File Nos. 333-38337
333-38337-01, 333-38337-02, 333-38337-03,
333-38337-04, 333-38337-05, 333-38337-06
Filed pursuant to Rule 424(b)(3)
Prospectus Supplement
(to Prospectus dated December 11, 1997)
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 29, 1998
AMERISERVE FOOD DISTRIBUTION, INC.*
Delaware 000-19367 75-2296149
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
14841 Dallas Parkway
Dallas, Texas 75240-2100
(Address of Principal Executive Offices)
(972) 338-7000
(Registrant's telephone number, including area code)
*This Current Report on Form 8-K is also filed on behalf of the Registrant's
operating subsidiaries that are guarantors of certain debt securities of the
Registrant that are registered under the Securities Act of 1933.
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The date of this Prospectus Supplement is January 30, 1998.
<PAGE>
ITEM 5. OTHER EVENTS.
On January 29, 1998, AmeriServe Food Distribution, Inc. (the
"Company"), a Delaware corporation and wholly owned subsidiary of Nebco Evans
Holdings Company ("Parent"), Steamboat Acquisition Corp., a newly formed
Delaware corporation and wholly owned subsidiary of the Company ("Merger Sub"),
and ProSource, Inc., a Delaware corporation ("ProSource"), entered into an
Agreement and Plan of Merger (the "Merger Agreement") providing that, among
other things, Merger Sub will be merged (the "Merger") with and into ProSource,
with ProSource as the surviving corporation. Pursuant to the Merger Agreement,
each share of ProSource Class A Common Stock, par value $0.01 per share ("Class
A Shares"), and each share of ProSource Class B Common Stock, par value $0.01
per share ("Class B Shares" and together with the Class A Shares, the "Shares"),
will be converted into the right to receive $15.00 in cash without interest (the
"Merger Consideration"). Following the Merger, ProSource will become a direct
wholly owned subsidiary of the Company and an indirect wholly owned subsidiary
of Parent.
The Merger is subject to the approval of ProSource's stockholders, the
expiration of antitrust waiting periods and certain other customary conditions.
In connection with the Merger, the Company and Merger Sub have entered
into a Voting Agreement (the "Voting Agreement") with Onex DHC LLC, a Wyoming
limited liability company, and certain of its affiliates (together, the
"Stockholders") which, as of the date hereof, are the beneficial owners of
496,583 Class A Shares (representing approximately 14.2% of the Class A Shares
outstanding) and 5,218,072 Class B Shares (representing approximately 88.6% of
the Class B Shares outstanding). Because the Class B Shares are entitled to ten
votes per share and the Class A Shares are entitled to one vote per share, the
Stockholders' Shares represent approximately 84.4% of the voting power with
respect to ProSource. Pursuant to the Voting Agreement the Stockholders have,
among other things, (i) agreed to vote all of their Shares in favor of the
Merger and against certain competing transactions, (ii) agreed not to sell or
transfer any of their Shares prior to the effective time of the Merger or
termination of the Voting Agreement, and (iii) granted Merger Sub an irrevocable
option to acquire their Shares at a price per share equal to the Merger
Consideration. The Option is exercisable within 30 days after termination of the
Merger Agreement (other than a termination upon mutual consent or a termination
by ProSource based on an actual material breach by the Company of its
obligations under the Merger Agreement). In the event that Merger Sub exercises
its option under the Voting Agreement, it will be required to make a cash tender
offer for the remaining Shares not held by it at a price per share equal to the
Merger Consideration. At a meeting held on January 29, 1998, the Board of
Directors of ProSource approved the Merger Agreement. Because the Stockholders
have agreed to vote all of their Shares in favor of the Merger and such Shares
represent approximately 84.4% of the voting power, the approval and adoption of
the Merger Agreement by ProSource's stockholders is assured.
The foregoing description of the Merger, the Merger Agreement and the
Voting Agreement does not purport to be complete and is qualified in its
entirety by reference to the Merger Agreement and the Voting Agreement, copies
of which are attached hereto as Exhibits
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<PAGE>
2.1 and 2.2, respectively, and are incorporated herein by reference. A copy of
the joint press release announcing the execution of the Merger Agreement is
attached hereto as Exhibit 99.1 and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of January 29, 1998, by
and among AmeriServe Food Distribution, Inc., Steamboat
Acquisition Corp. and ProSource, Inc.
2.2 Voting Agreement, dated as of January 29, 1998, by and among
AmeriServe Food Distribution, Inc., Steamboat Acquisition
Corp. and Onex DHC LLC and certain of its affiliates.
99.1 Joint Press Release, dated as of January 30, 1998.
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<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.
AMERISERVE FOOD DISTRIBUTION, INC.
By: /s/ John V. Holten
Name: John V.Holten
Title: Chairman and Chief Executive
Officer
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<PAGE>
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NUMBER
2.1 Agreement and Plan of Merger, dated as of January 29, 1998, by
and among AmeriServe Food Distribution, Inc., Steamboat
Acquisition Corp. and ProSource, Inc.
2.2 Voting Agreement, dated as of January 29, 1998, by and among
AmeriServe Food Distribution, Inc., Steamboat Acquisition
Corp. and Onex DHC LLC and certain of its affiliates.
99.1 Joint Press Release, dated as of January 30, 1998.
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================================================================================
AGREEMENT AND PLAN OF MERGER
by and among
AMERISERVE FOOD DISTRIBUTION, INC.
STEAMBOAT ACQUISITION CORP.
and
PROSOURCE, INC.
Dated as of January 29, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
SECTION 1.1. The Merger................................................. 2
SECTION 1.2. Closing.................................................... 2
SECTION 1.3. Effective Time of the Merger............................... 2
SECTION 1.4. Effects of the Merger...................................... 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
SECTION 2.1. Conversion of Shares....................................... 3
SECTION 2.2. Surrender and Payment...................................... 3
SECTION 2.3. Dissenting Shares.......................................... 5
SECTION 2.4. Stock Options and Stock Plans.............................. 5
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation............................... 6
SECTION 3.2. Bylaws..................................................... 6
SECTION 3.3. Directors and Officers..................................... 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.1. Organization, Standing and Corporate Power................. 7
SECTION 4.2. Subsidiaries............................................... 7
SECTION 4.3. Capital Structure.......................................... 8
SECTION 4.4. Authority; Noncontravention................................ 8
SECTION 4.5. SEC Documents; Financial Statements; No Undisclosed
Liabilities............................................ 10
SECTION 4.6. Disclosure Documents....................................... 10
SECTION 4.7. Property; Sufficiency of Assets............................ 11
SECTION 4.8. Absence of Certain Changes or Events....................... 11
SECTION 4.9. Litigation................................................. 13
SECTION 4.10. Compliance with Laws, Etc.................................. 13
<PAGE>
Page
SECTION 4.11. Absence of Changes in Stock or Benefit Plans............... 13
SECTION 4.12. ERISA Compliance........................................... 14
SECTION 4.13. Tax Matters................................................ 16
SECTION 4.14. Debt Instruments........................................... 17
SECTION 4.15. Insurance.................................................. 17
SECTION 4.16. Labor Matters.............................................. 18
SECTION 4.17. No Restrictive Agreements.................................. 18
SECTION 4.18. Interests of Officers and Directors........................ 18
SECTION 4.19. Brokers.................................................... 19
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
SECTION 5.1. Organization, Standing and Corporate Power................. 19
SECTION 5.2. Authority; Noncontravention................................ 19
SECTION 5.3. Disclosure Documents....................................... 20
SECTION 5.4. Brokers.................................................... 20
SECTION 5.5. Company Contracts ......................................... 20
ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.1. Conduct of Business........................................ 21
SECTION 6.2. Shareholder Meeting; Proxy Material........................ 22
SECTION 6.3. Access to Information...................................... 23
SECTION 6.4. Covenants Regarding Certain Benefit Plans.................. 23
SECTION 6.5. Cooperation in Arrangements with Lenders................... 24
ARTICLE VII
COVENANTS OF PARENT
SECTION 7.1. Confidentiality............................................ 24
SECTION 7.2. Obligations of Merger Subsidiary........................... 25
SECTION 7.3. Voting of Shares........................................... 25
SECTION 7.4. Director and Officer Liability............................. 25
ARTICLE VIII
COVENANTS OF PARENT AND THE COMPANY
SECTION 8.1. HSR Act Filings; Reasonable Efforts; Notification.......... 26
SECTION 8.2. Public Announcements....................................... 28
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Page
SECTION 8.3. No Solicitation............................................ 28
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party................ 28
SECTION 9.2. Conditions to the Obligations of Parent and Merger
Subsidiary.............................................. 28
SECTION 9.3. Conditions to the Obligations of the Company............... 30
ARTICLE X
TERMINATION
SECTION 10.1. Termination................................................ 30
SECTION 10.2. Effect of Termination...................................... 31
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Notices.................................................... 31
SECTION 11.2. Survival of Representations and Warranties................. 32
SECTION 11.3. Amendments; No Waivers..................................... 32
SECTION 11.4. Fees and Expenses.......................................... 32
SECTION 11.5. Successors and Assigns; Parties in Interest................ 33
SECTION 11.6. Governing Law.............................................. 33
SECTION 11.7. Counterparts; Effectiveness; Interpretation................ 33
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<PAGE>
INDEX OF DEFINED TERMS
Page Page
Agreement.........................1 Governmental Entity...............8
Benefit Plans....................12 HSR Act...........................9
CA Act............................9 indebtedness.....................16
Certificate of Merger.............2 Indemnified Parties..............23
Class A Shares....................1 Material Adverse Effect...........6
Class B Shares....................1 Merger............................1
Closing...........................2 Merger Consideration..............3
Code.............................13 Merger Subsidiary.................1
Company...........................1 Multiemployer Plan...............14
Company Option....................5 Multiple Employer Plan...........14
Company Proxy Statement...........9 Option Plans......................5
Company Shareholder Approval......8 Parent............................1
Company Shareholder Meeting......21 Parent Material Adverse Effect...18
Consents..........................8 person............................4
Constituent Corporations..........2 Plans............................13
Controlled Group Liability.......13 Preferred Shares..................7
DGCL..............................1 Qualified Plans..................13
Dissenting Shares.................4 SEC...............................9
Effective Time....................2 SEC Documents.....................9
ERISA............................13 Securities Act....................9
ERISA Affiliate..................13 Shares............................1
ESPP..............................5 Stockholders......................1
Exchange Act......................9 Voting Agreement..................1
GAAP..............................9
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<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of January
29, 1998, by and among ProSource, Inc. , a Delaware corporation (the "Company"),
AmeriServe Food Distribution, Inc., a Delaware corporation ("Parent"), and
Steamboat Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Sub").
WHEREAS, the Board of Directors of the Company has unanimously (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger (as defined herein), are fair to and in the best interests
of the shareholders of the Company, (ii) determined that the consideration to be
paid in the Merger is fair to and in the best interests of the shareholders of
the Company, (iii) approved this Agreement and the transactions contemplated
hereby, including the Merger, and (iv) resolved to recommend approval and
adoption of this Agreement, the Merger and the other transactions contemplated
hereby by such shareholders;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have approved the merger of Merger Sub into the Company as set forth
below (the "Merger"), upon the terms and subject to the conditions set forth in
this Agreement and the General Corporation Law of the State of Delaware (the
"DGCL"), whereby (i) each issued and outstanding share of Class A Common Stock,
par value $0.01 per share, of the Company (the "Class A Shares") shall be
converted into the right to receive the Merger Consideration (as defined herein)
and (ii) each issued and outstanding share of Class B Common Stock, par value
$0.01 per share, of the Company (the "Class B Shares" and, together with the
Class A Shares, the "Shares") shall be converted into the right to receive the
Merger Consideration, in each case excluding Class A Shares and Class B Shares
owned, directly or indirectly, by the Company or any subsidiary of the Company
or by Parent, Merger Sub or any other subsidiary of Parent and Dissenting Shares
(as defined herein);
WHEREAS, as a condition to the willingness of Parent and Merger Sub to
enter into this Agreement and consummate the transactions contemplated hereby,
Parent has required that Onex DHC LLC, a Wyoming limited liability company, and
certain of its affiliates (together, the "Stockholders"), agree, among other
things, to vote all Shares beneficially owned by the Stockholders in accordance
with the Voting Agreement, dated as of the date hereof, among the Stockholders,
Parent and Merger Sub (the "Voting Agreement") and comply with the other
provisions of the Voting Agreement; and in order to induce Parent and Merger Sub
to enter into this Agreement, the Stockholders will execute and deliver the
Voting Agreement; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the consummation thereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
<PAGE>
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, Merger Sub shall
be merged with and into the Company at the Effective Time (as defined herein).
At the Effective Time, the separate corporate existence of Merger Sub shall
cease, and the Company (i) shall continue as the surviving corporation as a
direct or indirect wholly owned subsidiary of Parent (Merger Sub and the Company
are sometimes hereinafter referred to as "Constituent Corporations" and, as the
context requires, the Company, after giving effect to the Merger, is sometimes
hereinafter referred to as the "Surviving Corporation") and (ii) shall succeed
to and assume all the rights and obligations of Merger Sub in accordance with
the DGCL.
SECTION 1.2. Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 10.1, and subject to the satisfaction or waiver of the conditions set
forth in Article IX, the closing of the Merger (the "Closing") shall take place
at 10:00 a.m. on the second business day after satisfaction or waiver of the
conditions set forth in Article IX, at the offices of Wachtell, Lipton, Rosen &
Katz, 51 West 52nd Street, New York, New York, unless another date, time or
place is agreed to in writing by the parties hereto. At the time of the Closing,
the Company and Merger Sub will cause the Merger to be consummated by filing
this Agreement or a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware in such form as required by and
executed in accordance with the relevant provisions of the DGCL and shall make
all other filings or recordings required by the DGCL in connection with the
Merger.
SECTION 1.3. Effective Time of the Merger. The Merger shall, subject
to the DGCL, become effective as of such date and time as the Certificate of
Merger is duly filed with the Secretary of State of the State of Delaware or at
such later date and time as is specified in the Certificate of Merger (the
"Effective Time").
SECTION 1.4. Effects of the Merger. From and after the Effective Time,
the Surviving Corporation shall possess all the property, rights, privileges,
immunities, powers and franchises and be subject to all of the debts,
restrictions, disabilities and duties of the Company and Merger Sub, all as
provided under the DGCL.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS
SECTION 2.1. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any Shares or any
shares of capital stock of Merger Sub:
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(a) each Share owned by the Company or owned by Parent, Merger Sub or
any subsidiary of any of the Company, Parent or Merger Sub immediately
prior to the Effective Time shall be canceled, and no payment shall be made
with respect thereto;
(b) each share of common stock of Merger Sub outstanding immediately
prior to the Effective Time shall be converted into and become one fully
paid and nonassessable share of common stock of the Surviving Corporation
and shall constitute the only outstanding shares of capital stock of the
Surviving Corporation; and
(c) each Share outstanding immediately prior to the Effective Time
shall, except as otherwise provided in Section 2.1(a) or as provided in
Section 2.3 with respect to Dissenting Shares, be converted into the right
to receive $15.00 in cash without interest (the "Merger Consideration").
SECTION 2.2. Surrender and Payment. (a) At the Effective Time, Parent
shall, or shall cause Merger Sub to, deposit in trust, or enter into such other
agreement or arrangement as may be reasonably satisfactory to the Company, with
a bank or trust company designated by Parent and reasonably acceptable to the
Company (the "Exchange Agent"), cash in an aggregate amount equal to the product
of (i) the number of Shares issued and outstanding at the Effective Time (other
than Shares owned by the Company, Parent or Merger Sub or any subsidiary of the
Company, Parent or Merger Sub) and (ii) the Merger Consideration (the "Exchange
Fund"). Promptly after the Effective Time, Parent will send, or will cause the
Exchange Agent to send, to each holder of Shares at the Effective Time a letter
of transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates representing Shares to the Exchange Agent). The
Exchange Agent shall, pursuant to irrevocable instructions given by Parent or
Merger Sub, make the payments provided in this Section. The Exchange Fund shall
not be used for any other purpose, except as provided in this Agreement.
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
certificate or certificates representing such Shares, together with a properly
completed letter of transmittal covering such Shares and other customary
documentation, will be entitled to receive the Merger Consideration payable in
respect of such Shares. Parent shall establish procedures reasonably
satisfactory to the Company under which holders of Shares will be able to
receive payment of the Merger Consideration in immediately available funds
immediately after the Effective Time. As of the Effective Time, all such Shares
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate previously
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration, without interest,
upon surrender of the certificates representing such Shares, as contemplated
hereby.
(c) If any portion of the Merger Consideration is to be paid to a
person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so
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<PAGE>
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such payment to a
person other than the registered holder of such Shares or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable. For purposes of this Agreement, "person" means an individual, a
corporation, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(d) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Corporation, they shall be canceled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article II.
(e) Any portion of the Exchange Fund that remains unclaimed by the
holders of Shares six months after the Effective Time shall be returned to
Parent, upon Parent's demand, and any such holder who has not exchanged his
Shares for the Merger Consideration in accordance with this Section prior to
that time shall thereafter look only to Parent and the Surviving Corporation for
payment of the Merger Consideration in respect of his Shares. Notwithstanding
the foregoing, Parent shall not be liable to any holder of Shares for any amount
paid to a public official pursuant to and in accordance with the requirements of
applicable abandoned property, escheat or similar laws.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.2(a) to pay for Shares for which the right
to a determination of fair market value, as contemplated by Section 2.3, has
been perfected shall be returned to Parent upon Parent's demand.
SECTION 2.3. Dissenting Shares. (a) Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by holders who have not voted in
favor of or consented to the Merger and who shall have delivered a written
demand for appraisal of such Shares in the time and manner provided in Section
262 of the DGCL and shall not have failed to perfect or shall not have
effectively withdrawn or lost their rights to appraisal and payment under the
DGCL (the "Dissenting Shares") shall not be converted into the right to receive
the Merger Consideration, but shall be entitled to receive the consideration as
shall be determined pursuant to Section 262 of the DGCL; provided, however,
that, if any such holder shall have failed to perfect or shall have effectively
withdrawn or lost his, her or its right to appraisal and payment under the DGCL,
such holder's Shares shall thereupon be deemed to have been converted, at the
Effective Time, into the right to receive the Merger Consideration set forth in
Section 2.1(c) of this Agreement, without any interest thereon.
(b) The Company shall give Parent and Merger Sub (i) prompt notice of
any demands for appraisal pursuant to Section 262 of the DGCL received by the
Company, withdrawals of such demands and any other instruments served pursuant
to the DGCL and received by the Company, and (ii) the opportunity to direct all
negotiations and proceedings with respect
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to demands for appraisal under the DGCL. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any such
demands for appraisal or offer to settle any such demands.
SECTION 2.4. Stock Options and Stock Plans. (a) Parent and the Company
shall take all actions necessary to provide that at the Effective Time, (i) each
Company Option (defined below) surrendered for cash, shall be canceled, and (ii)
in consideration of such cancellation, and except to the extent that Parent or
Merger Sub and the holder of any such Company Option otherwise agree, the
Company shall pay to each such holder of Company Options an amount in cash in
respect thereof equal to the product of (1) the excess, if any, of the Merger
Consideration over the per share exercise price thereof and (2) the number of
Shares subject thereto immediately prior to the Effective Time less applicable
withholding taxes. "Company Option" means any option granted, whether or not
exercisable (it being understood that all Company Options shall be deemed to be,
and shall be treated under this Article II as though, such Company Options were
fully vested and fully exercisable immediately prior to the Effective Time), and
not exercised or expired, to a current or former employee, director or
independent contractor of the Company or any of its subsidiaries or any
predecessor thereof to purchase Shares pursuant to the Amended Management Option
Plan (1995), the 1996 Stock Option Plan, and the 1997 Directors Stock Option
Plan (collectively, the "Option Plans").
(b) Prior to the Effective Time, the Company shall use its reasonable
efforts to (i) obtain any consents from holders of Company Options and (ii) make
any amendments to the terms of such stock option or compensation plans or
arrangements that, in the case of either clause (i) or (ii), are necessary to
give effect to the transactions contemplated by this Section.
(c) Immediately prior to the Effective Time, the Company shall
terminate the Option Plans.
(d) In the event the current Plan Year (as such term is defined in the
Company's 1997 Employee Stock Purchase Plan (the "ESPP")) ends prior to the
Effective Time, the Company shall take all such action as may be necessary in
accordance with the ESPP to terminate the ESPP as of the last day of such Plan
Year, with the effect, among other things, that no new Plan Year shall commence
thereafter. In the event the current Plan Year under the ESPP would not
otherwise end prior to the Effective Time, then prior to the date that is five
days prior to the Effective Time, the Company shall amend the ESPP such that the
date on which the Effective Time occurs shall be the last day of the current
Plan Year for purposes of the ESPP with respect to the current Plan Year, with
the effect that on such date immediately prior to the Effective Time, Shares
will be purchased from the Company as provided in Section 5.3 of the ESPP, and
the Shares purchased shall thereafter be converted in the Merger, as provided
for in Section 2.1(c). At the Effective Time, the Company shall terminate the
ESPP, any cash held in participants' accounts after giving effect to this
Section shall be distributed to the respective participants in the ESPP and no
Plan Year that would otherwise commence on or after such date shall commence.
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ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation. The certificate of
incorporation of the Merger Sub in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended as
provided therein and in accordance with applicable law; provided that the
provisions thereof as to indemnification and exculpation of directors shall be
no less favorable than those contained in the certificate of incorporation of
the Company, as previously filed as an exhibit to the SEC Documents.
SECTION 3.2. Bylaws. The bylaws of the Merger Sub in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended or
repealed as provided therein and in accordance with the certificate of
incorporation and applicable law; provided that the provisions thereof as to
indemnification and exculpation of directors shall be no less favorable than
those contained in the bylaws of the Company, as previously filed as an exhibit
to the SEC Documents.
SECTION 3.3. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, the officers and directors of Merger Sub at the Effective
Time shall be the officers and directors of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub:
SECTION 4.1. Organization, Standing and Corporate Power. Each of the
Company and each of its significant subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted. Each of the
Company and each of its significant subsidiaries is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where the
failure to be so qualified or licensed (individually or in the aggregate) would
not reasonably be expected to (i) have a material adverse effect on the
condition (financial or otherwise), business, or results of operations of the
Company and its subsidiaries taken as a whole, or (ii) prevent or materially
delay consummation of any of the transactions contemplated by this Agreement (a
"Material Adverse Effect"). The Company has delivered to Parent complete and
correct copies of its certificate of incorporation and bylaws, and the
certificate of incorporation and bylaws (or equivalent organizational documents)
of its significant subsidiaries, in each case as amended to the date of this
Agreement. For purposes of this Agreement, a "subsidiary" of any person means
another person in which such first person, directly or indi-
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rectly, owns 50% or more of the equity interests or has the right, through
ownership of equity, contractually or otherwise, to elect at least a majority of
its Board of Directors or other governing body, and "significant subsidiary" has
the meaning given that term in Regulation S-X promulgated by the United States
Securities and Exchange Commission.
SECTION 4.2. Subsidiaries. All the outstanding shares of capital stock
or other ownership interests of each significant subsidiary of the Company have
been validly issued and are fully paid and nonassessable and, all such shares or
ownership interests are owned by the Company, by another subsidiary of the
Company or by the Company and another such subsidiary, free and clear of all
encumbrances and liens and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or equity interests). All of the subsidiaries of the Company
that are not "significant subsidiaries" would not, if taken in the aggregate,
constitute a "significant subsidiary" and are not otherwise material to the
Company.
SECTION 4.3. Capital Structure. The authorized capital stock of the
Company consists of 50,000,000 Class A Shares, 10,000,000 Class B Shares and
10,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred
Shares"). As of December 31, 1997, (i) 3,490,835 Class A Shares were issued and
outstanding, (ii) 5,892,756 Class B Shares were issued and outstanding, (iii) no
Shares were held by the Company or by any of the Company's subsidiaries, (iv)
10,500 Class A Shares were reserved for issuance pursuant to the outstanding
Company Options, (v) 629,150 Class B Shares were reserved for issuance pursuant
to the outstanding Company Options, (vi) 300,000 Class A Shares and no Class B
Shares were reserved for issuance pursuant to the ESPP, and (vii) no shares of
Preferred Stock were issued, reserved for issuance or outstanding. Except as set
forth above or on Schedule 4.3, no shares of capital stock or other equity or
voting securities of the Company are issued, reserved for issuance or
outstanding, except for Shares referred to in clauses (iv) and (v) above which
may be issued upon exercise of the outstanding Company Options. All outstanding
shares of capital stock of the Company are, and all Shares which may be issued
pursuant to the Option Plans will, when issued, be duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except as set forth on Schedule 4.3, there are not any bonds, debentures, notes
or other indebtedness or securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which shareholders of the Company may vote. Other than the
Shares, Company Options, Option Plans and the ESPP, or as set forth on Schedule
4.3, there are not any securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them is bound
obligating the Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other equity or voting securities of the Company or of any of its subsidiaries
or obligating the Company or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are no outstanding rights,
commitments, agreements, arrangements or undertakings of any kind obligating the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire or
dispose of any shares of capital stock or other equity or voting securities of
the Company or any
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of its subsidiaries or any securities of the type described in the two
immediately preceding sentences.
SECTION 4.4. Authority; Noncontravention. (a) The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to the Company Shareholder Approval (as defined below) required in
connection with the consummation of the Merger, to consummate the transactions
contemplated by this Agreement. The Merger requires the approval by the
affirmative vote of the holders of Shares entitled to cast a majority of the
votes of all outstanding Shares (the "Company Shareholder Approval"), which
approval is the only vote of the holders of any class or series of the capital
stock of the Company necessary to approve the Merger and this Agreement and the
transactions contemplated hereby.
(b) The execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, except for the Company Shareholder Approval in connection
with the consummation of the Merger. This Agreement has been duly executed and
delivered by the Company and, assuming this Agreement constitutes a valid and
binding agreement of Parent and Merger Sub, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
(c) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or to a loss of a benefit under, or result in the
creation of any encumbrance or lien upon any of the properties or assets of the
Company or any of its subsidiaries under, (i) the certificate of incorporation
or bylaws of the Company or the comparable charter or organizational documents
of any of its subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lien, lease or any other contract, agreement, instrument,
permit, commitment, concession, franchise or license applicable to the Company
or any of its subsidiaries or their respective properties or assets, or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or any of its subsidiaries or their
respective properties or assets other than, in the case of clauses (ii) and
(iii) above, any such conflicts, violations, defaults, rights, losses or liens
that (x) individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect or (y) are set forth on Schedule 4.4.
(d) No consent, approval, franchise, order, license, permit, waiver or
authorization of, or registration, declaration or filing with or exemption,
notice, application, or certification by or to (collectively, "Consents") any
federal, state or local government or any arbitral panel or any court, tribunal,
administrative or regulatory agency or commission or other governmental
authority, department, bureau, commission or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company or any of
its subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated by this Agreement, except for (i)
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the filing of the documents referred to in Section 1.2 in accordance with the
DGCL and similar documents with the relevant authorities of other states in
which the Company is qualified to do business, (ii) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (iii) compliance
with any applicable requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (the "Exchange Act"), (iv)
such notifications as may be required pursuant to the Competition Act (Canada)
(the "CA Act") or the Investment Canada Act (Canada), and (v) such other
Consents as to which the failure to obtain or make would not reasonably be
expected to have a Material Adverse Effect.
SECTION 4.5. SEC Documents; Financial Statements; No Undisclosed
Liabilities. (a) The Company has filed, and made available to Parent true and
complete copies of, all required reports, schedules, forms, statements, exhibits
and other documents filed with the Securities and Exchange Commission ("SEC")
since January 1, 1996 (the "SEC Documents"). As of their respective dates, and
except to the extent later modified in subsequent SEC Documents, the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), or the Exchange Act, as the case may be, applicable to
such SEC Documents, and none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The financial statements of the Company included in the SEC
Documents comply in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with United States generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis throughout the periods
involved ("GAAP") (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(c) Except as set forth in the SEC Documents, and except for
liabilities and obligations arising in the ordinary course of business
consistent with past practice, neither the Company nor any of its subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), except for liabilities and obligations which,
individually or in the aggregate, have not had or would not reasonably be
expected to have a Material Adverse Effect.
SECTION 4.6. Disclosure Documents. (a) The definitive proxy statement
of the Company (the "Company Proxy Statement") to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply in all material respects with the applicable requirements of the
Exchange Act.
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(b) At the time of filing the Company Proxy Statement with the SEC, at
the time the Company Proxy Statement or any amendment or supplement thereto is
first mailed to shareholders of the Company, at the time such shareholders vote
on adoption of this Agreement, and at the Effective Time, the Company Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The representations and warranties
contained in this Section 4.6 will not apply to statements or omissions included
in the Company Proxy Statement based upon information furnished to the Company
in writing by Parent or Merger Sub specifically for use therein.
SECTION 4.7. Property; Sufficiency of Assets. Except in each case as
would not reasonably be expected to have a Material Adverse Effect, the Company
and its subsidiaries (i) have good and valid title to all property material to
the business of the Company and reflected in the latest audited financial
statements included in the SEC Documents as being owned by the Company and its
subsidiaries or acquired after the date thereof (except properties sold or
otherwise disposed of in the ordinary course of business since the date
thereof), and (ii) are collectively the lessee of all property material to the
business of the Company and reflected as leased in the latest audited financial
statements included in the SEC Documents (or on the books and records of the
Company as of the date thereof) or acquired after the date thereof (except for
leases that have expired by their terms) and are in peaceful and undisturbed
possession of the properties purported to be leased thereunder, and each such
lease is valid and in full force and effect without default thereunder by the
lessee or the lessor. Such owned and leased property that is tangible personal
property is in good working order, reasonable wear and tear excepted, and is
suitable for the use for which it is intended, except that, which individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
SECTION 4.8. Absence of Certain Changes or Events. Except as disclosed
in the SEC Documents or as set forth on Schedule 4.8, since September 27, 1997,
the Company and its subsidiaries have conducted their business only in the
ordinary course consistent with past practice, and, except in the ordinary
course of business consistent with past practice, there has not been:
(i) any event, occurrence or development of a state of circumstances
which has had or would reasonably be expected to have a Material Adverse
Effect,
(ii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
of the Company's capital stock or any repurchase, redemption or other
acquisition by the Company or any of its subsidiaries of any outstanding
shares of capital stock or other securities of the Company or any of its
subsidiaries,
(iii) any adjustment, split, combination or reclassification of any of
its capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for
shares of its capital stock,
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(iv) (A) any granting by the Company or any of its subsidiaries to any
current or former director, officer or employee of the Company or any of
its subsidiaries of any material increase in compensation or benefits,
except for grants to employees who are not officers or directors in the
ordinary course of business consistent with past practice, (B) any granting
by the Company or any of its subsidiaries to any such director, officer or
employee of any increase in severance or termination pay (including the
acceleration in the vesting of Shares (or other property) or the provision
of any tax gross-up), except for grants to employees who are not officers
or directors in the ordinary course of business consistent with past
practice, or (C) any entry by the Company or any of its subsidiaries into
any employment, deferred compensation, severance or termination agreement
or arrangement with or for the benefit of any such current or former
director, officer or employee, except with employees who are not officers
or directors in the ordinary course of business consistent with past
practice,
(v) any change in accounting methods, principles or practices by the
Company or any of its subsidiaries,
(vi) any amendment, waiver or modification of any material term of any
outstanding security of the Company or any of its subsidiaries,
(vii) any incurrence, assumption or guarantee by the Company or any of
its subsidiaries of any material indebtedness for borrowed money or other
material obligations, or any creation or assumption by the Company or any
of its subsidiaries of any encumbrance or lien on any asset other than in
the ordinary course of business consistent with past practice (including
borrowings under pre-existing credit facilities, not resulting in total
consolidated funded indebtedness as of the date of this Agreement in excess
of $200 million),
(viii) any making of any loan, advance or capital contributions to or
investment in any person other than in the ordinary course of business
consistent with past practice,
(ix) any single or related series of transactions or commitments made,
or any single or related series of contracts or agreements entered into, by
the Company or any of its subsidiaries involving aggregate obligations of
more than $2,000,000 for any transaction or series of transactions, or any
capital expenditures in excess of $20,000,000 in the aggregate,
(x) any acquisition or disposition of any assets or any merger or
consolidation with any person on behalf of the Company or any of its
subsidiaries (other than sales of inventory in the ordinary course of
business in accordance with past practice and other than dispositions of
used, obsolete or outmoded equipment or machinery in the ordinary course of
business in accordance with past practice),
(xi) any relinquishment by the Company or any of its subsidiaries of
any contract or other right, in either case, material to the Company and
its subsidiaries taken as a
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whole, other than transactions and commitments in the ordinary course of
business consistent with past practice and those contemplated by the
Agreement, or
(xii) any agreement, commitment, arrangement or undertaking by the
Company or any of its subsidiaries to perform any action described in
clauses (i) through (xi).
SECTION 4.9. Litigation. Except as set forth on Schedule 4.9, there is
no Action or proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries that, individually
or in the aggregate, has resulted in or would reasonably be expected to have a
Material Adverse Effect, nor is there any judgment, decree, injunction, rule or
order of any Governmental Entity outstanding against the Company or any of its
subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
SECTION 4.10. Compliance with Laws, Etc. The conduct by the Company
and its subsidiaries of their business is and has been in compliance with all
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees,
applicable thereto and does not infringe upon or conflict in any respect with
any patent, copyright, trademark, trade name, service mark, brand name, any
related regulations or other intellectual property rights of any other person,
except for violations, failures so to comply, infringements or conflicts, if
any, that, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.
SECTION 4.11. Absence of Changes in Stock or Benefit Plans. Except as
set forth on Schedule 4.11, except as required under this Agreement, since
September 27, 1997, there has not been (i) any acceleration, amendment or change
of the period of exercisability or vesting of any Company Options under the
Option Plans (including any discretionary acceleration of the exercise periods
or vesting by the Company's Board of Directors or any committee thereof or any
other persons administering an Option Plan) or authorization of cash payments in
exchange for any Company Options under any of such Option Plans, (ii) any
adoption or material amendment by the Company or any of its subsidiaries of any
collective bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, stock appreciation right, retirement, vacation,
severance, disability, death benefit, hospitalization, medical, worker's
compensation, supplementary unemployment benefits, or other plan, arrangement or
understanding or any employment agreement providing compensation or benefits to
any current or former employee, officer, director or independent contractor of
the Company or any of its subsidiaries or any beneficiary thereof or entered
into, maintained or contributed to, as the case may be, by the Company or any of
its subsidiaries (collectively, "Benefit Plans"), or (iii) any adoption of, or
amendment to, or change in employee participation or coverage under, any Benefit
Plans which would increase materially the expense of maintaining such Benefit
Plans above the level of the expense incurred in respect thereof for the fiscal
year ended on December 28, 1996. Except as expressly contemplated hereby or as
provided in the Option Plans, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(either alone or in conjunction with any other event) result in, cause the
accelerated vesting or delivery of, or increase the amount or value of, any
payment or benefit to any employee of the Company.
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SECTION 4.12. ERISA Compliance. (a) For purposes of this Agreement,
the following definitions apply: "Code" means the Internal Revenue Code of 1986,
as amended, and the Treasury regulations thereunder; "Controlled Group
Liability" means any and all liabilities under (i) Title IV of ERISA, (ii)
section 302 of ERISA, (iii) sections 412 and 4971 of the Code, (iv) the
continuation coverage requirements of section 601 et seq. of ERISA and section
4980B of the Code, and (v) corresponding or similar provisions of foreign laws
or regulations, other than such liabilities that arise solely out of, or relate
solely to, the Plans; "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and the regulations thereunder; "ERISA Affiliate" means,
with respect to any entity, trade or business, any other entity, trade or
business that is a member of a group described in Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity,
trade or business, or that is a member of the same "controlled group" as the
first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
(b) Schedule 4.12 includes a complete list of all employee benefit
plans, programs, policies and practices providing benefits to any current or
former employee, officer or director of the Company or any of its subsidiaries
or beneficiary or dependent thereof, whether or not written, and whether
covering one person or more than one person, sponsored or maintained by the
Company or to which the Company contributes or is obligated to contribute
("Plans"). Without limiting the generality of the foregoing, the term "Plans"
includes all employee welfare benefit plans within the meaning of Section 3(1)
of ERISA, all employee pension benefit plans within the meaning of Section 3(2)
of ERISA, and all other employee benefit, bonus, incentive, deferred
compensation, stock purchase, stock option, severance ,change of control and
fringe benefit plans, programs or agreements .
(c) With respect to each Plan, the Company has delivered or made
available to Parent and Merger Sub a true, correct and complete copy of: (i)
each writing constituting a part of such Plan, including without limitation all
plan documents (including benefit schedules), trust agreements, and insurance
contracts and other funding vehicles; (ii) the most recent Annual Report (Form
5500 Series) and accompanying schedule, if any; (iii) the current summary plan
description and any material modifications thereto, if any; (iv) the most recent
annual financial report, if any; (v) the most recent actuarial report, if any;
and (vi) the most recent determination letter from the IRS. Except as
specifically provided in the foregoing documents delivered to Parent and Merger
Sub, there are no amendments to any Plan or any new Plan that have been adopted
or approved nor has the Company undertaken to make any such amendments or adopt
or approve any new Plan.
(d) Schedule 4.12 identifies each Plan that is intended to be a
"qualified plan" within the meaning of Section 401(a) of the Code ("Qualified
Plans"). Except as set forth in Schedule 4.12(d), the IRS has issued a favorable
determination letter with respect to each Qualified Plan that has not been
revoked, and, to the knowledge of the Company, no circumstances exist nor have
any events occurred that could adversely affect the qualified status of any
Qualified Plan or the related trust. No Plan is intended to meet the
requirements of Code Section 501(c)(9).
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(e) All contributions required to be made to any Plan by applicable
law or regulation or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any Plan,
for any period through the date hereof have been timely made or paid in full or,
to the extent not required to be made or paid on or before the date hereof, have
been fully reflected on the financial statements contained in the SEC Documents.
(f) The Company has complied, and is now in compliance, in all
material respects with all provisions of ERISA, the Code and all laws and
regulations applicable to the Plans. There is not now, nor, to the knowledge of
the Company, do any circumstances exist that could give rise to, any requirement
for the posting of security with respect to a Plan or the imposition of any
encumbrance or lien on the assets of the Company under ERISA or the Code. No
non-exempt prohibited transaction has occurred with respect to any Plan.
(g) The Company does not maintain or contribute to any Plan that is
subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code.
All liabilities in connection with the termination of any employee pension
benefit plan that was sponsored, maintained or contributed to by the Company at
any time within the past three years (and any other material liabilities under
Title IV of ERISA with respect to any such plan) have been fully satisfied. Each
such employee pension benefit plan has received a favorable determination letter
from the IRS with respect to its termination.
(h)..... Except as set forth on Schedule 4.12, no Plan is a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA (a
"Multiemployer Plan") or a plan that has two or more contributing sponsors at
least two of whom are not under common control, within the meaning of Section
4063 of ERISA (a "Multiple Employer Plan"). No Plan that is a Multiemployer Plan
is in reorganization or is insolvent and, to the best knowledge of the Company,
no circumstances exist that would be reasonably expected to result in a
reorganization or insolvency of any such Multiemployer Plan. Neither the Company
nor any of its subsidiaries has withdrawn or partially withdrawn from any
Multiemployer Plan or has any liabilities under any Multiemployer Plan that have
not been fully satisfied. There are no more than 450 employees of the Company
and its subsidiaries who are currently participating in or have accrued benefits
under a Multiemployer Plan.
(i) There does not now exist, nor do any circumstances exist that
could result in, any Controlled Group Liability that would be a liability of the
Company following the Closing.
(j) The Company has no material liability for life, health, medical or
other welfare benefits to former employees or beneficiaries or dependents
thereof, except for health continuation coverage as required by Section 4980B of
the Code or Part 6 of Title I of ERISA and at no expense to the Company.
(k) All Plans covering foreign employees of the Company or any of its
subsidiaries comply with applicable local law and are fully funded and/or book
reserved to the extent applicable.
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(l) Except as set forth on Schedule 4.12, no labor organization or
group of employees of the Company has made a pending demand for recognition or
certification, and there are no representation or certification proceedings or
petitions seeking a representation proceeding presently pending or threatened to
be brought or filed, with the National Labor Relations Board or any other labor
relations tribunal or authority. Each of the Company and its subsidiaries have
complied with the Worker Adjustment and Retraining Notification Act.
(m) There are no pending or threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted against the Plans, any fiduciaries thereof with respect
to their duties to the Plans or the assets of any of the trusts under any of the
Plans which could reasonably be expected to result in any material liability of
the Company to the Pension Benefit Guaranty Corporation, the Department of
Treasury, the Department of Labor or any Multiemployer Plan.
SECTION 4.13. Tax Matters. Except as set forth in the SEC Documents:
(a) Each of the Company and each of its subsidiaries has filed all
federal income tax and other material tax returns and reports required to be
filed by it. All such returns are complete and correct in all material respects.
Each of the Company and each of its subsidiaries has paid (or the Company has
paid on its subsidiaries' behalf) all taxes shown as due on such returns and all
material taxes required to be paid by it for which no return was required to be
filed.
(b Except as set forth on Schedule 4.13, no tax return of the Company
or any of its subsidiaries is under audit or examination by any taxing
authority, and no written or unwritten notice of such an audit or examination
has been received by the Company or any of its subsidiaries. Each deficiency
resulting from any audit or examination relating to taxes by any taxing
authority has been paid, except for deficiencies being contested in good faith
by appropriate proceedings and which have been reserved against in accordance
with GAAP. None of the federal income tax returns of the Company and its
subsidiaries consolidated in such returns has been examined and settled with the
IRS for any year, and no years are otherwise closed. (c)..... No liens for taxes
exist with respect to any assets or properties of the Company or any of its
subsidiaries, except for statutory liens for taxes not yet due or taxes that are
being contested in good faith by appropriate proceedings and that have been
reserved against in accordance with GAAP.
(d) None of the Company or any of its subsidiaries is a party to or is
bound by any tax sharing agreement, tax allocation agreement, tax indemnity
obligation or similar written or unwritten agreement or arrangement with respect
to taxes (including any advance pricing agreement, closing agreement or other
agreement relating to taxes with any taxing authority), other than agreements or
arrangements among the Company and its subsidiaries.
(e) The disallowance of a deduction under Section 162(m) of the Code
for employee remuneration will not apply to any amount paid or payable by the
Company or any of its subsidiaries under any contract, Option Plan, Benefit
Plan, program, arrangement or understanding currently in effect.
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(f) No amount or other entitlement that could be received (whether in
cash or property or the vesting of property) in connection with the transactions
contemplated hereby (either alone or in conjunction with any other event) will
be an "excess parachute payment" (as such term is defined in Section 280G(b)(1)
of the Code).
(g) As used in this Agreement, "taxes" shall include all federal,
state, local and foreign income, property, sales, excise, withholding and other
taxes, tariffs or governmental charges of any nature whatsoever, and all
interest, penalties and additions to tax with respect to any of the foregoing.
SECTION 4.14. Debt Instruments. Except as set forth on Schedule 4.14,
all loan or credit agreements, notes, bonds, mortgages, indentures and other
agreements and instruments pursuant to which any material indebtedness of the
Company or any of its subsidiaries is outstanding or may be incurred are
prepayable at any time without penalty, subject to a notice period of not more
than thirty days. For purposes of this Section, "indebtedness" shall mean, with
respect to any person, without duplication, (i) all obligations of such person
for borrowed money, or with respect to deposits or advances of any kind to such
person, (ii) all obligations of such person evidenced by bonds, debentures,
notes or similar instruments, (iii) all obligations of such person upon which
interest charges are customarily paid, (iv) all obligations of such person under
conditional sale or other title retention agreements relating to property
purchased by such person, (v) all obligations of such person issued or assumed
as the deferred purchase price of property or services (excluding obligations of
such person to creditors for raw materials, inventory, services and supplies
incurred in the ordinary course of such person's business), (vi) all capitalized
lease obligations of such person, (vii) all obligations of others secured by any
encumbrance or lien on property or assets owned or acquired by such person,
whether or not the obligations secured thereby have been assumed, (viii) all
obligations of such person under interest rate or currency swap transactions
(valued at the termination value thereof), (ix) all letters of credit issued for
the account of such person (excluding letters of credit issued for the benefit
of suppliers to support accounts payable to suppliers incurred in the ordinary
course of business), (x) all obligations of such person to purchase securities
(or other property) which arises out of or in connection with the sale of the
same or substantially similar securities or property, and (xi) all guarantees
and arrangements having the economic effect of a guarantee of such person of any
indebtedness of any other person.
SECTION 4.15. Insurance. The Company and its subsidiaries are covered
by valid and currently effective insurance policies issued in favor of the
Company that are customary for companies of similar size and financial
condition.
SECTION 4.16. Labor Matters. Except as disclosed in the SEC Documents
or as set forth on Schedule 4.16, (i) neither the Company nor any of its
subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement with a labor union or labor organization; (ii) to
the knowledge of the Company, neither the Company nor any of its subsidiaries is
the subject of any proceeding asserting that it or any of its subsidiaries has
committed an unfair labor practice or seeking to compel it to bargain with any
labor organization as to wages or conditions of employment; (iii) there is no
strike, work stoppage or other labor dis-
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pute involving the Company or any of its subsidiaries pending or, to the
Company's knowledge, threatened; (iv) to the knowledge of the Company, no
material action, suit, complaint, charge, arbitration, inquiry, proceeding or
investigation by or before any Governmental Entity brought by or on behalf of
any employee, prospective employee, former employee, retiree, labor organization
or other representative of its employees is pending or threatened against the
Company or any of its subsidiaries; (v) to the knowledge of the Company, no
material grievance is pending or threatened against the Company or any of its
subsidiaries; and (vi) neither the Company nor any of its subsidiaries is a
party to, or otherwise bound by, any consent decree with, or citation by, any
Governmental Entity relating to employees or employment practices.
SECTION 4.17. No Restrictive Agreements. Except as disclosed in the
SEC Documents, the Company and its subsidiaries are not parties to or bound by
any agreement, contract, policy, license, document, instrument, arrangement or
commitment that limits the freedom of the Company or any of its subsidiaries to
compete in any line of business or with any person or in any geographic area or
which would so limit the freedom of the Company or any of its subsidiaries or
affiliates after the Effective Time.
SECTION 4.18. Interests of Officers and Directors. None of Onex DHC
LLC, a Wyoming limited liability company, or any of its respective affiliates
(other than the Company or any of its subsidiaries) has any interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
business of the Company or its subsidiaries, or any supplier, distributor or
customer of the Company or its subsidiaries, or any other relationship,
contract, agreement, arrangement or understanding with the Company or any of its
subsidiaries, except as set forth in Schedule 4.18 or as disclosed in the SEC
Documents and except for rights under the Benefit Plans and the Option Plans and
the normal rights of a holder of a non-controlling, direct or indirect interest
in equity securities. To the Company's knowledge, none of the Company's or any
of its subsidiaries' other officers or directors or any of their respective
affiliates (other than the Company or any of its subsidiaries) has any material
interest in any material property, real or personal, tangible or intangible,
used in the business of the Company or its subsidiaries, or any supplier,
distributor or customer of the Company or its subsidiaries, or any other
relationship, contract, agreement, arrangement or understanding with the Company
or any of its subsidiaries, except as disclosed in the SEC Documents and except
for rights under the Benefit Plans and the Option Plans and the normal rights of
a holder of a non-controlling, direct or indirect interest in equity
securities.
SECTION 4.19. Brokers. Morgan Stanley & Co. Incorporated, the fees and
expenses of which will be paid by the Company (and copies of whose engagement
letters and a calculation of the fees that would be due thereunder has been
provided to Parent), has orally delivered to the Company's Board of Directors
its opinion that the consideration to be paid in the Merger is fair to the
holders of Shares from a financial point of view, and shall deliver such opinion
in writing to the Company's Board of Directors prior to the date the Company
files the Company Proxy Statement with the SEC. In addition, no other broker,
investment banker, financial advisor or other person, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its subsidiaries. No
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such engagement letters obligate the Company to continue to use their services
or pay fees or expenses in connection with any future transaction.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Sub represent and warrant to the Company as follows:
SECTION 5.1. Organization, Standing and Corporate Power. Each of
Parent and Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of its respective state of incorporation and has
the requisite corporate power and authority to carry on its business as now
being conducted.
SECTION 5.2. Authority; Noncontravention. (a) Parent and Merger Sub
have all requisite corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement and the consummation
of the transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action on the part of Parent and Merger Sub. This
Agreement has been duly executed and delivered by Parent and Merger Sub and,
assuming this Agreement constitutes a valid and binding agreement of the
Company, constitutes a valid and binding obligation of such party, enforceable
against such party in accordance with its terms.
(c) The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or to a loss of a material benefit under, or
result in the creation of any encumbrance or lien upon any of the properties or
assets of Parent or any of its subsidiaries under, (i) the certificate of
incorporation or bylaws of Parent or Merger Sub, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or any other contract,
agreement, instrument, permit, concession, franchise or license applicable to
Parent or Merger Sub or their respective properties or assets, or (iii) subject
to the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent, Merger Sub or any other subsidiary of Parent or
their respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights, losses or liens that
individually or in the aggregate would not impair the ability of Parent and
Merger Sub to perform their respective obligations under this Agreement or
prevent the consummation of any of the transactions contemplated by this
Agreement (a "Parent Material Adverse Effect").
(d) No Consent of any Governmental Entity is required by or with
respect to Parent, Merger Sub or any other subsidiary of Parent in connection
with the execution and deliv-
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ery of this Agreement or the consummation by Parent or Merger Sub, as the case
may be, of any of the transactions contemplated by this Agreement, except for
(i) the filing of the documents referred to in Section 1.2 in accordance with
the DGCL and similar documents with the relevant authorities of other states in
which the Company is qualified to do business, (ii) the filing of a premerger
notification and report form under the HSR Act, (iii) compliance with any
applicable requirements of the Exchange Act, and (iv) such other Consents as to
which the failure to obtain or make could not reasonably be expected to have a
Parent Material Adverse Effect.
SECTION 5.3. Disclosure Documents. The information with respect to
Parent and its subsidiaries that Parent furnishes to the Company in writing,
specifically for use in the Company Proxy Statement will not contain, any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading at the time of filing the Company
Proxy Statement with the SEC, at the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to shareholders of the Company,
at the time the shareholders vote on adoption of this Agreement and at the
Effective Time.
SECTION 5.4. Brokers. No broker, investment banker, financial advisor
or other person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission from the Company in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Merger Sub.
SECTION 5.5. Company Contracts. Parent and Merger Sub acknowledge that
some of the Company's customers may be entitled, pursuant to the terms of their
contracts with the Company, to terminate their arrangements with the Company
upon the change of control of the Company effected by the Merger.
ARTICLE VI
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 6.1. Conduct of Business. During the period from the date of
this Agreement to the Effective Time, the Company shall, and shall cause its
subsidiaries to, carry on their business in the ordinary course of business in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees (as a group) and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time, the
Company shall not, and shall not permit any of its subsidiaries to, except as
contemplated by this Agreement or with the prior written approval of Parent:
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(a) (i) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of its
capital stock, other than dividends and distributions by any direct or indirect
wholly owned subsidiary of the Company to its parent, (ii) adjust, split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (iii) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options, including Company Options, to acquire,
any such shares, voting securities or convertible securities (other than the
issuance of Shares upon the exercise of Company Options outstanding as of the
date hereof or pursuant to the ESPP);
(c) amend its certificate of incorporation, bylaws or other comparable
charter or organizational documents;
(d) mortgage or otherwise encumber or subject to any encumbrance or
lien or, except in the ordinary course of business consistent with past practice
or pursuant to existing contracts or commitments, sell, lease, license, transfer
or otherwise dispose of any material properties or assets;
(e) amend, modify or waive any material term of any outstanding
security of the Company and its subsidiaries;
(f) incur, assume, guarantee or become obligated with respect to any
indebtedness (as defined in Section 4.14), other than in the ordinary course of
business, consistent with past practice , or incur, assume, guarantee or become
obligated with respect to any other material obligations other than in the
ordinary course of business and consistent with past practice;
(g) make or agree to make any new capital expenditures or acquisitions
of assets or property or other acquisitions or commitments other than in the
ordinary course of business, consistent with past practice and in any event not
in excess of $10,000,000 in the aggregate;
(h) make any material tax election or take any material tax position
(unless required by law) or change its fiscal year or accounting methods,
policies or practices (except as required by changes in GAAP) or settle or
compromise any material income tax liability;
(i) make any loan, advance or capital contributions to or investment
in any person other than in the ordinary course of business consistent with past
practice, but in no event in the amount of more than $250,000 for any one
transaction or $1,000,000 in the aggregate, and other than investments in cash
equivalents made in the ordinary course of business consistent with past
practice;
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(j) pay, discharge or satisfy any claims, liabilities or obligations,
other than the payment, discharge or satisfaction thereof, in the ordinary
course of business consistent with past practice and in accordance with their
terms, or modify or amend in any material respect or terminate any material
contract or agreement to which it is a party, or release or waive any material
rights or claims, other in the ordinary course of business consistent with past
practice;
(k) (i) provide to any current or former director, officer or employee
of the Company or any of its subsidiaries any material increase in compensation
or benefits or any severance payment or other benefit not required under the
terms of an existing Plan, except for employees who are not officers or
directors in the ordinary course of business consistent with past practice, (ii)
grant to any such director, officer, or employee any increase in severance or
termination pay (including the acceleration in the exercisability of Company
Options or in the vesting of Shares (or other property) except for automatic
acceleration in accordance with the terms of the Option Plans or the provision
of any tax gross-up), or (iii) enter into any employment, deferred compensation,
severance or termination agreement or arrangement with or for the benefit of any
such current or former director, officer, or employee; or
(l) authorize any of, or commit or agree to take any of, the foregoing
actions.
SECTION 6.2. Shareholder Meeting; Proxy Material. The Company shall
cause a meeting of its shareholders (the "Company Shareholder Meeting") to be
duly called and held as soon as reasonably practicable for the purpose of voting
on the approval and adoption of this Agreement and the Merger. The Directors of
the Company shall recommend approval and adoption of this Agreement and the
Merger by the Company's shareholders. In connection with such meeting, the
Company (i) will promptly prepare and file with the SEC, will use its reasonable
efforts to have cleared by the SEC and will thereafter mail to its shareholders
as promptly as practicable the Company Proxy Statement and all other proxy
materials for such meeting, (ii) will use its best efforts to obtain the
necessary approvals by its shareholders of this Agreement and the transactions
contemplated hereby, and (iii) will otherwise comply with all legal requirements
applicable to such meeting. The Company has been advised that all of its
directors currently intend to vote all shares owned by them in favor of the
Merger. The Company will provide Parent with a copy of the preliminary proxy
statement and all modifications thereto prior to filing or delivery to the SEC
and will consult with Parent in connection therewith. The Company will notify
Parent promptly of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff for amendments or supplements to the Company
Proxy Statement or for additional information and will supply Parent with copies
of all correspondence between the Company or any of its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the
Company Proxy Statement or the Merger. If at any time prior to the Company
Shareholder Meeting there shall occur any event that should be set forth in an
amendment or supplement to the Company Proxy Statement, the Company will
promptly prepare and mail to its shareholders such an amendment or supplement.
The Company will not mail any Company Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects.
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SECTION 6.3. Access to Information. From the date hereof until the
Effective Time, the Company will give Parent, its counsel, financial advisors,
auditors and other authorized representatives access (during normal business
hours and upon reasonable notice) to the offices, properties, officers,
employees, accountants, auditors, counsel and other representatives, books and
records of the Company and its subsidiaries, will furnish to Parent, its
counsel, financial advisors, auditors and other authorized representatives such
financial, operating and property related data and other information as such
persons may reasonably request, and will instruct the Company's and its
subsidiaries' employees, counsel and financial advisors to cooperate with Parent
in its investigation of the business of the Company and the subsidiaries, and
will exercise all reasonable efforts to obtain from landlords such estoppel
certificates as Parent may request. The Company and its subsidiaries shall not
be required to take any action under this Section 6.3 that (i) would violate any
confidentiality or similar obligation of the Company or its subsidiaries, or
(ii) would reasonably be expected to result in the waiver of attorney-client or
work product privilege.
SECTION 6.4. Covenants Regarding Certain Benefit Plans. Parent agrees
that it shall cause the Surviving Corporation to continue the employee benefit
plans and programs of the Company (other than equity-based plans and programs)
through December 31, 1998, or to provide during such period employee benefits no
less favorable in the aggregate than are provided pursuant to such employee
benefit plans and programs; provided that with respect to employees of the
Company who are subject to collective bargaining, all benefits shall be provided
in accordance with the applicable collective bargaining agreement. Parent shall
provide employees of the Company who continue as employees of the Surviving
Corporation or Parent with credit for years of service with the Company and its
subsidiaries for purposes of vesting, eligibility and benefit accrual (other
than benefit accrual under any defined benefit plans, including supplemental
retirement plans) under the employee benefit plans of the Surviving Corporation
and Parent which are made available to such employees, to the extent such
service was credited under similar employee benefit plans and programs of the
Company.
SECTION 6.5. Cooperation in Arrangements with Lenders. The Company
shall, and shall cause its subsidiaries to, cooperate with and assist Parent and
its professionals and advisors in arranging for the prepayment at the Effective
Time of all indebtedness (as defined in Article IV) of the Company and its
subsidiaries and shall provide whatever other assistance and cooperation Parent
and its professionals and advisors might reasonably request in connection
therewith.
ARTICLE VII
COVENANTS OF PARENT
Parent agrees that:
SECTION 7.1. Confidentiality. Prior to the Effective Time and after
any termination of this Agreement, Parent will hold, and will use its reasonable
best efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors and agents to hold, in
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confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, and not use for any purpose other than the
consummation of the transactions contemplated by this Agreement , all documents
and information concerning the Company and its subsidiaries furnished to Parent
in connection with the transactions contemplated by or otherwise in accordance
with this Agreement except to the extent that such information can be shown to
have been (i) previously known on a nonconfidential basis by Parent, (ii) in the
public domain through no fault of Parent, or (iii) later lawfully acquired by
Parent from sources other than the Company, not under a duty of confidentiality
to the Company or a subsidiary of the Company; provided that Parent may disclose
such information to its officers, directors, employees, accountants, counsel,
consultants, advisors and agents who Parent determines need to know the same in
connection with the transactions contemplated by this Agreement and to its (and
its parent entities') lenders and equity investors in connection with obtaining
the financing for the transactions contemplated by this Agreement so long as
such persons are informed by Parent of the confidential nature of such
information and are directed by Parent to treat such information confidentially
and in accordance with this Section 7.1. Parent shall be responsible for any
unauthorized disclosure or use of any such documents and information by any of
its officers, directors, employees, accountants, counsel, consultants, advisors
and agents. Parent's obligation to hold any such information in confidence shall
be satisfied if it exercises the same care with respect to such information as
it would take to preserve the confidentiality of its own similar information. If
this Agreement is terminated, Parent will, and will use its best efforts to
cause its officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, deliver to the Company, upon request, all documents and
other materials and all copies thereof, obtained by Parent or on its behalf from
the Company in connection with this Agreement and to destroy all documents (in
any form, including, without limitation, electronic media) prepared by or on
behalf of Parent or any person or entity to whom Parent provided information
under this Section that include or reflect any information provided by or on
behalf of the Company.
SECTION 7.2. Obligations of Merger Sub. Parent will take all action,
and provide all financing, necessary to cause Merger Sub to perform its
obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
SECTION 7.3. Voting of Shares. Each of Parent and Merger Sub agrees to
vote all Shares beneficially owned by it, if any, in favor of adoption of this
Agreement at the Company Shareholder Meeting.
SECTION 7.4. Director and Officer Liability. (a) For six years after
the Effective Time, Parent will cause the Surviving Corporation to indemnify and
hold harmless the present and former officers, directors, employees and agents
of the Company and its subsidiaries, and the heirs executors and administrators
of such persons (the "Indemnified Parties") in respect of acts or omissions
occurring on or prior to the Effective Time or arising out of or pertaining to
any Indemnified Person having been an officer, director, employee or agent of
the Company or any of its subsidiaries or to the transactions contemplated by
this Agreement to the extent provided under the Company's certificate of
incorporation and bylaws in effect on the date hereof (and shall pay expenses in
advance of the disposition of any action with respect to any such matters to the
fullest extent permitted by the DGCL, upon receipt from the person to whom
expenses are
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advanced of the undertaking to repay such advances contemplated by Section
145(e) of the DGCL); provided that such indemnification shall be subject to any
mandatory limitation imposed from time to time under applicable law. Parent and
Surviving Corporation shall not amend the certificate of incorporation or bylaws
of the Surviving Corporation to amend the indemnification or exculpation
provisions therein in a manner inconsistent with this Section or otherwise
adverse to the Indemnified Parties for the six-year period referred to above.
For six years after the Effective Time, Parent will cause the Surviving
Corporation to use its best efforts to provide officers' and directors'
liability insurance in respect of acts or omissions occurring on or prior to the
Effective Time covering each such person currently covered by the Company's
officers' and directors' liability insurance policy on terms substantially
similar to those of such policy in effect on the date hereof and from an insurer
or insurers having claims paying ratings of at least Best A+, provided that in
satisfying its obligation under this Section, Parent shall not be obligated to
cause the Surviving Corporation to pay annual premiums in excess of $250,000 per
annum, and if the Surviving Corporation is unable to obtain the insurance
required by this Section, it shall obtain as much comparable insurance as
possible for an annual premium equal to such maximum amount.
(b) The Indemnified Parties are intended third party beneficiaries of
this Section to the extent such provisions benefit any such Indemnified Party.
ARTICLE VIII
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
SECTION 8.1. HSR Act Filings; Reasonable Efforts; Notification. (a)
Each of Parent and the Company shall (i) promptly (but in no in event more than
eight business days after the date of this Agreement) make or cause to be made
the filings required of such party or any of its subsidiaries under the HSR Act
and the CA Act with respect to the transactions contemplated by this Agreement,
(ii) comply at the earliest practicable date with any request under the HSR Act
and the CA Act for additional information, documents, or other material received
by such party or any of its subsidiaries from the Federal Trade Commission or
the Department of Justice or any other Governmental Entity in respect of such
filings or such transactions, and (iii) cooperate with the other party in
connection with any such filing, and in connection with resolving any
investigation or other inquiry of any such agency or other Governmental Entity
under the HSR Act, the CA Act, the Sherman Act, as amended, the Clayton Act, as
amended, the Federal Trade Commission Act, as amended, and any other federal or
state statutes, rules, regulations, orders or decrees that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade with respect to any such filing or any such
transaction. Each party shall promptly inform the other party of any
communication with, and any proposed understanding, undertaking, or agreement
with, any Governmental Entity regarding any such filings or any such
transaction. Neither party shall participate in any meeting, with any
Governmental Entity in respect of any such filings, investigation, or other
inquiry without giving the other party
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notice of the meeting and, to the extent permitted by such Governmental Entity,
the opportunity to attend and participate.
(b) Each of Parent and the Company shall use its reasonable best
efforts to take such reasonable action as may be required to cause the
expiration of the notice periods under the HSR Act, the CA Act or any state
statutes, rules, regulations, orders or decrees that are designed to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade with respect to the transactions contemplated hereby as
promptly as possible after the execution of this Agreement.
(c) Each of the parties agrees to use its reasonable best efforts to
take, or cause to be taken, all reasonable actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all
reasonable things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable the Merger and the other
transactions contemplated by this Agreement, including (i) the obtaining of all
other necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all other necessary registrations and
filings (including other filings with Governmental Entities, if any), (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the preparation of the Company Proxy Statement, (iv) the repayment of all
of the Company's indebtedness as contemplated by Section 6.5 at the Effective
Time, and (v) the execution and delivery of any additional instruments necessary
to consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement.
(d) Notwithstanding anything to the contrary in Section 8.1(a), (b) or
(c), neither Parent nor Merger Sub shall be required to waive any of the
conditions to the Merger set forth in Article IX.
(e) The Company shall give prompt notice to Parent upon becoming aware
of (i) any representation or warranty made by it contained in this Agreement
becoming untrue or inaccurate in any respect that would result in the failure to
satisfy the condition in Section 9.2(b), or (ii) the failure by it to comply
with or satisfy in any respect any covenant, condition or agreement to be
compiled with or satisfied by it under this Agreement that would result in the
failure to satisfy the condition in Section 9.2(b); provided, however, that no
such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(f) The Company shall give prompt notice to Parent, and Parent or
Merger Sub shall give prompt notice to the Company, of:
(i) any written notice or other written 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 written notice or other written communication from any
Governmental Entity in connection with the transactions contemplated by
this Agreement; and
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(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to
or involving or otherwise affecting it or any of its subsidiaries which
relate to the consummation of the transactions contemplated by this
Agreement.
SECTION 8.2. Public Announcements. Parent and Merger Sub, on the one
hand, and the Company, on the other hand, will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by applicable law, court process or by obligations
pursuant to any listing agreement with any national securities exchange or with
the Nasdaq National Market. The parties agree that the initial press release to
be issued with respect to the transactions contemplated by this Agreement will
be in the form attached hereto.
SECTION 8.3. No Solicitation. Prior to the Effective Time and for
twelve months after any termination of this Agreement, Parent and Merger Sub, on
the one hand, and the Company, on the other hand, shall not, and shall not
permit any of their respective subsidiaries or affiliates to, employ or retain
in any capacity any person who was employed by the Company, in the case of
Parent and Merger Sub, or Parent or Merger Sub, in the case of the Company, or
any of their respective subsidiaries in a position of division president or
principal executive in charge of a distribution center or any position senior
thereto at any time after January 1, 1998.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the outstanding Shares of the Company within the meaning
and in accordance with the DGCL;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated; and
(c) no provision of any applicable law or regulation and no judgment,
injunction, order, decree or other legal restraint shall prohibit the
consummation of the Merger.
SECTION 9.2. Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate the Merger are further
subject to the satisfaction of the following conditions:
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(a) there shall not be instituted and remain pending any action by any
Governmental Entity (i) challenging or seeking to make illegal, to delay
materially or otherwise directly or indirectly to restrain or prohibit the
consummation by Parent or Merger Sub of the Merger, seeking to obtain material
damages or imposing any material adverse conditions in connection therewith,
(ii) seeking to restrain or prohibit Parent's or Merger Sub's ownership or
operation (or that of their respective subsidiaries or affiliates) of all or any
material portion of the business or assets of the Company and its subsidiaries,
or of Parent and its subsidiaries or affiliates, or to compel Parent or any of
its subsidiaries or affiliates to dispose of or hold separate all or any
material portion of the business or assets of the Company and its subsidiaries,
or of Parent and its subsidiaries and affiliates, (iii) seeking to impose
limitations on the ability of Parent or any of its subsidiaries or affiliates
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by Parent or
any of its subsidiaries or affiliates on all matters properly presented to the
Company's shareholders, (iv) seeking to require divestiture by Parent or any of
its subsidiaries or affiliates of any Shares, or (v) that otherwise would
reasonably be expected to materially adversely affect the condition (financial
or otherwise), business, or results of operations of the Company and its
subsidiaries, or Parent and its subsidiaries, in each case taken as a whole, nor
shall any judgment, injunction, order or decree have been entered that would
have any of the foregoing effects;
(b) the Company shall have performed in all material respects its
covenants and agreements under this Agreement, and the representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality shall be true when made and at and (except to the extent such
representations and warranties relate to a specific date) as of the Closing as
if made at and as of such time, and the representations and warranties set forth
in this Agreement that are not so qualified shall be true in all material
respects when made and (except to the extent such representations and warranties
relate to a specific date) at and as of the Closing as if made at and as of such
time, and other than any failure of such representations and warranties to be
true (x) arising from or in connection with changes in general economic
conditions or matters generally affecting the industry in which the Company and
its subsidiaries are engaged, (y) arising from the announcement or the
consummation of the transactions contemplated by this Agreement, or (z) which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and Parent and Merger Sub shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of the
Company to that effect; and
(c) other than the filing of the Certificate of Merger in accordance
with DGCL, after making reasonable efforts, Parent and its subsidiaries
(including Merger Sub) shall have obtained all regulatory approvals, licenses
and other Consents required to be obtained prior to the consummation of the
Merger and the transactions contemplated by this Agreement, except such
approvals, licenses and other Consents which, if not obtained, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
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<PAGE>
SECTION 9.3. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the further
satisfaction of the following conditions:
Parent and Merger Sub shall have performed in all material
respects their covenants and agreements under this Agreement, and the
representations and warranties of Parent and Merger Sub set forth in this
Agreement that are qualified as to materiality shall be true when made at
and as of the Effective Time as if made and at and as of such time, and the
representations and warranties set forth in this Agreement that are not so
qualified shall be true in all material respects when made and at and as of
the Effective Time as if made at and as of such time; and the Company shall
have received certificates of the Chief Executive Officer or Chief
Financial Officer of Parent and Merger Sub to that effect.
ARTICLE X
TERMINATION
SECTION 10.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the shareholders of the Company):
(a) by mutual written consent of the Company and Parent;
(b) by Parent if at the Company Shareholder Meeting or any adjournment
thereof at which the Company Shareholder Approval is voted upon, the Company
Shareholder Approval shall not have been obtained;
(c) by either the Company or Parent, if the Merger has not been
consummated by July 1, 1998 (provided that the party seeking to terminate the
Agreement shall not have breached its obligations under this Agreement in any
material respect);
(d) by either the Company or Parent, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited, or any judgment, injunction, order or decree enjoining Parent or the
Company from consummating the Merger (or the existence of which would otherwise
result in the failure of the condition set forth in Section 9.2(a)) is entered
and, in the case of any action brought other than by a Governmental Entity, such
judgment, injunction, order or decree shall become final and non-appealable; or
(e) by Parent, at any time prior to the Effective Time, by action of
the Board of Directors of Parent, if the Board of Directors of the Company shall
have withdrawn or modified in a manner adverse to Parent or Merger Sub its
approval or recommendation of this Agreement or the Merger, or shall have
resolved to do any of the foregoing.
SECTION 10.2. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.1, this Agreement shall become void and of no effect with
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no liability on the part of any party hereto or their respective officers and
directors, except that the agreements contained in Sections 7.1, 11.4 and 11.6
shall survive the termination hereof. Specifically, and without limiting the
generality of the foregoing, Parent and Merger Sub agree that termination of
this Agreement shall be their sole and exclusive remedy for any nonwillful
breach by the Company of its representations, warranties and covenants under
this Agreement and the Company agrees that termination of this Agreement shall
be its sole and exclusive remedy for any nonwillful breach by Parent or Merger
Sub of their representations, warranties and covenants under this Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Parent or Merger Sub, to:
AmeriServe Food Distribution, Inc.
545 Steamboat Road
Greenwich, Connecticutt 06830
Telecopy: (203) 661-5756
Attention: A. Petter 0stberg
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopy: (212) 403-2000
Attention: Adam O. Emmerich, Esq.
if to the Company, to:
ProSource, Inc.
530 Biltmore Way, 10th Floor
Coral Gables, Florida 33134
Telecopy: (305) 529-2573
Attention: Chairman of the Board
with a copy to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Telecopy: (212) 836-8689
Attention: Joel I. Greenberg, Esq.
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<PAGE>
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective when delivered at the address specified
in this Section.
SECTION 11.2. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement except for the
representations, warranties and agreements set forth in Sections 7.1, 7.4, 11.4
and 11.6.
SECTION 11.3. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, by the party to be charged
therewith; provided that after the adoption of this Agreement by the
shareholders of the Company, no such amendment or waiver shall, without the
further approval of such shareholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company, or (ii) any of the principal terms of the Merger.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.4. Fees and Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense.
SECTION 11.5. Successors and Assigns; Parties in Interest. The
provisions of this Agreement shall be binding upon, and inure to the benefit of
the parties hereto and their respective successors and assigns, provided that no
party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other parties hereto
except that Merger Sub may transfer or assign, in whole or from time to time in
part, to one or more of Parent or any of its wholly owned subsidiaries, any or
all of its rights or obligations, but any such transfer or assignment will not
relieve Merger Sub of its obligations under this Agreement. Except as expressly
set forth herein nothing in this Agreement, express or implied, is intended to
or shall confer upon any person not a party hereto any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement, including to
confer third party beneficiary rights.
SECTION 11.6. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware, without giving
effect to principles of conflicts of laws.
SECTION 11.7. Counterparts; Effectiveness; Interpretation. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by
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<PAGE>
all of the other parties hereto. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
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<PAGE>
The parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year first above written.
PROSOURCE, INC.
By:/s/ David R. Parker
Name: Davis R. Parker
Title: Chairman of the Board
AMERISERVE FOOD DISTRIBUTION, INC.
By:/s/ John V. Holten
Name: John V. Holten
Title: Chairman and Chief Executive
Officer
STEAMBOAT ACQUISITION CORP.
By:/s/ John V. Holten
Name: John V. Holten
Title: Chairman of the Board and
President
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VOTING AGREEMENT
VOTING AGREEMENT (this "Agreement") dated as of January 29, 1998, by
and among AmeriServe Food Distribution, Inc., a Delaware corporation ("Parent"),
Steamboat Acquisition Corp., a Delaware corporation ("Merger Sub") and Onex DHC
LLC, a Wyoming limited liability company, and certain of its affiliates the
names of which appear on the signature pages hereto (together, the
"Stockholders").
WHEREAS, Parent, Merger Sub and ProSource, Inc. , a Delaware
corporation (the "Company"), have entered into an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement"; capitalized terms used but
not defined herein shall have the meanings set forth in the Merger Agreement;
provided that the terms "Merger" and "Merger Agreement" shall not include any
amendments or modifications thereto unless such amendments and modifications
have been approved in writing by the Stockholders), providing for the merger
(the "Merger") of Merger Sub with and into the Company, upon the terms and
subject to the conditions set forth in the Merger Agreement; and
WHEREAS, the Stockholders beneficially own 496,583 Class A Shares and
5,218,072 Class B Shares (such Class A Shares and Class B Shares, together with
any other Class A Shares and Class B Shares that the Stockholders acquire
beneficial ownership of after the date hereof and during the term of this
Agreement, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution or otherwise, being collectively referred to
herein as the "Subject Shares"), owned by each of the Stockholders in the
amounts indicated beneath their respective names on the signature pages hereto;
and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent and Merger Sub have requested and required that the
Stockholders enter into this Agreement.
NOW, THEREFORE, to induce Parent and Merger Sub to enter into, and in
consideration of its entering into, the Merger Agreement, and in consideration
of the promises and the representations, warranties and agreements contained
herein, the parties hereto agree as follows:
1. Representations and Warranties of the Stockholders. Each of the
Stockholders hereby represents and warrants to Parent and Merger Sub as of the
date hereof as follows:
(a) Authority; No Conflicts. Each Stockholder has the necessary legal
capacity, power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by and
on behalf of each Stockholder, and, assuming due authorization, execution and
delivery by Parent and Merger Sub, constitutes a legal, valid and binding
obligation of the Stockholders, enforceable in accordance with its terms. Except
for the filings required under the HSR Act or the Exchange Act, (i) no filing
with, and no permit, authorization,
<PAGE>
consent or approval of, any Governmental Entity or any other person is necessary
for the execution and delivery of this Agreement by and on behalf of any
Stockholder and the consummation by any Stockholder of the transactions
contemplated hereby, and (ii) none of the execution and delivery of this
Agreement by and on behalf of any Stockholder, the consummation of the
transactions contemplated hereby and compliance with the terms hereof by any
Stockholder will conflict with, or result in any violation of, or default (with
or without notice or lapse of time or both) under any provision of, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise, license, judgment,
order, notice, decree, statute, law, ordinance, rule or regulation applicable to
any Stockholder or to any Stockholder's property or assets.
(b) The Subject Shares. Each Stockholder is the beneficial owner of
the Subject Shares indicated beneath its respective name on the signature pages
hereto and has, and throughout the term of this Agreement and at the Option
Closing Date will have, and will have the power and authority to convey to, and
will at the Option Closing convey to, Merger Sub, good and marketable title to
such Subject Shares free and clear of all encumbrances and liens (other than any
arising as a result of actions taken or omitted by Parent or Merger Sub). The
Stockholders do not beneficially own any shares of capital stock of the Company
or securities convertible into or exchangeable for shares of capital stock of
the Company, other than the Subject Shares. The Stockholders have the sole right
and power to vote and dispose of the Subject Shares, and none of the Subject
Shares is subject to any voting trust or other agreement, arrangement or
restriction with respect to the voting or transfer (other than the provisions of
the Securities Act) of any of the Subject Shares, except as contemplated by this
Agreement.
2. Representations and Warranties of Parent and Merger Sub. Each of
Parent and Merger Sub hereby represents and warrants to the Stockholders that it
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by and on behalf of each of
Parent and Merger Sub and, assuming due authorization, execution and delivery by
the Stockholders, constitutes a legal, valid and binding obligation of Parent
and Merger Sub enforceable in accordance with its terms. Except for the filings
required under the HSR Act and the Exchange Act, (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity or any
other person is necessary for the execution of this Agreement by and on behalf
of Parent or Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby, and (ii) none of the execution and delivery of
this Agreement by Parent and Merger Sub, the consummation of the transactions
contemplated hereby nor the compliance with the terms hereof by Parent and
Merger Sub will conflict with, or result in any violation of, or default (with
or without notice or lapse of time or both) under any provision of, the
certificate of incorporation or by-laws of Parent or Merger Sub, any trust
agreement, loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise, license, judgment,
order, notice, decree, statute, law, ordinance, rule or regulation applicable to
Parent or Merger Sub or to Parent's or Merger Sub's property or assets. If the
Option (as defined herein) is exercised, the Subject Shares will be acquired for
investment for Parent's and Merger Sub's own ac-
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<PAGE>
count, not as a nominee or agent and not with a view to the distribution of any
part thereof. Neither Parent nor Merger Sub has any present intention of
selling, granting any participation in or otherwise distributing the same nor
does Parent or Merger Sub have any contract, undertaking, agreement or
arrangement with any person with respect to any of the Subject Shares. Each of
Parent and Merger Sub further understands that the Subject Shares may not be
sold, transferred or otherwise disposed of without registration under the
Securities Act or pursuant to an exemption therefrom.
3. Covenants of the Stockholders. Until the termination of this
Agreement in accordance with Section 8 hereof, the Stockholders agree as
follows:
(a) Voting of Subject Shares. At any meeting of stockholders of the
Company called to vote upon the Merger and the Merger Agreement or at any
adjournment thereof or in any other circumstances upon which a vote or other
approval with respect to the Merger and the Merger Agreement is sought, each
Stockholder shall vote its Subject Shares in favor of the Merger, the adoption
by the Company of the Merger Agreement and the approval of the terms thereof and
each of the other transactions contemplated by the Merger Agreement.
At any meeting of stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Stockholders' vote, consent
or other approval as stockholders are sought, the Stockholders shall vote the
Subject Shares against (i) any action or agreement that would result in a breach
in any material respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or of the
Stockholders hereunder, and (ii) any action or agreement that would reasonably
be expected to impede, interfere with, delay, postpone or attempt to discourage
the Merger, including, but not limited to: (A) the adoption by the Company of a
proposal regarding (1) the acquisition of the Company by merger, tender offer or
otherwise by any person or group, other than Parent or Merger Sub or any
designee thereof (a "Third Party"), or any other merger, combination or similar
transaction with any Third Party; (2) the acquisition by a Third Party of 10% or
more of the assets of the Company and its subsidiaries, taken as a whole; (3)
the acquisition by a Third Party of 10% or more of the outstanding Shares; or
(4) the repurchase by the Company or any of its subsidiaries of 10% or more of
the outstanding Shares; (B) any amendment of the Company's certificate of
incorporation or by-laws or other proposal or transaction involving the Company
or any of its subsidiaries, which amendment or other proposal or transaction
would in any manner impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger Agreement
or change in any manner the voting rights of any class of the Company's capital
stock; (C) any change in the control of the board of directors of the Company;
(D) any material change in the present capitalization or dividend policy of the
Company; or (E) any other material change in the Company's corporate structure
or business. The Stockholders further agree not to commit or agree to take any
action inconsistent with the foregoing.
(b) Proxies. As security for the agreements of the Stockholders
provided for herein, each Stockholder hereby grants to Parent and Merger Sub a
proxy to vote the Subject Shares as indicated in Section 3(a) above. Each
Stockholder agrees that this proxy shall be ir-
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<PAGE>
revocable during the term of this Agreement and coupled with an interest and
each of the Stockholders, Parent and Merger Sub will take such further action or
execute such other instruments as may be necessary to effectuate the intent of
this proxy and hereby revokes any proxy previously granted by any Stockholder
with respect to any of the Subject Shares.
(c) Transfer Restrictions. Each Stockholder agrees not to (i) sell,
transfer, pledge, encumber, assign or otherwise dispose of or hypothecate
(including by gift or by contribution or distribution to any trust or similar
instrument or to any beneficiaries of such Stockholder (collectively,
"Transfer")), or enter into any contract, option or other arrangement or
understanding (including any profit sharing arrangement) with respect to the
Transfer of, any of the Subject Shares other than pursuant to the terms hereof
and the Merger Agreement, (ii) enter into any voting arrangement or
understanding with respect to the Subject Shares, whether by proxy, voting
agreement or otherwise, or (iii) take any action that would reasonably be
expected to make any of its representations or warranties contained herein
untrue or incorrect or could have the effect of preventing or disabling such
Stockholder from performing any of its obligations hereunder. Notwithstanding
the foregoing, each Stockholder may transfer its Subject Shares to another
direct or indirect wholly owned subsidiary of Onex Corporation on condition that
the transferee executes and delivers to Parent and Merger Sub an instrument in
writing, in form and substance reasonably satisfactory to Parent and Merger Sub,
assuming all of such Stockholder's obligations under this Agreement.
(d) Appraisal Rights. Each Stockholder hereby irrevocably waives any
and all rights which it may have as to appraisal, dissent or any similar or
related matter with respect to the Merger.
(e) No Solicitation. None of the Stockholders nor any of their
affiliates shall (whether directly or indirectly through any officer, director,
member, advisor, agent, representatives or other intermediary), nor shall the
Stockholders or any of their affiliates authorize or permit any of their
officers, directors, members, advisors, agents, representatives or other
intermediaries to, (i) solicit, initiate, encourage or take any action intended
to or reasonably likely to facilitate any submission of inquiries, proposals or
offers from any person relating to any acquisition or purchase of all or a
material amount of assets of, or any equity interest in, the Company (or any
subsidiary or division thereof) or any merger, consolidation, tender offer
(including a self tender offer), exchange offer, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company (or any subsidiary or division thereof), other than the transactions
contemplated by this Agreement or the Merger Agreement, or any other transaction
the consummation of which would reasonably be expected to impede, interfere
with, prevent or materially delay the Merger or which would reasonably be
expected to materially dilute the benefits to Parent or Merger Sub of the
transactions contemplated by the Merger Agreement (collectively, "Transaction
Proposals") or agree to or endorse any Transaction Proposal, other than the
transactions contemplated by the Merger Agreement, or (ii) enter into or
participate in any discussions or negotiations regarding any of the foregoing,
or furnish to any other person any information with respect to the Company's
business, properties or assets or any of the foregoing, or otherwise cooperate
in any way with, or assist or participate in, facilitate or encourage, any
effort to attempt by any other person to do or seek any of the foregoing.
Notwithstanding any-
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thing in this Agreement to the contrary, from and after the date hereof, the
Stockholders shall promptly advise Parent and Merger Sub orally and in writing
of the receipt by any of them (or any of the other entities or persons referred
to above) of any Transaction Proposal or any inquiry which is likely to lead to
any Transaction Proposal, the material terms and conditions of such Transaction
Proposal or inquiry, and the identity of the person making any such Transaction
Proposal or inquiry. The Stockholders will keep Parent and Merger Sub fully
informed of the status and details of any such Transaction Proposal or inquiry.
Nothing in this Section shall restrict the activities of any individual (whether
or not an affiliate of any Stockholder) in his or her capacity as a director,
officer, employee or agent of the Company or any of its subsidiaries.
(f) Merger Agreement. Each Stockholder accepts the terms and
conditions of the Merger Agreement as they apply to the holders of Shares.
4. Option.
(a) The Stockholders hereby grant to Merger Sub (or its designee), an
irrevocable option to purchase the Subject Shares, on the terms and subject to
the conditions set forth herein (the "Option").
(b) The Option may be exercised by Merger Sub, as a whole and not in
part, at any time during the period commencing upon the occurrence of any of the
following events and ending on the date which is the 30th calendar day following
the first to occur of such events:
(i) the Merger Agreement shall have been terminated pursuant to
Section 10.1(b) thereof;
(ii) the Merger Agreement shall have been terminated pursuant to
Section 10.1(c) thereof (other than a termination by the Company following
a failure to consummate the Merger as a result of an actual material breach
by Parent or Merger Sub of their respective obligations under the Merger
Agreement);
(iii) the Merger Agreement shall have been terminated pursuant to
Section 10.1(d) thereof;
(iv) the Merger Agreement shall have been terminated pursuant to
Section 10.1(e) thereof; or
(v) the Merger Agreement shall have been terminated for any other
reason (other than a termination as a result of an actual material breach
by Parent or Merger Sub of their respective obligations under the Merger
Agreement).
(c) If Merger Sub wishes to exercise the Option, Merger Sub shall send
a written notice to the Stockholders of its intention to exercise the Option,
specifying the place, and, if then known, the time and the date (the "Option
Closing Date") of the closing (the "Option Closing") of the purchase. The Option
Closing Date shall occur on the fifth business day (or such later date as shall
be no later than five business days following the first time that the Option
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<PAGE>
Closing shall be permitted by applicable law or regulation) after the later of
(i) the date on which such notice is delivered, and (ii) the satisfaction of the
conditions set forth in Section 4(f).
(d) At the Option Closing, the Stockholders shall deliver to Merger
Sub (or its designee) all of the Subject Shares by delivery of a certificate or
certificates evidencing the Subject Shares duly endorsed to Merger Sub or
accompanied by powers duly executed in favor of Merger Sub, with all necessary
stock transfer stamps affixed.
(e) At the Option Closing, Merger Sub shall, and Parent shall cause
Merger Sub to, pay to the Stockholders pursuant to the exercise of the Option,
by wire transfer, cash in immediately available funds to the accounts of the
Stockholders (such accounts to be specified in writing at least two days prior
to the Option Closing), an amount equal to the product of $15.00 and the number
of Subject Shares (the "Subject Shares Purchase Price").
(f) The Option Closing shall be subject to the satisfaction of each of
the following conditions:
(i) no court, arbitrator or governmental body, agency or official
shall have issued any order, decree or ruling and there shall not be any
statute, rule or regulation, restraining, enjoining or prohibiting the
consummation of the purchase and sale of the Subject Shares pursuant to the
exercise of the Option;
(ii) any waiting period applicable to the consummation of the purchase
and sale of the Subject Shares pursuant to the exercise of the Option under
the HSR Act shall have expired or been terminated; and
(iii) all actions by or in respect of, and any filing with, any
governmental body, agency, official, or authority required to permit the
consummation of the purchase and sale of the Subject Shares pursuant to the
exercise of the Option shall have been obtained or made and shall be in
full force and effect, except such actions and filings which, if not made
or obtained, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5. Further Agreements of Parent and Merger Sub.
(a) Parent and Merger Sub hereby agree that, in the event that Merger
Sub purchases the Subject Shares pursuant to the Option, as promptly as
practicable thereafter, Merger Sub will, and Parent will cause Merger Sub to,
make a tender offer for the remaining Shares to the stockholders of the Company
(the consummation of which shall be subject only to the condition that no court,
arbitrator or governmental body, agency or official shall have issued any order,
decree or ruling and there shall not be any statute, rule or regulation,
restraining, enjoining or prohibiting the consummation of such tender offer)
pursuant to which the stockholders of the Company (other than the Company, any
direct or indirect subsidiary of the Company or Parent or Merger Sub) will
receive an amount of cash consideration per Share equal to $15.00, and will take
such actions as may be necessary or appropriate in order to effectuate such
tender offer at the earliest practicable time.
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(b) Subject to the last sentence of this Section 5(b), if, after
purchasing the Subject Shares pursuant to the Option, Merger Sub or any of its
affiliates has not acquired the remaining Shares, Merger Sub or any of its
affiliates receives any cash or non-cash consideration in respect of the Subject
Shares in connection with a Third Party Business Combination (as defined below)
during the period commencing on the date of the Option Closing and ending on the
first anniversary thereof, Merger Sub shall promptly pay over to the
Stockholders, as an addition to the Subject Shares Purchase Price, (x) one-half
of the excess, if any, of such consideration over the aggregate Subject Shares
Purchase Price paid for the Subject Shares which are sold by Merger Sub
hereunder less (y) the sum of (I) the amount of taxes payable or to be payable
by Merger Sub (as estimated by Merger Sub in good faith) in connection with such
Third Party Business Combination (it being intended and understood that Merger
Sub retain one-half of the after-tax profit from such sale taking into account
any adjustment to basis resulting from the payment required by this section),
and (II) the amount of expenses of Merger Sub in connection herewith and the
Merger Agreement and in connection with such Third Party Business Combination,
and (II) the pro rata portion (based on share holdings) of all capital
contributions to and retained earnings of the Company from the date of date of
the Option Closing through the date of the Third Party Business Combination;
provided that, (i) if the consideration received by Merger Sub or such
affiliates shall be securities listed on a national securities exchange or
traded on the Nasdaq National Market, the per share value of such consideration
shall be equal to the closing price per share of such securities listed on such
national securities exchange or the Nasdaq National Market on the date such
transaction is consummated, and (ii) if the consideration received by Merger Sub
or such affiliates shall be in a form other than securities, the per share value
shall be determined in good faith as of the date such transaction is consummated
by Merger Sub and the Stockholders, or, if Merger Sub and the Stockholders
cannot reach agreement, by a nationally recognized investment banking firm
reasonably acceptable to the parties. The term "Third Party Business
Combination" means the occurrence of any of the following events: (A) the
Company, or more than 50% of the outstanding shares of the Company's capital
stock, is acquired by merger or otherwise by any Third Party; or (B) a Third
Party acquires all or substantially all of the total assets of the Company and
its subsidiaries, taken as a whole; provided, however, that in no event will any
transaction in which shares of the Company's capital stock or any of its assets
are sold or transferred directly or indirectly in connection with or as a part
of a sale or other transaction involving sale, merger or other similar
transaction of Parent or any of its material assets or business constitute a
Third Party Business Combination, and in no event will a sale of any division,
line of business or similar unit of the Company and its subsidiaries constitute
a Third Party Business Combination.
6. Stop Transfer Order. The Stockholders hereby authorize and request
the Company's counsel to notify the Company's transfer agent that there is a
stop transfer order with respect to all of the Subject Shares (and that this
Agreement places limits on the voting of the Subject Shares).
7. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder, except as expressly provided herein with respect to
Parent's and Merger Sub's rights under the Option, shall be assigned by any of
the parties without the prior written consent of the other parties, except that
each of Parent or Merger Sub may assign, in its sole discretion,
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<PAGE>
any or all of its rights, interests and obligations hereunder to any direct or
indirect wholly owned subsidiary of Parent. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their permitted assigns and their respective successors
(including the Company as successor to Merger Sub pursuant to the Merger),
heirs, agents, representatives, trust beneficiaries, attorneys, affiliates and
associates and all of their respective predecessors, successors, permitted
assigns, heirs, executors and administrators.
8. Termination. This Agreement shall terminate, and no party shall
have any rights or obligations hereunder and this Agreement shall become null
and void and have no further effect immediately following the earliest to occur
of (x) the Effective Time, (y) the 30th day following the termination of the
Merger Agreement pursuant to Section 10.1(b), 10.1(c), 10.1(d) or 10.1(e)
thereof, or (z) the termination of the Merger Agreement pursuant to Section
10.1(a) thereof. Notwithstanding the foregoing, in the event the Option shall
have been exercised in accordance with Section 4, but the Option Closing shall
not have occurred, this Agreement shall not terminate, except that this
Agreement may be terminated by the Stockholders if Merger Sub defaults on its
obligation to purchase the Subject Shares at the Option Closing. Nothing in this
Section shall relieve any party of liability for breach of this Agreement.
9. General Provisions.
(a) Amendments. This Agreement may not be amended except by an
instrument in writing signed by the party to be charged therewith.
(b) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or sent by overnight
courier (providing proof of delivery) to Parent and Merger Sub in accordance
with Section 11.1 of the Merger Agreement and to the Stockholders c/o Kaye,
Scholer, Fierman, Hays & Handler, LLP, 425 Park Avenue New York, New York 10022,
Telecopy: (212) 836-8689, Attention: Joel I. Greenberg, Esq. (or at such other
address for a party as shall be specified by like notice).
(c) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Wherever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation."
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
each party need not sign the same counterpart.
(e) 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 law
thereof.
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<PAGE>
10. 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 in any Federal court of the United
States located in the Southern District of the State of New York or in a New
York state court located in Manhattan, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit such party to the personal jurisdiction of
any Federal court located in the Southern District of the State of New York or
any New York state court located in Manhattan in the event any dispute arises
out of this Agreement or any of the transactions contemplated hereby, (ii)
agrees that such party will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii)
agrees that such party will not bring any action relating to this Agreement or
the transactions contemplated hereby in any court other than a Federal court
sitting in the Southern District of the State of New York or a New York state
court located in Manhattan, and (iv) waives any right to trial by jury with
respect to any claim or proceeding related to or arising out of this Agreement
or any of the transactions contemplated hereby.
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<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Stockholders have each
caused this Agreement to be signed by its signatory thereunto duly authorized,
each as of the date first written above.
AMERISERVE FOOD DISTRIBUTION, INC.
By:/s/ John V. Holten
Name: John V. Holten
Title: Chairman and Chief Executive
Officer
STEAMBOAT ACQUISITION CORP.
By:/s/ John V. Holten
Name: John V. Holten
Title: Chairman of the Board and
President
ONEX DHC LLC
(479,498 Class A Shares and
4,458,696 Class B Shares)
By:/s/ Anthony R. Melman
Name: Anthony R. Melman
Title: Attorney-in-fact
ONEX OMI LLC
(285,714 Class B Shares)
By:/s/ Anthony R. Melman
Name: Anthony R. Melman
Title: Attorney-in-fact
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<PAGE>
PROSOURCE EXECUTIVE INVESTCO LLC
(17,085 Class A Shares and
94,420 Class B Shares)
By:/s/ Anthony R. Melman
Name: Anthony R. Melman
Title: Attorney-in-fact
ONEX OHIO LLC
(379,242 Class B Shares)
By:/s/ Anthony R. Melman
Name: Anthony R. Melman
Title: Attorney-in-fact
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[AmeriServe Logo] [ProSource Logo]
FOR IMMEDIATE RELEASE
Contact:
AmeriServe ProSource
Samantha Crosby William F. Evans
972-338-7302 305-740-1406
AMERISERVE AND PROSOURCE TO MERGE
IN $342 MILLION TRANSACTION
DALLAS, TX and CORAL GABLES, FL, January 30, 1998 - AmeriServe Food
Distribution, Inc., a subsidiary of Holberg Industries, Inc., and ProSource,
Inc. (NASDAQ: PSDS) jointly announced today that they have signed a definitive
merger agreement under which AmeriServe will acquire all outstanding shares of
ProSource. The transaction will solidify AmeriServe's position as one of the
largest foodservice distributors in North America and enable it to deliver food,
supplies and equipment to 38,000 restaurants in the United States, Canada and
Mexico.
Under the terms of the merger agreement, AmeriServe will pay $15.00 in
cash for each outstanding share of ProSource common stock. AmeriServe will also
refinance all of ProSource's outstanding debt. The transaction has a total value
of approximately $342 million.
"The combination of AmeriServe and ProSource provides an unmatched
opportunity to realize significant benefits for our customers," said AmeriServe
Chairman and CEO John V. Holten. "AmeriServe has always sought to be the low
cost provider in the foodservice distribution industry and to provide the best
service at the lowest possible cost. We will keep a sharp focus on maintaining
and improving customer service as we integrate our two companies."
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"The decision to combine with AmeriServe was reached following an
exploration of strategic alternatives by ProSource. That process demonstrated
clearly that AmeriServe and ProSource share the same values and commitment to
customer service," said David R. Parker, Chairman of ProSource. "We too have
sought to provide customers with outstanding service at a low cost. The merger
of our two companies will accelerate these efforts. The entire ProSource team
and I look forward to working towards a smooth and seamless transition."
"Acquiring and merging distribution companies and investing the
necessary capital to integrate them into a single, efficient system has been our
history; the combination of AmeriServe and ProSource is the next logical step,"
Holten said. "Together, we expect to achieve service excellence and cost savings
as we move forward and we plan to share the resulting benefits with our
customers as they are realized over time.
"In addition, the timing of this transaction is ideal. AmeriServe is
in the initial phase of an aggressive $150 million capital improvement program
that has already built or expanded distribution centers in Minneapolis, Grand
Rapids, Cincinnati and Fort Worth. New distribution centers are under
construction in Orlando and Denver and new facilities are planned for Memphis,
Atlanta and Charlotte. We will be enhancing our state-of-the-art systems and
technology platform to take us well into the next century," Holten concluded.
"This transaction is also a reflection of the hard work and dedication
of the associates of ProSource," Parker continued. "Their efforts have built
ProSource into one of the finest companies in the foodservice distribution
industry. Combining our two companies creates a larger, stronger company with
outstanding career opportunities for the employees of both companies."
The combined AmeriServe and ProSource will employ 8,500 people and
generate pro forma sales of $9.4 billion. It will serve approximately 38,000
restaurants in the United States, Canada and Mexico, including Arby's, Burger
King, Chick-fil-A, Chili's, Dairy Queen, KFC, Long John Silver's, Olive Garden,
Pizza Hut, Red Lobster, Sonic, Taco Bell, TCBY, TGI Friday's and Wendy's.
AmeriServe will continue to have its headquarters in Dallas and maintain certain
corporate functions in Coral Gables.
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The merger is subject to customary regulatory approvals. Onex
Corporation, which owns approximately 61% of ProSource's outstanding stock,
representing 85% of the voting power, has committed to vote in favor of the
merger, which will assure the necessary shareholder approval. The merger is
expected to close in the second quarter.
ProSource is a leader in providing foodservice distribution to
restaurants in North America. ProSource also provides purchasing and logistics
services to the foodservice market. The Company's 3,500 employees serve
approximately 12,500 restaurants from a nationwide network of distribution
centers and its Corporate Support Center in Coral Gables, Florida.
AmeriServe is one of the nation's largest foodservice distributors. It
serves a total of 25,500 restaurants in the United States, Canada and Mexico and
has more than 5,000 employees operating out of 35 distribution centers.
AmeriServe also has customer support offices in Wichita, KS, Louisville, KY, and
Irvine, CA, in addition to its corporate headquarters in Dallas.
Holberg Industries, Inc. is a privately owned, diversified service
company headquartered in Greenwich, Connecticut, with annualized sales of $5.9
billion and 9,300 employees. Along with AmeriServe, Holberg owns APCOA, Inc.,
one of the largest operators of paid parking facilities in North America. APCOA
recently announced it had signed a definitive merger agreement with Standard
Parking, which will create a company with approximately $1 billion of pro forma
revenues, operating parking facilities in 50 North American cities.
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