otherwise defined herein shall have the meanings given to
such terms under GAAP.
[Signature Page Follows]
<PAGE>
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:________________________
Name:______________________
Title:_____________________
CELADON GROUP, INC.
By:________________________
Name:______________________
Title:_____________________
<PAGE>
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TABLE OF CONTENTS
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
<PAGE>
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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
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
<PAGE>
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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
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
<PAGE>
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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:
3. 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
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
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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 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
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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.
1. Agreement To Vote; Proxy.
2. 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.
3. 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) 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
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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.
4. Certain Covenants of Stockholders. Except in accordance with the terms of
this Agreement, each Stockholder hereby severally covenants and agrees as
follows:
5. 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.
6. 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.
7. Waiver of Appraisal Rights. Each Stockholder hereby waives any rights of
appraisal from the Merger that such Stockholder may have.
8. 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 to such conversion
pursuant to Section 3.2 of the Merger Agreement. Each Stockholder hereby agrees
to
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rollover the number of shares of Company Common Stock set forth opposite such
Stockholder's name on Schedule A to the Merger Agreement.
9. 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.
1. 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 breached as a result of the existence
of the Stockholders Agreement.
2. Further Assurances. From time to time, at the other party's request and
without further consideration,
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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.
3. 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.
4. 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.
5. 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.
6. Miscellaneous.
7. 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. 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.
9. 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:
c/o Odyssey Investment Partners, LLC
280 Park Avenue
West Tower, 38th Floor
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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.
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 thereof.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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 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,
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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.
1. 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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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:________________________
Name:______________________
Title:_____________________
By:________________________
Name:______________________
Title:_____________________
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STOCKHOLDERS:
Stephen Russell
___________________________
Hanseatic Corporation
By:________________________
Name:______________________
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Title:_____________________
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Schedule I
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Name Number of Existing Shares
Stephen Russell 924,804
Hanseatic Corporation 947,232*
*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.
<PAGE>
KCSA
WORLDWIDE News
- --------------------------------------------------------------------------------
Public & Investor Relations, Corporate & Marketing Communications
FOR: CELADON GROUP, INC.
One Celadon Drive
Indianapolis, IN 46235
CONTACT: Steve Russell/Bob Goldberg
(317) 972-7034/(317) 972-7039
ODYSSEY Kekst & Company
INVESTMENT Jim Fingeroth/Wendi Kopsick
PARTNERS: (212) 521-4800
KCSA Joseph A. Mansi/Adam I. Friedman
CONTACT: (212) 682-6300, ext. 205/215,
FOR IMMEDIATE RELEASE
CELADON GROUP., INC. TO BE ACQUIRED FOR $259 MILLION BY ITS
MANAGEMENT AND ODYSSEY INVESTMENT PARTNERS
INDIANAPOLIS, IN., June 23, 1998 -- Celadon Group, Inc. (NASDAQ: CLDN), the
leading truckload transportation services provider from the United States and
Canada to and from Mexico, announced today it has entered into a definitive
agreement to be acquired by the management of Celadon and Odyssey Investment
Partners for $259 million, and to pursue growth as a private entity.
Under the terms of the agreement, stockholders of Celadon will receive $20
per share in cash. The total transaction value of approximately $259 million
includes assumed debt as well as retirement of outstanding stock options. The
transaction is subject to customary conditions, including a vote of Celadron
shareholders, and is expected t close within approximately three month's.
Following the acquisition, Celadron's senior management will continue to serve
in their present positions.
(more)
<PAGE>
CELADON/2
In announcing the transaction, Stephen Russell, Chairman and Chief
Executive Officer of Celadon, said, "The entire Celadon management team is
extremely pleased to establish a strong relationship with such a recognized
financial partner as Odyssey Investment Partners. The combined industry-leading
resources of both Celadon and Odyssey afford us an opportunity to enhance our
growth within the trucking industry. At the same time, it allows us to maximize
value for our shareholders."
Stephen Berger, Chairman of Odyssey Investment Partners, said, "We've
carefully looked at the trucking industry. We are enthusiastic about the
truckload and sector and Celadon's leadership position in it. We are impressed
with Celadon "experienced management team and its significant opportunity for
growth as the Company stays focused on the North-South corridor connecting
Canada, the United States and Mexico."
Celadon Group, Inc. is a truckload company specializing in the transport of
goods to and from Mexico. The Company has approximately 2,100 tractors and
6,100 trailers.
Odyssey Investment Partners LLC, headquartered in New York, is a newly
formed $680 million fund which has been raised to pursue corporate private
equity transactions.
###
The discussion set forth above as well as oral statements made by officers of
the Company relating thereto, may contain forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such comments
are based upon information currently available to management's perception
thereof as of the date of this press release. Actual results of the Company's
operations could materially differ from those forward looking statements. Such
differences could be caused by a number of factors including, but not limited
to, potential adverse affects of regulation; changes in competition and the
effects of such changes; increased competition; change in fuel prices; changes
in economic, political or regulatory environments: changes in the availability
of a stable labor force; ability of the Company to hire drivers meeting Company
standards; changes in management strategies; environmental or tax matters; and
risk described from time to time in reports filed by the Company with the
Securities and Exchange Commission. Readers should take these factors into
account in evaluating any such forward looking statements.
This release is available on the KCSA Worldwide website at www.kcsa.com.
<PAGE>
