SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Under Rule 14a-12
MIKASA, INC.
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(Name of Registrant as Specified In its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|_| No fee required.
|X| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies: common
stock, $.01 par value per share
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(2) Aggregate number of securities to which transaction applies: 16,163,095
shares
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): The filing fee of $49,022 was
calculated pursuant to Exchange Act Rule 0-11(c)(1) by multiplying 1/50th
of 1% by (1) the proposed cash payment of $236,367,368 for 14,325,295
shares of common stock, par value $.01 per share, of Mikasa, Inc., at
$16.50 per share and (2) the proposed cash payment of $8,739,800 to be paid
to persons holding options to acquire shares of common stock in
consideration of cancellation of such options (assuming options to purchase
an aggregate of 1,837,800 shares of common stock are cancelled in exchange
for cash in the transaction).
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(4) Proposed maximum aggregate value of transaction: $245,107,168
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(5) Total fee paid: $49,022
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|_| Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
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(1) Amount Previously Paid:
--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
As filed with the Securities and Exchange Commission on October 5, 2000
MIKASA, INC.
One Mikasa Drive
Secaucus, New Jersey 07096
-----------------------------------
To our Stockholders:
You are cordially invited to attend a special meeting of stockholders
of Mikasa, Inc. to be held at o:00 a.m., local time, on o, 2000 at o located at
o.
At the special meeting, you will be asked to consider and vote upon the
approval and adoption of an Agreement and Plan of Merger, dated September 10,
2000, providing for the merger of Mountain Acquisition Corp. into Mikasa.
Mountain Acquisition Corp., a newly formed Delaware corporation, is wholly owned
by J.G. Durand Industries, S.A., a French societe anonyme.
In the merger, each issued share of Mikasa common stock outstanding
immediately prior to the effective time of the merger will be canceled and
converted automatically into the right to receive $16.50 in cash, without
interest or any other payment thereon, except that shares held in the treasury
of Mikasa and shares of Mikasa common stock owned by any of Mikasa's
subsidiaries will be canceled and shares held by stockholders who have perfected
their dissenters' rights will be subject to appraisal in accordance with
Delaware law. If the stockholders of Mikasa approve and adopt the Agreement and
Plan of Merger, Mikasa will become a private company and will be approximately
84.7% owned by J.G. Durand Industries and, in the aggregate, 15.3% owned by
three members of Mikasa's senior management and Mikasa's founder. These three
members of management and Mikasa's founder are referred to in the proxy
statement together as the "continuing stockholders."
The accompanying proxy statement explains the proposed merger and
provides specific information concerning the special meeting. Please read these
materials, including the appendices, completely and carefully.
A special committee of the Board of Directors of Mikasa has unanimously
determined that the proposed merger as contemplated by the merger agreement is
fair to and in the best interests of the stockholders of Mikasa (other than the
continuing stockholders) and has recommended that the Board of Directors of
Mikasa approve and declare advisable the merger agreement, submit the merger
agreement to Mikasa's stockholders and recommend that Mikasa's stockholders
adopt the merger agreement. The special committee consists solely of directors
who are not officers or employees of Mikasa, and who will not retain an interest
in Mikasa following the merger. The Board of Directors has unanimously
determined that the terms of the merger are advisable, and are fair to, and in
the best interests of, Mikasa stockholders. The Board of Directors unanimously
recommends that you vote FOR the approval of the merger and the adoption of the
merger agreement.
<PAGE>
In reaching its decision, the special committee considered, among other
things, a written opinion dated September 10, 2000, from CIBC World Markets
Corp., the special committee's financial advisor, to the effect that, as of
September 10, 2000, based on and subject to the limitations, assumptions and
qualifications stated in its opinion, the consideration to be received by the
stockholders of Mikasa (other than the continuing stockholders, as to whom CIBC
World Markets Corp. was not asked to express an opinion) in the merger was fair
from a financial point of view to such stockholders.
We cannot complete the merger unless holders of a majority of the
outstanding shares of our common stock vote to approve and adopt the merger
agreement and the transactions contemplated by the merger agreement. It is very
important that your shares be represented at the special meeting. Whether or not
you plan to attend the special meeting, we request that you complete, date, sign
and return the enclosed proxy card promptly in the enclosed pre-addressed
postage-paid envelope. Failure to return a properly executed proxy card or vote
at the special meeting will have the same effect as a vote against the merger
agreement and the transactions contemplated by the merger agreement.
If the merger is consummated, you will receive instructions for
surrendering your Mikasa common stock certificates in exchange for $16.50 in
cash for each share and a letter of transmittal to be used for this purpose. You
should not submit your stock certificates for exchange until you have received
the instructions and the letter of transmittal.
Sincerely,
Alfred J. Blake
Chairman
Secaucus, New Jersey
o, 2000
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This proxy statement is dated o 2000, and
is first being mailed to stockholders on or about o 2000.
<PAGE>
MIKASA, INC.
------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON o, 2000
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To Our Stockholders:
A special meeting of the stockholders of Mikasa, Inc. will be held at
o:00 a.m., local time, on o, 2000, at o located at o, for the following
purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated September 10, 2000, by and
between Mikasa, J.G. Durand Industries, S.A., a French societe
anonyme, Mountain Acquisition Corp., a newly-formed Delaware
corporation and wholly owned subsidiary of J.G. Durand
Industries, and certain stockholders of Mikasa, and the
transactions contemplated by the merger agreement. Under the
terms of the merger agreement, Mountain Acquisition Corp. will be
merged into Mikasa, and Mikasa will be the surviving corporation
following the merger. In the merger, each issued share of Mikasa
common stock outstanding immediately prior to the effective time
of the merger will be canceled and converted automatically into
the right to receive $16.50 in cash, without interest or any
other payment thereon, except that treasury shares and shares of
Mikasa common stock owned by any of Mikasa's subsidiaries will be
canceled and shares held by stockholders who have perfected their
dissenters' rights will be subject to appraisal in accordance
with Delaware law. A copy of the merger agreement is attached as
Appendix A to the accompanying proxy statement.
2. To transact such other business as may properly come before the
special meeting or any adjournment(s) or postponement(s) thereof.
Upon completion of the merger, J.G. Durand Industries will own
approximately 84.7% of Mikasa and three members of Mikasa's senior management
and Mikasa's founder, referred to in the proxy statement together as the
"continuing stockholders," will own approximately 15.3% of Mikasa.
The Board of Directors has fixed o, 2000 as the record date for the
special meeting. Only those stockholders who were holders of record of Mikasa
common stock at the close of business on o, 2000 will be entitled to notice of,
and to vote at, the special meeting and any adjournment(s) or postponements(s)
thereof. A list of those stockholders will be available for review at Mikasa's
principal executive office during normal business hours for a period of ten days
before the special meeting.
The approval and adoption of the merger agreement requires the
affirmative vote of a majority of the outstanding shares of Mikasa common stock
held by stockholders of record on the record date. The continuing stockholders
owned an aggregate of [9,325,897] shares of Mikasa common stock as of the record
date, constituting approximately [54.9]% of the outstanding shares of Mikasa
common stock entitled to vote at the special meeting. Under a
<PAGE>
support agreement, dated as of September 10, 2000, among J.G. Durand Industries,
Mountain Acquisition Corp. and the continuing stockholders, the continuing
stockholders have agreed, among other things, to vote their shares in favor of
the merger and for the adoption of the Agreement and Plan of Merger, except
under certain conditions. A copy of the support agreement is attached as
Appendix B to the accompanying proxy statement.
Acting upon the unanimous recommendation of a special committee of the
Board of Directors, consisting solely of directors who are not officers or
employees of Mikasa and who will not retain an interest in Mikasa following the
merger, the Board of Directors of Mikasa has unanimously determined that the
terms of the merger are advisable, and are fair to, and in the best interests
of, Mikasa stockholders. The Board of Directors unanimously recommends that you
vote FOR the approval and adoption of the merger agreement and the transactions
contemplated by the merger agreement.
Stockholders of Mikasa who do not vote in favor of approval and
adoption of the merger agreement will have the right to seek appraisal of the
fair value of their shares if the merger is completed, but only if they submit a
written demand for such an appraisal before we take the vote on the merger
agreement and they comply with Delaware law as explained in the accompanying
proxy statement.
Your vote is important to us. Whether or not you plan to attend the
special meeting in person and regardless of the number of shares of Mikasa
common stock that you own, please complete, sign, date and return the enclosed
proxy card promptly in the enclosed pre-addressed postage-paid envelope.
Failure to return a properly executed proxy card or vote at the special
meeting will have the same effect as a vote against the merger agreement and the
transactions contemplated by the merger agreement.
Your proxy is revocable and will not affect your right to vote in
person if you decide to attend the special meeting. Simply attending the special
meeting, however, will not revoke your proxy. For an explanation of the
procedures for revoking your proxy, see the section of the proxy statement
captioned "THE SPECIAL MEETING--Solicitation; Revocation and Use of Proxies."
Returning your proxy card without indicating how you want to vote will have the
same effect as a vote FOR the approval and adoption of the merger agreement and
the transactions contemplated by the merger agreement.
<PAGE>
The merger is described in the accompanying proxy statement, which you
are urged to read carefully. In addition, you may obtain information about
Mikasa from documents that Mikasa has filed with the Securities and Exchange
Commission, including the Schedule 13E-3 transaction statement filed in
connection with the merger.
By Order Of The Board Of Directors,
Amy Tunis
Secretary
Secaucus, New Jersey
o, 2000
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY TERM SHEET...........................................................i
QUESTIONS AND ANSWERS ABOUT THE MERGER.....................................iii
SUMMARY......................................................................1
The Companies.......................................................1
The Merger..........................................................2
Our Recommendation to Stockholders;
Fairness of the Merger..............................................2
Opinion of Financial Advisor to
Special Committee...................................................2
Interests of Mikasa Directors and
Executive Officers in the Merger....................................3
Financing for the Merger............................................3
The Special Meeting; Support Agreement..............................4
Appraisal Rights....................................................4
Effects of the Merger...............................................5
Conditions to the Merger............................................5
Termination of the Merger Agreement.................................6
What Happens if Mikasa Receives a Better Offer......................7
Payment of Fees Upon Termination Events.............................8
Amending or Waiving Terms of
the Merger Agreement................................................9
Federal Regulatory Matters..........................................9
Litigation Related to the Merger....................................9
Price Range of Common Stock.........................................9
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS..................................................10
SELECTED CONSOLIDATED FINANCIAL DATA........................................11
THE SPECIAL MEETING.........................................................13
General............................................................13
Purpose............................................................13
Voting Rights; Support Agreement...................................13
Solicitation; Revocation and
Use of Proxies.....................................................14
THE MERGER..................................................................16
Background of the Merger...........................................16
Recommendations of the Special
Committee and Board of Directors;
Fairness of the Merger.............................................22
Unaudited Projected Income Statements..............................27
Opinion of Financial Advisor to
the Special Committee..............................................29
<PAGE>
Financial Advisor to Mikasa........................................34
Purpose and Structure of the Merger................................35
Effects of the Merger..............................................35
Risk that the Merger will not
be Completed.......................................................36
Interests of Mikasa Directors and
Executive Officers in the Merger...................................37
Financing for the Merger...........................................46
Litigation.........................................................46
Accounting Treatment of the Merger.................................46
Federal Regulatory Matters.........................................46
Material Federal Income
Tax Consequences to Stockholders...................................46
Dissenters' Rights of Appraisal....................................47
THE MERGER AGREEMENT........................................................52
The Merger.........................................................52
Effective Time of the Merger.......................................52
Structure; Merger Consideration....................................52
Treatment of Options...............................................53
Payment for Shares.................................................53
Transfer of Shares.................................................54
Officers, Directors and
Governing Documents................................................54
Representations and Warranties.....................................54
Conduct of Business Pending
the Merger.........................................................56
No Solicitation....................................................58
Access to Information..............................................59
Regulatory and Other Consents
and Approvals......................................................59
Mikasa Stockholder Approval........................................59
Conditions to the Merger...........................................59
Indemnification and Insurance......................................61
Termination of the Merger Agreement................................62
Amendment and Waiver...............................................63
Termination Fee....................................................64
FEES AND EXPENSES...........................................................66
PRICE RANGE OF COMMON STOCK.................................................67
<PAGE>
DIVIDENDS...................................................................67
COMMON STOCK PURCHASE INFORMATION...........................................67
DIRECTORS AND EXECUTIVE OFFICERS OF MIKASA..................................69
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
OWNERSHIP...................................................................70
INFORMATION ABOUT J.G. DURAND
INDUSTRIES AND MERGER SUB...................................................71
Members of the Supervisory Board of J.G. Durand Industries.........71
Members of the Directorate of J.G. Durand Industries...............72
Directors and Executive Officers of Merger Sub.....................72
OTHER MATTERS...............................................................73
FUTURE STOCKHOLDER PROPOSALS................................................73
WHERE YOU CAN FIND MORE INFORMATION.........................................73
Appendix A Agreement and Plan of Merger.............................A-1
Appendix B Support Agreement........................................B-1
Appendix C Stockholders' Agreement..................................C-1
Appendix D Section 262 of the Delaware
General Corporation Law..................................D-1
Appendix E Opinion of CIBC World Markets Corp.......................E-1
Annex A Form of Proxy
<PAGE>
SUMMARY TERM SHEET
This summary term sheet highlights selected information contained in
this proxy statement and may not contain all of the information that is
important to you. We urge you to read carefully this entire proxy statement,
including the appendices and the other documents we refer to in this proxy
statement. In this proxy statement, the terms "Mikasa," "we," "us" and "our"
refer to Mikasa, Inc.
o Stockholder Vote--You are being asked to approve and adopt the
merger agreement and the transactions contemplated by the merger
agreement, by which Mountain Acquisition Corp. will be merged
into Mikasa. The merger agreement must be approved and adopted by
the affirmative vote of the holders of a majority of the
outstanding shares of Mikasa common stock. See "THE SPECIAL
MEETING."
o Payment--In the merger, each issued and outstanding share of
Mikasa common stock owned by Mikasa's public stockholders will be
converted into the right to receive $16.50 in cash, without
interest or other payment thereon. See "THE MERGER AGREEMENT."
o Merger Sub--Mountain Acquisition Corp., which we refer to as
"Merger Sub," is a newly formed Delaware corporation that is
wholly owned by J.G. Durand Industries, S.A., a French societe
anonyme. See "INFORMATION ABOUT J.G. DURAND AND MERGER SUB."
o Continuing Stockholders--Alfred J. Blake, Chairman of the Board
of Directors of Mikasa, Raymond B. Dingman, Chief Executive
Officer, President, Chief Operating Officer and a Director of
Mikasa, Anthony F. Santarelli, Executive Vice
President--Operations and a Director of Mikasa, and George T.
Aratani, Mikasa's founder and Chairman Emeritus of the Board of
Directors of Mikasa, have agreed to own stock of Mikasa after the
merger. We refer to Messrs. Blake, Dingman and Santarelli as the
"three executives" and to these four Mikasa stockholders,
including the three executives, as the "continuing stockholders."
As of the record date, the continuing stockholders owned
(directly or, in the case of Messrs. Dingman and Aratani, through
one or more family trusts with respect to which they are trustees
and beneficial owners) [9,325,897] shares of Mikasa common stock,
as well as options to purchase an additional 985,000 shares of
Mikasa common stock.
Immediately prior to the merger, a total of 2,672,800 shares of
Mikasa common stock then held by the continuing stockholders will
be converted into shares of a new series of preferred stock of
Mikasa, the Series A Preferred Stock. The remaining shares of
Mikasa common stock then held by the continuing stockholders will
be converted into the right to receive $16.50 in cash per share
in the merger and all of the options then held by the continuing
stockholders will be converted into the right to receive $16.50
per share, less the applicable exercise price and tax withholding
for each option. Immediately after the merger, the shares of the
Series A Preferred Stock held by the continuing stockholders will
be converted into shares of the common stock of
i
<PAGE>
the surviving corporation. In the aggregate, the continuing
stockholders will own approximately 15.3% of Mikasa following the
merger.
In addition, the continuing stockholders have entered into
employment agreements with Mikasa and a stockholders' agreement
with respect to the common stock they will hold in the surviving
corporation, each of which will take effect at the time of the
merger. As a result of all these factors, the continuing
stockholders may have interests that are different from, or in
addition to, your interests as a Mikasa stockholder generally.
See "THE MERGER--Interests of Mikasa Directors and Executive
Officers in the Merger."
o Support Agreement--As of o, 2000, the record date for
determination of stockholders entitled to receive notice of and
to vote at the special meeting regarding the merger agreement,
the continuing stockholders owned approximately [54.9]% of the
outstanding shares of Mikasa common stock. These stockholders,
along with J.G. Durand Industries and Merger Sub, have entered
into a support agreement under which the continuing stockholders
have agreed to vote all their shares of Mikasa common stock in
favor of the merger agreement and the transactions contemplated
by the merger agreement, except under certain circumstances. If
the continuing stockholders vote as they have agreed in the
support agreement, the merger agreement and the transactions
contemplated by the merger agreement will be approved and adopted
regardless of how any other stockholder votes on these issues.
See "THE MERGER--Interests of Mikasa Directors and Executive
Officers in the Merger."
o Tax Consequences--Generally, the consideration received in the
merger will be taxable for U.S. federal income tax purposes. You
will recognize taxable gain or loss in the amount of the
difference between $16.50 and your adjusted tax basis for each
share of Mikasa common stock that you own. See "THE
MERGER--Material Federal Income Tax Consequences to
Stockholders."
o Conditions--The merger agreement and the transactions
contemplated by the merger agreement are subject to Mikasa
stockholder approval as well as certain other conditions. See
"THE MERGER AGREEMENT--Conditions to the Merger."
o After the Merger--Upon completion of the merger, J.G. Durand
Industries and the continuing stockholders are expected to own
approximately 84.7% and 15.3%, respectively, of Mikasa. You will
not own any Mikasa common stock after completion of the merger.
See "THE MERGER--Interests of Mikasa Directors and Executive
Officers in the Merger."
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
The following questions and answers briefly address some commonly asked
questions about the merger. They may not include all the information that is
important to you. We urge you to read carefully this entire proxy statement,
including the appendices and the other documents we refer to in this proxy
statement.
Q: What am I being asked to vote upon?
A: You are being asked to approve and adopt a merger agreement that provides
for Merger Sub to be merged into Mikasa. Merger Sub, a newly formed
Delaware corporation, is wholly owned by J.G. Durand Industries, a French
societe anonyme. If the merger is completed, Mikasa will no longer be a
publicly-held corporation and you will no longer own Mikasa common stock.
Q: What will I receive for my Mikasa common stock if the merger is completed?
A: In the merger, each issued share of Mikasa common stock outstanding
immediately prior to the time of the merger will be canceled and converted
automatically into the right to receive $16.50 in cash, without interest or
any other payment thereon, except that treasury shares and shares of Mikasa
common stock owned by any of Mikasa's subsidiaries will be canceled and
shares held by stockholders who have perfected their dissenters' rights
will be subject to appraisal in accordance with Delaware law.
Q: What does the Board of Directors recommend regarding the merger agreement?
A: After receiving the unanimous recommendation of a special committee of the
Board of Directors, consisting solely of directors who are not officers or
employees of Mikasa and who will retain no interest in Mikasa following the
merger, the Board of Directors unanimously determined that the terms of the
merger are advisable, and are fair to, and in the best interests of, Mikasa
stockholders. The Board of Directors unanimously recommends that you vote
FOR the approval and adoption of the merger agreement and the transactions
contemplated by the merger agreement.
Q: Why did the Board of Directors form the special committee?
A: The Board of Directors formed the special committee because of the
interests of the three executives discussed below in the answer to the next
question. The members of the special committee, Joseph S. Muto, Raymond E.
Inouye and Norman R. Higo, are directors who are not officers or employees
of Mikasa and who will not retain any interest in Mikasa following the
merger. Messrs. Inouye and Muto hold options, granted to them in May 2000
pursuant to Mikasa's Non-Employee Director Stock Option Plan, each to
purchase 2,500 shares of Mikasa common stock at $9.5625 per share, all of
which will vest as a result of the merger.
iii
<PAGE>
Q: What will happen to present members of management in the merger?
A: All current members of management, including the directors of Mikasa, will
be entitled to the same consideration for each share of Mikasa common stock
that they own at the time of the merger as other Mikasa stockholders. In
addition, they will be entitled to receive cash payments in respect of
options they hold to purchase Mikasa common stock in an amount equal to
$16.50 per share, less the applicable exercise price and tax withholding
for each option.
Immediately prior to the merger, Messrs. Blake, Dingman and Santarelli (who
are currently executive officers and directors of Mikasa and whom we refer
to as the "three executives") and Mr. Aratani (the founder of Mikasa and
Chairman Emeritus of the Board of Directors and whom we refer to
collectively with the three executives as the "continuing stockholders"),
will convert an aggregate of 2,672,800 shares of Mikasa common stock held
by them into shares of a new series of preferred stock of Mikasa, the
Series A Preferred Stock. The Series A Preferred Stock will not be
converted into the right to receive cash in the merger, but will instead be
converted into shares of common stock in the surviving corporation after
the merger. All of the other shares of Mikasa common stock held by the
three executives and Mr. Aratani at the time of the merger (which, as of
the record date, would total [6,653,097] shares) will be converted into the
right to receive $16.50 per share, and all of the options held by them will
be converted into the right to receive $16.50 per share, less the
applicable exercise price and tax withholding for each option.
As a result, following the merger, the continuing stockholders will
together own approximately 15.3% of Mikasa. The three executives will
continue to serve as officers of Mikasa and, together with Mr. Aratani,
have entered into employment agreements with Mikasa and a stockholders'
agreement, all of which will take effect at the time of the merger. The
stockholders' agreement is attached as Appendix C to this proxy statement.
From and after the effective time of the merger, the directors of Merger
Sub will become the directors of Mikasa, and the current officers of Mikasa
will remain the officers of Mikasa, in each case until their successors are
elected or appointed and qualified. Under the terms of the stockholders'
agreement, the three executives will have the right to nominate certain
members for election to the board of directors of the surviving
corporation.
Q: Is the merger subject to the fulfillment of certain conditions?
A: Yes. Before completion of the transactions contemplated by the merger
agreement, Mikasa and Merger Sub must fulfill or waive several closing
conditions, including, approval of the merger and adoption of the merger
agreement by the stockholders of Mikasa, the receipt of applicable
governmental and regulatory approvals, the accuracy of representations and
warranties made by the parties, the fulfillment by the parties of various
contractual obligations, the absence of certain material adverse effects on
Mikasa and other customary closing conditions. If these conditions are not
satisfied or waived the merger will not be completed even if the
stockholders of Mikasa vote to approve and
iv
<PAGE>
adopt the merger agreement. See "THE MERGER AGREEMENT--Conditions to the
Merger."
Q: When do you expect the merger to be completed?
A: We are working toward completing the merger as quickly as possible. We
expect to complete the merger by the end of this year.
Q: Will I owe any U.S. federal income tax as a result of the merger?
A: The receipt of cash for shares of Mikasa common stock in the merger will be
a taxable transaction for U.S. federal income tax purposes and may also be
a taxable transaction under applicable state, local, foreign or other tax
laws. Generally, for U.S. federal income tax purposes you will recognize
gain or loss for these purposes equal to the difference between $16.50 per
share and your adjusted tax basis for the shares of Mikasa common stock
that you owned immediately before the merger. For U.S. federal income tax
purposes, this gain or loss generally would be a capital gain or loss if
you held the shares of Mikasa common stock as a capital asset.
Tax matters are very complicated and the tax consequences of the merger to
you will depend on the facts of your own situation. You should consult your
tax advisor for a full understanding of the tax consequences of the merger
to you.
Q: When and where is the special meeting?
A: The special meeting of Mikasa stockholders will be held at o:00 a.m., local
time, on o, 2000, at o located at o.
Q: Who can vote on the merger agreement?
A: Holders of Mikasa common stock at the close of business on o 2000, the
record date relating to the special meeting, may vote in person or by proxy
on the merger agreement at the special meeting.
Q: What vote is required to approve and adopt the merger agreement and the
transactions contemplated by the merger agreement?
A: The merger agreement and the transactions contemplated by the merger
agreement must be approved and adopted by the affirmative vote of the
holders of at least a majority of the outstanding shares of Mikasa common
stock.
The continuing stockholders have entered into a support agreement with J.G.
Durand Industries and Merger Sub under which they agreed to vote their
shares of Mikasa common stock for the approval of the merger and adoption
of the merger agreement and the transactions contemplated by the merger
agreement, except under certain circumstances. On the record date for the
special meeting, the continuing stockholders owned [9,325,897] shares of
Mikasa common stock, representing approximately [54.9]% of the outstanding
shares of Mikasa common stock. If the continuing stockholders vote
v
<PAGE>
as they have agreed to in the support agreement, the merger agreement and
the transactions contemplated by the merger agreement will be approved and
adopted regardless of how any other stockholder votes on these issues. A
copy of the support agreement is attached as Appendix B to this proxy
statement.
Q: What do I need to do now?
A: After you have carefully reviewed this proxy statement, please mark your
vote on the accompanying proxy card and sign and mail it in the enclosed
return envelope as soon as possible. This will ensure that your shares will
be represented at the special meeting. If you sign and send in the proxy
card and do not indicate how you want to vote, your proxy will be voted FOR
the approval and adoption of the merger agreement and the transactions
contemplated by the merger agreement. If you do not vote by either sending
in your proxy card or voting in person at the special meeting, it will have
the same effect as a vote AGAINST the approval and adoption of the merger
agreement and the transactions contemplated by the merger agreement.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: Your broker will vote your shares only if you provide written instructions
as to how to vote your shares. You should follow the directions provided by
your broker regarding how to instruct your broker to vote your shares.
Without instructions, your shares will not be voted by your broker and the
failure to vote will have the same effect as a vote AGAINST the approval
and adoption of the merger agreement and the transactions contemplated by
the merger agreement.
Q. What rights do I have to dissent from the merger?
A: If you wish, you may dissent from the merger and seek an appraisal of the
fair value of your shares, but only if you comply with all requirements of
Delaware law summarized on pages o through o and in Appendix D to this
proxy statement. Based on the determination of the Delaware Court of
Chancery, the appraised fair value of your shares of Mikasa common stock,
which will be paid to you if you seek an appraisal, may be more than, less
than or equal to the $16.50 per share to be paid in the merger.
Q: Can I change my vote after I have mailed my signed proxy card?
A: Yes. You can change your vote at any time before the vote is taken at the
special meeting. If you are the record holder of your shares, you can do
this in one of the following three ways:
o You can send a written notice to Mikasa dated later than your proxy
card stating that you would like to revoke your current proxy.
o You can complete and submit a new proxy card dated later than your
original proxy card.
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o You can attend the special meeting and vote in person.
If you choose to submit a notice of revocation or a new proxy card you must
send it to the Secretary of Mikasa at One Mikasa Drive, Secaucus, New
Jersey, 07096. Mikasa must receive the notice or new proxy card before the
vote is taken at the special meeting.
If you hold your shares in "street name" and have instructed a broker to
vote your shares, you must follow the directions received from your broker
as to how to change your vote.
Q: Should I send in my stock certificates now?
A: No. If the merger is completed, we will promptly send you written
instructions for sending in your stock certificates in exchange for the
$16.50 per share cash payment for your shares.
Q: Who can help answer my questions?
A: The information provided above in the summary term sheet and in the
"question and answer" format is for your convenience only and is merely a
summary of the information contained in this proxy statement. You should
carefully read this entire proxy statement, including the attached
appendices and the documents we refer to in this proxy statement.
If you have more questions about the merger you should contact our
proxy solicitor:
Georgeson Shareholder Communications Inc.
17 State Street
New York, New York 10004
(800) 223-2064
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SUMMARY
This brief summary highlights selected information contained elsewhere
in this proxy statement and may not contain all of the information that is
important to you. We urge you to read carefully this entire proxy statement,
including the attached appendices and the other documents we refer to in this
proxy statement. See "WHERE YOU CAN FIND MORE INFORMATION" on page o.
The Companies
Mikasa, Inc.
One Mikasa Drive
Secaucus, New Jersey 07096
(201) 867-9210
Mikasa is a leading designer, developer and marketer of quality
tabletop and decorative home products. Mikasa's products are manufactured in 23
countries, including the United States. Mikasa distributes its products in the
United States and Canada through both retail accounts and direct to consumer
channels. Internationally, Mikasa's products are sold through subsidiary
companies or authorized distributors.
Mikasa was originally organized as a California corporation in 1936 and
was reincorporated in Delaware in March 1994. Mikasa's corporate headquarters
are located at One Mikasa Drive, Secaucus, New Jersey 07096 and its phone number
is (201) 867-9210. See "WHERE YOU CAN FIND MORE INFORMATION."
J. G. Durand Industries, S.A. and Mountain Acquisition Corp.
38 rue Adrien Danvers
62510 Arques, France
011-33-3-21-93-00-00
J.G. Durand Industries, S.A., which we sometimes refer to as J.G.
Durand Industries, is a French societe anonyme. The principal business of J.G.
Durand Industries is the manufacture of crystalware. J.G.Durand's corporate
headquarters are located at 38 rue Adrien Danvers, Arques, France, 62510. See
"INFORMATION ABOUT J.G. DURAND INDUSTRIES AND MERGER SUB".
Mountain Acquisition Corp., which we sometimes refer to as Merger Sub
was formed solely for purposes of completing the merger. Merger Sub was
incorporated in Delaware on September 7, 2000 and is wholly owned by J.G. Durand
Industries. Merger Sub has not carried on any activities to date other than
those activities incident to its formation and as contemplated by the merger
agreement. See "INFORMATION ABOUT J.G. DURAND INDUSTRIES AND MERGER SUB".
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The Merger
(See Pages o through o and Appendix A)
In the merger, Mikasa will be merged with Merger Sub, and each issued
share of Mikasa common stock outstanding immediately prior to the effective time
of the merger will be canceled and converted automatically into the right to
receive $16.50 in cash, without interest or any other payment thereon, except
that treasury shares and shares of Mikasa common stock owned by any of Mikasa's
subsidiaries will be canceled and shares held by stockholders who have perfected
their dissenters' rights will be subject to appraisal in accordance with
Delaware law.
The merger agreement is described on pages o through o and is attached
as Appendix A to this proxy statement. We encourage you to read the entire
merger agreement carefully, as it is the legal document that governs the merger.
Our Recommendation to Stockholders; Fairness of the Merger
(See Pages o through o)
A special committee of the Board of Directors has unanimously
determined that the terms of the merger as contemplated by the merger agreement
are fair to and in the best interests of the stockholders of Mikasa (other than
the continuing stockholders) and has recommended that the Board of Directors of
Mikasa approve and declare advisable the merger agreement, submit the merger
agreement to Mikasa's stockholders and recommend that Mikasa's stockholders
adopt the merger agreement. The special committee consists solely of directors
who are not officers or employees of Mikasa and who will not retain an interest
in Mikasa following the merger.
The Board of Directors has unanimously determined that the terms of the
merger are advisable, and are fair to, and in the best interests of, Mikasa
stockholders. The Board of Directors unanimously recommends that you vote FOR
the approval of the merger and the adoption of the merger agreement.
The special committee's decision to recommend that the Board of
Directors approve, and the Board of Directors' decision to approve, the merger
agreement and the transactions contemplated by the merger agreement, were based
upon a number of factors which are described in "THE MERGER--Recommendations of
the Special Committee and Board of Directors; Fairness of the Merger."
Opinion of Financial Advisor to Special Committee
(See Pages o through o and Appendix E)
The special committee received an opinion on September 10, 2000, from
CIBC World Markets Corp., which we refer to as CIBC World Markets, its financial
advisor, as to the fairness, from a financial point of view and as of the date
of the opinion, of the merger consideration of $16.50 per share to be paid to
the holders of Mikasa common stock (other than the continuing stockholders, as
to whom CIBC World Markets was not requested to express an opinion). CIBC World
Markets' written opinion dated September 10, 2000 is attached to this
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proxy statement as Appendix E. We encourage you to read this opinion carefully
in its entirety for a description of the procedures followed, assumptions made,
matters considered and limitations on the review undertaken by CIBC World
Markets in providing its opinion. CIBC World Markets' opinion is addressed to
the special committee and does not constitute a recommendation to any
stockholder with respect to any matter relating to the proposed merger. See "THE
MERGER--Opinion of Financial Advisor to the Special Committee."
Interests of Mikasa Directors and Executive Officers in the Merger
(See pages o through o)
When considering the recommendation of Mikasa's Board of Directors with
respect to the merger, you should be aware that some of Mikasa's directors and
executive officers have interests that are different from, or in addition to,
your interests as a Mikasa stockholder.
Immediately following the merger, the continuing stockholders are
expected to own approximately 15.3% of Mikasa. In addition, it is expected that
all officers of Mikasa will continue to serve in their current capacities
following the merger. The three executives, along with Mr. Aratani, have entered
into employment agreements with Mikasa and a stockholders' agreement which will
take effect at the time of the merger.
Under the terms of the merger agreement, all outstanding stock options
of Mikasa granted to employees, consultants or directors of Mikasa (including
Messrs. Muto and Inouye, who are members of the special committee) will vest and
the holder will be entitled to receive an amount of cash equal to the excess of
$16.50 per share over the option exercise price, subject to applicable tax
withholding. Messrs. Inouye and Muto hold options each to purchase 2,500 shares
of Mikasa common stock at $9.5625 per share, all of which will vest as a result
of the merger.
For more information on the interests of Mikasa executive officers and
directors in the merger, which may be different from, or in addition to, your
interests as a Mikasa stockholder, see "THE MERGER--Interests of Mikasa
Directors and Executive Officers in the Merger."
The Board of Directors formed the special committee, which was given
authority to evaluate, negotiate the terms of, and make recommendations to the
Board of Directors with respect to any offer to acquire Mikasa by a third party
acting in connection with certain directors and officers of Mikasa, and to
retain its own financial advisor and legal counsel in connection therewith. For
additional information regarding the special committee, see "THE
MERGER--Recommendations of the Special Committee and Board of Directors;
Fairness of Merger."
Financing for the Merger
(See Page o)
J.G. Durand Industries estimates that approximately $245,000,000 will
be required to complete the merger and pay the related fees and expenses. It
expects this amount to be funded through cash on hand at the effective time of
the merger.
3
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The Special Meeting; Support Agreement
(See Pages o through o and Appendix B)
At the special meeting to be held on o, 2000, you will be entitled to
one vote for each share of Mikasa common stock you hold of record as of o, 2000.
The merger agreement must be approved and adopted by the affirmative
vote of the holders of at least a majority of the outstanding shares of Mikasa
common stock. On the record date, there were [16,998,095] shares of Mikasa
common stock entitled to vote at the special meeting.
Mikasa's directors and executive officers have indicated that they
intend to vote all of their Mikasa common stock FOR the approval and adoption of
the merger agreement and the transactions contemplated by the merger agreement.
The continuing stockholders have entered into a support agreement with J.G.
Durand Industries and Merger Sub, agreeing to vote their shares of Mikasa common
stock in favor of the approval and adoption of the merger agreement and the
transactions contemplated by the merger agreement, except under certain
circumstances. On the record date for the special meeting, the continuing
stockholders owned a total of [9,325,897] shares of Mikasa common stock,
representing approximately [54.9]% of the total number of shares entitled to
vote at the special meeting. In addition, the continuing stockholders, in the
aggregate, own options to purchase 985,000 shares of Mikasa common stock, which
options, and any shares received upon exercise thereof, are subject to the
support agreement. If the continuing stockholders vote as they have agreed to
vote in the support agreement, the merger agreement and the transactions
contemplated by the merger agreement will be approved and adopted regardless of
how any other stockholder votes on these issues. The support agreement is
attached as Appendix B to this proxy statement.
We do not expect to ask you to vote on any matters other than the
merger and the merger agreement at the special meeting. However, if any other
matters are properly presented at the special meeting for consideration, the
holder of the proxies will have discretion to vote on these matters in
accordance with their best judgment. Proxies voting against a specific proposal
may be used by the holder to vote for adjournment of the meeting for the purpose
of giving the holder additional time to solicit votes in favor of that proposal.
Appraisal Rights
(See Pages o through o and Appendix D)
Mikasa is a corporation organized under Delaware law. Under Delaware
law, if you do not vote in favor of the merger and you follow all of the
procedures for demanding appraisal rights described on pages o through o and in
Appendix D, you will receive a cash payment for the "fair value" of your shares
of Mikasa common stock, as determined by the Delaware Court of Chancery, instead
of the $16.50 cash payment to be received by the public stockholders in
connection with the merger. The price determined by the Delaware Court of
Chancery may be more than, the same as or less than the $16.50 in cash you would
have received for each of your shares in the merger if you had not exercised
your appraisal rights. Generally, in order to exercise appraisal rights, among
other things:
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o You must NOT vote in favor of the merger agreement and the
transactions contemplated by the merger agreement; and
o You must make a written demand for appraisal in compliance with
Delaware law BEFORE the vote on the merger agreement and the
transactions contemplated by the merger agreement.
Merely voting against the merger agreement will not preserve your
appraisal rights under Delaware law. Appendix D to this proxy statement contains
the Delaware statute relating to your appraisal rights. If you want to exercise
your appraisal rights, you are urged to read and carefully follow the procedures
on pages o through o and in Appendix D. Failure to take all of the steps
required under Delaware law may result in the loss of your appraisal rights.
Effects of the Merger
(See Pages o and o)
Upon completion of the merger, J.G Durand and the continuing
stockholders are expected to own approximately 84.7% and 15.3%, respectively, of
Mikasa. Upon completion of the merger, you will no longer be a stockholder of
Mikasa, and Mikasa's current stockholders, other than the continuing
stockholders, will not participate in any future earnings or losses and growth
or decline of Mikasa. J.G. Durand Industries and the continuing stockholders
will be the sole beneficiaries of any future earnings and growth of Mikasa.
After the merger, Mikasa will be a closely-held corporation. As a
result, there will be no public market for Mikasa common stock, and the common
stock will cease to be quoted on the New York Stock Exchange. The registration
of Mikasa common stock under the Securities Exchange Act of 1934, as amended,
which we refer to as the "Exchange Act," will be terminated.
Conditions to the Merger
(See Pages o and o)
The merger will be completed only if a number of conditions set forth
in the merger agreement are satisfied or waived, including, but not limited to,
the following:
o the merger agreement and the transactions contemplated by the
merger agreement are approved by the Mikasa stockholders at the
special meeting;
o holders of no more than 7% of the shares of Mikasa common stock
outstanding as of the effective time of the merger have exercised
appraisal rights under Delaware law;
o each of the parties to the merger agreement, including the
continuing stockholders, has performed its obligations under the
merger agreement in all material respects at or before the
effective time of the merger;
o we have obtained all necessary consents, permits and approvals;
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<PAGE>
o the waiting period imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, which we refer to as the
"HSR Act," has expired or been terminated;
o no law, injunction or order prohibits the completion of the
merger or restricts the conduct of Merger Sub or Mikasa, or the
operation of the business of Mikasa after the merger;
o the representations and warranties made by the parties in the
merger agreement are true and correct in all material respects at
the effective time of the merger; and
o since the date of the merger agreement, there has not occurred an
event which is continuing and constitutes a material adverse
effect on Mikasa.
The merger agreement defines a material adverse effect on Mikasa as any
change, effect, event, occurrence, condition or development that is or is
reasonably likely to be materially adverse to the business, assets, liabilities,
properties, results of operations or condition (financial or otherwise) of
Mikasa and its subsidiaries, taken as a whole, or the ability of Mikasa to
timely perform its obligations under the merger agreement, in each case other
than effects due to general economic, market or political conditions, matters
generally affecting the industries in which Mikasa operates, or the announcement
or expectation of the merger agreement or the transactions it contemplates. In
this proxy statement, references to "a material adverse effect on Mikasa" are
intended to refer to this definition.
If these conditions are not satisfied or waived, the merger will not be
completed even if our stockholders vote to approve the merger and adopt the
merger agreement.
Termination of the Merger Agreement
(See Pages o and o)
Mikasa and Merger Sub may mutually agree to terminate the merger
agreement at any time before the effective time of the merger. In addition,
either party may terminate the merger agreement if:
o the effective time of the merger has not occurred on or before
March 31, 2001;
o the waiting period applicable to the consummation of the merger
under the HSR Act has not expired or been terminated prior to
March 31, 2001;
o the other party materially breaches any of its representations,
warranties, agreements or obligations under the merger agreement
and does not cure its breach as set forth in the merger
agreement;
o any court or other governmental entity has restrained, prohibited
or enjoined the merger in a final and nonappealable order, decree
or decision; or
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o our stockholders fail to approve and adopt the merger agreement
and the transactions contemplated by the merger agreement at the
special meeting.
In addition, Merger Sub may terminate the merger agreement if, among
other things:
o Mikasa's special committee or its Board of Directors withdraws,
adversely modifies or refrains from giving its approval or
recommendation of the merger agreement, the merger or any of the
transactions contemplated by the merger agreement;
o Mikasa's special committee or its Board of Directors recommends
or approves an acquisition of Mikasa by a party other than Merger
Sub or J.G. Durand Industries, as described in the bullet points
under "THE MERGER AGREEMENT--No Solicitation"; or
o any change, effect, event, occurrence, condition or development
which constitutes a material adverse effect on Mikasa occurs and
is not cured by Mikasa within 30 days after receiving notice from
Merger Sub.
Mikasa may also terminate the merger agreement before the completion of
the merger under certain circumstances if, acting in good faith and after
consultation with outside counsel, the special committee or the Board of
Directors determines it is required to do so by its fiduciary obligations. See
"THE MERGER AGREEMENT--No Solicitation," and "--Termination of the Merger
Agreement."
What Happens if Mikasa Receives a Better Offer
(See Pages o through o)
The continuing stockholders and Mikasa have agreed that they will not,
and that Mikasa will not authorize its officers, directors, employees or other
representatives to, solicit or initiate any inquiries or discussions regarding
any other merger or similar alternative transaction involving Mikasa, including
the sale of stock or assets of Mikasa or its subsidiaries, or engage in any
discussions with any person (other than with J.G. Durand Industries or Merger
Sub) with respect to any such "competing transaction."
However, if the special committee or our Board of Directors receives an
unsolicited proposal for or request to discuss any competing transaction, the
special committee or our Board of Directors may supply to and receive non-public
information from the person or entity making such proposal or request if, and to
the extent that, the special committee or our Board of Directors determines, in
its good faith judgment after consultation with outside legal counsel, that such
action is required in order to comply with its fiduciary obligations. Supplying
non-public information under these circumstances must be subject to a customary
confidentiality agreement. After consultation with outside legal counsel, the
special committee or the Board of Directors also may conduct discussions and
negotiations or take any other action to review or respond to a competing
transaction as the special committee or the Board of Directors believes is
necessary in light of its fiduciary obligations.
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We have agreed to notify Merger Sub promptly of any such proposals or
inquiries and to keep Merger Sub informed as to the status of any such proposals
or inquiries.
In addition, neither the special committee nor our Board of Directors
may withdraw or modify, or propose to withdraw or modify, its approval, adoption
or recommendation of the merger agreement or the merger or approve or recommend,
or propose to approve or recommend, or cause or allow Mikasa to enter into any
agreement with respect to, a competing transaction, or submit any competing
transaction to our stockholders for purposes of voting upon it, unless the
special committee or our Board of Directors determines in good faith by a
majority vote after consultation with outside legal counsel that its fiduciary
obligations require that action. If the special committee or our Board of
Directors takes any such action, Mikasa must terminate the merger agreement and
pay a $7,225,000 termination fee to Merger Sub. Also, the terms of the support
agreement require the continuing stockholders to pay a fee to J.G. Durand
Industries under certain circumstances if the merger agreement is terminated and
Mikasa consummates a competing transaction. See "THE MERGER
AGREEMENT--Termination Fee" and "THE MERGER--Interests of Mikasa Directors and
Executive Officers in the Merger."
Payment of Fees Upon Termination Events
(See Page o)
Mikasa must pay a termination fee of $1,445,000 if the merger agreement
is terminated:
o by Merger Sub or by Mikasa under the provision giving rise to a
right of termination as a result of a failure of the stockholders
to approve and adopt the merger and the merger agreement; or
o by Merger Sub under the provision giving rise to a right of
termination as a result of a material breach by Mikasa of a
representation, warranty or agreement or the occurrence of a
material adverse effect on Mikasa, so long as such right to
termination resulted from an intentional breach of the merger
agreement by Mikasa or any continuing stockholder.
Mikasa must pay a termination fee of $7,225,000 if the merger agreement
is terminated:
o by Merger Sub, if the Board of Directors or any of its committees
withdraws, adversely modifies or refrains from giving its
approval or recommendation of the merger agreement or the merger
or recommends a competing transaction; or
o by Mikasa, if the Board of Directors or any of its committees, as
required by its fiduciary obligations, terminates the merger
agreement in connection with withdrawing or modifying its
approval, adoption or recommendation of the merger agreement or
merger, recommending or causing Mikasa to enter into an agreement
with respect to a competing transaction or submitting a competing
transaction to Mikasa's stockholders for a vote.
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Amending or Waiving Terms of the Merger Agreement
(See Page o)
Mikasa and Merger Sub may amend or waive any provision of the merger
agreement by mutual consent before the time of the merger. However, following
approval and adoption of the merger agreement by our stockholders, Mikasa and
Merger Sub cannot amend the merger agreement without approval of our
stockholders if the amendment would change the amount or type of consideration
to be received by our stockholders in the merger, make any change to the merger
agreement that would materially adversely affect Mikasa or our stockholders or
if the amendment would purport to change any term of our certificate of
incorporation on which our stockholders are entitled to vote.
Federal Regulatory Matters
(See Page o)
The HSR Act requires Mikasa and the ultimate parent entities of Merger
Sub to provide certain information to the Antitrust Division of the United
States Department of Justice and the United States Federal Trade Commission. A
waiting period must expire or be terminated before the merger can be completed.
Merger Sub and Mikasa made the required filings with the Department of Justice
and the Federal Trade Commission on o, 2000.
Litigation Related to the Merger
(See Page o)
Since the announcement of the proposed merger, Mikasa and its directors
have been named as defendants in three substantially similar purported class
action lawsuits filed in the Court of Chancery of the State of Delaware. The
plaintiffs purport to represent a class of all persons whose stock will be
converted into the right to receive $16.50 in cash per share in connection with
the merger. While the allegations contained in the complaints are not identical,
the complaints generally assert that the $16.50 per share does not reflect the
value of the assets and future prospects of Mikasa. The complaints also
generally allege that the directors of Mikasa engaged in self-dealing without
regard to conflicts of interest and that they breached their fiduciary duties in
approving the merger agreement. The complaints seek remedies including
unspecified monetary damages, attorneys' fees and injunctive relief that would,
if granted, prevent the completion of the merger. Mikasa believes that the
allegations contained in these lawsuits are without merit. While Mikasa and its
directors intend to defend themselves vigorously, no assurance can be given as
to the outcome of these lawsuits.
Price Range of Common Stock
(See Page o)
Mikasa common stock is quoted on the New York Stock Exchange. On
September 8, 2000, the last trading day before Mikasa's public announcement of
the signing of the merger agreement, Mikasa common stock closed at $9.75 per
share. On ___________, 2000, the last
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trading day before the date of this proxy statement, Mikasa common stock closed
at $_____ per share.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this proxy statement that
are not historical facts but rather reflect current expectations concerning
future results and events. When used in this proxy statement, the words
"believes," "expects," "intends," "plans," "anticipates," "likely," "will," and
similar expressions identify the "forward-looking statements." These
forward-looking statements are subject to risks, uncertainties, and other
factors, some of which are beyond Mikasa's control, that could cause actual
results to differ materially from those forecast or anticipated in the
forward-looking statements. These risks, uncertainties and other factors
include, but are not limited to, the following:
o Mikasa's reliance on imports and on current levels of tariffs and
quotas;
o the effect of more rigorous governmental regulation of lead
and/or cadmium levels in consumer products on Mikasa's
manufacture of ceramic dinnerware and leaded crystal products;
o challenges posed by competitors expanding their retail store
networks and Mikasa's ability to compete; and
o Mikasa's dependence upon the efforts of its senior management.
You are cautioned not to place undue reliance on forward-looking
statements, which reflect management's view only as of the date of this proxy
statement. All forward-looking statements included in this proxy statement and
all subsequent forward-looking statements attributable to Mikasa or persons
acting on its behalf are expressly qualified in their entirety by these
cautionary statements. Mikasa undertakes no obligation to publicly release the
result of any revisions to these forward-looking statements that may be made to
reflect events or circumstances after the date of this proxy statement or to
reflect the occurrence of unanticipated events.
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SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial and
operating data for each of the years in the five-year period ended December 31,
1999, and for the six months ended June 30, 2000. The selected consolidated
financial data presented below under the captions "Income Statement Data" and
"Balance Sheet Data" for each of the years in the five-year period ended
December 31, 1999 are derived from the consolidated financial statements of
Mikasa and its subsidiaries, which financial statements have been audited by
independent certified public accountants. The unaudited selected consolidated
financial data presented below under the captions "Income Statement Data" and
"Balance Sheet Data" as of and for the six months ended June 30, 2000, are
derived from the unaudited consolidated financial statements of Mikasa and its
subsidiaries. The financial data set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Mikasa's Annual Report on Form 10-K for the year ended December
31, 1999 and in Mikasa's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000, which are incorporated by reference in this proxy statement. The
financial data set forth below also should be read in conjunction with Mikasa's
audited consolidated financial statements as of December 31, 1999 and for each
of the years in the three-year period ended December 31, 1999, and the report
thereon, which are incorporated by reference in this proxy statement from
Mikasa's Annual Report on Form 10-K for the year ended December 31, 1999, and
with Mikasa's unaudited consolidated financial statements as of June 30, 2000
and for the six months ended June 30, 2000, which are incorporated by reference
in this proxy statement from Mikasa's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000. No pro forma data giving effect to the merger is
provided because Mikasa does not believe such information is material to
stockholders in evaluating the merger and the merger agreement because the
merger consideration will be paid to Mikasa's public stockholders solely in cash
and if the merger is completed, Mikasa's public stockholders will no longer have
any equity interest in Mikasa.
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED FINANCIAL DATA
Six Months
Ended Fiscal Year Ended
Jun. 30,
2000 Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(Unaudited) 1999 1998 1997 1996 1995
----------- ---- ---- ---- ---- ----
(Dollars in thousands, except per share and operating data)
Income Statement Data:
Net sales............................... $ 164,239 $ 424,615 $ 410,665 $ 397,217 $ 372,331 $ 362,453
Cost of sales........................... 84,639 222,564 216,157 208,833 205,016 200,399
---------- ---------- ---------- --------- --------- ----------
Gross profit......................... 79,600 202,051 194,508 188,384 167,315 162,054
Selling, general and
administrative expenses............... 75,282 160,476 161,442 150,497 130,347 112,845
Restructuring charge.................... -- -- 2,400 -- -- --
Store closure charge.................... -- -- -- -- 4,100 --
---------- ---------- ---------- --------- --------- ----------
Income from operations............... 4,318 41,575 30,666 37,887 32,868 49,209
Interest expense, net................... 2,848 6,666 6,956 2,205 1,437 510
---------- ---------- ---------- --------- --------- ----------
Income before income tax provision... 1,470 34,909 23,710 35,682 31,431 48,699
Income tax provision.................... 566 13,316 9,447 14,018 12,381 18,927
---------- ---------- ---------- --------- ---------- ----------
Net income.............................. $ 904 $ 21,593 $ 14,263 $ 21,664 $ 19,050 $ 29,772
========== ========== ========== ========= ========== ==========
Basic and diluted net income per share of
common stock.............................. $ 0.05 $ 1.23 $ 0.78 $ 1.18 $ 0.91 $ 1.34
Weighted average number of shares of
Mikasa common stock outstanding and
dilutive securities.................. 17,031 17,632 18,324 18,445 20,934 22,298
Cash dividend per share of common stock. $ 0.10 $ 0.20 $ 0.20 $ 0.20 $ -- $ --
Net Sales by Channel of Distribution:
Direct to consumers..................... $ 92,854 $ 245,151 $ 238,774 $ 223,459 $ 197,463 $ 177,222
Retail accounts......................... 53,004 140,423 137,794 145,669 149,901 165,527
International........................... 18,381 39,041 34,097 28,089 24,967 19,704
---------- ---------- ---------- --------- --------- ----------
Total................................... $ 164,239 $ 424,615 $ 410,665 $ 397,217 $ 372,331 $ 362,453
========== ========== ========== ========= ========= ==========
Operating Data:
Stores at end of period................. 167 165 158 152 134 119
Percentage increase (decrease) in total
comparable store net sales(1)........... (5.3%)(2) (0.4%) 0.4% 0.2% (0.7%) (1.4%)
Balance Sheet Data:
Working capital......................... $ 165,345 $ 175,101 $ 171,195 $ 183,430 $ 162,385 $ 219,267
Total assets............................ 342,718 371,403 364,742 370,433 283,981 299,012
Long-term debt.......................... 80,000 90,000 100,000 110,000 60,000 60,000
Total stockholders' equity.............. 209,170 212,485 201,373 196,092 178,572 200,068
-------------------------------------------------------------------------------------------------------------------
(1) A store is considered to be comparable only if it is open for all of both periods being compared.
(2) Decrease is as compared to same period in 1999.
</TABLE>
12
<PAGE>
THE SPECIAL MEETING
General
The special meeting of stockholders of Mikasa will be held on o, 2000,
o:00 a.m., local time, at o located at o. The accompanying proxy is being
solicited by our Board of Directors and is to be voted at the special meeting or
any adjournment(s) or postponement(s) thereof. The Board of Directors has fixed
o, 2000 as the record date for determination of stockholders entitled to receive
notice of and to vote at the special meeting and any adjournment(s) or
postponement(s) thereof. On the record date, there were [16,998,095] shares of
Mikasa common stock outstanding held by o record holders. No other voting
securities of Mikasa are outstanding. This proxy statement will first be mailed
to stockholders on or about o, 2000. The costs of solicitation of proxies will
be paid by Mikasa.
Purpose
At the special meeting, you are being asked to consider and vote upon
the approval of the merger and adoption of the merger agreement. In the merger,
each issued share of Mikasa common stock outstanding immediately prior to the
effective time of the merger will be canceled and converted automatically into
the right to receive $16.50 in cash, without interest or any other payment
thereon, except that treasury shares and shares of Mikasa common stock owned by
any of Mikasa's subsidiaries will be canceled and shares held by stockholders
who have perfected their dissenters' rights will be subject to appraisal in
accordance with Delaware law.
We do not expect to ask you to vote on any other matters at the special
meeting. However, if any other matters are properly presented at the special
meeting for consideration, the holder of the proxies will have discretion to
vote on these matters in accordance with their best judgment. Proxies voting
against a specific proposal may be used by the holder to vote for adjournment of
the meeting for the purpose of giving the holder additional time to solicit
votes in favor of that proposal.
Voting Rights; Support Agreement
Each outstanding share of Mikasa common stock is entitled to one vote.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of our common stock entitled to vote at the special meeting
is necessary to constitute a quorum for the transaction of business at the
special meeting. Abstentions are counted for purposes of determining whether a
quorum exists at the special meeting. The affirmative vote of the holders of a
majority of the outstanding shares of Mikasa common stock is required to approve
and adopt the merger agreement and the transactions contemplated by the merger
agreement. Accordingly, proxies that reflect abstentions and proxies that are
not returned will have the same effect as a vote AGAINST approval and adoption
of the merger agreement and the transactions contemplated by the merger
agreement.
All Mikasa directors and executive officers have indicated that they
intend to vote all of their Mikasa common stock FOR the approval of the merger
and the adoption of the merger agreement and the transactions contemplated by
the merger agreement. On the record date for
13
<PAGE>
the special meeting, the directors and executive officers of Mikasa owned an
aggregate of [10,945,982] shares of Mikasa common stock, representing
approximately [64.4]% of the total number of shares entitled to vote at the
special meeting. The continuing stockholders have entered into a support
agreement with J.G. Durand Industries and Merger Sub, agreeing to vote their
shares of Mikasa common stock in favor of the approval and adoption of the
merger agreement and the transactions contemplated by the merger agreement,
except under certain circumstances. On the record date for the special meeting,
the continuing stockholders owned a total of [9,325,897] shares of Mikasa common
stock, representing approximately [54.9]% of the total number of shares entitled
to vote at the special meeting. In addition, on the record date the continuing
stockholders, in the aggregate, owned options to purchase 985,000 shares of
Mikasa common stock, which options, and any shares received upon exercise
thereof, are subject to the support agreement. If the continuing stockholders
vote as they have agreed to vote in the support agreement, the merger will be
approved and the merger agreement will be adopted regardless of how any other
stockholder votes on these issues.
Solicitation; Revocation and Use of Proxies
Proxies are being solicited by and on behalf of Mikasa's Board of
Directors. We will pay the costs of soliciting proxies from our stockholders as
well as all mailing and Securities and Commission filing fees incurred in
connection with this proxy statement.
Mikasa has engaged the services of Georgeson Shareholder Communications
Inc. to solicit proxies and assist in the distribution of proxy materials. In
connection with its retention by Mikasa, Georgeson Shareholder Communications
Inc. has agreed to provide consulting and analytic services and provide
solicitation services with respect to banks, brokers, institutional investors
and individual stockholders. Mikasa has agreed to pay Georgeson Shareholder
Communications Inc. a fee of $2,500 plus reasonable out-of-pocket expenses and
to indemnify Georgeson Shareholder Communications Inc. against certain
liabilities and expenses, including liabilities and expenses under the federal
securities laws.
In addition to the solicitation of proxies by mail, some of our
directors, officers and employees may solicit proxies by telephone, facsimile
and personal contact, without separate compensation for those activities. Copies
of solicitation materials will be furnished to fiduciaries, custodians and
brokerage houses for forwarding to beneficial owners of Mikasa common stock, and
these persons will be reimbursed for their reasonable out-of-pocket expenses.
The grant of a proxy on the enclosed form does not preclude you from
attending the special meeting and voting in person. You may revoke your proxy at
any time before it is voted at the special meeting. If you are a record holder
of shares of Mikasa common stock, you may revoke your proxy by:
o delivering to the Secretary of Mikasa, before the vote is taken
at the special meeting, a written notice of revocation bearing a
later date than the proxy;
o duly executing a later dated proxy relating to the same shares of
Mikasa common stock and delivering it to the Secretary of Mikasa
before the vote is taken at the special meeting; or
14
<PAGE>
o attending the special meeting and voting in person.
Attendance at the special meeting will not in and of itself constitute
a revocation of a proxy. Any written notice of revocation or subsequent proxy
should be sent to the Secretary of Mikasa at One Mikasa Drive, Secaucus, New
Jersey, 07096, or hand delivered to the Secretary of Mikasa before the vote is
taken at the special meeting. All valid proxies will be voted at the meeting in
accordance with the instructions given. If no instructions are given, the shares
represented by the proxy will be voted at the special meeting for approval and
adoption of the merger agreement and the transactions contemplated by the merger
agreement. If you hold your shares in "street name" and have instructed a broker
to vote your shares, you must follow the directions received from your broker as
to how to change your vote.
Brokers who hold shares in "street name" for customers have the
authority to vote on "routine" proposals when they have not received
instructions from beneficial owners. However, absent specific instructions from
the beneficial owner of the shares, brokers are not allowed to exercise their
voting discretion with respect to the approval and adoption of non-routine
matters such as the merger proposal. Abstentions and properly executed broker
non-votes will be treated as shares that are present and entitled to vote at the
special meeting for purposes of determining whether a quorum exists, but will
have the same effect as votes AGAINST the approval of the merger and the
adoption of the merger agreement
Stockholders who do not vote in favor of approval and adoption of the
merger agreement and the transactions contemplated by the merger agreement, and
who otherwise comply with the applicable statutory procedures of the Delaware
General Corporation Law summarized elsewhere in this proxy statement, will be
entitled to seek appraisal of the value of their Mikasa common stock under
Section 262 of the Delaware General Corporation Law. See "THE
MERGER--Dissenters' Rights of Appraisal."
Please do not send in your stock certificates at this time. In the
event the merger is completed, we will send you instructions regarding the
procedures for exchanging your existing stock certificates for the $16.50 per
share cash payment.
15
<PAGE>
THE MERGER
Background of the Merger
J.G. Durand Industries has been a manufacturing source for certain
Mikasa products, and initial contacts between J.G. Durand Industries and Mikasa
regarding a business combination were made on August 24, 1999, when Alfred J.
Blake, Chairman of the Board of Directors of Mikasa, and Raymond B. Dingman,
Chief Executive Officer, President and Chief Operating Officer of Mikasa, met
with Philippe Durand, a member of the Directorate of J.G. Durand Industries. The
idea of a business combination of the two companies was first raised at that
meeting; however, neither party was prepared to pursue such a transaction at
that time.
In November 1999, Mikasa began to explore strategic alternatives
because of, among other factors, the limited trading volume in Mikasa common
stock, the large percentage of outstanding shares of Mikasa common stock held by
a small number of stockholders, including current and former managers of Mikasa,
the fact that Mikasa common stock appeared undervalued relative to stock market
indices and the competitive pressures faced by Mikasa and similarly situated
companies.
In November and December 1999, Mikasa and UBS Warburg LLC, Mikasa's
financial advisor, contacted over 30 potential strategic and financial partners
(in addition to J.G. Durand Industries), of which only one, an investment fund
(the "Financial Sponsor"), conducted due diligence with respect to Mikasa.
In November 1999, after Mikasa began investigating other strategic
alternatives, representatives of J.G. Durand Industries communicated to
representatives of Mikasa that J.G. Durand Industries wanted to explore the
possibility of a strategic transaction with Mikasa. In response, representatives
of J.G. Durand Industries were invited to tour Mikasa facilities in the U.S. and
begin preliminary discussions with respect to a strategic transaction.
On November 30, 1999, Mr. Durand and Mr. Paul Fontaine, a
representative of J.G. Durand Industries, met with Mr. Dingman and toured Mikasa
stores and other retail venues in the Atlanta, Georgia area.
On December 1, 1999, Messrs. Durand and Fontaine met with Anthony F.
Santarelli, Executive Vice President--Operations of the Company, and toured
Mikasa's distribution facility in Charleston, South Carolina.
On December 2, 1999, Messrs. Blake, Dingman and Santarelli met with
Messrs. Durand and Fontaine. During that meeting, the results of the Atlanta and
Charleston tours were reviewed and preliminary conversations were held regarding
potential synergies that might result from a strategic transaction involving
Mikasa and J.G. Durand Industries. It was decided that a potential significant
investment in Mikasa by J.G. Durand Industries should be explored, and that a
more detailed due diligence review of Mikasa would be conducted by
representatives of J.G. Durand Industries.
On December 10, 1999, a confidentiality agreement was executed by J.G.
Durand Industries and Mikasa. Following execution of the confidentiality
agreement, more detailed due
16
<PAGE>
diligence information regarding Mikasa was provided to representatives of J.G.
Durand Industries.
On January 26, 2000, Messrs. Blake and Dingman met with Messrs. Durand
and Fontaine to discuss Mikasa's financial and operating results. The same
parties met again on February 19, 2000, to further discuss these topics with
representatives of Clinvest/Credit Lyonnais Investment Banking Group, advisor to
J.G. Durand Industries, and UBS Warburg. Following the February meeting,
additional due diligence information was provided to Clinvest and J.G. Durand
Industries and telephone discussions were held between representatives of
Clinvest and representatives of UBS Warburg regarding the due diligence
information provided to J.G. Durand Industries by Mikasa.
On March 23, 2000, J.G. Durand Industries sent Mikasa a letter that
indicated that J.G. Durand Industries would be willing to consider a transaction
pursuant to which J.G. Durand Industries would acquire all the publicly held
shares of Mikasa common stock for cash at a price in the range of $15.30 to
$15.80 per share of Mikasa common stock. The letter stated that any such
transaction would be conditioned on, among other things, the satisfactory
completion of due diligence and the negotiation of definitive agreements, but
would not be conditioned on J.G. Durand Industries obtaining financing for the
transaction. The J.G. Durand Industries proposal also was conditioned upon
Messrs. Blake, Dingman and Santarelli continuing to be involved in the
management of, and retaining a substantial equity stake in, Mikasa following any
such transaction.
On April 10, 2000, Mr. Dingman sent a letter to Messrs. Durand and
Fontaine in which he stated that, although he and Messrs. Blake and Santarelli
remained interested in a potential transaction with J.G. Durand Industries, they
likely would not support a transaction in the price range proposed in the March
23 letter.
On April 17, 2000, Messrs. Blake and Dingman met with Messrs. Durand
and Fontaine, along with representatives of Clinvest, UBS Warburg, Arthur
Andersen and Kirkland & Ellis, counsel to J.G. Durand Industries. At that
meeting, the parties discussed Mikasa's financial and operating results, the
progress of J.G. Durand Industries' due diligence to date, possible structures
for a transaction and J.G. Durand Industries' ability to complete a cash
acquisition transaction.
On April 28, 2000, J.G. Durand Industries sent Mikasa a letter that
indicated that J.G. Durand Industries would be willing to consider a transaction
in which J.G. Durand Industries would acquire all the publicly held shares of
Mikasa common stock for cash at a price of $16.30 per share of Mikasa common
stock. The April 28 letter reiterated that any such transaction would be
conditioned on, among other things, the satisfactory completion of due diligence
and also would be conditioned upon Messrs. Blake, Dingman and Santarelli
continuing to be involved in the management of, and retaining a substantial
equity stake in, Mikasa following any such transaction. The J.G. Durand
Industries proposal was not conditioned on J.G. Durand Industries obtaining
financing for the transaction.
During April 2000, Messrs. Dingman and Blake also engaged in
preliminary discussions regarding a potential transaction with the Financial
Sponsor. During these discussions, the
17
<PAGE>
representatives of the Financial Sponsor indicated that the Financial Sponsor
might be prepared to pursue a transaction at a price of up to $16.00 per share
of Mikasa common stock but that any such transaction, including the ultimate
pricing, would be conditioned on, among other things, the satisfactory
completion of due diligence, senior management retaining a significant equity
stake in Mikasa and the ability of the Financial Sponsor to obtain financing for
the transaction on satisfactory terms.
On May 10, 2000, the Financial Sponsor and its advisors began a due
diligence review of Mikasa.
On May 11, 2000, Messrs. Blake and Dingman reviewed with the Board of
Directors the course of their discussions with J.G. Durand Industries and the
Financial Sponsor. The Board of Directors determined that further discussions
with J.G. Durand Industries and the Financial Sponsor should be pursued, and
formed a special committee of independent members of the Board of Directors
consisting of directors Norman R. Higo, Raymond E. Inouye and Joseph S. Muto.
The special committee was given authority to evaluate, negotiate the terms of,
and make recommendations to the Board of Directors with respect to, any offer to
acquire Mikasa by a third party acting in connection with certain directors and
officers of Mikasa. The special committee also was authorized to retain its own
financial advisor and legal counsel in connection with such tasks.
In May 2000, the special committee interviewed a number of law firms
and financial advisors and determined to retain CIBC World Markets as its
financial advisor and Dewey Ballantine LLP as its legal counsel.
In May and June 2000, representatives of Mikasa continued discussions
with the Financial Sponsor and its potential sources of financing, which
included UBS Warburg.
On May 31, 2000, representatives of J.G. Durand Industries and Mikasa
participated in a conference call with respect to the diligence process. From
June 12, 2000 though June 23, 2000, representatives of J.G. Durand Industries
continued their due diligence review of Mikasa.
On June 26, 2000 through June 29, 2000, Mr. Dingman and Ms. Brenda
Flores, Chief Financial Officer of Mikasa, met with Mr. Durand along with
representatives of Clinvest and UBS Warburg to complete J.G. Durand Industries'
due diligence review of Mikasa. Mr. Santarelli was also present at one of these
meetings.
Between June 29, 2000 and July 15, 2000, Messrs. Dingman, Durand and
Fontaine, as well as representatives of Clinvest and UBS Warburg, exchanged
correspondence and conducted telephone discussions regarding the structure and
terms of a potential transaction.
In July 2000, following further discussions with the Financial Sponsor
and its potential sources of financing, Messrs. Dingman, Blake and Santarelli,
Ms. Flores and other members of the management of Mikasa and representatives of
UBS Warburg concluded that because of, among other things, prevailing conditions
in the financial markets that would make it difficult for the Financial Sponsor
to obtain the necessary financing on terms acceptable to all parties, a
transaction with the Financial Sponsor likely could not be concluded on terms
(including with
18
<PAGE>
respect to certainty of closing) that would be acceptable to
Mikasa and the continuing stockholders.
On July 15, and July 16, 2000, Mr. Dingman and Ms. Amy Tunis, Secretary
and Senior Counsel of Mikasa, met with Mr. Durand along with representatives of
Clinvest, UBS Warburg, Kirkland & Ellis, and Cleary, Gottlieb, Steen & Hamilton,
counsel to Mikasa. During those meetings, Mr. Durand indicated that J.G. Durand
Industries would be prepared to make a proposal to the special committee to
acquire all publicly held shares of Mikasa common stock for a purchase price in
the range of $15.00 to $16.30 per share in cash. Mr. Durand stated that any such
proposal assumed that Messrs. Blake, Dingman, Santarelli and George T. Aratani,
founder and Chairman Emeritus of Mikasa, as well as another holder of Mikasa
common stock, would be willing to retain approximately 3,000,000 shares of
Mikasa common stock following the merger, would enter into a support agreement
pursuant to which they would agree to vote their shares of Mikasa common stock
in favor of the merger, and would enter into a stockholders' agreement pursuant
to which J.G. Durand Industries or its designee (including Mikasa) would have
rights to require the continuing stockholders to sell to it, and the continuing
stockholders would have rights to require J.G. Durand Industries or its designee
(including Mikasa) to purchase, their retained shares of Mikasa common stock at
prices based on Mikasa's performance following the merger. In addition, Mr.
Durand stated that Messrs. Blake, Dingman and Santarelli would be required to
enter into employment agreements with Mikasa to take effect after the merger.
Mr. Dingman indicated that, subject to agreement among all parties with respect
to the terms of the merger (including the price to be paid per share of Mikasa
common stock), the support agreement, the employment agreements, the
stockholders' agreement, and a long-term incentive compensation plan for
Mikasa's management, he, along with Messrs. Blake and Santarelli, each in their
capacity as a stockholder of Mikasa, would be supportive of a transaction on the
general terms outlined by Mr. Durand.
On July 18, 2000, J.G. Durand Industries submitted a proposal to the
special committee to acquire all outstanding shares of Mikasa common stock
(other than those shares to be retained by the continuing stockholders) for a
purchase price in the range of $15.00 to $16.30 per share. The proposal included
a proposed merger agreement and support agreement.
On July 19, 2000, the special committee met to commence its
consideration of the proposal from J.G. Durand Industries. The special committee
instructed CIBC World Markets to undertake a due diligence investigation of
Mikasa, which CIBC World Markets began on that date.
On August 2, 2000, the special committee met with its legal and
financial advisors to consider the proposal from J.G. Durand Industries. Dewey
Ballantine reviewed the fiduciary duties of the special committee applicable to
the proposed transaction and reviewed the terms of the proposed transaction.
CIBC World Markets reviewed the due diligence performed by CIBC World Markets,
industry considerations, financial information regarding Mikasa and J.G. Durand
Industries and CIBC World Markets' preliminary views regarding the proposed
transaction. Following these presentations, the special committee determined to
seek a higher purchase price from J.G. Durand Industries than the highest price
in the range proposed by J.G. Durand Industries and to seek to improve certain
other terms of the proposed transaction, including
19
<PAGE>
reducing impediments to any competing transaction that might be more beneficial
to Mikasa's public stockholders, increasing the certainty of closing and
providing that J.G. Durand Industries, rather than just a shell subsidiary,
would be bound by the merger agreement. The special committee instructed Dewey
Ballantine to convey to Kirkland & Ellis that the consideration offered was
inadequate and to convey the major issues relating to the draft agreements.
Thereafter, at the direction of the special committee, CIBC World Markets had a
number of conversations with Clinvest to negotiate the purchase price.
On August 21, 2000, Kirkland & Ellis informed Dewey Ballantine that as
a result of a number of factors, including the additional information supplied
to J.G. Durand Industries' financial advisors and the completion of J.G. Durand
Industries' due diligence investigation of Mikasa, J.G. Durand Industries would
be prepared to offer a purchase price at the high end of its initial offer range
($16.30 per share), but was not willing to increase the proposed purchase price
beyond that point.
Later that day, the special committee met with its legal and financial
advisors to review the status of the proposed transaction. Dewey Ballantine
reported on its conversation with Kirkland & Ellis. The special committee
instructed CIBC World Markets to hold further discussions with Clinvest to
attempt to induce J.G. Durand Industries to increase the proposed purchase
price.
On August 23 and 24, the special committee held meetings to review the
status of the proposed transaction. Dewey Ballantine and CIBC World Markets
reported that, in numerous conversations, J.G. Durand Industries had refused to
increase the proposed price. In an effort to cause J.G. Durand Industries to
increase the proposed price, the special committee determined to propose a
purchase price of $17.25 per share. CIBC World Markets communicated this
proposal to Clinvest. Thereafter, at the direction of the special committee,
CIBC World Markets held a number of discussions with Clinvest to attempt to
induce J.G. Durand Industries to increase the proposed purchase price.
On August 28, 2000, following a meeting of the special committee, Dewey
Ballantine transmitted the comments of the special committee on the merger
agreement and other aspects of the proposed transaction documents to Kirkland &
Ellis. Counsel to Mikasa and the continuing stockholders also transmitted
comments to Kirkland & Ellis.
On August 29, 2000, Mr. Dingman and Ms. Tunis met with Messrs. Durand
and Fontaine, along with representatives of Clinvest, UBS Warburg, Kirkland &
Ellis and Cleary, Gottlieb, Steen & Hamilton. Following that meeting, Mr. Durand
indicated that, as a result of its negotiations with the special committee, J.G.
Durand Industries would increase its proposed offer price to $16.50 per share of
Mikasa common stock.
On August 30, 2000, a representative of Dewey Ballantine met with
representatives of J.G. Durand Industries, including Mr. Durand and Kirkland &
Ellis. At the meeting, Mr. Fontaine of J.G. Durand Industries stated that J.G.
Durand Industries was not willing to increase its proposed price above $16.50
per share and stated unequivocally that $16.50 was J.G. Durand Industries' best
and final offer. The parties discussed a number of issues regarding the proposed
20
<PAGE>
merger agreement, including provisions which would have an impact on a
third-party bid and provisions relating to certainty of closing.
Later that day, the special committee held a meeting. Dewey Ballantine
reported on the meeting with representatives of J.G. Durand Industries and
Kirkland & Ellis. CIBC World Markets advised the special committee that, subject
to its review of the final transaction documents and internal approvals, it was
prepared to deliver its opinion that the proposed price of $16.50 per share was
fair from a financial point of view to the holders of Mikasa common stock (other
than the continuing stockholders, as to whom CIBC World Markets was not asked to
express an opinion). The special committee noted that the proposed merger
agreement would allow Mikasa to terminate the merger agreement and accept a
third-party bid at a higher price under specified circumstances and determined
that the provisions of the proposed merger agreement and support agreement
should not present a substantial impediment to a bona fide bidder paying a
higher price for Mikasa. The special committee concluded that subject to
negotiation of a final merger agreement and other transaction documents, the
delivery of an opinion by CIBC World Markets and a meeting of the special
committee to consider the transaction, it would be prepared to recommend that
the Board of Directors approve a price of $16.50 per share. Representatives of
Dewey Ballantine communicated this conclusion to representatives of Mikasa and
J.G. Durand Industries.
From September 1, 2000 through September 10, 2000, representatives of
Mikasa, J.G. Durand Industries, the special committee, the continuing
stockholders, Kirkland & Ellis, Cleary, Gottlieb, Steen & Hamilton and Dewey
Ballantine negotiated the terms of the merger agreement and the support
agreement. Concurrently with those negotiations, representatives of Mikasa, J.G.
Durand Industries, the continuing stockholders, Kirkland & Ellis and Cleary,
Gottlieb, Steen & Hamilton negotiated the terms of the stockholders' agreement,
the employment agreements and the long-term incentive compensation plan.
On September 10, 2000, the special committee met to consider the
proposed transaction. A representative of Dewey Ballantine reviewed the
fiduciary duties of the special committee under the circumstances and summarized
the terms of the proposed transaction, including the merger agreement, support
agreement and arrangements with management and the continuing stockholders. CIBC
World Markets delivered its oral opinion to the special committee, confirmed by
delivery of a written opinion dated September 10, 2000, to the effect that, as
of that date and based on, and subject to, the matters described in its opinion,
the $16.50 in cash per share of Mikasa common stock to be received by the
holders of Mikasa common stock in the merger was fair from a financial point of
view to such holders (other than the continuing stockholders). CIBC World
Markets also reviewed with the special committee the financial analyses it
performed in connection with its opinion. After considering these matters, the
special committee unanimously determined that the terms of the proposed merger
were fair to and in the best interests of the stockholders of Mikasa (other than
the continuing stockholders) and resolved to recommend that the Board of
Directors approve and declare advisable the merger agreement, submit the merger
agreement to Mikasa's stockholders and recommend that Mikasa's stockholders
adopt the merger agreement.
Following the meeting of the special committee on September 10, 2000,
the Board of Directors met to consider the proposed transaction. A
representative of Dewey Ballantine
21
<PAGE>
summarized the terms of the merger agreement and the support agreement. A
representative of Cleary, Gottlieb, Steen & Hamilton summarized the terms of the
stockholders' agreement, the employment agreements and the long-term incentive
compensation plan and advised the directors regarding their fiduciary duties
with respect to the transaction proposed by J.G. Durand Industries.
Representatives of CIBC World Markets reviewed the opinion delivered by CIBC
World Markets to the special committee and the financial analyses performed by
CIBC World Markets in connection with that opinion. The special committee then
delivered its recommendation to the Board of Directors. After considering these
matters, the Board of Directors unanimously resolved that the terms of the
merger agreement and merger are advisable, and are fair to and in the best
interests of, Mikasa's stockholders, and recommended to Mikasa's stockholders
that the merger be approved and the merger agreement and the transactions
contemplated thereby be approved and adopted. The Board of Directors also
approved the long-term incentive compensation plan to take effect at the
effective time of the merger.
Subsequent to the Board of Directors meeting, the merger agreement, the
support agreement, the stockholders' agreement and the employment agreements
were executed by the parties thereto.
On September 11, 2000, prior to the commencement of trading on the New
York Stock Exchange, the parties issued a press release announcing the
transaction.
Recommendations of the Special Committee and Board of Directors; Fairness of the
Merger
On September 10, 2000, the special committee of the Board of Directors
unanimously determined that the terms of the merger as contemplated by the
merger agreement are fair to and in the best interests of the stockholders of
Mikasa (other than the continuing stockholders) and recommended that the Board
of Directors of Mikasa approve and declare advisable the merger agreement,
submit the merger agreement to Mikasa's stockholders and recommend that Mikasa's
stockholders adopt the merger agreement.
The special committee considered a number of factors, as more fully
described above under "Background of the Merger" and below under "Reasons for
the Special Committee's Determination," in determining to recommend that the
Board of Directors and Mikasa stockholders adopt the merger agreement.
On September 10, 2000, the Board of Directors, acting upon the
recommendation of the special committee, unanimously determined that the terms
of the merger are advisable, and are fair to, and in the best interests of,
Mikasa's public stockholders. The Board of Directors unanimously recommends that
you vote FOR the approval of the merger and adoption of the merger agreement.
Reasons for the Special Committee's Determination. In reaching its
conclusion on September 10, 2000, the special committee considered the following
material factors:
22
<PAGE>
o The fact that the $16.50 per share price represents a premium of
approximately 69% over the closing price of a share of Mikasa
common stock on September 8, 2000, the last trading day prior to
the execution of the merger agreement, a premium of 36% over the
highest trading price of a share of Mikasa common stock during
the 52-week
period prior to the execution of the merger agreement and a
premium of 121% over the lowest trading price of a share of
Mikasa common stock during the 52-week period prior to the
execution of the merger agreement. The special committee also
considered the historical trading prices and trading volume of
Mikasa common stock.
o The arm's-length negotiations between the special committee and
J.G. Durand Industries with respect to the terms of the merger
agreement, including with respect to the consideration to be paid
in the merger. As a result of its negotiations, the special
committee believed that $16.50 per share was the best price
reasonably available from J.G. Durand Industries.
o The limited trading volume, institutional sponsorship and public
float of Mikasa common stock, the small market capitalization of
Mikasa and the lack of research attention from market analysts,
all of which continued to adversely affect the trading market
for, and the value of, Mikasa common stock.
o The special committee's knowledge of the business, assets,
financial condition, and results of operations and prospects of
Mikasa and the industry in which it operates. Based on this
knowledge and the other factors considered by the special
committee, the special committee concluded that, from the
perspective of the holders of Mikasa common stock (other than the
continuing stockholders), it was preferable that Mikasa enter
into the merger agreement providing for a price of $16.50 per
share, rather than continue to own the stock of Mikasa, the value
of which would be subject to the risks of future performance and
the market's reaction to that performance.
o The opinion of CIBC World Markets, dated September 10, 2000, as
to the fairness, from a financial point of view, of the $16.50
price per share of Mikasa common stock to the holders of shares
of Mikasa common stock (other than the continuing stockholders,
as to whom CIBC World Markets was not asked to express an
opinion) and the related financial analyses. See "THE
MERGER--Opinion of Financial Advisor to the Special Committee"
for a discussion of the factors that CIBC World Markets
considered in rendering its opinion. The opinion is included as
Appendix E to this proxy statement. We urge you to read the CIBC
World Markets opinion carefully in its entirety.
o Information regarding contacts by Mikasa and UBS Warburg with
over 30 companies that might have been interested in acquiring
Mikasa, J.G. Durand Industries' statement that it would withdraw
its offer if Mikasa engaged in discussions with any other person
regarding a competing transaction and the likelihood that further
contacts would not generate a bid from a third party willing to
pay a price higher than $16.50 per share of Mikasa common stock
and that, if a third party were to be interested in acquiring
Mikasa at a higher price, the terms of the merger agreement and
related agreements would not significantly deter such third
party.
23
<PAGE>
o The terms of the merger agreement and related agreements, including:
o Mikasa's ability, if the special committee or the Board of
Directors determines that such actions are required by its
fiduciary duties in response to an unsolicited proposal, to
provide information to and negotiate with third parties
and to terminate the merger agreement upon the payment of a
termination fee, and the special committee's belief that these
provisions would not significantly deter a more attractive offer
for Mikasa;
o The requirement that the press release announcing the merger
include language inviting third parties interested in acquiring
Mikasa to contact Mikasa through CIBC World Markets; and
o That the continuing stockholders' obligation to vote for the
merger agreement and to vote against any competing transaction
would terminate upon the termination of the merger agreement.
o J.G. Durand Industries' financial ability to complete the merger,
including J.G. Durand Industries' representation that it has
sufficient cash on hand to pay the merger consideration, and the
absence of any financing condition to the merger.
o The availability of appraisal rights for Mikasa's stockholders
under Delaware law in connection with the merger.
The special committee believed that each of the above factors generally
supported its conclusion. The special committee also considered the following
potentially negative factors in its deliberations concerning the merger:
o That following the merger, Mikasa's stockholders (other than the
continuing stockholders) will cease to participate in any future
earnings growth or increase in value of Mikasa.
o The actual or potential conflicts of interest that some of
Mikasa's executive officers and directors have in connection with
the merger, including the arrangements between J.G. Durand
Industries and the continuing stockholders described under
"--Interests of Mikasa Directors and Executive Officers in the
Merger." The special committee believed that these conflicts of
interest were mitigated by the establishment of the special
committee to negotiate the terms of the merger agreement and to
evaluate the fairness of the merger.
In considering the fairness of the merger consideration, the special
committee did not consider Mikasa's liquidation value or net book value, because
it believed those values were not material indicators of Mikasa's value as a
going concern. Mikasa's book value per share as of June 30, 2000 was $12.31,
significantly below the $16.50 per share merger consideration. The special
committee also noted that CIBC World Markets did not consider the "liquidation
value" or "book value" of Mikasa shares in performing its analysis in rendering
its opinion. In addition, the special committee did not consider the purchase
prices paid in Mikasa's open market
24
<PAGE>
purchase program, except to the extent that it considered historical market
prices generally. These purchases were at then current market prices which were
below $16.50 per share. Accordingly, the other factors listed above were more
useful to the special committee in assessing the merger consideration.
The special committee also considered the fact that although the merger
is conditioned upon the approval of the affirmative vote of the holders of at
least a majority of the shares of Mikasa Common Stock, it was not structured to
require the approval of a majority of the votes entitled to be cast by
stockholders unaffiliated with Mikasa or the continuing stockholders. The
special committee was aware that the continuing stockholders held a sufficient
number of shares to approve the merger without the vote of any other stockholder
and that, pursuant to the support agreement, the continuing stockholders would
be obligated to vote for the merger so long as the merger agreement is in
effect. The special committee did not structure the transaction to require the
approval of a majority of the shares held by stockholders unaffiliated with
Mikasa or the continuing stockholders because such approval is not required
under Delaware law and because the special committee believed that the
substantive and procedural fairness of the merger was established by the factors
set forth above.
The foregoing discussion of the information and factors considered by
the special committee is not intended to be exhaustive, but includes the
material factors considered by the special committee. In view of the variety of
factors considered in connection with the evaluation of the proposed merger and
the terms of the merger agreement, the special committee did not deem it
practicable to, and did not, quantify or otherwise assign relative weights to
the specific factors considered in reaching its conclusion. Individual directors
may have given different weights to different factors and may have viewed some
factors more positively or negatively than others.
Reasons for the Board of Directors' Determination. In reaching its
decision to approve the merger agreement and the transactions contemplated by
the merger agreement, the Board of Directors relied on the special committee's
recommendation and the factors examined by the special committee as described
above. In view of the wide variety of factors considered in connection with its
evaluation of the proposed merger, the Board of Directors did not find it
practicable to, and did not quantify or otherwise attempt to, assign relative
weights to those factors or determine that any factor was of particular
importance. Rather, the Board of Directors viewed its position as being based on
the totality of the information presented and considered by it. As part of its
determination with respect to the merger, the Board of Directors adopted the
conclusion of the special committee and the analysis underlying such conclusion,
based upon its view as to the reasonableness of that conclusion and analysis.
Fairness of the Merger to Unaffiliated Stockholders. For all the
reasons set forth above under "--Reasons for the Special Committee's
Determination" and "--Reasons for the Board of Directors' Determination," the
Board of Directors believes that the merger is fair to and in the best interests
of those of Mikasa's stockholders who are not affiliates of J.G. Durand
Industries, Mikasa or any of the continuing stockholders.
In this regard, the Board of Directors noted in particular that it
formed the special committee consisting of three directors of Mikasa, none of
whom are officers or employees of
25
<PAGE>
Mikasa or will retain an interest in Mikasa following the merger. The Board of
Directors granted the special committee the authority to evaluate, negotiate the
terms of, and make a recommendation to the Board of Directors with respect to,
any offer to acquire Mikasa by a third party acting in connection with certain
directors and officers of Mikasa. It also granted the special committee the
authority to retain legal and financial advisors at Mikasa's expense. The
consideration of $16.50 in cash per share was the highest price obtained
following arm's length negotiations between the special committee and
representatives of J.G Durand.
In reaching its conclusion that the merger is fair to, and in the best
interests of, Mikasa's unaffiliated stockholders, the Board of Directors also
considered it significant that:
o other than with respect to the vesting of certain options to
purchase Mikasa common stock as described below under
"--Interests of Mikasa Directors and Executive Officers in the
Merger," no member of the special committee has an interest in
the proposed merger different from that of Mikasa's unaffiliated
stockholders generally;
o the special committee retained its own financial and legal
advisors, which advisors have extensive experience with
transactions similar to the merger and which assisted the special
committee in its negotiations with J.G Durand;
o the special committee conducted extensive negotiations with J.G.
Durand Industries and had the authority to reject the transaction
proposed by J.G. Durand Industries; and
o the special committee received the opinion of CIBC World Markets
as to the fairness, from a financial point of view, of the merger
consideration to the holders of shares of Mikasa common stock,
other than the continuing stockholders. See "--Opinion of
Financial Advisor to the Special Committee."
Because of these factors, the Board of Directors concluded that the
merger agreement is fair to, and in the best interests of, Mikasa's unaffiliated
stockholders, notwithstanding the fact that the merger agreement does not
require as a condition to completion of the merger that a majority of Mikasa's
unaffiliated stockholders vote in favor of approval of the merger and adoption
of the merger agreement.
Position of the Continuing Stockholders as to the Fairness of the
Merger. Under the Exchange Act and the rules promulgated thereunder, one or more
of the continuing stockholders may be deemed to be an affiliate of Mikasa. The
continuing stockholders are making the statements included in this sub-section
solely for the purposes of complying with the requirements of Rule 13e-3 and
related rules under the Exchange Act. Although the continuing stockholders may
have interests in the merger that are different from, or in addition to, the
interests of Mikasa's unaffiliated stockholders, each of the continuing
stockholders believes the merger is substantively fair, and the method by which
it was approved by the Board of Directors was procedurally fair, to Mikasa's
unaffiliated stockholders.
The continuing stockholders were not members of, and did not
participate in the deliberations of, the special committee; however, as
directors of Mikasa, the continuing
26
<PAGE>
stockholders participated in the deliberations of the Board of Directors
described above. Based on that conclusion and analysis, the continuing
stockholders both as directors and in their individual capacities, believe that
the merger is substantively and procedurally fair to Mikasa's unaffiliated
stockholders.
Position of J.G. Durand Industries and Merger Sub as to the Fairness of
the Merger. Under a potential interpretation of the Exchange Act rules governing
"going private" transactions, J.G. Durand Industries and Merger Sub may be
deemed to be affiliates of Mikasa. Each of J.G. Durand Industries and Merger Sub
is making the statements included in this sub-section solely for the purposes of
complying with the requirements of Rule 13e-3 and related rules under the
Exchange Act. The position of J.G. Durand Industries and Merger Sub as to the
fairness of the merger is not a recommendation to any stockholder as to how such
stockholder should vote on the merger.
J.G. Durand Industries and Merger Sub believe that the merger is
substantively and procedurally fair to Mikasa's unaffiliated stockholders.
However, neither J.G. Durand Industries nor Merger Sub has undertaken any formal
evaluation of the fairness of the merger to Mikasa's unaffiliated stockholders.
Moreover, neither J.G. Durand Industries nor Merger Sub participated in the
deliberations of the special committee or received advice from the special
committee's financial advisor. Each of Merger Sub and J.G. Durand Industries
believes that the merger is substantively fair to Mikasa's unaffiliated
stockholders based on the current and historical market prices of Mikasa's
common stock and the fact that the merger consideration of $16.50 per share
represents a premium of approximately 69% over the closing price per share on
September 8, 2000 (the last trading day before the public announcement of the
merger agreement). Neither J.G. Durand Industries nor Merger Sub considered the
net book value, liquidation value or going concern value of Mikasa in evaluating
the fairness of the merger to Mikasa's unaffiliated stockholders. Each of Merger
Sub and J.G. Durand Industries believes that the merger is procedurally fair to
Mikasa's unaffiliated stockholders because the special committee, consisting
solely of directors who are not officers or employees of Mikasa, and who will
not retain an interest in Mikasa following the merger, was given exclusive
authority to, among other things, consider, negotiate and evaluate the terms of
the merger.
Unaudited Projected Income Statements
Forward-Looking Information. We do not, as a matter of course, make
public forecasts or projections as to future financial results. However, in
connection with the possible sale of Mikasa, our management prepared and
provided to J.G. Durand projections for the fiscal years ending December 2000
through December 2002, and provided additional information to the special
committee and CIBC World Markets, enabling the derivation of two sets of
projections, a "Base Case" and a "Management Case" for the fiscal years ending
December 2000 through December 2004. The information provided to J.G. Durand is
included below under "--Unaudited Projected Income Statements--`Management
Case.'"
Such projections were not prepared with a view toward compliance with
published guidelines of the Securities and Exchange Commission, the guidelines
established by the American Institute of Certified Public Accountants for
preparation and presentation of financial projections or generally accepted
accounting principles, nor do they comply in certain respects
27
<PAGE>
with those guidelines, and, pursuant to applicable legal requirements, are
included in this proxy statement only because such projections were provided to
J.G. Durand, the special committee and CIBC World Markets in the course of
negotiating the terms of the merger. The projections included in this proxy
statement have been prepared solely by Mikasa and Mikasa bears sole
responsibility for the contents thereof. PricewaterhouseCoopers LLP, Mikasa's
accountants, has neither examined nor compiled these projections and
accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other
form of assurance with respect thereto. The PricewaterhouseCoopers LLP report
incorporated by reference in this proxy relates to Mikasa's historical financial
information. It does not extend to the projections and should not be read to do
so.
Neither Mikasa, Mikasa's Board of Directors, the special committee nor
any of Mikasa's, the Board of Directors' or the special committee's advisors,
agents or representatives assumed any responsibility for the accuracy of any of
these projections and each believes that, because projections of this type are
based on a number of significant uncertainties and contingencies, all of which
are difficult to predict and most of which are beyond our control, it cannot
assure you that any of these projections will be realized.
The projections are based upon a variety of assumptions, including our
ability to achieve strategic goals, objectives and targets over the applicable
period. These assumptions involve judgments with respect to future economic,
competitive and regulatory conditions, financial market conditions and future
business decisions, all of which are difficult or impossible to
predict accurately and many of which are beyond our control. You should
understand that many important factors, in addition to those discussed elsewhere
in this proxy statement, could cause our results to differ materially from those
expressed in forward-looking information. These factors include our competitive
environment, economic and other market conditions in which we operate, cyclical
and seasonal fluctuations in our operating results and matters affecting
business generally. See "CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS."
In addition to the specific assumptions described below with respect to
each of the Base Case and the Management Case, all of the projections
incorporate the assumptions described above, assume continuation of Mikasa's
quarterly dividend policy, and are based on certain assumptions with respect to
(i) currency exchange rates, (ii) expected stock repurchases, (iii) planned
national advertising, (iv) inventory value change, (v) expansion of distribution
centers, (vi) capital expenditures, and (vii) store openings and closings.
Unaudited Projected Income Statements--"Base Case." The first set of
projections represents current operating performance forecast into the future
and assumes, in addition to the assumptions mentioned above under
"--Forward-Looking Information," (i) gross margins remain constant by
distribution segment, (ii) selling, general and administrative expenses remain a
constant percentage of sales by distribution segment and (iii) sales grow at an
annual rate of 4.3% from 1999 to 2004.
28
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Projected for Fiscal Year Ending December
-------------- ---------------- -------------- --------------- ---------------
2000 2001 2002 2003 2004
---- ---- ---- ---- ----
(Dollars in thousands)
Total sales........................ $ 436,979 $ 460,176 $ 481,267 $ 501,805 $ 523,040
Cost of goods sold................. 229,448 241,814 253,116 264,147 275,582
--------- --------- --------- --------- ---------
Gross profit.................... 207,531 218,362 228,151 237,658 247,458
Selling, general and administrative
expense......................... 162,239 172,026 180,385 188,460 196,602
------- --------- --------- --------- ---------
Income from operations.......... 45,292 46,336 47,766 49,198 50,856
Interest expense, net.............. 5,457 3,659 2,160 2,742 1,251
--------- --------- --------- --------- ---------
Income before income taxes...... 39,835 42,677 45,606 46,455 49,605
Income tax provision............... 15,566 18,690 21,741 18,235 19,463
--------- --------- --------- --------- ---------
Net income...................... $ 24,269 $ 23,987 $ 23,865 $ 28,221 $ 30,142
========= ========= ========= ========= =========
</TABLE>
Unaudited Projected Income Statements--"Management Case." The second
set of projections assumes, in addition to the assumptions mentioned above under
"--Forward-Looking Information," (i) gross margins increase from 47.6% in 1999
to 49.8% in 2004, (ii) selling, general and administrative expenses as a
percentage of sales drop from 37.8% in 1999 to 36.9% in 2004 and (iii) sales
grow at an annual rate of 6.1% from 1999 to 2004.
<TABLE>
<S> <C> <C> <C> <C> <C>
Projected for Fiscal Year Ending December
--------------- ---------------- ---------------- --------------- ----------------
2000 2001 2002 2003 2004
---- ---- ---- ---- ----
(Dollars in thousands)
Total sales........................ $ 444,763 $476,332 $ 506,536 $ 537,106 $ 569,563
Cost of goods sold................. 230,589 245,231 259,364 272,138 285,782
--------- -------- --------- --------- ---------
Gross profit.................... 214,174 231,101 247,172 264,968 283,781
Selling, general and administrative
expense......................... 168,395 179,171 188,851 199,564 210,479
--------- -------- -------- -------- --------
Income from operations.......... 45,779 51,930 58,321 65,404 73,307
Interest expense, net.............. 5,457 3,659 2,160 1,040 (309)
--------- -------- --------- --------- ---------
Income before income taxes...... 40,322 48,271 56,161 64,364 73,616
Income tax provision............... 15,566 18,690 21,741 25,219 28,827
--------- -------- --------- --------- ---------
Net income...................... $ 24,756 $ 29,581 $ 34,420 $ 39,145 $ 44,789
========= ======== ========= ========= =========
</TABLE>
Opinion of Financial Advisor to the Special Committee
The special committee retained CIBC World Markets to render an opinion
as to the fairness, from a financial point of view, of the merger consideration
of $16.50 per share to be paid to the holders of Mikasa common stock (other than
the continuing stockholders as to whom CIBC World Markets was not requested to
express an opinion). At a meeting of the special committee on September 10, 2000
held to evaluate the proposed merger, CIBC World Markets delivered an oral
opinion, confirmed by delivery of a written opinion dated September 10, 2000, to
the effect that, as of the date of the opinion and based on and subject to the
matters described in the opinion, the merger consideration was fair, from a
financial point of view, to the holders of Mikasa common stock (other than the
continuing stockholders).
The full text of CIBC World Markets' opinion, dated September 10, 2000,
which describes the assumptions made, procedures followed, matters considered
and limitations on the review undertaken, is attached as Appendix E and is
incorporated into this proxy statement by reference. CIBC World Markets' opinion
is addressed to the special committee and relates only
29
<PAGE>
to the fairness of the merger consideration, from a financial point of view, to
the holders of Mikasa common stock (other than the continuing stockholders). The
opinion does not address any other aspect of the proposed merger or any related
transaction and does not constitute a recommendation to any stockholder with
respect to any matter relating to the merger. The description of CIBC World
Markets' opinion included in this proxy statement is qualified in its entirety
by reference to Appendix E. Holders of Mikasa common stock are urged to read the
opinion carefully in its entirety.
In arriving at its opinion, CIBC World Markets, among other things:
o reviewed the merger agreement;
o reviewed audited financial statements for Mikasa for the fiscal
years ended December 31, 1997, December 31, 1998 and December 31,
1999;
o reviewed unaudited financial statements for Mikasa for the
six-month period ended June 30, 2000;
o reviewed financial projections for Mikasa prepared by the
management of Mikasa, as set forth above under "--Unaudited
Projected Income Statements";
o reviewed the historical market prices and trading volume for
Mikasa common stock;
o held discussions with the senior management of Mikasa with
respect to the business and prospects for future growth of
Mikasa;
o reviewed and analyzed publicly available financial data for
companies CIBC World Markets deemed comparable to Mikasa;
o reviewed and analyzed publicly available information for
transactions that CIBC World Markets deemed comparable to the
merger;
o performed discounted cash flow analyses of Mikasa using
assumptions of future performance provided to CIBC World Markets
by the management of Mikasa;
o reviewed public information concerning Mikasa; and
o performed such other analyses, reviewed such other information
and considered such other factors as CIBC World Markets deemed
appropriate.
In rendering its opinion, CIBC World Markets relied on and assumed,
without independent verification or investigation, the accuracy and completeness
of all of the financial and other information provided to or discussed with CIBC
World Markets by Mikasa and its employees, representatives and affiliates. With
respect to forecasts of the future financial condition and operating results of
Mikasa, CIBC World Markets assumed, at the direction of the management of
Mikasa, without independent verification or investigation, that the forecasts
were 30
<PAGE>
reasonably prepared on bases reflecting the best available information,
estimates and judgments of the management of Mikasa.
CIBC World Markets did not make or obtain any independent evaluations
or appraisals of the assets or liabilities (contingent or otherwise) of Mikasa
or its affiliated entities. CIBC World Markets did not express any opinion as to
the underlying valuation, future performance or long-term viability of Mikasa,
or the price at which the Mikasa common stock would trade or otherwise be
transferable subsequent to announcement of the proposed merger. In connection
with its engagement, CIBC World Markets was not requested to, and did not,
solicit third-party indications of interest in the acquisition of all or a part
of Mikasa. CIBC World Markets expressed no view as to, and its opinion does not
address, the relative merits of the merger as compared to any alternative
business strategies that might exist for Mikasa or the effect of any other
transaction in which Mikasa may engage.
CIBC World Markets' opinion was necessarily based on the information
available to CIBC World Markets and general economic, financial and stock market
conditions and circumstances as they existed and could be evaluated by CIBC
World Markets as of the date of the opinion. No other instructions or
limitations were imposed by Mikasa on CIBC World Markets with respect to the
investigations made or procedures followed by CIBC World Markets in rendering
its opinion. It should be understood that, although subsequent developments may
affect its opinion, CIBC World Markets does not have any obligation to update,
revise or reaffirm its opinion.
A copy of CIBC World Markets' written presentation to the special
committee has been filed as an exhibit to the Rule 13e-3 Transaction Statement
on Schedule 13E-3 filed by Mikasa with the Securities and Exchange Commission in
connection with the merger and is available as set forth below under "WHERE YOU
CAN FIND MORE INFORMATION."
In its analyses, CIBC World Markets considered industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of Mikasa. No company, transaction or
business used in CIBC World Markets' analyses as a comparison is identical to
Mikasa or the proposed merger, and an evaluation of the results of the analyses
is not entirely mathematical. Rather, the analyses involve complex
considerations and judgements concerning financial and operating characteristics
and other factors that could affect the acquisition, public trading or other
values of the companies, business segments or transactions analysed.
The estimates contained in CIBC World Markets' analyses and the ranges
of valuations resulting from any particular analyses are not necessarily
indicative of actual values or predictive of future results or values, which may
be significantly more or less favorable than those suggested by its analyses. In
addition, analyses relating to the value of businesses or securities do not
purport to be appraisals or to reflect the prices at which businesses or
securities actually may be sold. Accordingly, CIBC World Markets' analyses and
estimates are inherently subject to substantial uncertainty.
Although CIBC World Markets evaluated the merger consideration from a
financial point of view, it was not asked to and did not recommend the specific
consideration payable in the
31
<PAGE>
merger. The type and amount of consideration payable in the merger were
determined through negotiations between Mikasa, the special committee and J.G.
Durand Industries. The decision to enter into the merger agreement was solely
that of Mikasa's Board of Directors. CIBC World Markets' opinion and financial
analyses were only one of many factors considered by the special committee in
its evaluation of the proposed merger and should not be viewed as determinative
of the views of Mikasa's special committee, Board of Directors or management
with respect to the merger or the merger consideration.
The following is a summary of the material analyses underlying CIBC
World Markets' opinion presented to the special committee on September 10, 2000:
Selected Companies Analysis. CIBC World Markets compared financial and
operating data for Mikasa with corresponding information for the following four
selected companies in the tableware industry:
o Libbey Inc.
o Lifetime Hoan Corporation
o Oneida Ltd.
o Waterford Wedgwood Plc
CIBC World Markets reviewed enterprise values (calculated as equity
market value, plus net debt) for the selected companies as multiples of, among
other things, latest 12 months revenues, earnings before interest, taxes,
depreciation and amortization, commonly known as "EBITDA," and earnings before
interest and taxes, commonly known as "EBIT." CIBC World Markets also reviewed
equity values for the selected companies as a multiple of estimated
calendar years 2000 and 2001 earnings per share, commonly referred to as "EPS."
All multiples were based on closing stock prices on September 6, 2000. Estimated
financial and operating data for the selected companies were based on publicly
available research analysts' estimates and estimated financial and operating
data for Mikasa were based on internal estimates of the management of Mikasa.
CIBC World Markets then applied a range of multiples derived for the
selected companies of latest 12 months revenues, EBITDA and EBIT, and estimated
calendar years 2000 and 2001 EPS, to corresponding financial data of Mikasa.
This analysis indicated an implied equity reference range for Mikasa of
approximately $14.45 to $25.57 per share, as compared to the merger
consideration of $16.50 per share.
Precedent Transactions Analysis. CIBC World Markets analyzed the
implied transaction and purchase price multiples paid in the following selected
merger and acquisition transactions in the tableware industry:
Target Acquiror
------ --------
Delco International Oneida Ltd.
Viners of Sheffield Ltd. Oneida Ltd.
Sakura, Inc. Oneida Ltd.
32
<PAGE>
Vidriera Leonesa S.A. Barbosa & Almeida
Oneida Ltd. Libbey Inc.
Denby Group Plc Table Design Plc
Corning Consumer Products Company Borden Inc. (KKR)
Rosenthal AG Waterford Wedgwood Plc
WorldCrisa Corporation Libbey Inc.
All of the selected merger and acquisition transactions were
consummated except the Oneida Ltd./Libbey Inc. transaction.
CIBC World Markets compared transaction values in the selected
transactions as multiples of latest 12 months revenues, EBITDA and EBIT, and
equity purchase prices as a multiple of, among other things, latest 12 months
EPS. All multiples were based on financial information available at the time the
relevant transaction was announced.
CIBC World Markets then applied a range of multiples derived for the
selected transactions of latest 12 months revenues, EBITDA, EBIT and EPS to
corresponding financial data of Mikasa. This analysis indicated an implied
equity reference range for Mikasa of approximately $12.53 to $22.31 per share,
as compared to the merger consideration of $16.50 per share.
Discounted Cash Flow Analyses. CIBC World Markets performed discounted
cash flow analyses to estimate the present value of the stand-alone, unlevered,
after-tax free cash flows that Mikasa could generate over calendar years 2000
through 2004, based on two sets of internal estimates of the management of
Mikasa: (A) the "Base Case" which assumes current operating performance forecast
into the future and (B) the "Management Case" which assumes increases in gross
margins and sales growth and a decrease in selling, general and administrative
expenses as a percentage of sales. The range of estimated terminal values for
Mikasa was calculated by applying terminal value multiples of 5.5x to 7.5x to
Mikasa's estimated calendar year 2004 EBITDA. The cash flows and terminal values
were discounted to present values using discount rates ranging from 10.0% to
12.0%. These analyses indicated implied equity reference ranges for Mikasa of
approximately $15.62 to $20.70 per share based upon the Base Case and
approximately $22.05 to $29.00 per share based upon the Management Case, as
compared to the merger consideration of $16.50 per share.
Leveraged Buyout Analyses. CIBC World Markets derived implied equity
reference ranges for Mikasa by performing leveraged buyout analyses based on
internal estimates of the management of Mikasa and estimated rates of return for
a financial buyer. CIBC World Markets utilized management projections for the
years 2000 through 2004 based on the Base Case and the Management Case. The
analyses were performed assuming, among other things, a range of required rates
of return to a financial buyer of 30% to 40% and a range of EBITDA terminal
multiples of 5.5x to 7.5x. These analyses indicated implied equity reference
ranges for Mikasa of approximately $11.66 to $12.54 per share based on the Base
Case and approximately $15.44 to $16.12 per share based on the Management Case,
as compared to the merger consideration of $16.50 per share.
33
<PAGE>
Premiums Paid Analysis. CIBC World Markets reviewed the premiums paid
in 59 cash transactions in which more than 50% of the shares were acquired.
These transactions were effected between January 1, 1999 and September 6, 2000
and had transaction values of between $250 million and $500 million. CIBC World
Markets then applied selected premiums based on the average of the per share
market prices of the target company during the four weeks prior to public
announcement of the transaction to $9.69, the average of the closing stock
prices of Mikasa common stock one day, one week and four weeks prior to
September 7, 2000. This analysis indicated an implied equity reference range for
Mikasa of approximately $12.07 to $15.39 per share, as compared to the merger
consideration of $16.50 per share.
Other Factors. In rendering its opinion, CIBC World Markets also
reviewed and considered, among other things:
o historical and projected financial data for Mikasa; and
o historical market prices and trading volumes for Mikasa common
stock and the relationship between movements in Mikasa common
stock, movements in the common stock of the selected companies
and movements in the S&P 500 Index.
Miscellaneous. Pursuant to an engagement letter dated July 20, 2000,
Mikasa agreed to pay CIBC World Markets an aggregate fee of $800,000, of which
$100,000 became payable upon execution of the engagement letter and $700,000
became payable upon the delivery of CIBC World Markets' opinion. Mikasa also
agreed to reimburse CIBC World Markets for its reasonable out-of-pocket
expenses, including reasonable fees and expenses of legal counsel, and to
indemnify CIBC World Markets and related parties, to the full extent lawful,
from and against liabilities, including liabilities under the federal securities
law, incurred in connection with CIBC World Markets' engagement.
The special committee selected CIBC World Markets because of CIBC World
Markets' reputation, experience and expertise. As part of CIBC World Markets'
investment banking business, CIBC World Markets is regularly engaged in
valuations of businesses and securities in connection with acquisitions and
mergers (including "going-private transactions"), underwritings, secondary
distributions of securities, private placements and valuations for other
purposes. In the ordinary course of business, CIBC World Markets and its
affiliates may actively trade securities of Mikasa for their own account and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
Financial Advisor to Mikasa
Mikasa retained UBS Warburg LLC as its financial advisor in connection
with Mikasa's investigation of strategic alternatives. UBS Warburg assisted
Mikasa in the negotiation of the terms of the merger. Mikasa agreed to pay UBS
Warburg a fee of approximately $2,500,000, plus reasonable out-of-pocket
expenses, payable upon the consummation of the merger. Robert Hotz, a director
of Mikasa, is a Managing Director of UBS Warburg.
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Purpose and Structure of the Merger
The purpose of the merger is to provide Mikasa's public stockholders
cash for their shares, to permit J.G. Durand Industries to acquire majority
ownership of Mikasa, and to terminate the status of Mikasa as a company with
publicly traded equity. The transaction has been structured as a cash merger in
order to provide the public stockholders of Mikasa with cash for all of their
shares and to provide an orderly transfer of majority ownership of Mikasa with
reduced transaction costs. In the merger, each share of Mikasa common stock
outstanding immediately prior to the effective time of the merger will be
converted into the right to receive $16.50 in cash.
On the record date, the continuing stockholders owned [9,325,897]
shares of Mikasa common stock, representing [54.9]% of the outstanding shares of
Mikasa common stock. In connection with the merger agreement, the Board of
Directors has provided for the creation of a new series of Mikasa's preferred
stock, designated the "Series A Preferred Stock," which ranks on a parity with
Mikasa's common stock with respect to dividends and distributions upon
liquidation, dissolution or winding up of Mikasa. Immediately prior to the
effective time of the merger, 2,672,800 shares of Mikasa common stock held by
the continuing stockholders will be converted into 44,101.2 shares of Series A
Preferred Stock. At the effective time of the merger, all of the continuing
stockholders' remaining shares (as of the record date, this would equal
[6,653,097] shares) will be converted into cash at $16.50 per share. Immediately
following the effective time of the merger, the Series A Preferred Stock of
Mikasa held by the continuing stockholders will be converted into new shares of
Mikasa common stock, following which, the continuing stockholders will own
approximately 15.3% of Mikasa.
Effects of the Merger
After the effective time of the merger, Mikasa stockholders, other than
the continuing stockholders, will cease to have ownership interests in Mikasa or
rights as Mikasa stockholders. Upon completion of the merger, J.G. Durand
Industries and the continuing stockholders are expected to own approximately
84.7% and 15.3%, respectively, of Mikasa. Although their equity investment in
Mikasa involves risk resulting from, among other things, the limited liquidity
of the investment, the stockholders of J.G. Durand Industries and the continuing
stockholders will be the sole beneficiaries of the future earnings and growth of
Mikasa, if any.
As a result of the merger, Mikasa will be a privately-held corporation
and there will be no public market for its common stock. After the merger, the
common stock will cease to be quoted on the New York Stock Exchange and price
quotations with respect to sales of shares of Mikasa common stock in the public
market will no longer be available. In addition, registration of the Mikasa
common stock under the Exchange Act will be terminated. This termination will
make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b) and the requirement of furnishing a proxy
or information statement in connection with stockholders meetings, no longer
applicable to Mikasa. After the effective time of the merger, Mikasa will no
longer be required to file periodic reports with the Securities and Exchange
Commission.
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From and after the effective time of the merger, the directors of
Merger Sub will become the directors of Mikasa, and the current officers of
Mikasa will remain the officers of Mikasa, in each case until their successors
are duly elected or appointed and qualified. From and after the effective time
of the merger, the certificate of incorporation of Merger Sub in effect
immediately prior to the effective time will become the certificate of
incorporation of Mikasa (except that, as of the effective time, the name of the
corporation given in the certificate will be "Mikasa, Inc."), and the by-laws of
Mikasa in effect immediately prior to the effective time will remain the by-laws
of Mikasa, each until amended afterwards.
It is expected that following completion of the merger, the operations
of Mikasa will be conducted substantially as they are currently being conducted.
Other than the merger and the other transactions described in the merger
agreement, neither Mikasa, J.G. Durand Industries nor any of the continuing
stockholders has any present plans or proposals that relate to or would result
in an extraordinary corporate transaction involving Mikasa's corporate
structure, business or management, such as a merger, reorganization,
liquidation, relocation of any operations, or sale or transfer of a material
amount of assets. However, J.G. Durand Industries, Mikasa and the continuing
stockholders will continue to evaluate Mikasa's business and operations after
the merger, and may develop new plans and proposals in the future.
At the effective time of the merger, each option to purchase shares of
Mikasa common stock outstanding and unexercised as of such date granted pursuant
to Mikasa's Long-Term Incentive Plan, Non-Employee Directors Stock Option Plan
or 1998 Long-Term Incentive Plan will become 100% vested and immediately
exercisable. Each holder of an option outstanding as of the effective time of
the merger will be entitled to receive, and will be paid in full satisfaction of
the option, or each option will after the effective time of the merger be
exercisable solely for, a cash payment equal to the product of (x) the excess,
if any, of $16.50 over the exercise price per share of Mikasa common stock
subject to the option multiplied by (y) the number of shares of Mikasa common
stock subject to the option immediately prior to the effective time of the
merger, less applicable tax withholding. Any amounts withheld from these
payments and paid to the proper authority will be treated for all purposes as
having been paid to the option holders. Upon the receipt by the option holder of
this payment, the option held by such holder will be cancelled and the option
holder's acceptance of the payment will be deemed a release of all of his rights
with respect to the option. At and after the effective time of the merger, no
holder of Mikasa stock options granted under the Mikasa option plans mentioned
above will have any rights to acquire any equity securities of Mikasa, the
surviving corporation or any of its subsidiaries.
Risk that the Merger will not be Completed
Completion of the merger is subject to various conditions set forth in
the merger agreement, including, but not limited to, the following :
o the merger agreement and the transactions contemplated by the
merger agreement are approved by the Mikasa stockholders at the
special meeting;
o holders of no more than 7% of the shares of Mikasa common stock
outstanding as of the effective time of the merger have exercised
appraisal rights under Delaware law;
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o each of the parties to the merger agreement must have performed
its obligations under the merger agreement in all material
respects at or before the effective time of the merger;
o we have obtained all necessary consents, permits and approvals;
o the waiting period imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, which we refer to as the
"HSR Act," has expired or been terminated;
o no law, injunction or order prohibits the completion of the
merger or restricts the conduct of Merger Sub or Mikasa, or the
operation of the business of Mikasa after the Merger;
o the representations and warranties made by the parties in the
merger agreement are true and correct in all material respects at
the effective time of the merger; and
o since the date of the merger agreement, there has not occurred an
event which is continuing and which constitutes a material
adverse effect on Mikasa.
As a result of the various conditions to the completion of the merger,
we cannot assure you that the merger will be completed even if the requisite
stockholder approval is obtained.
It is expected that if Mikasa stockholders do not approve and adopt the
merger agreement and the transactions contemplated by the merger agreement, or
if the merger is not completed for any other reason, the current management of
Mikasa, under the direction of the Board of Directors, will continue to manage
Mikasa as an on-going business.
Interests of Mikasa Directors and Executive Officers in the Merger
In considering the recommendation of the Board of Directors, you should
be aware that certain members of Mikasa's management and the Board of Directors
have interests in the transaction that are or may be different from, or in
addition to, your interests as a Mikasa stockholder. The Board of Directors
appointed the special committee, consisting solely of directors who are not
officers or employees of Mikasa and who will retain no interest in Mikasa
following the merger, to evaluate, negotiate the terms of, and make a
recommendation to the Board of Directors with respect to, any offer to acquire
Mikasa by a third party acting in connection with certain directors and officers
of Mikasa. The special committee was aware of these differing interests and
considered them, among other matters, in recommending the approval of the merger
agreement and in recommending that the Board of Directors approve the merger
agreement and recommend to Mikasa stockholders that the merger agreement be
adopted.
Messrs. Inouye and Muto. Messrs. Inouye and Muto, members of the
special committee, hold options granted to them in May 2000 pursuant to Mikasa's
Non-Employee Director Stock Option Plan, each to purchase 2,500 shares of Mikasa
common stock at $9.5625 per share, all of which will vest as a result of the
merger. In the merger, the options held by Messrs. Inouye and
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Muto will be converted into the right to receive a total of $17,343.75 each. See
"--Treatment of Stock Options" below.
Continuing Stockholders. As of the record date, the continuing
stockholders owned (directly or, in the case of Messrs. Dingman and Aratani,
through one or more family trusts with respect to which they are trustees and
beneficial owners) [9,325,897] shares of Mikasa common stock, as well as options
to purchase an additional 985,000 shares of Mikasa common stock. Immediately
prior to the effective time of the merger, 2,672,800 shares of Mikasa common
stock held by the continuing stockholders will be converted into 44,101.2 shares
of a new series of Mikasa preferred stock, as described in "THE MERGER--Purpose
and Structure of the Merger" and "THE MERGER AGREEMENT--Structure; Merger
Consideration." At the effective time of the merger, like the shares of Mikasa
common stock held by the public stockholders, all of the remaining shares of the
continuing stockholders' common stock (as of the record date for the special
meeting, this would equal [6,653,097] shares) will be converted into cash at
$16.50 per share. Immediately following the effective time of the merger, the
Series A Preferred Stock of Mikasa held by the continuing stockholders will be
converted into new shares of Mikasa common stock, following which, the
continuing stockholders will own, approximately 15.3% of Mikasa. Like all other
Mikasa option holders, the continuing stockholders will receive an amount equal
to the excess, if any, of $16.50 per share over the per share exercise price for
their outstanding options less applicable tax withholding. Because the
continuing stockholders will retain Mikasa common stock after completion of the
merger, they may have interests in connection with the merger that are different
from, or in addition to, your interests as a Mikasa stockholder.
We expect the continuing stockholders to own the indicated number and
percent of shares of Mikasa common stock outstanding immediately after
completion of the merger:
Shares of
Name of Individual Common Stock
------------------ ------------
Alfred J. Blake.............. 19,577.25 (6.8%)
Raymond B. Dingman........... 6,405.30 (2.2%)
Anthony F. Santarelli........ 7,855.65 (2.7%)
George T. Aratani............ 10,263.00 (3.6%)
----------------
Total........................ 44,101.20 (15.3%)
=================
As a result of the structure of the merger, the continuing stockholders
will not recognize gain or loss for U.S. federal income tax purposes on the
conversion of their Mikasa common stock into new shares of Mikasa Series A
Preferred Stock or the conversion of the preferred stock into new shares of
Mikasa common stock.
Treatment of Stock Options. At the effective time of the merger, each
option to purchase shares of Mikasa common stock outstanding and unexercised as
of such date granted pursuant to Mikasa's Long-Term Incentive Plan, Non-Employee
Directors Stock Option Plan or 1998 Long-Term Incentive Plan will become 100%
vested and immediately exercisable. Each holder of an option outstanding as of
the effective time of the merger will be entitled to receive, and will be paid
in full satisfaction of the option, or each option will after the effective time
of the merger be exercisable solely for, a cash payment equal to the product of
(x) the excess, if any, of $16.50 over the exercise price per share of Mikasa
common stock subject to the option multiplied by (y)
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the number of shares of Mikasa common stock subject to the option immediately
prior to the effective time of the merger, less applicable tax withholding. Any
amounts withheld from these payments and paid to the proper authority will be
treated for all purposes as having been paid to the option holders. Upon the
receipt by the option holder of this payment, the option held by such holder
will be cancelled and the option holder's acceptance of the payment will be
deemed a release of all of his rights with respect to the option. At and after
the effective time of the merger, no holder of Mikasa stock options granted
under the Mikasa option plans mentioned above will have any rights to acquire
any equity securities of Mikasa, the surviving corporation or any of its
subsidiaries.
The following chart shows the number of shares of Mikasa common stock
receivable upon exercise of outstanding options held by the directors and
executive officers of Mikasa and the number of such options for which vesting
would be accelerated by the merger (assuming consummation of the merger prior to
December 10, 2000).
<TABLE>
<S> <C> <C> <C> <C>
Total Shares of
Mikasa Common Stock Exercise Price of
Receivable upon Weighted Average Options Vesting Options Vesting
Exercise Exercise Price Solely as a Result Solely as a Result
of Options of All Options of the Merger of the Merger
---------- -------------- ------------- -------------
Name
Alfred J. Blake............. 247,500 $11.8460 25,000 $10.3750
50,000 9.9375
George T. Aratani........... 0 -- 0 --
Anthony F. Santarelli ...... 240,000 11.7162 25,000 10.3750
50,000 9.9375
Raymond B. Dingman.......... 497,500 11.1068 25,000 10.3750
50,000 9.9375
Brenda W. Flores............ 82,500 11.6326 5,000 10.3750
25,000 9.9375
Robert H. Hotz.............. 15,000 11.7504 1,250 10.9400
2,500 ------------
9.5625
Norman R. Higo.............. 0 -- 0 --
Joseph S. Muto.............. 2,500 9.5625 2,500 9.5625
Raymond E. Inouye........... 2,500 9.5625 2,500 9.5625
------------------------------------------------------------------ -------
Total for all Directors and
Executive Officers.......... 1,087,500 263,750
</TABLE>
Executive Officers. Under the terms of the merger agreement, upon
completion of the merger, the current Mikasa officers will continue to be
officers of Mikasa, and to serve in their current offices, until their
successors are duly elected or appointed. The current executive officers of
Mikasa are Raymond B. Dingman (Chief Executive Officer, President and Chief
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Operating Officer), Alfred J. Blake (Chairman of the Board of Directors),
Anthony F. Santarelli (Executive Vice President - Operations) and Brenda W.
Flores (Vice President and Chief Financial Officer).
Employment Agreements--General. Mikasa currently has an employment and
consulting agreement with Mr. Blake, which will be terminated at the effective
time of the merger. Mikasa and Mr. Blake have entered into a new employment
agreement which will become effective upon completion of the merger. Mr.
Dingman, Mr. Santarelli and Mr. Aratani have also entered into employment
agreements with Mikasa which will become effective upon completion of the
merger.
Each of the employment agreements has been filed as an exhibit to the
Schedule 13E-3 filed by Mikasa with the Securities and Exchange Commission in
connection with the merger. See "WHERE YOU CAN FIND MORE INFORMATION."
Employment Agreements--Messrs. Blake, Dingman and Santarelli. The
employment agreements with Mikasa will provide for Mr. Blake to serve in a
position to be mutually agreed upon by Mr. Blake and Mikasa and for Messrs.
Dingman and Santarelli to serve as Mikasa's Chief Executive Officer, President
and Chief Operating Officer and as its Executive Vice President--Operations,
respectively, in each case until December 31, 2002. The employment agreements
also will provide for each executive to receive the following:
o an annual base salary of $350,000 (Mr. Blake), $350,000 (Mr.
Dingman) and $275,000 (Mr. Santarelli), subject to annual review
but not to decrease;
o a discretionary annual cash bonus which will be no less than his
1999 cash bonus so long as Mikasa meets certain "net income" (as
defined in the employment agreements) targets;
o participation in Mikasa's Incentive Compensation Plan (as
described below); and
o employee benefits and perquisites no less favorable, in the
aggregate, than those provided to the executive before the
merger.
Under the employment agreements, upon termination of the executive's
employment prior to December 31, 2002 by Mikasa without "cause" (as defined in
the employment agreements), by the executive for "good reason" (as defined in
the employment agreements) or as a result of the executive's death or
"disability" (as defined in the employment agreements), the executive will be
entitled to:
o an amount equal to the base salary he would have received until
December 31, 2002, had his employment not been terminated; and
o employee benefits and perquisites for him and his eligible
dependents until December 31, 2002, as if his employment had not
been terminated.
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The employment agreements also will provide that a termination of
employment prior to December 31, 2002 by the executive "for good reason" will be
treated for purposes of the Incentive Compensation Plan as a termination by
Mikasa without "cause."
Under the employment agreements, upon any termination of his employment
with Mikasa at any time, the executive and his spouse will each continue to
receive medical and dental benefits paid for by Mikasa until such time as he and
she reach age 65, respectively.
The employment agreements will include provisions that restrict the
executive from engaging in the following conduct in the United States for a
period of 18 months following any termination of his employment with Mikasa at
any time:
o directly or indirectly, participating in the management,
operation or control of any competitor of Mikasa with respect to
the business of manufacturing and selling ceramic dinnerware,
crystal and glassware products; and
o soliciting employees of Mikasa to be employed by a competitor of
Mikasa with respect to Mikasa's business described above.
The employment agreements also will provide that if the executive
prevails in any dispute with respect to the employment agreement, Mikasa will
reimburse him for attorneys' fees and costs.
Employment Agreement--Mr. Aratani. Mr. Aratani's employment agreement
will provide for Mr. Aratani to serve as Mikasa's Chairman Emeritus until
December 31, 2002. The employment agreement also will provide for Mr. Aratani to
receive the following:
o an annual base salary of $15,000, subject to annual review but
not to decrease;
o office and administrative support substantially similar to those
he received prior to the merger; and
o employee benefits and perquisites no less favorable, in the
aggregate, than those provided to the executive before the
merger.
The employment agreement also will provide that if Mr. Aratani prevails
in any dispute with respect to the employment agreement, Mikasa will reimburse
him for attorneys' fees and costs.
Incentive Compensation Plan. As of the completion of the merger, Mikasa
will implement a long-term cash incentive compensation plan for certain members
of management, including the three executives. We refer to this plan as the
"Incentive Compensation Plan." The Incentive Compensation Plan will be in
addition to the annual cash bonus program in place for such employees.
The Incentive Compensation Plan will be administered by a committee
comprised of four individuals designated by J.G. Durand Industries (referred to
as "Durand designees") and three
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<PAGE>
executive officers of Mikasa designated by Mikasa prior to the completion of the
merger (referred to as "Mikasa designees").
Under the Incentive Compensation Plan, a pool of cash (referred to as
the "plan pool") will be distributed to participants after the end of fiscal
year 2003 based on awards granted to them by the Durand designees (in the case
of awards to the Mikasa designees) or by the Mikasa designees (in the case of
awards to other participants) each year of the plan's operation. The awards will
entitle the participants to a fixed percentage of the plan pool at the time of
its distribution. The plan pool will be irrevocably credited, with respect to
each fiscal year starting with fiscal year 2000 and ending with fiscal year
2003, with an amount of cash based upon the formula set forth in the Incentive
Compensation Plan, including certain minimum targets, and the "net income" (as
defined in the Incentive Compensation Plan) recorded by Mikasa for the relevant
fiscal year. The maximum amount to be distributed to participants under the
Incentive Compensation Plan is $15 million.
The aggregate awards granted to a participant in the Incentive
Compensation Plan will vest with respect to 0% at the end of the first year, 30%
at the end of the second year, 60% at the end of the third year and 100% at the
end of the fourth year of the period of the plan's operation. If a participant's
employment is terminated by Mikasa for "cause" (as defined in the Incentive
Compensation Plan), the participant will forfeit all of his awards. If a
participant terminates his own employment for any reason, the participant will
forfeit his unvested awards but Mikasa will pay him a cash amount for his vested
awards at the time payments are made generally to other participants. If the
employment of a participant is terminated as a result of his death or
"disability" (as defined in the Incentive Compensation Plan) or is terminated by
Mikasa without cause, the participant's awards will vest in full at the time of
such termination and Mikasa will pay him a cash amount for all of his awards at
the time payments are made generally to other participants. Any awards forfeited
by participants may be reallocated by the Durand designees or the Mikasa
designees, as applicable, as new awards to certain other participants.
The plan pool will be distributed prior to the end of fiscal year 2003
in the event of a "control transaction" (as defined in the Incentive
Compensation Plan) or in the event of the termination of the Incentive
Compensation Plan by the committee (with the agreement of at least two Mikasa
designees). In each case, the plan pool will be determined based upon Mikasa's
net income prior to the triggering event and payments will be made to
participants based upon their outstanding awards, whether vested or not, with
any unallocated amounts of the plan pool distributed to participants by the
committee in its discretion.
The Incentive Compensation Plan has been filed as an exhibit to the
Schedule 13E-3 filed by Mikasa with the Securities and Exchange Commission in
connection with the merger. See "WHERE YOU CAN FIND MORE INFORMATION."
Support Agreement. In connection with the merger agreement, the
continuing stockholders, Messrs. Blake, Dingman, Santarelli and Aratani, have
entered into a support agreement dated September 10, 2000, with Merger Sub and
J.G. Durand Industries. As of the record date, the continuing stockholders own,
in the aggregate, [9,325,897] shares of Mikasa common stock, or approximately
[54.9]% of the outstanding shares, as well as options to purchase 985,000
shares. Under the terms of the support agreement, which is attached as
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Appendix B to this proxy statement, Messrs. Blake, Dingman, Santarelli and
Aratani have each agreed, among other things:
o to vote their shares to approve and adopt the merger agreement
and the transactions contemplated by the merger agreement, and to
vote their shares in favor of any other matter necessary to
complete the transactions contemplated by the merger agreement;
o to vote against any competing transaction or certain other
transactions which may frustrate the merger;
o not to sell, transfer, pledge, assign or otherwise dispose of any
shares of Mikasa common stock; and
o to refrain from directly or indirectly soliciting, initiating, or
otherwise facilitating any third-party acquisition inquiries.
These obligations terminate upon completion of the merger, or if the
merger agreement is terminated for any reason. In addition, each of the
continuing stockholders has granted to and appointed a designee of Merger Sub as
such stockholder's proxy and attorney-in-fact, with full power of substitution,
to vote or otherwise grant consent or approval with respect to all of such
stockholder's shares of Mikasa common stock in accordance with the agreements
described above. Each proxy is coupled with an interest and is irrevocable until
either the merger is consummated or the merger agreement is terminated.
If the merger agreement is not terminated and the continuing
stockholders comply with the terms of the support agreement, the merger
agreement and the transactions contemplated by the merger agreement will be
approved and adopted regardless of how any other stockholder votes on these
issues.
In addition, in the support agreement, each of the continuing
stockholders has agreed that if Mikasa consummates a competing transaction
within one year of the termination of the merger agreement, or if Mikasa enters
into an agreement with respect to a competing transaction within one year of the
termination of the merger agreement and such competing transaction is
consummated, the continuing stockholder will pay a fee to J.G. Durand Industries
equal to the product of:
o 0.50;
o the total number of shares of Mikasa common stock owned by the
continuing stockholder at the time of the termination of the
merger agreement (less, subject to certain limitations, the
number of shares to be rolled over in the alternative
transaction); and
o the excess of the highest price per share of Mikasa common stock
paid in the competing transaction over $16.50.
This fee will only be payable if:
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<PAGE>
o the merger agreement is terminated by Merger Sub because the
Board of Directors recommended the competing transaction;
o the merger agreement is terminated by the Board of Directors of
Mikasa in the exercise of their fiduciary duties in connection
with a competing transaction; or
o the merger agreement is terminated by any party because the
stockholders of Mikasa did not approve the merger agreement, or
by Merger Sub because the Board of Directors withdrew or modified
its recommendation of the merger agreement or because of a breach
of the merger agreement by Mikasa, and in each case a proposal
for a competing transaction had been made prior to the
termination of the merger agreement.
Stockholders' Agreement. Messrs. Blake, Dingman, Santarelli and
Aratani, together with Mikasa, J.G. Durand Industries and Merger Sub, have
entered into a stockholders' agreement which will become effective upon
completion of the merger. A stock purchase agreement between Mikasa and Mr.
Blake, dated August 6, 1996, will be superseded by the terms of the
stockholders' agreement, and upon completion of the merger will be of no further
force and effect. The stockholders' agreement is attached as Appendix C to this
proxy statement.
The stockholders' agreement restricts the ability of the continuing
stockholders to freely transfer the shares of Mikasa common stock held by them
following the merger (other than to family or charities). The stockholders'
agreement establishes, among other things, certain rights of the continuing
stockholders to require J.G. Durand Industries or its designee (including
Mikasa) to purchase, and certain rights of J.G. Durand Industries or its
designee (including Mikasa) to require the continuing stockholders to sell to
it, their shares of Mikasa common stock for a price that is based upon Mikasa's
exceeding certain "cumulative net income per share" (as defined in the
stockholders' agreement) targets following the merger but which in any event
will be no less than $16.50 per share (as equitably adjusted for changes in
Mikasa's stock and minus certain amounts with respect to dividends). Certain of
these rights are triggered, in the case of all of the continuing stockholders,
upon the close of Mikasa's fiscal year 2003 and in connection with a "control
transaction" (as defined in the stockholders' agreement) involving J.G. Durand
Industries or Mikasa prior to the end of Mikasa's fiscal year 2003; in the case
of each of the three executives, upon the termination of his employment with
Mikasa prior to the end of Mikasa's fiscal year 2003 or upon his failure to
enter into an employment agreement with Mikasa with respect to his employment
after December 31, 2002; and, in the case of Mr. Aratani, upon changes in the
senior management of Mikasa prior to the end of Mikasa's fiscal year 2003. In
addition, unless otherwise agreed by the continuing stockholder, there will be a
purchase by J.G. Durand Industries of all of the shares of Mikasa common stock
held by a continuing stockholder following the end of Mikasa's fiscal year 2003.
In certain circumstances following a public offering by Mikasa of shares of
Mikasa common stock, these rights and restrictions will cease to be effective.
With respect to a sale by J.G. Durand Industries of any of its shares
of Mikasa common stock to a third party, the stockholders' agreement grants the
continuing stockholders the right to sell to such third party, on the same terms
and conditions as J.G. Durand Industries' sale, an amount of their shares of
Mikasa common stock proportionate to the amount of shares to be sold
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by J.G. Durand Industries. The continuing stockholders may require the third
party to purchase all of their shares of Mikasa common stock if J.G. Durand
Industries' sale would result in J.G. Durand Industries owning less than 50% of
the amount of Mikasa common stock it will own immediately following the
effective time of the merger.
With respect to a sale by J.G. Durand Industries to a third party of
more than 85% of its shares of Mikasa common stock, the stockholders' agreement
grants J.G. Durand Industries the right to require the continuing stockholders
to sell to such third party, on the same terms and conditions as J.G. Durand
Industries' sale, an amount of their shares of Mikasa common stock which is
proportionate to the amount of shares to be sold by J.G. Durand Industries.
The stockholders' agreement also grants the continuing stockholders the
opportunity to have their shares included in any registration statement that
Mikasa files in connection with any public offering of shares of Mikasa common
stock, other than a registration statement on Form S-4 or Form S-8.
The stockholders' agreement provides that so long as any of the three
executives owns shares of Mikasa common stock, the three executives who own
shares shall have the right to nominate for election as members of the Board of
Directors a number of persons equal to the number of such three executives who
then beneficially own shares and J.G. Durand Industries shall nominate the
remaining candidates. The stockholders' agreement also provides that the
continuing stockholders and J.G. Durand Industries will vote for all of the
nominees to the Board of Directors. Moreover, only the party who nominated a
director may remove him or her from the Board of Directors prior to the
expiration of his or her term and only the party who nominated a terminating
director may nominate a replacement for such director.
Under the stockholders' agreement, if a continuing stockholder prevails
in any dispute with respect to the stockholders' agreement, J.G. Durand
Industries will reimburse him for attorneys' fees and costs. J.G. Durand
Industries has also agreed to guarantee certain of the obligations of Mikasa to
the continuing stockholders under the stockholders' agreement.
Indemnification of Directors and Officers; Directors' and Officers'
Insurance. The merger agreement provides that Mikasa will indemnify and hold
harmless each present and former director and officer of Mikasa for a period of
six years for acts and omissions occurring before the effective time of the
merger. The merger agreement further provides that for a period of six years
after the effective time of the merger, Mikasa will maintain officers' and
directors' liability insurance covering the persons who, on the date of the
merger agreement, were covered by Mikasa's officers' and directors' liability
insurance policies with respect to acts and omissions occurring before the
effective time of the merger, subject to limitations on the maximum premium that
Mikasa must pay for this insurance. The persons benefiting from the insurance
provisions include all of Mikasa's current directors and executive officers.
J.G. Durand Industries has agreed to cause Mikasa and Merger Sub to perform
their obligations described in this paragraph. See "THE MERGER
AGREEMENT--Indemnification and Insurance."
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Financing for the Merger
J.G. Durand Industries estimates that approximately $245,000,000 will
be required to complete the merger and pay its related fees and expenses. It
expects this amount to be funded through cash on hand at the effective time of
the merger.
Litigation
Since the announcement of the proposed merger, Mikasa and its directors
have been named as defendants in three substantially similar purported class
action lawsuits filed in the Court of Chancery of the State of Delaware. The
plaintiffs purport to represent a class of all persons whose stock will be
converted into the right to receive $16.50 in cash per share in connection with
the merger. While the allegations contained in the complaints are not identical,
the complaints generally assert that the $16.50 per share does not reflect the
value of the assets and future prospects of Mikasa. The complaints also
generally allege that the directors of Mikasa engaged in self-dealing without
regard to conflicts of interest and that they breached their fiduciary duties in
approving the merger agreement. The complaints seek remedies including
unspecified monetary damages, attorneys' fees and injunctive relief that would,
if granted, prevent the completion of the merger. Mikasa believes that the
allegations contained in these lawsuits are without merit. While Mikasa and its
directors intend to defend themselves vigorously, no assurance can be given as
to the outcome of these lawsuits.
Accounting Treatment of the Merger
For U.S. accounting purposes, the merger will be accounted for under
the purchase method of accounting under which the total consideration paid in
the merger will be allocated among Mikasa's consolidated assets and liabilities
based on the fair values of the assets acquired and liabilities assumed.
Federal Regulatory Matters
The HSR Act and the rules and regulations promulgated thereunder
require that Mikasa and the ultimate parent entities of Merger Sub file
notification and report forms with respect to the merger and related
transactions with the Antitrust Division of the United States Department of
Justice and the United States Federal Trade Commission. The parties thereafter
are required to observe a waiting period before completing the merger. In
compliance with the HSR Act the necessary forms were filed on o, 2000 with the
Department of Justice and the Federal Trade Commission. The Department of
Justice and the Federal Trade Commission, state antitrust authorities or a
private person or entity could seek to enjoin the merger under the antitrust
laws at any time before its completion or to compel rescission or divestiture at
any time subsequent to the merger. Completion of the merger is conditioned on
the expiration or early termination of the applicable waiting period under the
HSR Act.
Material Federal Income Tax Consequences to Stockholders
The following is a summary of the material U.S. federal income tax
consequences of the merger to holders of Mikasa common stock (including holders
exercising appraisal rights). This summary is based on laws, regulations,
rulings and decisions now in effect, all of which are
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subject to change, possibly with retroactive effect. This summary does not
address all of the U.S. federal income tax consequences that may be applicable
to a particular holder of Mikasa common stock or to holders who are subject to
special treatment under U.S. federal income tax law (including, for example,
banks, insurance companies, tax-exempt investors, S corporations, dealers in
securities, non-U.S. persons, holders who hold their common stock as part of a
hedge, straddle or conversion transaction, and holders who acquired common stock
through the exercise of employee stock options or other compensation
arrangements). Moreover, this summary does not deal with the taxation
consequences to employees of Mikasa who receive new shares of Mikasa common
stock at the effective time of the merger. In addition, this summary does not
address the tax consequences of the merger under applicable state, local or
foreign laws. You should consult your own tax advisor as to the particular tax
consequences to you of the merger, including the application of any state, local
or foreign tax laws.
The receipt of cash by holders of Mikasa common stock in the merger or
upon exercise of dissenters' appraisal rights will be a taxable transaction for
U.S. federal income tax purposes. A holder of Mikasa common stock generally will
recognize gain or loss in an amount equal to the difference between the merger
consideration received by such holder and such holder's adjusted tax basis in
the common stock. That gain or loss generally will be capital gain or loss if
the common stock is held as a capital asset at the effective time of the merger.
Any capital gain or loss generally will be long-term capital gain or loss if the
common stock has been held by the holder for more than one year. If the common
stock has been held by the holder for less than one year, any gain or loss will
generally be taxed as a short-term capital gain or loss.
Dissenters' Rights of Appraisal
Under Section 262 of the Delaware General Corporation Law, which we
refer to as the "DGCL," any holder of Mikasa common stock who does not wish to
accept $16.50 per share in cash for his or her shares of Mikasa common stock may
dissent from the merger and elect to have the fair value of his or her shares of
Mikasa common stock (exclusive of any element of value arising from the
accomplishment or expectation of the merger) judicially determined and paid to
such holder in cash, together with a fair rate of interest, if any, provided
that the holder complies with the provisions of Section 262.
The following discussion is not a complete statement of the law
pertaining to appraisal rights under the DGCL, and is qualified in its entirety
by the full text of Section 262, which is provided in its entirety as Appendix D
to this proxy statement. All references in Section 262 and in this summary to a
"stockholder" are to the record holder of the shares of Mikasa common stock as
to which appraisal rights are asserted. A person having a beneficial interest in
shares of Mikasa common stock held of record in the name of another person, such
as a broker or nominee, must act promptly to cause the record holder to follow
properly the steps summarized below and in a timely manner to perfect appraisal
rights.
Under Section 262, where a proposed merger is to be submitted for
approval and adoption at a meeting of stockholders, as in the case of the
special meeting, the corporation, not less than 20 days before the meeting, must
notify each of its stockholders entitled to appraisal rights that appraisal
rights are available and include in that notice a copy of Section 262. This
proxy statement constitutes that notice to the holders of Mikasa common stock
and the applicable
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statutory provisions of the DGCL are attached to this proxy statement as
Appendix D. Any stockholder who wishes to exercise appraisal rights or who
wishes to preserve the right to do so should review carefully the following
discussion and Appendix D to this proxy statement. Failure to comply with the
procedures specified in Section 262 timely and properly will result in the loss
of appraisal rights. Moreover, because of the complexity of the procedures for
exercising the right to seek appraisal of the common stock, Mikasa believes that
stockholders who consider exercising such appraisal rights should seek the
advice of counsel.
Any holder of Mikasa common stock wishing to exercise the right to
demand appraisal under Section 262 of the DGCL must satisfy each of the
following conditions:
o as more fully described below, the holder must deliver to Mikasa
a written demand for appraisal of the holder's shares before the
vote on the merger agreement at the special meeting, which demand
will be sufficient if it reasonably informs Mikasa of the
identity of the holder and that the holder intends to demand an
appraisal of the holder's shares;
o the holder must not vote the holder's shares of Mikasa common
stock in favor of the merger agreement; a proxy which does not
contain voting instructions will, unless revoked, be voted in
favor of the merger agreement, therefore, a stockholder who votes
by proxy and who wishes to exercise appraisal rights must vote
against the merger agreement or abstain from voting on the merger
agreement; and
o the holder must continuously hold the shares from the date of
making the demand through the effective time of the merger; a
stockholder who is the record holder of shares of Mikasa common
stock on the date the written demand for appraisal is made but
who thereafter transfers those shares before the effective time
of the merger will lose any right to appraisal in respect of
those shares.
Neither voting (in person or by proxy) against, abstaining from voting
on or failing to vote on the proposal to approve and adopt the merger agreement
and the transactions contemplated by the merger agreement will constitute a
written demand for appraisal within the meaning of Section 262. The written
demand for appraisal must be in addition to and separate from any such proxy or
vote.
Only a holder of record of shares of Mikasa common stock issued and
outstanding immediately before the effective time of the merger is entitled to
assert appraisal rights for the shares of Mikasa common stock registered in that
holder's name. A demand for appraisal should be executed by or on behalf of the
stockholder of record, fully and correctly, as the stockholder's name appears on
the stock certificates, should specify the stockholder's name and mailing
address, the number of shares of Mikasa common stock owned and that the
stockholder intends to demand appraisal of the stockholder's Mikasa common
stock. If the shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of the demand should be made in that
capacity. If the shares are owned of record by more than one person, as in a
joint tenancy or tenancy in common, the demand should be executed by or on
behalf of all owners. An authorized agent, including one or more joint owners,
may execute a demand for appraisal on behalf of a stockholder; however, the
agent must identify the record
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owner or owners and expressly disclose the fact that, in executing the demand,
the agent is acting as agent for such owner or owners. A record holder such as a
broker who holds shares as nominee for several beneficial owners may exercise
appraisal rights with respect to the shares held for one or more beneficial
owners while not exercising appraisal rights with respect to the shares held for
one or more beneficial owners; in such case, the written demand should set forth
the number of shares as to which appraisal is sought, and where no number of
shares is expressly mentioned the demand will be presumed to cover all shares
held in the name of the record owner. Stockholders who hold their shares in
brokerage accounts or other nominee forms and who wish to exercise appraisal
rights are urged to consult with their brokers to determine appropriate
procedures for the making of a demand for appraisal by the nominee.
A stockholder who elects to exercise appraisal rights under Section 262
should mail or deliver a written demand to: Mikasa, Inc., One Mikasa Drive,
Secaucus, New Jersey, 07096, Attention: Amy Tunis, Secretary.
Within ten days after the effective time of the merger, Mikasa must
send a notice as to the effectiveness of the merger to each former stockholder
of Mikasa who has made a written demand for appraisal in accordance with Section
262 and who has not voted to approve and adopt the merger agreement and the
transactions contemplated by the merger agreement. Within 120 days after the
effective time of the merger, but not thereafter, either Mikasa or any
dissenting stockholder who has complied with the requirements of Section 262 may
file a petition in the Delaware Court of Chancery demanding a determination of
the value of the shares of Mikasa common stock held by all stockholders who have
perfected their dissenters' rights. Mikasa is under no obligation to and has no
present intent to file a petition for appraisal, and stockholders seeking to
exercise appraisal rights should not assume that Mikasa will file such a
petition or that Mikasa will initiate any negotiations with respect to the fair
value of the shares. Accordingly, stockholders who desire to have their shares
appraised should initiate any petitions necessary for the perfection of their
appraisal rights within the time periods and in the manner prescribed in Section
262. Inasmuch as Mikasa has no obligation to file such a petition, the failure
of a stockholder to do so within the period specified could nullify the
stockholder's previous written demand for appraisal.
Under the merger agreement, Mikasa has agreed to give Merger Sub prompt
written notice of any demands for appraisal received by Mikasa. Merger Sub has
the right to participate in and approve all negotiations and proceedings with
respect to demands for appraisal under the DGCL. Mikasa will not, except with
the prior written consent of Merger Sub, make any payment with respect to any
demands for appraisal, or offer to settle, or settle, any such demands.
Within 120 days after the effective time of the merger, any stockholder
who has complied with the provisions of Section 262 to that point in time will
be entitled to receive from Mikasa, upon written request, a statement setting
forth the aggregate number of shares not voted in favor of the merger agreement
and with respect to which demands for appraisal have been received and the
aggregate number of holders of such shares. Mikasa must mail that statement to
the stockholder within 10 days of receipt of the request or within 10 days after
expiration of the period for delivery of demands for appraisals under Section
262, whichever is later.
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A stockholder timely filing a petition for appraisal with the Delaware
Court of Chancery must deliver a copy to Mikasa, which will then be obligated
within 20 days to provide the Delaware Court of Chancery with a duly verified
list containing the names and addresses of all stockholders who have demanded
appraisal of their shares. After notice to those stockholders, the Delaware
Court of Chancery is empowered to conduct a hearing on the petition to determine
which stockholders are entitled to appraisal rights. The Delaware Court of
Chancery may require stockholders who have demanded an appraisal for their
shares and who hold stock represented by certificates to submit their
certificates to the Register in Chancery for notation thereon of the pendency of
the appraisal proceedings, and if any stockholder fails to comply with the
requirement, the Delaware Court of Chancery may dismiss the proceedings as to
that stockholder.
After determining the stockholders entitled to an appraisal, the
Delaware Court of Chancery will appraise the "fair value" of their shares,
exclusive of any element of value arising from the accomplishment or expectation
of the merger, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. The costs of the action may be
determined by the Delaware Court of Chancery and taxed upon the parties as the
Delaware Court of Chancery deems equitable. Upon application of a dissenting
stockholder, the Delaware Court of Chancery may also order that all or a portion
of the expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts, be charged pro rata against the value of all of
the shares entitled to appraisal. Stockholders considering seeking appraisal
should be aware that the fair value of their shares as determined under Section
262 could be more than, the same as or less than the $16.50 per share they would
receive under the merger agreement if they did not seek appraisal of their
shares. Stockholders should also be aware that investment banking opinions are
not opinions as to fair value under Section 262.
In determining fair value and, if applicable, a fair rate of interest,
the Delaware Court of Chancery is to take into account all relevant factors. In
Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that
could be considered in determining fair value in an appraisal proceeding,
stating that "proof of value by any techniques or methods that are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered, and that "fair price obviously requires
consideration of all relevant factors involving the value of a company." The
Delaware Supreme Court stated that, in making this determination of fair value,
the court must consider market value, asset value, dividends, earnings
prospects, the nature of the enterprise and any other facts that could be
ascertained as of the date of the merger that throw any light on future
prospects of the merged corporation. In Weinberger, the Delaware Supreme Court
stated that "elements of future value, including the nature of the enterprise,
which are known or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered." Section 262 provides that fair value
is to be "exclusive of any element of value arising from the accomplishment or
expectation of the merger."
Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the effective time of the merger, be entitled to
vote the shares subject to that demand for any purpose or be entitled to the
payment of dividends or other distributions on those
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shares (except dividends or other distributions payable to holders of record of
shares as of a record date before the effective time of the merger).
Any stockholder may withdraw its demand for appraisal and accept $16.50
per share by delivering to Mikasa a written withdrawal of the stockholder's
demand for appraisal, except that (1) any such attempt to withdraw made more
than 60 days after the effective time of the merger will require written
approval of Mikasa and (2) no appraisal proceeding in the Delaware Court of
Chancery will be dismissed as to any stockholder without the approval of the
Delaware Court of Chancery, and such approval may be conditioned upon such terms
as the Delaware Court of Chancery deems just. If Mikasa does not approve a
stockholder's request to withdraw a demand for appraisal when that approval is
required or if the Delaware Court of Chancery does not approve the dismissal of
an appraisal proceeding, the stockholder would be entitled to receive only the
appraised value determined in any such appraisal proceeding, which value could
be more than, the same or less than $16.50 per share.
Failure to comply strictly with all of the procedures set forth in
Section 262 of the DGCL may result in the loss of a stockholder's statutory
appraisal rights. Consequently, any stockholder wishing to exercise appraisal
rights is urged to consult legal counsel before attempting to exercise appraisal
rights.
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THE MERGER AGREEMENT
The description of the merger agreement contained in this proxy
statement describes the material terms of the merger agreement. The actual legal
terms of the merger agreement may be found in Appendix A to this proxy statement
and are incorporated herein by reference. You are urged to read the entire
merger agreement as it is the legal document that governs the merger.
The Merger
The merger agreement provides that, subject to conditions summarized
below, Merger Sub, a Delaware corporation, will merge into Mikasa. Following the
completion of the merger, Merger Sub will cease to exist as a separate entity,
and Mikasa will continue as the surviving corporation.
Effective Time of the Merger
The merger will become effective upon the filing of a certificate of
merger with the Secretary of State of the State of Delaware in accordance with
the DGCL or at such later time as is specified in the certificate of merger. We
refer to this time as the "effective time." The filing is expected to occur as
soon as practicable after approval and adoption of the merger agreement and the
transactions contemplated by the merger agreement by our stockholders at the
special meeting and satisfaction or waiver of the other conditions to the merger
contained in the merger agreement. We cannot assure you that all conditions to
the merger contained in the merger agreement will be satisfied or waived. See
"--Conditions to the Merger."
Structure; Merger Consideration
At the effective time of the merger, each share of Mikasa common stock
outstanding immediately before the effective time of the merger, including all
shares of Mikasa common stock held by the continuing stockholders and not
converted into preferred stock as described below, will be canceled and
automatically converted into the right to receive $16.50 in cash, without
interest or any other payment thereon, with the following exceptions:
o treasury shares and shares of Mikasa common stock owned by any of
Mikasa's subsidiaries will be canceled without any payment
thereon; and
o shares held by stockholders who have perfected their dissenters'
rights will be subject to appraisal in accordance with Delaware
law.
In connection with the merger agreement, the Board of Directors has
provided for the creation of a new series of Mikasa's preferred stock,
designated the "Series A Preferred Stock," which ranks on a parity with Mikasa's
common stock with respect to dividends and distributions upon the liquidation,
dissolution or winding up of Mikasa. Immediately prior to the effective time of
the merger, 2,672,800 of the continuing stockholders' shares of Mikasa common
stock will be converted into 44,101.2 shares of Series A Preferred Stock.
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At the effective time of the merger, each share of Merger Sub common
stock issued and outstanding immediately before the effective time will be
converted into the right to receive one share of Series A Preferred Stock.
Immediately following the effective time of the merger, each share of
Series A Preferred Stock held by the continuing stockholders and by Merger Sub
will be converted into one share of common stock of the surviving corporation,
following which, the continuing stockholders will own approximately 15.3% of
Mikasa and J.G. Durand Industries will own approximately 84.7% of Mikasa.
Treatment of Options
At the effective time of the merger, each option to purchase shares of
Mikasa common stock granted pursuant to Mikasa's Long-Term Incentive Plan,
Non-Employee Directors Stock Option Plan or 1998 Long-Term Incentive Plan and
outstanding and unexercised as of such date will become 100% vested and
immediately exercisable. Each holder of an option outstanding as of the
effective time of the merger will be entitled to receive, and will be paid in
full satisfaction of the option, or each option will after the effective time of
the merger be exercisable solely for, a cash payment equal to the product of (x)
the excess, if any, of $16.50 over the exercise price per share of Mikasa common
stock subject to the option multiplied by (y) the number of shares of Mikasa
common stock subject to the option immediately prior to the effective time of
the merger, less applicable tax withholding. Any amounts withheld from these
payments and paid to the applicable authority will be treated for all purposes
as having been paid to the option holders. Upon the receipt by the option holder
of this payment, the option held by such holder will be cancelled and the option
holder's acceptance of the payment will be deemed a release of all of his rights
with respect to the option. At and after the effective time of the merger, no
holder of Mikasa stock options granted under the Mikasa option plans mentioned
above will have any rights to acquire any equity securities of Mikasa, the
surviving corporation or any of its subsidiaries.
As of o, 2000, there were options outstanding to purchase an aggregate
of 1,837,800 shares of Mikasa common stock at a weighted average exercise price
of $11.744 per share.
Payment for Shares
Immediately prior to the effective time, Merger Sub shall deliver the
cash consideration owing to each person who has surrendered to Mikasa prior to
such time one or more certificates representing shares of Mikasa common stock.
Merger Sub will also deposit, or cause to be deposited with the paying agent
designated by Merger Sub, all amounts necessary for the paying agent to pay the
merger consideration to all other holders of shares of Mikasa common stock.
Promptly after the effective time, Mikasa will cause the paying agent to mail to
each such person who did not surrender certificates representing shares of
Mikasa common stock a letter of transmittal and instructions to effect the
surrender of the share certificates which, immediately before the effective
time, represented the record holder's shares, in exchange for payment of $16.50
per share. You should not forward share certificates with the enclosed proxy
card. You should surrender certificates representing shares of Mikasa common
stock only after receiving instructions from the paying agent or Mikasa.
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The holder will be entitled to receive $16.50 per share, after giving
effect to any required tax withholdings, only upon surrender to Mikasa or the
paying agent of the relevant share certificates. The paying agent will pay the
$16.50 per share attributable to any certificates representing shares
outstanding before the effective time which have been lost or destroyed, but
only after the person claiming the certificate to be lost or stolen provides an
affidavit of that fact and, if required by Mikasa, posts an appropriate
indemnification bond. No interest will accrue or will be paid on the cash
payable upon the surrender of any certificate. Neither Merger Sub nor the paying
agent will make payments to any person who is not the registered holder of the
certificate surrendered unless the certificate is properly endorsed and
otherwise in proper form for transfer. Further, the person requesting such
payment will be required to pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of the certificate
surrendered or establish to the satisfaction of Mikasa or the paying agent that
such tax has been paid or is not payable.
Transfer of Shares
At and after the effective time, our transfer agent will not record on
the stock transfer books transfers of any shares of Mikasa common stock that
were outstanding immediately prior to the effective time of the merger.
Officers, Directors and Governing Documents
From and after the effective time of the merger, the directors of
Merger Sub will become the directors of Mikasa, and the current officers of
Mikasa will remain the officers of Mikasa, in each case until their successors
are duly elected or appointed and qualified. From and after the effective time
of the merger, the certificate of incorporation of Merger Sub in effect
immediately prior to the effective time will become the certificate of
incorporation of Mikasa (except that, as of the effective time, the name of the
corporation given in the certificate will be "Mikasa, Inc."), and the by-laws of
Mikasa in effect immediately prior to the effective time will remain the by-laws
of Mikasa, each until amended afterwards.
Representations and Warranties
The merger agreement contains various representations and warranties
made by Mikasa to Merger Sub, subject to identified exceptions, including
representations and warranties relating to:
o the due incorporation, valid existence, good standing, and
necessary corporate powers of Mikasa and its subsidiaries;
o the absence of any equity interest of Mikasa in any corporation
or other entity other than its subsidiaries;
o the authorization, execution, delivery and enforceability of the
merger agreement;
o the absence of any conflicts between the merger agreement and
Mikasa's certificate of incorporation or by-laws, and any
applicable laws or other material contracts or documents;
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o intellectual property rights held by Mikasa and its subsidiaries;
o material permits held by Mikasa and its subsidiaries;
o the absence of consents, approvals, orders or authorizations of
governmental authorities, except those specified in the merger
agreement, in order for Mikasa to complete the merger;
o the absence of material liabilities or obligations, except for
those disclosed in the merger agreement;
o the capitalization of Mikasa;
o the adequacy and accuracy of filings made by Mikasa with the
Securities and Exchange Commission;
o the accuracy of information concerning Mikasa in this proxy
statement;
o the absence of material changes to Mikasa's business and
operations since January 1, 2000, except for those disclosed in
the merger agreement;
o the absence of any material action, claim, investigation or
proceeding actually pending or threatened against Mikasa or its
subsidiaries, except those disclosed in the merger agreement;
o the approval of the merger by Mikasa's Board of Directors;
o material benefit plans, programs and agreements and matters
relating to the Employee Retirement Income Security Act of 1974,
as amended, and the Internal Revenue Code of 1986, as amended;
o the compliance of Mikasa and its subsidiaries with material laws
relating to their business or operations;
o the compliance of Mikasa and its subsidiaries with laws relating
to the environment;
o the compliance of Mikasa and its subsidiaries with all material
tax laws and obligations;
o material insurance policies of Mikasa and its subsidiaries;
o material contracts of Mikasa and its subsidiaries;
o property owned or leased by Mikasa or its subsidiaries; and
o the receipt by the special committee of the Board of Directors of
an opinion from a financial advisor that the $16.50 per share to
be received by Mikasa stockholders in the merger is fair from a
financial point of view.
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The merger agreement contains various representations and warranties
made by Merger Sub and J.G. Durand Industries, jointly and severally, to Mikasa,
subject to identified exceptions, including representations and warranties
relating to:
o the due incorporation, valid existence, good standing and
necessary corporate powers of Merger Sub and J.G. Durand
Industries;
o the authorization, execution, delivery and enforceability of the
merger agreement;
o the capitalization of Merger Sub;
o the absence of any material action, claim, suit or proceeding
actually pending or threatened against Merger Sub or J.G. Durand
Industries;
o the absence of consents, approvals, orders or authorizations of
governmental authorities, except those specified in the merger
agreement, required to complete the merger;
o the absence of any conflict between the merger agreement and
Merger Sub's or J.G. Durand Industries' certificate of
incorporation or by-laws, any applicable law or other contracts
or documents;
o the accuracy of information supplied for inclusion in this proxy
statement;
o the availability of sufficient funds to complete the merger and
related transactions; and
o the absence of arrangements with the continuing stockholders
other than those expressly referred to in the merger agreement.
The merger agreement also contains representations and warranties made
by the continuing stockholders to Mikasa as to their ownership of shares of
Mikasa common stock and as to the absence of any conflict which would be caused
by their execution of the merger agreement or the completion of the merger.
None of the representations and warranties in the merger agreement will
survive after the completion of the merger.
Conduct of Business Pending the Merger
In the merger agreement, we agreed, before completion of the merger, to
conduct business only in the ordinary course of business and in a manner
consistent in all material respects with past practice and to use commercially
reasonable efforts to maintain our business organization assets, insurance,
intellectual property rights and our relationships with key employees,
customers, suppliers and others with whom we have significant business
relationships. In addition, we agreed, subject to certain exceptions, not to
take, and to prevent our subsidiaries from taking, any of the following actions
without the prior consent of Merger Sub (not to be unreasonably withheld or
delayed):
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o amend our certificate of incorporation or by-laws;
o issue or authorize shares of capital stock of Mikasa or our
subsidiaries, or any instrument that gives rights to acquire such
capital stock except through our established stock option plans;
o sell or otherwise dispose of our assets except in the ordinary
course of business consistent with past practice and except for
asset sales of less than $500,000;
o split, reclassify, combine, redeem or otherwise purchase our
shares or make dividends, distributions or repurchases of shares,
except we may pay dividends in an amount and manner consistent
with past practice;
o acquire or agree to acquire any corporation or other business
organization;
o incur or agree to incur any debt, or become responsible for the
obligations of any person, or make any loans, advances or capital
contributions to any person, in excess of $500,000;
o authorize capital expenditures which are, in the aggregate, in
excess of $5,000,000;
o acquire, agree to acquire, sell or dispose of any real property
or other material asset outside the ordinary course of business
consistent with past practice;
o enter into, amend or renew any material employment or similar
agreement with any director or executive officer or grant any
salary increase to any executive officer, except in the ordinary
course of business;
o establish, adopt, amend or increase benefits materially under any
pension, retirement, stock option, stock purchase, savings,
profit sharing, deferred compensation or consulting plan or
arrangement, except as required by law, or terminate Mikasa's
defined benefit pension plan or take any action in respect
thereof;
o enter into any labor or collective bargaining agreement, except
as required by law;
o discharge or satisfy any material lien, or pay or satisfy any
material liability or obligation except in the ordinary course of
business consistent with past practice, or initiate any
proceeding under bankruptcy or similar law;
o take any action, or omit to take an action, that would result in
a violation of any applicable law or that would cause a breach of
any agreement, contract or commitment, in each case, to the
extent such violation or breach would have a material adverse
effect on Mikasa;
o make changes in accounting methods except as required by GAAP or
tax elections except as required by tax regulations;
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o enter into any material agreement with any director, executive
officer, employee or stockholder of Mikasa or its subsidiaries,
except in the ordinary course of business;
o enter into any agreement that is reasonably likely to be material
to the business of Mikasa or its subsidiaries, except in the
ordinary course of business consistent with past practice;
o license, assign or otherwise transfer to any person, or fail to
maintain, enforce or protect, any material intellectual property
rights owned or used by Mikasa and its subsidiaries except in the
ordinary course of business; and
o settle or enter into any agreement related to the settlement of
any action, claim, investigation or litigation arising from or
related to the merger.
No Solicitation
The continuing stockholders and Mikasa have agreed that they will not,
and Mikasa has agreed that it will cause its subsidiaries not to, and that it
will not authorize its officers, directors, employees, representatives or agents
to, directly or indirectly, encourage, solicit or initiate any inquiries or
discussions or the making of any proposal with respect to any merger,
consolidation or other business combination with respect to Mikasa, or the sale
of a material portion of the assets or stock of Mikasa or its subsidiaries,
taken as a whole, or engage in any discussions with any person (other than with
J.G. Durand Industries and Merger Sub) with respect to any such "competing
transaction."
However, if the special committee or our Board of Directors receives an
unsolicited proposal for or request to discuss any competing transaction from a
person that was not solicited by Mikasa after the date of the merger agreement
and that did not result from a breach of the provisions described above, Mikasa
and the persons mentioned above may supply to and receive non-public information
from that person as, and to the extent that, the special committee or our Board
of Directors determines in its good faith judgment after consultation with
outside legal counsel that such action is required in order to comply with its
fiduciary obligations. Supplying non-public information under these
circumstances must be subject to a customary confidentiality agreement. After
consultation with outside legal counsel, the special committee or the Board of
Directors also may conduct discussions and negotiations or take any other action
to review or respond to a competing transaction as the special committee or the
Board of Directors believes is necessary in light of their fiduciary
obligations.
We have agreed to notify Merger Sub promptly of any such proposals or
inquiries, including the identities of the parties making such proposals or
inquiries, and the material terms and conditions thereof, and thereafter to keep
Merger Sub informed as to the status of any such proposals or inquiries.
In addition, neither the special committee nor our Board of Directors
may withdraw or modify, or propose to withdraw or modify, its approval, adoption
or recommendation of the merger agreement or the merger, or approve or
recommend, or propose to approve or recommend, or cause or allow Mikasa to enter
into any agreement with respect to, a competing
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transaction, or submit any competing transaction to the stockholders of Mikasa
for purposes of voting upon it, unless the special committee or our Board of
Directors determines in good faith by a majority vote after consultation with
outside legal counsel that its fiduciary obligations require that action. Before
taking any such action, Mikasa must terminate the merger agreement and pay a
termination fee as described below under "--Termination Fee."
In addition, the special committee or our Board of Directors may
disclose the fact that it has received a proposal for a competing transaction
and the terms of such proposal if the special committee or our Board of
Directors, as applicable, determines, after consultation with outside legal
counsel, that it is required to make that disclosure in order to comply with its
fiduciary duties under applicable law or with federal securities laws.
Access to Information
We have agreed to allow Merger Sub, its officers, directors, employees,
counsel, accountants, consultants, legal counsel and other representatives, at
reasonable times upon prior notice, reasonable access to our officers,
employees, agents, properties, offices and other facilities and to all our books
and records. We further agreed to furnish reasonably promptly to Merger Sub all
documents and information regarding our businesses, assets, liabilities and
personnel as Merger Sub may from time to time reasonably request.
Regulatory and Other Consents and Approvals
Subject to the terms and conditions of the merger agreement, Mikasa and
Merger Sub have agreed to use commercially reasonable efforts to obtain promptly
from any government authorities all regulatory and other consents, licenses,
permits, approvals, waivers, authorizations or orders necessary for the
consummation of this merger and to make promptly all necessary filings and any
other required submissions under the Exchange Act, any other applicable federal
or state securities laws, the HSR Act, any related government request under the
HSR Act and any other applicable law. Mikasa and Merger Sub have agreed to
cooperate with each other in connection with obtaining government approvals and
making those filings.
Mikasa Stockholder Approval
We have agreed to use our reasonable best efforts to solicit proxies in
favor of the approval and adoption of the merger and the merger agreement and to
take all other actions reasonably necessary to obtain the approval and adoption
of the merger agreement by the stockholders of Mikasa, except to the extent any
such action would conflict with the fiduciary duties of the Board of Directors
or the special committee.
Conditions to the Merger
The obligations of Mikasa, Merger Sub, and the continuing stockholders
to complete the merger are subject to the satisfaction or, if legal, waiver of
each of the following conditions:
o stockholders who hold a majority of our outstanding common stock
must approve and adopt the merger agreement and the transactions
contemplated by the merger agreement;
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o all necessary and material governmental and regulatory
clearances, consents or approvals must be received;
o the applicable waiting period under HSR Act must have expired or
been terminated; and
o no provision of applicable law and no judgment, order, decree or
injunction prohibiting or making illegal the completion of the
merger or limiting or restricting the operation or business of
Merger Sub or Mikasa after the merger shall have been enacted,
entered, issued, promulgated or enforced.
The obligations of Mikasa and the continuing stockholders to complete
the merger are subject to the satisfaction or waiver of each of the following
conditions:
o the representations and warranties made by J.G. Durand Industries
and Merger Sub in the merger agreement must be true and correct
in all material respects at the closing date of the merger
(provided that if a representation or warranty was made regarding
a specific date, it need only be true as of that date);
o J.G. Durand Industries and Merger Sub must have performed in all
material respects all of their obligations under the merger
agreement required to be performed at or before the effective
time of the merger;
o Mikasa must have received a certificate signed by an executive
officer of Merger Sub and an executive officer of J.G. Durand
Industries as to compliance with the conditions specified in the
two immediately preceding paragraphs; and
o J.G. Durand Industries must have made a $244,936,705 cash capital
contribution to Merger Sub for the purpose of funding the payment
of the merger consideration.
The obligations of J.G. Durand Industries and Merger Sub to complete
the merger are subject to the satisfaction or waiver of each of the following
conditions:
o the representations and warranties made by Mikasa in the merger
agreement must, in the aggregate, be true and correct in all
respects material to Mikasa and its subsidiaries taken as a whole
at the closing date of the merger (provided that if a
representation or warranty was made regarding a specific date, it
need only be true as of that date);
o Mikasa must have performed in all material respects its
obligations contained in the merger agreement required to be
performed at or before the effective time of the merger;
o Merger Sub must have received a certificate signed by an
executive officer of Mikasa as to its compliance with the
conditions specified in the two immediately preceding paragraphs;
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o Mikasa must, except where failure to do so would not result in a
material adverse effect on Mikasa, have received from third
parties all consents, authorizations, approvals and waivers that
are necessary for the consummation of the merger and are
necessary to enable Mikasa to conduct its business after the
merger on the same basis as before the merger and Merger Sub must
be reasonably satisfied with their form;
o holders of no more than 7% of the shares of Mikasa common stock
have exercised appraisal rights under Delaware law;
o the exchange of 2,672,800 shares of Mikasa common stock for
Series A Preferred Stock by the continuing stockholders must have
been completed; and
o since the date of the merger agreement, there must not have
occurred an event which constituted, and continues to constitute,
a material adverse effect on Mikasa.
The merger agreement defines a material adverse effect on Mikasa as any
change, effect, event, occurrence, condition or development that is or is
reasonably likely to be materially adverse to the business, assets, liabilities,
properties, results of operations or condition (financial or otherwise) of
Mikasa and its subsidiaries, taken as a whole, or the ability of Mikasa to
timely perform its obligations under the merger agreement, in each case other
than effects due to general economic, market or political conditions, matters
generally affecting the industries in which Mikasa operates, or the announcement
or expectation of the merger agreement or the transactions it contemplates. In
this proxy statement, references to "a material adverse effect on Mikasa" are
intended to refer to this definition.
The obligations of the continuing stockholders to exchange their shares
of Mikasa common stock for Series A Preferred Stock as contemplated by the
merger agreement are subject to the waiver or satisfaction of the following
additional conditions
o Mikasa must have validly created the Series A Preferred Stock;
o J.G. Durand Industries must have made the cash contribution to
Merger Sub specified above;
o J.G. Durand Industries and Merger Sub must have performed in all
material respects all of their obligations under the merger
agreement required to be performed at or before the effective
time of the merger; and
o the representations and warranties of J.G. Durand Industries and
Merger Sub must be true and correct in all material respects at
the closing date of the merger (provided that if a representation
or warranty was made regarding a specific date, it need only be
true as of that date).
Indemnification and Insurance
The merger agreement provides that Mikasa will, for six years after the
effective time of the merger, continue to honor all indemnification obligations
in force as of the date of the merger
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agreement and will not amend, repeal or otherwise modify those obligations in a
way that would adversely affect the rights of the individuals who are covered by
the indemnification obligations. In addition, following the consummation of the
merger, Mikasa is required to indemnify, defend, and hold harmless all current
and former officers and directors of Mikasa and its subsidiaries from all
liabilities, costs, expenses and claims arising out of actions taken before the
effective time in performance of their duties as directors or officers of Mikasa
or any subsidiaries in connection with the merger. In addition, Mikasa is
required to maintain its directors' and officers' liability insurance policies
in effect for six years after the effective time of the merger or until the
applicable statute of limitation expires, except that Mikasa will not be
required to pay insurance premiums in excess of 200% of the premiums it
currently pays. J.G. Durand Industries has agreed to cause Merger Sub and the
surviving corporation to comply with the obligations described in this
paragraph.
Termination of the Merger Agreement
Termination By Mikasa or Merger Sub. At any time before the effective
time of the merger, Mikasa and Merger Sub may terminate the merger agreement and
abandon the merger by mutual written consent, regardless of whether the
stockholders of Mikasa have adopted and approved the merger and the merger
agreement. Either party may also terminate the merger agreement (provided that
the terminating party's failure to fulfill any material obligation under the
merger agreement did not cause the event or circumstance giving rise to the
right of termination) if:
o the effective time has not occurred on or before March 31, 2001;
o the waiting period applicable to the consummation of the merger
under the HSR Act has not expired or been terminated before March
31, 2001;
o any court or other governmental entity has restrained, prohibited
or enjoined the merger in a final and nonappealable order, decree
or decision or the non-terminating party is not using its
reasonable best efforts to remove a non-final or appealable
order, decree or decision; or
o Mikasa's stockholders fail to approve and adopt the merger
agreement and the transactions contemplated by the merger
agreement at the stockholders' meeting. However, if such failure
results from a breach by Mikasa and the breach is curable by
Mikasa, Merger Sub may not terminate the merger agreement under
this provision unless the stockholders do not approve and adopt
the merger agreement within 30 days after Merger Sub gives notice
of the breach to Mikasa. Merger Sub also may not terminate the
merger agreement under this provision if it fails to use
commercially reasonable efforts to enforce its rights to vote, or
cause the continuing stockholders to vote, in favor of the
merger.
Termination by Merger Sub. Merger Sub may terminate the merger
agreement before the effective time of the merger if:
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o The Board of Directors or any committee of the Board of Directors
withdraws or adversely modifies or refrains from giving its
approval or recommendation of the merger agreement or the merger
or recommends a competing transaction, as described in "--No
Solicitation";
o there exists a material breach of one or more of the
representations, warranties or agreements set forth in the merger
agreement, such that either of the conditions to the obligations
of Merger Sub and Parent set forth above relating to the
representations, warranties and agreements of Mikasa or to the
existence of a material adverse effect on Mikasa, are not met,
except that, if the breach is curable by either Mikasa or the
continuing stockholders and it or they are using their best
efforts to cure it, Merger Sub cannot terminate the agreement
unless the breach continues for 30 days after Merger Sub has
given written notice of the breach to Mikasa; or
o any change, effect, event, occurrence, condition or development
which constitutes a material adverse effect on Mikasa occurs,
except that, if the material adverse effect is curable by either
Mikasa or the continuing stockholders and it or they are using
their best efforts to cure it, Merger Sub cannot terminate the
agreement unless the material adverse effect continues for 30
days after Merger Sub has given written notice of the material
adverse effect to Mikasa.
Termination by Mikasa. Mikasa may terminate the merger agreement before
the effective time of the merger if:
o in connection with the actions involving withdrawal or adverse
modification of its recommendations or the advancement of
competing transactions as described above under "--No
Solicitation," the Board of Directors or any committee of the
Board of Directors determines, following a majority vote and
consultation with outside legal counsel, that its fiduciary
obligations require the taking of such actions; or
o there exists a material breach of one or more of the
representations, warranties or agreements set forth in the merger
agreement, such that the condition to the obligations of Mikasa
set forth above, relating to the representations, warranties and
agreements of Merger Sub and J.G. Durand Industries, is not met,
except that, if the breach is curable by Merger Sub and it is
using its best efforts to cure it, Mikasa cannot terminate the
agreement unless the breach continues for 30 days after Mikasa
has given written notice of the breach to Merger Sub.
Amendment and Waiver
Any provision of the merger agreement may be amended before the
effective time of the merger. After the adoption of the merger agreement by our
stockholders, however, no amendment may be made which would change the amount or
the type of the merger consideration to be received by the stockholders, change
any term or condition of the merger agreement if that change would materially
and adversely affect Mikasa or its stockholders, or change any term of the
certificate of incorporation of Mikasa without a subsequent stockholder vote.
Further, at any time before the effective time, any party to this agreement may
extend the
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time for the performance of any obligation of any other party, waive
any inaccuracy in the representations and warranties of any other party in the
merger agreement or in any other document and waive compliance with any
agreement or condition to its obligations, except for the conditions that the
agreement be approved and adopted by the holders of the majority of outstanding
shares of Mikasa and that the applicable waiting period under the HSR Act be
expired or have been terminated.
Termination Fee
Under certain circumstances, Mikasa must pay a termination fee to
Merger Sub upon termination of the merger agreement.
Mikasa must pay Merger Sub a fee of $1,445,000 if the merger agreement
is terminated:
o by Merger Sub or by Mikasa under the provision giving rise to a
right of termination as a result of a failure of the stockholders
to approve and adopt the merger and the merger agreement; or
o by Merger Sub under the provision giving rise to a right of
termination as a result of a material breach by Mikasa of a
representation, warranty or agreement or the occurrence of a
material adverse effect on Mikasa, so long as such right to
termination resulted from an intentional breach of the merger
agreement by Mikasa or any continuing stockholder.
Mikasa must pay Merger Sub a fee of $7,225,000 if the merger agreement
is terminated:
o by Merger Sub under the provision giving rise to a right of
termination as a result of the Board of Directors of Mikasa or
any committee of the Board of Directors withdrawing, adversely
modifying or refraining from giving its approval or
recommendation of the merger agreement or the merger, or
recommending a competing transaction; or
o by Mikasa, if the Board of Directors or any of its committees, as
required by its fiduciary obligations, terminates the merger
agreement in connection with withdrawing or modifying its
approval, adoption or recommendation of the merger agreement or
merger, recommending or causing Mikasa to enter into an agreement
with respect to a competing transaction or submitting a competing
transaction to Mikasa's stockholders for a vote.
No such fees need be paid, however, in the event the termination of the
merger agreement resulted from the material failure of either Merger Sub or J.G.
Durand Industries to fulfill any its obligations under the merger agreement, or
following the breach by either Merger Sub or J.G. Durand Industries of any
representation, warranty or covenant in the merger agreement.
In the event that it is judicially determined that termination of the
merger agreement was caused by an intentional breach of the merger agreement by
one party, in addition to any remedies granted, the party found to have
intentionally breached the merger agreement must
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indemnify and hold harmless the other parties for their respective reasonable
costs, fees and expenses.
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FEES AND EXPENSES
Whether or not the merger is completed and except as otherwise provided
in the merger agreement, all fees and expenses incurred in connection with the
merger will be paid by the party incurring those fees and expenses, except that
Mikasa will bear all printing, filing and regulatory expenses and fees (other
than with respect to HSR Filings) related to the proxy statement, and Mikasa and
Merger Sub will share equally the expenses of all the parties related to filings
made under the HSR Act.
In addition to any termination fee that may become payable by Mikasa
under the merger agreement, Mikasa's estimated fees and expenses (rounded to the
nearest thousand) to be incurred in connection with the merger and related
transactions are as follows:
Filing fees (Securities and Exchange Commission and HSR Act) ... $o
Legal, accounting and financial advisor's fees and
special committee's legal and financial
advisors' fees and expenses ............................... $o
Printing and solicitation fees and expenses .................... $o
Miscellaneous .................................................. ______
Total........................................................... $
======
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PRICE RANGE OF COMMON STOCK
Mikasa common stock is currently traded on the New York Stock Exchange
under the symbol "MKS." Public trading of Mikasa common stock commenced on May
26, 1994. The following table sets forth the high and low closing sale prices
for shares of Mikasa common stock, as reported on the New York Stock Exchange
for the periods listed.
High Low
---- ---
Fiscal Year 1998
First quarter........................... $14 7/8 $13 1/4
Second quarter.......................... 13 13/16 12 13/16
Third quarter........................... 15 11
Fourth quarter.......................... 12 3/4 10 5/16
Fiscal Year 1999
First quarter........................... 12 7/16 7 3/8
Second quarter.......................... 11 9/16 7 9/16
Third quarter........................... 13 9/16 11 9/16
Fourth quarter.......................... 12 1/16 9 3/4
Fiscal Year 2000
First quarter........................... 10 1/4 7 7/16
Second quarter.......................... 11 8 1/16
Third quarter........................... 16 9/16 9 7/16
Fourth quarter to [o], 2000............. [o] [o]
On September 8, 2000, the last trading day before the public
announcement of the merger agreement, the high, low and closing sales prices for
Mikasa common stock as reported on the New York Stock Exchange were $9.75 per
share. On o, 2000, the last trading day before the date of this proxy statement,
the closing sale price, as reported on the New York Stock Exchange, was $o per
share. You are urged to obtain current market quotations for Mikasa common stock
before making any decision with respect to the merger.
DIVIDENDS
During the fiscal year ended December 31, 1998 Mikasa declared four
regular dividends of $0.05 per share of Mikasa common stock. During the fiscal
year ended December 31, 1999 Mikasa declared four regular dividends of $0.05 per
share of Mikasa common stock. As of September 8, 2000, the last trading day
before the public announcement of the merger agreement, Mikasa had declared
three regular dividends of $0.05 per share of Mikasa common stock since January
1, 2000. Following the transaction, it is not expected that Mikasa will pay any
dividends.
COMMON STOCK PURCHASE INFORMATION
None of Mikasa, its directors or executive officers, Merger Sub, or
J.G. Durand Industries and its affiliates has engaged in any transaction with
respect to Mikasa common stock within 60 days of the date of this proxy
statement.
The following table sets forth purchases of Mikasa common stock by
Mikasa during the past two years, including (per quarter) the number of shares
purchased and the high, low and average price paid.
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<TABLE>
<S> <C> <C> <C> <C>
Mikasa Purchases of Common Stock
Price per share
Number of Shares Low High Average
Fiscal Year 1998
Third quarter............................61,300.. $11.000 $12.750 $11.96
Fourth quarter..........................200,600 10.250 11.250 $10.92
Fiscal Year 1999
First quarter...........................261,400 7.875 11.375 $10.33
Second quarter..........................118,100 7.688 11.342 $10.94
Third quarter...........................108,700 11.438 13.250 $12.48
Fourth quarter..........................303,500 10.438 11.438 $11.10
Fiscal Year 2000
First quarter...........................153,500 8.563 10.125 $9.84
Second quarter...........................40,200 8.250 9.438 $9.36
Third quarter.................................0 -- -- --
Fourth quarter to o, 2000.....................0 -- -- --
</TABLE>
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DIRECTORS AND EXECUTIVE OFFICERS OF MIKASA
Raymond B. Dingman was named Chief Executive Officer of Mikasa in
August 1996. He has also served as President, Chief Operating Officer and a
Director of Mikasa since December 1993, and was Chief Financial Officer of
Mikasa from December 1993 until May 1995. From 1990 to December 1993, he served
as Executive Vice President and Controller of Mikasa.
Anthony F. Santarelli was named Executive Vice President--Operations,
in 1990. He has also served as a Director of Mikasa since December 1993.
Brenda W. Flores has been Chief Financial Officer of Mikasa since May
1995 and Vice President and Chief Accounting Officer since December 1993. She
was Controller from December 1993 to May 1995 and was Director of Accounting
from April 1986 to December 1993.
Alfred J. Blake was appointed Chairman of the Board of Mikasa in
December 1993. From 1976 until August 1996, he served as Chief Executive Officer
of Mikasa. He has served as a Director since 1976 and was also Mikasa's
President from 1976 until December 1993.
Robert H. Hotz was elected a Director of Mikasa in August 1994. Since
1991, Mr. Hotz has been a Managing Director at UBS Warburg LLC. UBS Warburg LLC
is an investment banking business, and its address is 299 Park Avenue, New York,
NY 10171. From 1968 to 1991, Mr. Holtz was employed by Smith Barney Inc. where
he last served as a Senior Executive Vice President. Mr. Hotz is also a Director
of Universal Health Services, Inc. and Warburg Dillon Read LLC.
Joseph S. Muto has served as a Director of Mikasa since 1985. From
September 1994 until July 1999, he served as Secretary and General Counsel of
Mikasa. Mr. Muto served as a Director and as President of MPEG Super Site Inc.
from October 1, 1999 to June 1, 2000. MPEG Super Site Inc. is a web-based music
entertainment business, and its address is 22865 Lake Forest Drive, Lake Forest,
CA 92630. Prior to joining Mikasa, Mr. Muto was a partner in the law firm of
Kelley Drye & Warren LLP in Los Angeles, California.
George T. Aratani has served as Chairman Emeritus of the Board of
Directors of Mikasa since December 1993. Prior to that time, he was Chairman of
the Board. Mr. Aratani became Chief Executive Officer and a Director of Mikasa
in 1939 and served as Chief Executive Officer until 1976.
Norman R. Higo has served as a Director of Mikasa since 1985. He
retired from Mikasa as an officer in November 1995 and served as a consultant to
Mikasa through February 1997. Before his retirement, Mr. Higo had served as
Executive Vice President and Treasurer since 1985, as President and Chief
Operating Officer -- International Operations since December 1993 and as
Secretary of Mikasa from 1985 until September 1994.
Raymond E. Inouye has served as a Director since July 1999. From 1989
to 1997, he was a Managing Director of Marsh & McLennan, Inc. Marsh & McLennan,
Inc. is an insurance brokerage, and its business address is 777 S. Figueroa
Street, Los Angeles, CA 90017. Mr. Inouye is also a Director of Dai Ichi Kangyo
Bank.
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PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information regarding beneficial
ownership of the shares of Mikasa common stock as of o, 2000 by each of Mikasa's
executive officers and directors, Mikasa's executive officers and directors as a
group, and all other stockholders known by Mikasa to beneficially own more than
five percent of Mikasa common stock.
Percent
Number of Shares Beneficially
of Common Stock(6) Owned
------------------ -----
Name
Alfred J. Blake(1) ................ [4,128,853] [24.0]%
George T. Aratani(1)(2)............ [2,488,469] [14.6]
Anthony F. Santarelli(1) .......... [1,752,038] [10.2]
Raymond B. Dingman(1)(4) .......... [1,716,537] [9.9]
Norman R. Higo(1)(3) .............. [1,544,274] [9.1]
Tadao Yamada(1).................... [1,272,463] [7.5]
Brenda W. Flores................... [107,146] *
Robert H. Hotz..................... [27,250] *
Joseph S. Muto..................... [3,065] *
Raymond E. Inouye(5)............... [2,100] *
All directors and executive
officers as a group (9 persons).... [11,769,732] [66.0]%
--------------------------------------------------------------------------------
* Less than one percent
(1) The address for Messrs. Blake, Aratani, Higo, Dingman, Santarelli
and Yamada is One Mikasa Drive, Secaucus, New Jersey 07094.
(2) Includes shares held in a trust as to which Mr. Aratani and his
wife are trustees.
(3) Includes shares held in a trust as to which Mr. Higo and his wife
are trustees.
(4) Includes shares held in a trust as to which Mr. Dingman is the
trustee and shares held in another trust as to which Mr. Dingman
and his wife are trustees.
(5) Includes shares held in a trust as to which Mr. Inouye is the
trustee and shares owned by Mr. Inouye's wife.
(6) Includes options exercisable within 60 days as follows: A. J.
Blake [172,500] shares; A. F. Santarelli [165,000] shares; R. B.
Dingman [422,500] shares; B. W. Flores [52,500] shares; R. H.
Hotz [11,250] shares; and all directors and executive officers as
a group [823,750] shares.
As of o, 2000, the directors and officers of Mikasa beneficially owned
[66.0]% of the outstanding shares of Mikasa common stock as a group. Following
the merger, J. G. Durand will own approximately 84.7%, and the continuing
stockholders will own approximately 15.3%, of Mikasa. Messrs. Yamada, Inouye,
Hotz, Muto and Higo and Ms. Flores will cease to own any interest in Mikasa
following the merger.
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INFORMATION ABOUT J.G. DURAND INDUSTRIES AND MERGER SUB
J.G. Durand Industries, S.A., which we sometimes refer to as J.G.
Durand Industries, is a French societe anonyme. The principal business of J.G.
Durand Industries is the manufacture of crystalware.
J.G.Durand Industries' corporate headquarters are located at 38 rue
Adrien Danvers, Arques, France and its telephone number is 011-33-3-21-93-00-00.
Mountain Acquisition Corp., which we sometimes refer to as Merger Sub,
was formed solely for purposes of completing the merger. Merger Sub was
incorporated in Delaware on September 7, 2000 and is wholly owned by J.G. Durand
Industries. Merger Sub has not carried on any activities to date other than
those activities incident to its formation and as contemplated by the merger
agreement.
Mountain Acquisition Corp.'s headquarters are located at 38 rue Adrien
Danvers, Arques, France, 62510 and its telephone number is 011-33-3-21-93-00-00.
Members of the Supervisory Board of J.G. Durand Industries
The following persons are members of the Supervisory Council of J.G.
Durand Industries: Odette Durand, Hubert Ibled, Timothee Durand, and Jean-Michel
Delloye.
Odette Durand has been the President of the Supervisory Council of J.G.
Durand Industries since December 12, 1994. Since December 23, 1981, she has been
a member of the Supervisory Council of Societe des Verres de Securite, located
in France. Since March 31, 1998, she has been the President of the Supervisory
Council of Verrerie Cristallerie d'Arques, located in France. Her business
address is ARC International, 41 avenue du General de Gaulle, Arques, France
62510. Her business telephone number is 011-33-3-21-95-46-47.
Hubert Ibled has been the Vice-President of the Supervisory Council of
J.G. Durand Industries since December 12, 1994. Since June 1, 1994, he has been
the President of the Supervisory Council of Societe des Verres de Securite,
located in France. Mr. Ibled was the Administrative and Financial Director of
ARC International but retired in 1995. His business address is ARC
International, 41 avenue du General de Gaulle, Arques, France 62510. His
business telephone number is 011-33-3-21-95-46-47.
Timothee Durand has been a member of the Supervisory Council of J.G.
Durand Industries since December 12, 1994. Since July 2000 he has been a Budget
Assistant at Aventis Pasteur, located in France. His business address is Aventis
Pasteur, 64 Avenue Leclerc, BP 7046, Lyon, France, 69348. His business telephone
number is 011-33-4-37-37-73-46.
Jean-Michel Delloye has been a member of the Supervisory Council of
J.G. Durand Industries since June 5, 1999. His business address is 10 rue de
l'hospice, France, 76260. His business telephone number is 011-33-2-35-86-59-49.
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Members of the Directorate of J.G. Durand Industries
The following persons are members of the Directorate of J.G. Durand
Industries: Philippe Durand, Annick Ibled and Francine Delloye.
Philippe Durand has been a member of the Directorate of J.G. Durand
Industries since December 12, 1994 and served as President of the Directorate of
ARC International since March 31, 1998. Since December 10, 1982 he has been a
co-manager of Societe Machines et Materiel de Verrerie, located in France. Since
December 10, 1982, he has been a co-manager of Societe Audomaroise de Publicite,
located in France. Since June 1, 1995, he has been a co-manager of Societe
Cartons et Plastique, located in France. Since November 3, 1999, he has been the
President of the Board of Directors of Vicrila, located in Spain. Since November
3, 1999 he has been the President of the Directorate of Societe des Verres de
Securite, located in France. Since September 18, 1999, he has been the President
of the Board of Directors of Arc Glassware (Nanjing), located in China. Since
February 23, 1998, he has been the Director of Arc Sunrise Glassware Ltd.,
located in India. His business address is Arc International, 41 Avenue du
General de Gaulle, Arques, France, 62510. His business telephone number is
011-33-3-21-95-46-47.
Annick Ibled has been the President of the Directorate of J.G. Durand
Industries since December 12, 1994. Since December 23, 1981, she has been a
member of the Directorate of Societe des Verres de Securite, located in France.
Since March 31, 1998, she has served as a member of the Supervisory Council of
ARC International. Since May 31, 1997, she has been a co-manager of Societe
Machines et Materiel de Verrerie, located in France. Since June 1, 1995, she has
been a co-manager of Societe Cartons et Platiques, located in France. Since
December 10, 1982, she has been a co-manager of Societe Audomaroise de
Publicite, located in France. Her business address is Arc International, 41
Avenue du General de Gaulle, Arques, France, 62510. Her business telephone
number is 011-33-3-21-95-46-47.
Francine Delloye has been a member of the Directorate of J.G. Durand
Industries since December 12, 1994. Since March 31, 1998, she has served as a
member of the Supervisory Council of ARC International. Since December 23, 1981,
she has been a member of the directorate of Societe des Verres de Securite,
located in France. Since December 10, 1982, she has been a co-manager of Societe
Machines et Materiel de Verrerie, located in France. Since June 1, 1995, she has
been a co-manager of Societe Cartons et Plastiques, located in France. Since
December 10, 1982, she has been a co-manager of Societe Audomaroise de
Publicite, located in France. Since September 18, 1999, she has been a Director
of Arc Glassware (Nanjing), located in China. Her business address is Arc
International, 41 Avenue du General de Gaulle, Arques, France, 62510. Her
business telephone number is 011-33-3-21-95-46-47.
Directors and Executive Officers of Merger Sub
Matt Petrillo has been the sole director of Merger Sub since September
7, 2000. He has been employed as a Vice President of Finance and Chief Financial
Officer of ARC International North America since September 15, 1980. His
business address is ARC International North America, Wade Boulevard, Millville,
New Jersey, 08332. His business telephone number is (856) 825-5620.
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OTHER MATTERS
The Board of Directors does not presently know of, or intend to
present, any matters for consideration at the special meeting other than matters
described in the notice of special meeting mailed together with this proxy
statement. If other matters are presented, the persons named in the accompanying
proxy to vote on such matters will have discretionary authority to vote in
accordance with their best judgment.
FUTURE STOCKHOLDER PROPOSALS
If the merger is completed there will be no public participation in any
future meetings of stockholders of Mikasa. However, if the merger is not
completed, Mikasa stockholders will continue to be entitled to attend and
participate in Mikasa stockholders' meetings. If the merger is not completed,
you will be informed, by press release or other means determined reasonable by
us, of the date by which stockholder proposals must be received by us for
inclusion in the proxy materials relating to the annual meeting, which proposals
must comply with the rules and regulations of the Securities and Exchange
Commission then in effect.
WHERE YOU CAN FIND MORE INFORMATION
Mikasa files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). In addition, because the merger is a "going private" transaction,
Mikasa has filed a Rule 13e-3 Transaction Statement on Schedule 13E-3 with
respect to the merger. The Schedule 13E-3 and such reports, proxy statements and
other information contain additional information about Mikasa. You may read and
copy any reports, statements or other information filed by Mikasa at the
Commission's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following Regional Offices of the Commission: 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite
1300, New York, New York 10048. Please call the Commission at 1-800-732-0330 for
further information on the operation of the public reference rooms. Mikasa's
filings with the Commission are also available to the public from commercial
document retrieval services and at the website maintained by the Commission
located at:
"http://www.sec.gov."
The Commission allows Mikasa to "incorporate by reference" information
into this proxy statement. This means that Mikasa can disclose important
information by referring to another document filed separately with the
Commission. The information incorporated by reference is considered to be part
of this proxy statement, and later information filed with the Commission will
update and supersede the information in this proxy statement.
Mikasa incorporates by reference into this proxy statement each
document it files under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this proxy statement and before the special meeting. Mikasa
also incorporates by reference into this proxy statement the following documents
filed by it with the Commission under the Exchange Act:
o Mikasa's Annual Report on Form 10-K for the year ended December
31, 1999;
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o Mikasa's Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 2000; and
o Mikasa's Report on Form 8-K filed on September 15, 2000.
Mikasa undertakes to provide without charge to each person to whom a
copy of this proxy statement has been delivered, upon request, a copy of any or
all of the documents incorporated by reference herein, other than the exhibits
to such documents, unless such exhibits are specifically incorporated by
reference into the information that this proxy statement incorporates. Requests
for copies should be directed to Mikasa, Inc., One Mikasa Drive, Secaucus, N.J.
07096, Attention.: Amy Tunis, Secretary.
If you would like to request documents from Mikasa, please do so by o,
2000 in order to receive them before the special meeting.
The proxy statement does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities, or the solicitation of a proxy,
in any jurisdiction to or from any person to whom it is not lawful to make any
offer or solicitation in such jurisdiction. The delivery of this proxy statement
will not create an implication that there has been no change in the affairs of
Mikasa since the date of this proxy statement or that the information herein is
correct as of any later date.
You should rely on the information contained or incorporated by
reference in this proxy statement. Mikasa has not authorized anyone to provide
you with information that is different from what is contained in this proxy
statement. This proxy statement is dated o, 2000. You should not assume that the
information contained in this proxy statement is accurate as of any date other
than such date, and the mailing of this proxy statement will not create any
implication to the contrary.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
MOUNTAIN ACQUISITION CORP.
THE SHAREHOLDERS NAMED HEREIN
MIKASA, INC.
AND
J. G. DURAND INDUSTRIES, S.A.
September 10, 2000
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.........................................................A-2
SECTION 1.01 Issuance of Preference Shares.............................A-2
SECTION 1.02 The Merger ...............................................A-2
SECTION 1.03 Effective Time; Closing...................................A-2
SECTION 1.04 Effect of the Merger......................................A-3
SECTION 1.05 Certificate of Incorporation; By-laws.....................A-3
SECTION 1.06 Directors and Officers....................................A-3
SECTION 1.07 Additional Actions........................................A-3
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES; DEPOSIT.......A-4
SECTION 2.01 Effect on Capital Stock. ................................A-4
SECTION 2.02 Exchange of Certificates..................................A-5
SECTION 2.03 Company Stock Options; Plans..............................A-7
SECTION 2.04 Shares of Dissenting Stockholders.........................A-8
SECTION 2.05 Adjustment of Merger Consideration........................A-9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................A-9
SECTION 3.01 Organization and Qualification; Subsidiaries..............A-9
SECTION 3.02 Certificate of Incorporation and By-laws.................A-10
SECTION 3.03 Capitalization...........................................A-10
SECTION 3.04 Authority Relative to this Agreement.....................A-11
SECTION 3.05 No Conflict; Required Filings and Consents...............A-11
SECTION 3.06 SEC Filings; Financial Statements; Undisclosed
Liabilities..............................................A-12
SECTION 3.07 Absence of Certain Changes or Events.....................A-13
SECTION 3.08 Absence of Litigation....................................A-15
SECTION 3.09 Stockholder Vote Required................................A-15
SECTION 3.10 Opinion of Financial Advisor.............................A-15
SECTION 3.11 Brokers .................................................A-15
SECTION 3.12 Company Action...........................................A-15
SECTION 3.13 Information Supplied.....................................A-16
SECTION 3.14 Environmental and Safety Matters.........................A-16
SECTION 3.15 Real Property............................................A-16
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SECTION 3.16 Personal Property........................................A-17
SECTION 3.17 Contracts ...............................................A-17
SECTION 3.18 Insurance Policies.......................................A-18
SECTION 3.19 Compliance with Laws.....................................A-18
SECTION 3.20 Tax Matters..............................................A-18
SECTION 3.21 Employment Agreements....................................A-20
SECTION 3.22 Change of Control Provisions.............................A-20
SECTION 3.23 Permits .................................................A-20
SECTION 3.24 Employee Benefit Plans...................................A-20
SECTION 3.25 Intellectual Property Rights.............................A-22
SECTION 3.26 Unions ..................................................A-22
SECTION 3.27 Affiliated Transactions..................................A-23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT..........A-23
SECTION 4.01 Organization and Qualification; Subsidiaries.............A-23
SECTION 4.02 Charter Documents and By-laws............................A-24
SECTION 4.03 Authority Relative to this Agreement.....................A-24
SECTION 4.04 No Conflict; Required Filings and Consents...............A-24
SECTION 4.05 Interim Operations of Merger Sub.........................A-25
SECTION 4.06 Information Supplied.....................................A-25
SECTION 4.07 Brokers .................................................A-25
SECTION 4.08 Litigation ..............................................A-25
SECTION 4.09 Capitalization of Merger Sub.............................A-25
SECTION 4.10 Capitalization of Surviving Corporation..................A-26
SECTION 4.11 Financing ...............................................A-26
SECTION 4.12 Share Ownership..........................................A-26
SECTION 4.13 Arrangements with Shareholders...........................A-26
SECTION 4.14 Ownership of VCA.........................................A-26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS................A-26
SECTION 5.01 No Conflict; Required Filings and Consents...............A-26
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SECTION 5.02 Ownership of Shares......................................A-27
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER...........................A-27
SECTION 6.01 Conduct of Business by the Company Pending the Merger....A-27
ARTICLE VII ADDITIONAL AGREEMENTS...........................................A-30
SECTION 7.01 Shareholders' Meeting....................................A-30
SECTION 7.02 Preparation of Proxy Statement...........................A-31
SECTION 7.03 Appropriate Action; Consents; Filings; Further
Assurances...............................................A-32
SECTION 7.04 Access to Information; Confidentiality...................A-33
SECTION 7.05 No Solicitation..........................................A-34
SECTION 7.06 Indemnification and Insurance............................A-36
SECTION 7.07 Notification of Certain Matters..........................A-37
SECTION 7.08 Public Announcements.....................................A-38
SECTION 7.09 Employment Agreements....................................A-38
SECTION 7.10 Certain Assistance.......................................A-39
SECTION 7.11 Exchange Act and NYSE Filings............................A-39
SECTION 7.12 Representations..........................................A-40
SECTION 7.13 Support Agreement........................................A-40
SECTION 7.14 Incentive Compensation Plan; Employee Benefits...........A-40
SECTION 7.15 Application of Section 16(a) of the Exchange Act.........A-41
SECTION 7.16 Performance by Merger Sub................................A-41
ARTICLE VIII CONDITIONS TO THE MERGER.......................................A-41
SECTION 8.01 Conditions to the Obligations of Each Party..............A-41
SECTION 8.02 Conditions to the Obligations of Parent and Merger Sub...A-42
SECTION 8.03 Conditions to the Obligations of the Company and the
Shareholders.............................................A-42
SECTION 8.04 Conditions to the Obligations of the Shareholders........A-43
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER................................A-43
SECTION 9.01 Termination.............................................A-43
SECTION 9.02 Method of Termination; Effect of Termination............A-45
SECTION 9.03 Fees and Expenses.......................................A-45
SECTION 9.04 Amendment ..............................................A-46
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SECTION 9.05 Waiver .................................................A-46
ARTICLE X GENERAL PROVISIONS................................................A-46
SECTION 10.01 Non-Survival of Representations, Warranties and
Agreements..............................................A-46
SECTION 10.02 Notices ................................................A-46
SECTION 10.03 Certain Definitions.....................................A-48
SECTION 10.04 Accounting Terms........................................A-50
SECTION 10.05 Severability............................................A-50
SECTION 10.06 Entire Agreement; Assignment............................A-51
SECTION 10.07 Parties in Interest.....................................A-51
SECTION 10.08 Specific Performance....................................A-51
SECTION 10.09 Governing Law...........................................A-51
SECTION 10.10 Headings ...............................................A-52
SECTION 10.11 Counterparts............................................A-52
SECTION 10.12 Construction............................................A-52
SECTION 10.13 Capacity ...............................................A-52
SECTION 10.14 Company Disclosure Statement............................A-52
A-iv
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Exhibits
Exhibit A The Preference Amendment
Exhibit B Conversion of Common Stock into New Preference Stock
Exhibit C Employment Agreements
Exhibit D Stockholders' Agreement
Exhibit E Incentive Compensation Plan
Exhibit F Support Agreement
A-v
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER dated September 10, 2000 (this
"Agreement") is by and among Mountain Acquisition CORP., a Delaware corporation,
("Merger Sub"), Mikasa, Inc., a Delaware corporation (the "Company"), for
purposes of Articles I, V, VIII and X and Sections 7.03, 7.05, 7.07, 7.08, 7.09,
7.12, 7.13, 9.04 and 9.05 only, Alfred Blake, Raymond Dingman, The Raymond
Burnett Dingman Separate Property Trust, Anthony Santarelli, George Aratani and
the George T. Aratani and Sakaye I. Aratani Revocable Living Trust
(collectively, the "Shareholders"), and J. G. Durand Industries, S.A., a societe
anonyme organized under the laws of France ("Parent");
WHEREAS, Merger Sub is a new corporation formed by Parent for the
purpose of entering into this Agreement and consummating the transactions
contemplated hereby;
WHEREAS, the Board of Directors of the Company has deemed it advisable
in connection with the transactions contemplated by this Agreement and subject
to the terms and conditions hereof that the Company amend its Certificate of
Incorporation or adopt a Certificate of Designation (the "Preference Amendment")
to provide for the authorization to create and issue up to 500,000 shares of
Preferred Stock, par value $0.01 per share (the "New Preference Stock"), of the
Company having the terms set forth on Exhibit A;
WHEREAS, immediately prior to the Effective Time (as defined below),
the Shareholders shall convert the number of shares of their Common Stock, par
value $0.01, of the Company (the "Company Common Stock") into New Preference
Stock in the amounts set forth on Exhibit B;
WHEREAS, immediately prior to the Effective Time, Parent shall (i) make
a capital contribution in cash into Merger Sub in an amount equal to the
aggregate Merger Consideration to be paid hereunder and (ii) if necessary, repay
any indebtedness of the Company required to be repaid as a result of the Merger;
WHEREAS, the respective Boards of Directors of the Company and Merger
Sub have approved and declared advisable a merger (the "Merger") of Merger Sub
with and into the Company upon the terms and subject to the conditions set forth
in this Agreement, with the Company surviving the Merger as the surviving
corporation (the "Surviving Corporation"), and the Board of Directors of the
Company has recommended that the holders of shares of Company Common Stock
approve the Merger and the other transactions contemplated by this Agreement
upon the terms of this Agreement;
WHEREAS, the Merger is subject to the affirmative vote of at least a
majority of the outstanding shares of Company Common Stock and the satisfaction
of certain other conditions described in this Agreement; and
WHEREAS, the Boards of Directors of Merger Sub and the Company have
determined that the Merger is in furtherance of and consistent with their
respective long-term business strategies and is fair to and in the best
interests of their respective stockholders.
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NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 Issuance of Preference Shares.
(a) Authorization. Upon the terms and subject to the conditions set
forth in this Agreement, prior to the Effective Time, the Company shall
have amended its Certificate of Incorporation or adopted a Certificate of
Designation in the form of Exhibit A hereto to authorize the creation,
issuance and sale of 500,000 shares of New Preference Stock.
(b) Conversion of Company Common Stock into Preference Shares. Upon the
terms and subject to the conditions set forth in this Agreement, the
Shareholders agree to convert immediately prior to the Effective Time,
shares of Company Common Stock into New Preference Stock (the "Preference
Exchange") in the amounts set forth on Exhibit B hereto.
(c) Capital Contribution. Upon the terms and subject to the conditions
set forth in this Agreement, immediately prior to the Effective Time,
Parent shall make an aggregate capital contribution of $244,936,705 in cash
into Merger Sub in exchange for 244,936.705 shares of common stock, par
value $.01 per share, of Merger Sub (the "Capital Contribution").
SECTION 1.02 The Merger. Upon the terms and subject to the conditions
set forth in Article VIII, and in accordance with the provisions of the Delaware
General Corporation Law (the "DGCL"), at the Effective Time (as defined below),
Merger Sub shall be merged with and into the Company. As a result of the Merger,
the separate corporate existence of Merger Sub shall cease, and the Company
shall be the Surviving Corporation of the Merger.
SECTION 1.03 Effective Time; Closing. As promptly as practicable, and
in no event later than two business days after the satisfaction or, if
permissible, waiver of the conditions set forth in Article VIII (other than
those conditions that can only be satisfied on the Closing Date (as defined
below)), the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in
accordance with, the DGCL. The term "Effective Time" means the date and time of
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware (or such later time as may be agreed by the parties hereto and
specified in the Certificate of Merger). Immediately prior to the filing of the
Certificate of Merger, a closing (the "Closing") will be held at the offices of
Kirkland & Ellis, Citigroup Center, 153 East 53rd Street, New York, New York
10022 (or such other place as the parties may agree). The date on which such
Closing takes place shall be referred to herein as the "Closing Date".
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SECTION 1.04 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, immunities, privileges, powers,
franchises and licenses of the Company and Merger Sub shall vest in the
Surviving Corporation, without further act or deed, and all debts, liabilities,
obligations, restrictions and duties of each of the Company and Merger Sub shall
become the debts, liabilities, obligations, restrictions and duties of the
Surviving Corporation.
SECTION 1.05 Certificate of Incorporation; By-laws.
(a) Certificate of Incorporation. From and after the Effective Time,
the Certificate of Incorporation of Merger Sub in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended in accordance with its terms
and as provided by the DGCL and this Agreement, except that, as of the
Effective Time, Article I of such Certificate of Incorporation shall be
amended to read as follows: "The name of the Corporation is Mikasa, Inc.
(b) Bylaws. From and after the Effective Time, the By-laws of the
Company as in effect immediately prior to the Effective Time shall be the
By-laws of the Surviving Corporation until thereafter amended in accordance
with its terms and as provided by the DGCL and the Certificate of
Incorporation of the Surviving Corporation.
SECTION 1.06 Directors and Officers.
(a) Directors. From and after the Effective Time, the directors of
Merger Sub immediately prior to the Effective Time shall be the directors
of the Surviving Corporation until the earlier of their resignation or
removal or until their respective successors are duly elected and
qualified, as the case may be, in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, the DGCL and this
Agreement.
(b) Officers. From and after the Effective Time, the officers of the
Company immediately prior to the Effective Time shall be the officers of
the Surviving Corporation and shall hold office until the earlier of their
resignation or removal or until their respective successors are duly
elected and qualified, as the case may be, in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation, the
DGCL and this Agreement.
SECTION 1.07 Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any further
deeds, assignments or assurances in law or any other acts are necessary or
desirable to (a) vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its rights, title or interest in, to or under any of the
rights, properties or assets of the Company or its subsidiaries, or (b)
otherwise carry out the provisions of this Agreement, the Company and its
officers and directors shall be deemed to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all such
deeds, assignments or assurances in law and to take all acts necessary, proper
or desirable to
A-3
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vest, perfect or confirm title to and possession of such rights, properties or
assets in the Surviving Corporation and otherwise to carry out the provisions of
this Agreement, and the officers and directors of the Surviving Corporation are
authorized in the name of the Company to take any and all such action.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES; DEPOSIT
SECTION 2.01 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
Company Common Stock or any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each share of common stock of Merger
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive one share of New Preference Stock.
(b) Cancellation of Company Owned Stock. All shares of Company Common
Stock and New Preference Stock (if any) that are held in the treasury of
the Company or by any wholly owned subsidiary of the Company shall be
canceled and retired and shall cease to exist without any consideration
payable therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other
than shares of the Company Common Stock referred to in Section 2.01(b))
shall be converted into (as provided in and subject to the limitations set
forth in this Article II) the right to receive from the Surviving
Corporation in cash, $16.50 (the "Merger Consideration") without interest
thereon upon surrender of the certificate previously representing such
share of Company Common Stock as provided in Section 2.02(c). As of the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such share of
Company Common Stock shall cease to have any rights with respect thereto,
except the right to receive the cash into which their shares of Company
Common Stock have been converted by the Merger as provided in this Section
2.01(c).
(d) Conversion of New Preference Stock. Each share of New Preference
Stock issued and outstanding immediately after the Effective Time (other
than shares of New Preference Stock to be canceled pursuant to Section
2.01(b)) shall be converted into (as provided in and subject to the
limitations set forth in this Article II) and become one fully paid and
nonassessable share of Common Stock, par value $0.01, of the Surviving
Corporation (the "Surviving Corporation Common Stock"), upon the surrender
of the certificate previously representing such shares of New Preference
Stock, and all such shares of New Preference Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such share of
New Preference Stock shall cease to have any rights with respect thereto,
except the right to receive the Surviving Corporation Common Stock into
which
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their shares of New Preference Stock have been converted by the Merger as
provided in this Section 2.01(d).
(e) Further Amendment. Notwithstanding any provision to the contrary,
the parties agree to amend this Agreement prior to Closing to permit shares
of Company Common Stock and/or Company Stock Options (as defined below)
owned by certain employees or directors of the Company as mutually agreed
by the Company and Merger Sub to be converted into shares of New Preference
Stock with corresponding adjustments to be made to this Section 2.01 and
the related definitions.
SECTION 2.02 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Merger Sub shall, with
the approval of the Company, designate a bank or trust company to act as
paying agent in the Merger (the "Paying Agent").
(b) At the Closing, Merger Sub shall deliver:
(i) to each person (who has been identified on a list to be
provided to Merger Sub by the Company not later than five business days
before the Closing) who has surrendered to the Company prior to the
Closing one or more certificates which immediately prior to the
Effective Time represented shares of Company Common Stock (such
certificates, the "Certificates") by wire transfer of immediately
available funds, the amount of cash into which the shares of Company
Common Stock represented by the Certificates so surrendered have been
converted pursuant to the provisions of this Article II;
(ii) to the Shareholders who shall have surrendered to the
Merger Sub at the Closing the certificates which, immediately prior to
the Effective Time, represented shares of outstanding New Preference
Stock, the securities of the Surviving Corporation into which the
shares of New Preference Stock represented by such certificates have
been converted pursuant to the provisions of this Article II; and
(iii) to the Paying Agent, for the benefit of the holders of
Company Common Stock not so listed as provided in clause (i) above,
funds in the aggregate amount into which such shares of Company Common
Stock shall have been converted pursuant to the provisions of this
Article II.
(c) Exchange Procedure. Promptly after the Effective Time, the
Surviving Corporation shall mail to each holder of record of Certificates
not surrendered pursuant to Section 2.02(b), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the address specified therein) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation to
the Paying Agent, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent,
the holder of such Certificate shall be entitled to receive promptly in
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exchange therefor from the Paying Agent the amount of cash into which the
shares of Company Common Stock theretofore represented by such Certificate
shall have been converted pursuant to Section 2.01, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of the shares of Company Common Stock that is not registered in
the transfer records of the Company, payment may be made to a person other
than the person in whose name the Certificate so surrendered is registered,
if such Certificate shall be properly endorsed or otherwise be in proper
form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 2.02,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the amount of cash,
without interest, into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to
Section 2.01. No interest will be paid or will accrue on the cash payable
upon the surrender of any Certificate. In the event any Certificate shall
have been lost, stolen or destroyed, upon making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or
destroyed, the Surviving Corporation will pay in exchange for such lost,
stolen or destroyed Certificate, the cash payable in respect of the shares
represented by such Certificate as determined in accordance with this
Article II, except that when authorizing such payment, the Board of
Directors of the Surviving Corporation, may, in its discretion and as a
condition precedent to such payment, require the owner of such lost, stolen
or destroyed Certificate to deliver a bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against the
Surviving Corporation or the Paying Agent with respect to such Certificate.
(d) Withholding. Merger Sub, Surviving Corporation and Paying Agent
shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable or issuable pursuant to this Agreement to any holder of
Company Common Stock such amount as is required to be deducted and withheld
with respect to such payment or issuance under any provision of U.S.
federal, state or local tax law or any foreign tax law applicable because
of the residence or citizenship of the holder. To the extent that amounts
are so withheld, such withheld amounts shall promptly be paid to the
appropriate governmental authority and shall be treated for all purposes of
this Agreement as having been paid to the holder of Company Common Stock in
respect of which such deduction and withholding was made.
(e) Closing of Stock Transfer Books. All cash paid upon the surrender
of Certificates in accordance with the terms of this Article II shall be
deemed to have been paid in full satisfaction of all rights pertaining to
the shares of Company Common Stock theretofore represented by such
Certificates. At the Effective Time, the stock transfer books of the
Company shall be closed, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
shares of Company Common Stock that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for any reason,
they shall be canceled and exchanged as provided in this Article II.
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(f) No Liability. At any time following the expiration of twelve months
after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying
Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to any applicable abandoned property, escheat or
similar law) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates, without any
interest thereon; provided, however, with respect to any Certificates which
shall not have been surrendered prior to five years after the Closing Date,
the unclaimed cash payable in exchange for such Certificates shall, to the
extent permitted by applicable abandoned property, escheat or similar law,
become the property of the Surviving Corporation, free and clear of all
claims or interests of any person previously entitled thereto.
Notwithstanding the foregoing, none of Merger Sub, the Shareholders, the
Company, the Paying Agent or Parent shall be liable to any person in
respect of any cash delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
SECTION 2.03 Company Stock Options; Plans.
(a) Option Consideration. Except as set forth in this Section 2.03 and
except to the extent that Merger Sub and the holder of any option otherwise
agree in writing prior to or contemporaneously with the Effective Time:
(i) At the Effective Time, each outstanding option to purchase
Company Common Stock (a "Company Stock Option") granted pursuant to the
Company's Long-Term Incentive Plan, 1998 Long-Term Stock Incentive Plan
or Non-Employee Directors Stock Option Plan (collectively, the "Company
Stock Option Plans") shall become 100% vested and immediately
exercisable;
(ii) Each holder of a Company Stock Option outstanding as of
the Effective Time shall be entitled to receive, and shall be paid in
full satisfaction of such Company Stock Option, a cash payment in an
amount in respect thereof equal to the product of (x) the excess, if
any, of the Merger Consideration over the exercise price of each such
Company Stock Option, and (y) the number of shares of Company Common
Stock subject to the Company Stock Option immediately prior to the
Effective Time, less any income or employment tax withholding required
under any provision of U.S. federal, state or local tax law or any
foreign tax law applicable because of the residence or citizenship of
the holder (the "Option Consideration"). To the extent that amounts are
so withheld by the Surviving Corporation and paid to the applicable
Governmental Authority, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of such
Company Stock Option. Upon delivery of the related Option
Consideration, the Company Stock Option shall be canceled. The
acceptance by the holder of a Company Stock Option of the related
Option Consideration shall be deemed to be a release of all rights the
holder had or may have had in respect of that Company Stock Option; and
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(iii) Prior to the Effective Time, the Board of Directors of
the Company and/or the appropriate committee of the Board of Directors
shall determine that each Company Stock Option shall be exercisable at
and following the Effective Time at its then existing exercise price
for the Merger Consideration, less any income or employment tax
withholding required under any provision of U.S. federal, state, local
or foreign tax law. Each Company Stock Option, the obligations under
which have not been satisfied in accordance with the provisions of this
Section 2.03(a), shall be exercisable following the Effective Time in
accordance with such determination.
(b) No Other Rights. Except as may otherwise be agreed in writing by
Merger Sub and the Company, following the Effective Time, no holder of
Company Stock Options or any participant in the Company Stock Option Plans
shall have any rights thereunder to acquire any equity securities of the
Company, the Surviving Corporation or any subsidiary thereof.
(c) Termination of Other Plans and Programs. Except as may otherwise be
agreed in writing by Merger Sub and the Company, all other plans, programs
or arrangements providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any of its subsidiaries
shall terminate as of the Effective Time, and no participant in any such
plans, programs or arrangements shall have any rights thereunder to acquire
any equity securities of the Company, the Surviving Corporation or any
subsidiary thereof.
SECTION 2.04 Shares of Dissenting Stockholders.
(a) Notwithstanding anything in this Agreement to the contrary, any
shares of Company Common Stock that are issued and outstanding as of the
Effective Time and that are held by a holder who has not voted in favor of
the Merger or consented thereto in writing and who has properly exercised
his or her appraisal rights (the "Dissenting Shares") under the DGCL, shall
not be converted into the right to receive the Merger Consideration, unless
and until such holder shall have failed to perfect, or shall have
effectively withdrawn or lost, his or her right to dissent from the Merger
under the DGCL and to receive such consideration as may be determined to be
due with respect to such Dissenting Shares pursuant to and subject to the
requirements of the DGCL. If, after the Effective Time, any such holder
shall have failed to perfect or shall have effectively withdrawn or lost
such right, each share of such holder's Company Common Stock shall
thereupon be deemed to have been converted into and to have become, as of
the Effective Time, the right to receive, without interest or dividends
thereon, the consideration provided for in this Article II.
(b) The Company shall give Merger Sub and Parent (i) prompt notice of
any notices or demands for appraisal or payment for shares of Company
Common Stock received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to
any such demands or notices. The Company shall not, without prior written
consent of Merger Sub and Parent, make any payments
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with respect to, or settle, offer to settle or otherwise negotiate, with
respect to any such demands.
(c) Dissenting Shares, if any, after payments of fair value in respect
thereto have been made to the holders thereof pursuant to the DGCL, shall
be canceled.
SECTION 2.05 Adjustment of Merger Consideration. In the event that,
subsequent to the date of this Agreement but prior to the Effective Time, the
outstanding shares of Company Common Stock shall have been changed into a
different number of shares of a different class as a result of a stock split,
reverse stock split, stock dividend, subdivision, reclassification, split,
combination, exchange, recapitalization or other similar transaction, the Merger
Consideration shall be appropriately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a separate disclosure schedule referring to the
Sections contained in this Agreement, which has been delivered by the Company to
Merger Sub prior to the execution of this Agreement (the "Company Disclosure
Statement"), the Company hereby represents and warrants to Merger Sub that:
SECTION 3.01 Organization and Qualification; Subsidiaries.
(a) Each of the Company and its subsidiaries is a corporation or other
legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has the requisite
organizational power and authority and all necessary governmental approvals
to own, lease and operate the properties and assets it currently owns,
operates or holds under lease and to carry on its business as it is now
being conducted, except where the failure to be organized, existing or in
good standing or to have such organizational power and authority or
approvals would not, individually or in the aggregate, have a Company
Material Adverse Effect (as defined below). Except as set forth in Section
3.01(a) of the Company Disclosure Statement, each of the Company and its
subsidiaries is duly qualified or licensed as a foreign entity to do
business, and is in good standing, in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, have a Company Material Adverse
Effect. The term "Company Material Adverse Effect" means, when used in
connection with the Company, any change, effect, event, occurrence,
condition or development that is or is reasonably likely to be materially
adverse to (i) the business, assets, liabilities, properties, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole or (ii) the ability of the Company to timely
perform its obligations under this Agreement, other than effects due to (A)
general economic, market or political conditions, (B) matters generally
affecting the industries in which such person operates or (C) the
announcement or expectation of this Agreement or the Transactions.
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(b) Except as set forth in Section 3.01 of the Company Disclosure
Statement, the Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation,
partnership, limited liability company, joint venture or other business
association or entity. All outstanding equity interests of each such
subsidiary of the Company have been duly authorized and validly issued and
are fully paid and non-assessable, and are owned, directly or indirectly,
by the Company free and clear of any Liens, and there are no outstanding
options, warrants, convertible securities, calls, rights, commitments,
preemptive rights or agreements or instruments or understandings of any
character, obligating any subsidiary of the Company to issue, deliver or
sell, or cause to be issued, delivered or sold, contingently or otherwise,
additional equity interests in such subsidiary or any securities or
obligations convertible or exchangeable for such equity interests or to
grant, extend or enter into any such option, warrants, convertible
security, call, right, commitment, preemptive right or agreement, in each
case except as provided by applicable law.
SECTION 3.02 Certificate of Incorporation and By-laws. The Company has
heretofore made available to merger Sub complete and correct copies of its
Certificate of Incorporation and By-laws, each as amended to the date hereof.
Such Certificate of Incorporation and By-laws are in full force and effect. The
Company is not in violation of any provision of its Certificate of Incorporation
or By-laws.
SECTION 3.03 Capitalization. The authorized capital stock of the
Company consists of (i) 80,000,000 shares of Company Common Stock and (ii)
2,000,000 shares of preferred stock, par value $.01 per share ("Preferred
Stock"). As of the date hereof, there are 16,985,445 shares of Company Common
Stock issued and outstanding, no shares of Preferred Stock outstanding (and
after the Preference Amendment and the Preference Exchange pursuant to Section
1.01(b) but prior to the Effective Time, there shall be 44,101.20 shares of New
Preference Stock issued and outstanding). Section 3.03 of the Company Disclosure
Statement sets forth the number of shares of Company Common Stock to be received
upon exercise or conversion and the exercise or conversion price of each
outstanding Company Stock Option. Except for the Company Stock Options granted
under the Company Stock Option Plans or as expressly contemplated by this
Agreement or as set forth in Section 3.03 of the Company Disclosure Statement,
there are no existing options, warrants, convertible securities, calls,
subscriptions, or other rights or other agreements or commitments obligating the
Company to issue, transfer or sell, or caused to be issued, transferred or sold,
contingently or otherwise, any shares of capital stock of the Company or any
other securities convertible into or evidencing the right to subscribe for or
purchase any such shares. Except as identified and described in Section 3.03 of
the Company Disclosure Statement, there are no outstanding stock appreciation
rights or similar phantom equity securities issued by the Company with respect
to the capital stock of the Company. All issued and outstanding shares of
Company Common Stock are duly authorized and validly issued, fully paid,
non-assessable and free of preemptive rights with respect thereto. All shares of
New Preference Stock to be issued to (i) the Shareholders pursuant to the
Preference Exchange and (ii) Parent in connection with the Capital Contribution,
shall, when issued in accordance with the terms of this Agreement and other
applicable agreements, be duly authorized and validly issued, fully paid,
non-assessable and free of preemptive rights with respect thereto.
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SECTION 3.04 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
and, subject to obtaining the necessary Governmental Approvals, the adoption of
this Agreement and the Preference Amendment by the requisite holders of the
shares of Company Common Stock and the filing and recordation of appropriate
merger documents and the Preference Amendment under applicable Law, to perform
its obligations hereunder and to consummate the Merger and the other
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions (other than obtaining the necessary Governmental
Approvals, the adoption of this Agreement and, if required, the Preference
Amendment by the holders of the requisite majority of the shares of Company
Common Stock and the filing and recordation of appropriate merger documents and
the Preference Amendment as required by applicable Law). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Merger Sub, constitutes a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company does
not, and the consummation by the Company of the Transactions will not (i)
conflict with or violate the Certificate of Incorporation or By-laws of the
Company or any of its subsidiaries, (ii) conflict with or violate any
domestic (federal, state or local) or foreign law, rule, regulation, order,
judgment or decree of any Governmental Authority (collectively, "Laws")
applicable to the Company, its subsidiaries or by which any of its
properties or assets is bound or affected, except for such conflicts or
violations that, individually or in the aggregate, would not have a Company
Material Adverse Effect, or (iii) result in a violation or breach of or
constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any property or asset of the Company or its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or its subsidiaries is a party or by which
the Company, its subsidiaries or any of its properties or assets is bound
or affected, except as disclosed in Section 3.05(a) of the Company
Disclosure Statement and except for any such violations, breaches, defaults
or other occurrences that, individually or in the aggregate, would not have
a Company Material Adverse Effect and will not prevent or materially delay
the consummation of the Transactions.
(b) Except as disclosed in Section 3.05(b) of the Company Disclosure
Statement, the execution and delivery of this Agreement by the Company does
not, and the consummation by the Company of the Transactions will not,
require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Authority (collectively, "Governmental
Approvals"), except (i) for applicable
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requirements, if any, of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Securities Act of 1933, as amended (the
"Securities Act"), state securities or "blue sky" laws ("Blue Sky Laws"),
the rules of the New York Stock Exchange ("NYSE"), state takeover laws, the
pre-merger notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), and filing and recordation of appropriate
merger and amendment documents as required by the DGCL, or (ii) where
failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, individually or in the aggregate,
would not have a Company Material Adverse Effect.
SECTION 3.06 SEC Filings; Financial Statements; Undisclosed
Liabilities.
(a) The Company has filed all forms, reports and documents required to
be filed by it with the Securities and Exchange Commission (the "SEC")
since December 31, 1997 and has made available to the Merger Sub all
registration statements filed by the Company with the SEC, including all
exhibits filed in connection therewith (on all forms applicable to the
registration of securities) since December 31, 1997 and prior to the date
of this Agreement (collectively, the "Company SEC Reports"). As of their
respective dates, the Company SEC Reports (and giving effect to any
amendments thereof) (i) complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations thereunder and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made,
not misleading. The Company will notify Merger Sub promptly after any
Company SEC Reports filed subsequent to the date hereof and prior to the
Effective Time become publicly available.
(b) Each of the financial statements (including, in each case, any
notes and schedules thereto) contained in the Company SEC Reports complied
as to form with the applicable accounting requirements and rules and
regulations of the SEC and was prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods indicated (except as may be indicated in the
notes thereto), and each fairly presented in all material respects the
consolidated financial position, results of operations or cash flows, as
the case may be, of the Company and its consolidated subsidiaries as at the
respective dates thereof and for the respective periods indicated therein
in accordance with GAAP, subject, in the case of unaudited statements (the
"Interim Financial Statements"), to the absence of footnotes and to normal
and recurring year-end adjustments none of which would, individually or in
the aggregate, have a Company Material Adverse Effect.
(c) Neither the Company nor its subsidiaries have any liabilities or
obligations (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated and whether due or to become due, including any
liability for taxes) material to the Company and its subsidiaries taken as
a whole other than such liabilities or obligations (i) disclosed in Section
3.06(c) of the Company Disclosure Statement, (ii) disclosed or reserved
against in the most recent consolidated balance sheet of the Company filed
with the SEC,
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(iii) incurred in the ordinary course of business consistent with past
practice (none of which is a liability arising from breach of contract,
breach of warranty, tort or claim for infringement) since the date of the
most recent audited consolidated balance sheet of the Company filed with
the SEC, (iv) under the Contracts (none of which is a liability for breach
of contract), or (v) that are not required by GAAP to have been included in
the most recent consolidated balance sheet of the Company filed with the
SEC.
SECTION 3.07 Absence of Certain Changes or Events. Except as disclosed
in Section 3.07 of the Company Disclosure Statement or the Company SEC Reports
or as contemplated by this Agreement, since January 1, 2000, neither the Company
nor its subsidiaries have, directly or indirectly:
(a) redeemed, purchased, otherwise acquired, or agreed to redeem,
purchase or otherwise acquire, any shares of capital stock of the Company,
or declared, set aside or paid any dividend or otherwise made a
distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock (other than between the Company
and a wholly-owned subsidiary thereof);
(b) authorized for issuance, issued, sold, delivered, granted or issued
any options, warrants, calls, subscriptions or other rights for, or
otherwise agreed or committed to issue, sell, deliver or grant any shares
of any class of capital stock of the Company or any securities convertible
into or exchangeable or exercisable for shares of any class of capital
stock of the Company or its subsidiaries, other than pursuant to and in
accordance with (i) the Company Stock Option Plans or (ii) the terms of the
agreements listed in Section 3.03 of the Company Disclosure Statement;
(c) except in the ordinary course of business (i) created or incurred
any indebtedness for borrowed money in excess of $1,000,000, (ii) assumed,
guaranteed, endorsed or otherwise as an accommodation become responsible
for the obligations of any other individual, firm or corporation, made any
loans or advances to any other individual, firm or corporation in excess of
$1,000,000, (iii) incurred any liabilities except for liabilities which,
individually and in the aggregate, would not have a Company Material
Adverse Effect; or (iv) mortgaged, pledged or subjected to any material
lien or encumbrance, any asset having a book or market value in excess of
$1,000,000;
(d) instituted any material change in its accounting methods,
principles or practices except as required by GAAP;
(e) revalued any of its assets in any material respect, including
without limitation, writing down the value of inventory or writing off
notes or accounts receivables except for (i) amounts previously reserved as
reflected in the Company's December 31, 1999 audited consolidated balance
sheet, or (ii) revaluations and write downs of the value of inventory in
the ordinary course of business;
(f) suffered any damage, destruction or loss, whether covered by
insurance or not, except for such as would not, individually and in the
aggregate, have a Company Material Adverse Effect;
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(g) suffered any adverse change, or any development involving a
prospective adverse change, except for those changes or prospective changes
which, individually and in the aggregate, would not have a Company Material
Adverse Effect;
(h) granted any material increase in the base compensation of, or made
any other material change in the employment terms for, any of its
directors, officers and employees, except for increases or changes
reflecting or based upon changed responsibilities or duties and increases
or changes made in the ordinary course of business consistent with past
practice;
(i) adopted, modified or terminated any bonus, profit-sharing,
incentive, severance or other plan or contract for the benefit of any of
its directors, officers and employees other than such adoptions,
modifications and terminations which do not materially increase the
aggregate cost of such plan or contract;
(j) except for provision of services or sales in the ordinary course of
business (i) sold, leased, licensed, assigned, transferred or otherwise
disposed of any of its assets or property having a book or market value, in
excess of $1,000,000 or (ii) entered into, or consented to the entering
into of, any agreement granting a preferential right to sell, lease,
license, assign, transfer or otherwise dispose of any of such assets;
(k) entered into any new line of business that is substantially and
materially different from the Company's business as of December 31, 1999,
or incurred or committed to incur any capital expenditures, obligations or
liabilities in connection therewith in excess of $5,000,000 in the
aggregate;
(l) acquired or agreed to acquire by merging or consolidating with, or
agreed to acquire by purchasing a substantial portion of the assets of, or
in any other manner, any business of any other person;
(m) made any cancellation or waiver of (i) any right material to the
operation of the business of the Company or its subsidiaries, or (ii) any
material debts or claims against any affiliate of the Company;
(n) made any disposition of, or failed to enforce, maintain or keep in
effect any patent, trademark, service mark, trade name, copyright or trade
secret of the Company or its subsidiaries or any registration or
application for registration thereof or right or interest therein, to the
extent material to the Company and its subsidiaries taken as a whole;
(o) to the knowledge of the Company, entered into any agreement,
arrangement or transaction with any affiliate of the Company;
(p) entered into any agreement, arrangement or transaction to purchase
any real property to the extent material to the Company and its
subsidiaries taken as a whole; or
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(q) agreed to (i) do any of the things described in the preceding
clauses (a) through (p) other than as contemplated or provided for in this
Agreement or (ii) take, whether in writing or otherwise, any action which,
if taken prior to the date of this Agreement, would have made any
representation or warranty in this Article III untrue or incorrect.
SECTION 3.08 Absence of Litigation. Except as disclosed in Section 3.08
of the Company Disclosure Statement, as of the date hereof there is no claim,
action, proceeding or investigation pending or, to the Company's Knowledge,
threatened against the Company, its subsidiaries, or any of its properties or
assets, before any court, arbitrator or Governmental Authority, which,
individually or in the aggregate, would have a Company Material Adverse Effect.
Except as disclosed on Section 3.08 of the Company Disclosure Statement as of
the date hereof, neither the Company nor its subsidiaries nor any of its
properties or assets is subject to any order, writ, judgment, injunction,
decree, determination or award which would have, individually or in the
aggregate, a Company Material Adverse Effect.
SECTION 3.09 Stockholder Vote Required. The affirmative vote of the
holders of at least a majority of the outstanding shares of Company Common Stock
held by all stockholders is the only vote of the holders of any class or series
of capital stock of the Company necessary to approve the Merger, this Agreement,
the Preference Amendment and the transactions contemplated hereby under the DGCL
and the Company's Certificate of Incorporation.
SECTION 3.10 Opinion of Financial Advisor. The special committee of the
Company's Board of Directors (the "Special Committee") has received the opinion,
dated as of the date hereof, of CIBC World Markets (the "Special Committee
Financial Advisor"), to the effect that, as of the date thereof, and subject to
the qualifications and limitations set forth therein, the Merger Consideration
is fair to the Company's stockholders (other than the Shareholders) from a
financial point of view.
SECTION 3.11 Brokers. Except as disclosed in Section 3.11 of the
Company Disclosure Statement, no broker, finder or investment banker (other than
the Special Committee Financial Advisor and UBS Warburg) is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger
based upon arrangements made by or on behalf of the Company or which are to be
paid by the Company. The Company has heretofore furnished to Merger Sub a
complete and correct copy of all agreements between the Company and the Special
Committee Financial Advisor or any other firms pursuant to which the Special
Committee Financial Advisor or any such firms would be entitled to any payment
relating to the Merger, and there have been no amendments to such agreements.
SECTION 3.12 Company Action. The Company's Board of Directors (at a
meeting duly called and held) has by requisite vote of directors (i) approved
and adopted this Agreement and the Transactions, and such approval is sufficient
to render inapplicable to this Agreement and the Transactions, the provisions of
Section 203 of the DGCL to the extent, if any, any such section is applicable to
this Agreement and the Transactions and (ii) subject to Section 7.05 hereof,
agreed to recommend that the stockholders of the Company approve and adopt this
Agreement and the Transactions.
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SECTION 3.13 Information Supplied. The Proxy Statement (as defined
below) and any other document to be filed by the Company with the SEC or any
Governmental Authority in connection with the Transactions (the "Other Filings")
will not, in the case of the Proxy Statement, at the time of mailing thereof to
the Company's shareholders, or, in the case of all other such documents, at the
respective times filed with the SEC or other Governmental Authority, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances in which they were made, not misleading; provided,
that the Company makes no representation with respect to any information
provided by Parent, Merger Sub or any Shareholder. The Proxy Statement (except
for those portions relating to Parent or Merger Sub) at the time of the mailing
thereof to the Company's shareholders will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
SECTION 3.14 Environmental and Safety Matters. Except as set forth in
Section 3.14 of the Company Disclosure Statement and except as would not have a
Company Material Adverse Effect, the Company and its Subsidiaries are (i) in
compliance with all applicable Environmental Laws, (ii) have received and are in
compliance with all permits, licenses or other approvals required under
applicable Environmental Laws for the conduct of their respective businesses,
and (iii) have not received notice of any actual or potential material liability
for the investigation or remediation of any disposal or release of Hazardous
Materials.
SECTION 3.15 Real Property.
(a) Except as set forth on Section 3.15 of the Company Disclosure
Statement, (i) the Company and its Subsidiaries have good and marketable
title to all Owned Real Property, in each case free and clear of any Liens,
except for Permitted Encumbrances, and (ii) any Leased Real Property held
by a Company or a Subsidiary of the Company is held under a valid,
subsisting and enforceable Lease, with such exceptions as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
(b) The term "Permitted Encumbrances" shall mean: (A) real estate
taxes, assessments and other governmental levies, fees or charges imposed
with respect to such Real Property which are not due and payable as of the
Closing Date; (B) mechanics liens and similar liens for labor, materials or
supplies provided with respect to such Real Property incurred in the
ordinary course of business for amounts which are not delinquent and which
would not, individually or in the aggregate, have a Company Material
Adverse Effect; (C) zoning, building codes and other land use Laws
regulating the use or occupancy of such Real Property or the activities
conducted thereon which are imposed by any Governmental Authority which are
not violated by the current use or occupancy of such Real Property or the
operation of the Company's business thereon in any material respect; and
(D) easements, covenants, conditions, restrictions and other similar
matters of record affecting title to such Real Property which do not or
would not materially impair the current use or occupancy of such Real
Property.
(c) Except as set forth on Section 3.15 of the Company Disclosure
Statement, to the Company's Knowledge, (A) all material permits, licenses
and other approvals
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necessary to the current occupancy and use of the Real Property have been
obtained, are in full force and effect had have not been violated by the
Company in any material respect and (B) there exists no material violation
by the Company of any material covenant, condition, restriction, easement,
agreement or order affecting any portion of the Real Property that
individually or in the aggregate would have a Company Material Adverse
Effect. All facilities located on the Real Property are supplied with
adequate utilities and other services necessary for the conduct of the
Company's business as currently conducted. There is no pending or, to the
Knowledge of the Company, threatened condemnation proceeding, or material
lawsuit or administrative action affecting any portion of the Real Property
to which the Company or its subsidiaries is a named party that could be
material to the Company and its subsidiaries taken as a whole.
SECTION 3.16 Personal Property.
(a) Each of the Company and its subsidiaries has good title to all
personalty of any kind or nature that is material to the Company and its
subsidiaries which the Company or its subsidiaries purport to own, free and
clear of all Liens, except for (i) Liens disclosed on Section 3.16 of the
Company Disclosure Statement, (ii) Liens for non-delinquent taxes and
non-delinquent statutory liens arising other than by reason of default,
(iii) statutory Liens of landlords, liens of carriers, warehousemen,
mechanics and materialmen incurred in the ordinary course of business for
sums not yet due; (iv) Liens incurred or deposits made in the ordinary
course of business in connection with worker's compensation, unemployment
insurance and other types of social security, (v) purchase money Liens, and
(vi) Liens which do not materially detract from the value or use of said
personalty. The Company and its subsidiaries, as lessees, have the right
under valid and subsisting leases to use and possess all personalty that is
material to the Company and its subsidiaries taken as a whole and is leased
by the Company or its subsidiaries as now used or possessed by the Company
or its subsidiaries, as applicable.
(b) All machinery, equipment and other tangible assets currently being
used by the Company or its subsidiaries which are owned or leased by the
Company or its subsidiaries and that are material to the Company and its
subsidiaries taken as a whole are usable in the ordinary course of business
and are reasonably adequate and suitable for the uses to which they are
being put, except where any other condition of any machinery, equipment or
other tangible asset would not have a Company Material Adverse Effect.
SECTION 3.17 Contracts. The Company has made available to Merger Sub
true and correct copies of all written agreements of the Company or its
subsidiaries (other than contracts or leases for the sale in the ordinary course
of business of the Company's services or products) that are currently in effect
and that are (i) material license agreements or franchise agreements with any
person that provides services in the name of or on behalf of the Company; (ii)
material leases, sales contracts and other agreements with respect to any
personal property of the Company or its subsidiaries which provide for the
receipt or expenditure by the Company or its subsidiaries after the date of this
Agreement, of more than $1,000,000; (iii) contracts or commitments for capital
expenditures or acquisitions in excess of $1,000,000 for one project or set of
related projects; (iv) guarantees of third party obligations; (v) agreements
(including non-competition agreements) which restrict the kinds of businesses in
which the Company or its
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subsidiaries may engage or the geographical area in which any of them may
conduct their business; (vi) indentures, mortgages, loan agreements or other
agreements relating to the borrowing of money by the Company, the granting of
Liens by the Company or lines of credit by the Company, in each case, involving
an amount in excess of $1,000,000; (vii) collective bargaining agreements, if
any; (viii) material licenses, agreements, assignments or contracts (whether as
licensor or licensee, assignor or assignee) relating to any patent and trademark
rights; (ix) brokerage or finder's agreements; (x) joint venture agreements,
partnership agreements or similar agreements; or (xi) stock purchase agreements,
asset purchase agreements or other acquisition or divestiture agreements
executed within the last five years, in each case, involving an amount in excess
of $1,000,000; (all items so made available or required to be made available to
Merger Sub being hereinafter referred to as "Contracts"). Except as disclosed in
Section 3.17 of the Company Disclosure Statement, (i) all Contracts are valid
and subsisting and in full force and effect, and each of the Company and its
subsidiaries has duly performed its obligations thereunder in all material
respects to the extent such obligations have accrued, and (ii) there has not
occurred thereunder any breach or default by the Company, its subsidiaries, or,
to the Company's Knowledge, by any other party thereto that continues to exist,
or any event which with the passage of time or the giving of notice, or both,
would result in a breach or default or event of non-compliance thereunder by the
Company, its subsidiaries, or, to the Knowledge of the Company, by any other
party thereto, except for such failures to be in full force and effect, failures
to perform, breaches or defaults that, individually or in the aggregate, would
not be material to the Company and its subsidiaries taken as a whole.
SECTION 3.18 Insurance Policies. The Company has made available to
Merger Sub all material insurance policies of the Company and its subsidiaries,
and each such policy is in full force and effect. No written notice of
cancellation or termination has been received by the Company or its subsidiaries
with respect to any such policy. To the Knowledge of the Company, there are no
pending claims against such insurance by the Company or its subsidiaries as to
which the insurers have denied coverage or otherwise reserved rights.
SECTION 3.19 Compliance with Laws. Except as set forth in Section 3.19
of the Company Disclosure Statement, neither the Company nor its subsidiaries
are in violation of or have violated or failed to comply with any Law or
judgment applicable to its business or operations, except for violations and
failures to comply that would not, individually or in the aggregate, result in a
Company Material Adverse Effect.
SECTION 3.20 Tax Matters.
(a) Except as disclosed on Section 3.20(a) of the Company Disclosure
Statement, the Company and each subsidiary of the Company have filed all
material Tax Returns that were required to be filed prior to the date
hereof by any of them (taking into account all available extensions). All
such Tax Returns were correct and complete in all material respects. All
Taxes shown as due on such returns by any of the Company and each
subsidiary of the Company have been paid. Except with respect to any of the
Company's or its subsidiaries' Tax Returns for the 1999 tax year, none of
the Company or any subsidiary of the Company currently is the beneficiary
of any extension of time within which to file any Tax Return. To the
Company's Knowledge, there are no material Liens on any of the assets of
any of the Company or any subsidiary of the
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Company that arose in connection with any failure (or alleged failure) to
pay any material Tax.
(b) The Company and each subsidiary of the Company have withheld and
paid all material Taxes required to have been withheld and paid by
applicable Law.
(c) To the Company's Knowledge, no material undisputed deficiencies for
any Tax has been proposed in writing, asserted or assessed, in each case by
any taxing authority, against the Company or any subsidiary of the Company.
Section 3.20(c) of the Company Disclosure Statement lists all federal,
state and foreign income Tax Returns filed with respect to any of the
Company and any subsidiary of the Company for taxable periods ended on or
after December 31, 1996, indicates those income Tax Returns (with respect
to Taxes that are material to the Company and its Subsidiaries, taken as a
whole) for such periods that have been audited, and indicates those income
Tax Returns that currently are the subject of audit. The Company has made
available to Merger Sub correct and complete copies of all federal income
Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by any of the Company or any subsidiary of the Company
since December 31, 1996.
(d) Neither the Company nor any subsidiary of the Company has waived
any statute of limitations in respect of material Taxes or agreed to any
extension of time with respect to a material Tax assessment or deficiency.
(e) Except as set forth on Section 3.20(e) of the Company Disclosure
Statement or as contemplated by this Agreement, neither the Company nor any
subsidiary of the Company has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under
Code ss.280G or Code ss.162(m). Neither the Company nor any subsidiary of
the Company has been a United States real property holding corporation
within the meaning of Code ss.897(c)(2) during the applicable period
specified in Code ss.897(c)(1)(A)(ii). Neither the Company nor any
subsidiary of the Company is a party to any Tax allocation or sharing
agreement. Neither the Company nor any of its subsidiaries has been a
member of an affiliated group filing a consolidated U.S. federal income Tax
Return other than a group the common parent of which is the Company.
(f) Neither the Company nor any subsidiary of the Company has any
liability for any material Taxes of any person other than the Company and
the subsidiaries of the Company (i) under Treas. Reg.ss.1.1502-6 (or any
similar provision of state, local, or foreign law), (ii) as a transferee or
successor, (iii) by contract, or (iv) otherwise.
(g) Except as disclosed on Section 3.20(g) of the Company Disclosure
Statement, neither the Company nor any subsidiary of the Company will be
required to make any material adjustment to taxable income under Code
ss.481 (or any similar provision of state, local, or foreign law) for any
period ending on or after the Closing Date by reason of a voluntary change
in accounting method initiated by the Company or any of its subsidiaries on
or prior to the Closing Date and neither the Internal Revenue
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Service nor any other governmental authority has initiated or proposed any
such change in accounting method.
(h) The Company shall not be required as a result of any "closing
agreement," entered into on or prior to the date of this Agreement as
described in Section 7121 of the Code (or any corresponding provision of
state, local or foreign income Tax law), to include any item of income in,
or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date.
SECTION 3.21 Employment Agreements. Except as disclosed on Section 3.21
of the Company Disclosure Statement or as expressly contemplated by this
Agreement, there are no employment, consulting, severance or indemnification
agreements between the Company and any directors, officers, or other employees
of the Company or any of its subsidiaries providing for (i) payments in excess
of $200,000 per year, (ii) severance payments, or (iii) any bonus or special
payment obligation of the Company or any of its subsidiaries payable in
connection with the sale, acquisition, or change of control of the Company or
any of its subsidiaries.
SECTION 3.22 Change of Control Provisions. Except as disclosed on
Section 3.22 of the Company Disclosure Statement or with respect to any lease
agreement, to the Company's Knowledge, none of the arrangements, agreements or
understandings set forth in Article III hereof and none of the Company's
employee benefit plans, programs or arrangements contain any provision that
would become operative as a result of the Merger and that will result in
payments by the Company or its subsidiaries in excess of $500,000, either
individually or in the aggregate.
SECTION 3.23 Permits. Except as set forth in Section 3.23 of the
Company Disclosure Statement, each of the Company and its subsidiaries has all
Permits, except for those Permits the failure to have would not, individually or
in the aggregate, have a Company Material Adverse Effect (the "Material
Permits"). Except as set forth in Section 3.23 of the Company Disclosure
Statement, to the Knowledge of the Company, all Material Permits are in full
force and effect except where the failure to be so in effect would not have a
Company Material Adverse Effect. Except as set forth in Section 3.23 of the
Company Disclosure Statement, no outstanding notice of cancellation or
termination has been delivered to the Company or its subsidiaries in connection
with any Material Permit nor, to the Knowledge of the Company, has any such
cancellation or termination been threatened. Except as set forth in Section 3.23
of the Company Disclosure Statement, to the Knowledge of the Company, no
application, action or proceeding for the modification of any such Material
Permit is pending or threatened that may result in the revocation, modification,
nonrenewal or suspension of any Material Permit.
SECTION 3.24 Employee Benefit Plans.
(a) Section 3.24 of the Company Disclosure Statement contains a list of
each material employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and
each other material plan, program, policy, practice, arrangement or
contract (whether group or individual) providing for payments, deferred
compensation or benefits or reimbursements to employees or former employees
(or their beneficiaries or dependents) of the Company or
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with respect to which the Company has any material liability or potential
material liability. For purposes of Section 3.25 of the Company Disclosure
Statement, "Company" shall be deemed to include any entity required to be
aggregated with the "Company" under Section 414(b), (c), (m) or (o) of the
Code or Section 4001 of ERISA, at any relevant time. Each item listed in
Section 3.25 of the Company Disclosure Statement is a "Benefit Plan."
(b) Each Benefit Plan that is intended to be qualified within the
meaning of Section 401(a) of the Code has received a determination from the
Internal Revenue Service (the "IRS") that such Benefit Plan is qualified
under Section 401(a) of the Code, and, to the Knowledge of the Company,
nothing has occurred since the date of such determination that would
reasonably be expected to adversely affect the qualification of such
Benefit Plan.
(c) Except as disclosed on Section 3.24 of the Company Disclosure
Statement, the Company does not have any material liability or potential
material liability (including, but not limited to, withdrawal liability)
with respect to (i) any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA) that is subject to Section 302 of Title I
of ERISA, Title IV of ERISA or Section 412 of the Code, or (ii) any
"multiemployer plan" (as such term is defined in Section 3(37) of ERISA).
(d) Except as disclosed on Section 3.22 or 3.24 of the Company
Disclosure Statement, none of the Benefit Plans obligates the Company to
pay any separation, severance, termination or similar benefit solely as a
result of any transaction contemplated by this Agreement or solely as a
result of a change in control or ownership within the meaning of Section
280G of the Code.
(e) Each Benefit Plan and any related trust, insurance contract or fund
has been maintained, funded and administered in compliance in all material
respects with its respective terms and in compliance in all material
respects with all applicable laws and regulations, including, but not
limited to, ERISA and the Code.
(f) The Company has complied with the health care continuation
requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B
of the Code ("COBRA") in all material respects.
(g) With respect to each Benefit Plan, the Company has made available
to Merger Sub true, complete and correct copies of (to the extent
applicable) (i) all documents pursuant to which the Benefit Plan is
maintained, funded and administered, (ii) the most recent annual report
(Form 5500 series) filed with the IRS (with applicable attachments), (iii)
the most recent financial statement, (iv) the most recent summary plan
description provided to participants, and (v) the most recent determination
letter received from the IRS.
(h) With respect to each Benefit Plan, all material payments, premiums,
contributions or reimbursements for all periods (or partial periods) ending
prior to or as of the Closing required to be made pursuant to any Benefit
Plan shall have been made or
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properly accrued on the Company's most recent audited consolidated balance
sheet filed with the SEC.
(i) Except as set forth on Section 3.24 of the Company Disclosure
Statement or as required by any Laws or any Governmental Authority, the
Company does not maintain, contribute to or sponsor any material employee
benefit plan, agreement or arrangement providing for payments, deferred
compensation or benefits or reimbursements applicable to employees outside
the United States (the "Foreign Plans"). Each Foreign Plan is in compliance
in all material respects with all laws applicable thereto and the
respective requirements of such Foreign Plan's governing documents.
SECTION 3.25 Intellectual Property Rights. Except as disclosed in
Section 3.25 of the Company Disclosure Statement: (i) each of the Company and
its subsidiaries owns and possesses all right, title and interest in and to, or
has a valid and enforceable license to use, all of the Intellectual Property
Rights necessary for the operation of the business of the Company and its
subsidiaries as currently conducted free and clear of all encumbrances, licenses
or other restrictions that would materially interfere with the use of such
Intellectual Property Rights as currently used, except for any such failure to
own or possess that would not, individually or in the aggregate, have a Company
Material Adverse Effect; (ii) no claim by any third party contesting the
validity, enforceability, use or ownership of any of the Intellectual Property
Rights owned or used by the Company or its subsidiaries is pending or, to the
Knowledge of the Company is threatened, and to the Knowledge of the Company,
there are no grounds for the same, except for any such claim that would not,
individually or in the aggregate, have a Company Material Adverse Effect; (iii)
no loss or expiration of any Intellectual Property Right owned or used by the
Company or its subsidiaries is threatened, pending or reasonably foreseeable
which would have a Company Material Adverse Effect; (iv) neither the Company nor
its subsidiaries have received any notices of, and, to the Company's Knowledge,
there is no infringement or misappropriation by, or conflict with, any third
party with respect to the Intellectual Property Rights owned or used by the
Company or its subsidiaries (including, without limitation, any demand or
request that the Company or its subsidiaries license any rights from a third
party), except for any such infringement, misappropriation or conflict that
would not, individually or in the aggregate, have a Company Material Adverse
Effect; (v) neither the Company nor its subsidiaries, to the Company's
Knowledge, have infringed, misappropriated or otherwise violated any
Intellectual Property Rights of any third parties and, to the Company's
Knowledge, there is no infringement, misappropriation or violation which will
occur as a result of the continued operation of the business of the Company and
its subsidiaries as currently conducted, except for any such infringement,
misappropriation or violation that would not, individually or in the aggregate,
have a Company Material Adverse Effect; and (vi) each of the Company and its
subsidiaries has taken commercially reasonable steps to protect, maintain and
safeguard the Intellectual Property Rights owned or used by the Company or its
subsidiaries that are material to the Company and its subsidiaries taken as a
whole.
SECTION 3.26 Unions. Except as set forth on Section 3.26 of the Company
Disclosure Statement, since January 1, 2000 no executive of the Company or any
of its subsidiaries and no group of employees of the Company or any of its
subsidiaries, has terminated, or to the Knowledge of the Company, plans to
terminate, employment with the Company or any of its subsidiaries. Except as set
forth on Section 3.26 of the Company
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Disclosure Statement, there are no collective bargaining or other labor union
agreements applicable to any employees or by which the Company or any of its
subsidiaries is bound. As of the date hereof, no work stoppage, material
grievance, material claim of unfair labor practice, or dispute against the
Company or any of its subsidiaries has occurred within the past five (5) years,
is pending or, to the Knowledge of the Company, threatened, and to the Knowledge
of the Company there is no basis for any of the foregoing. To the Knowledge of
the Company, there is no organizational activity being made or threatened by or
on behalf of any labor union with respect to any employees of Company or any of
its subsidiaries.
SECTION 3.27 Affiliated Transactions. Except as set forth in Section
3.17, Section 3.21 or Section 3.27 of the Company Disclosure Statement or in the
Schedule 14A filed with respect to the annual meeting of the Company's
stockholders held on May 24, 2000, there are no agreements or contracts between
the Company or any of its subsidiaries, on the one hand, and any person who is
an officer, director or affiliate of the Company or any of its subsidiaries, or,
to the knowledge of the Company, any immediate family member, any relative of
any of the foregoing or any entity of which any of the foregoing is an
affiliate, on the other hand. Correct and complete copies of such documents have
previously been made available to Merger Sub.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
MERGER SUB AND PARENT
Except as disclosed in a separate disclosure schedule referring to the
Sections contained in this Agreement, which has been delivered by Merger Sub to
the Company prior to the execution of this Agreement (the "Merger Sub Disclosure
Schedule"), Merger Sub and Parent jointly and severally represent and warrant to
the Company that:
SECTION 4.01 Organization and Qualification; Subsidiaries. Each of
Merger Sub and Parent is a legal entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization and has the requisite organizational power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted. Each of Merger Sub and
Parent is duly qualified or licensed as a foreign entity to do business, and is
in good standing, in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that, individually or in the
aggregate, would not have a Merger Sub Material Adverse Effect. The term "Merger
Sub Material Adverse Effect" means, when used in connection with the Merger Sub,
any change, effect, event, occurrence, condition or development that is or is
reasonably likely to be materially adverse to (i) the business, assets,
liabilities, value, properties, results of operations, prospects or condition
(financial or otherwise) of Merger Sub or Parent or (ii) the ability of Merger
Sub or Parent to timely perform its obligations under this Agreement, other than
effects due to (A) general economic, market or political conditions, (B) matters
generally affecting the industries in which such person operates or (C) the
announcement or expectation of this Agreement or the Transactions.
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SECTION 4.02 Charter Documents and By-laws. Merger Sub has heretofore
furnished to the Company a complete and correct copy of the Certificate of
Incorporation and By-laws, each as amended to date, of Merger Sub. Such charter
documents are in full force and effect. Merger Sub is not in violation of any
provision of its charter documents.
SECTION 4.03 Authority Relative to this Agreement. Each of Merger Sub
and Parent has all necessary organizational power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution and delivery of this Agreement by Merger Sub or
Parent and the consummation by Merger Sub or Parent of the Transactions have
been duly and validly authorized by all necessary organizational action and no
other organizational proceedings on the part of Merger Sub or Parent are
necessary to authorize this Agreement or to consummate the Transactions (other
than, with respect to the Merger, the filing and recordation of appropriate
merger documents as required by the DGCL). This Agreement has been duly and
validly executed and delivered by Merger Sub or Parent and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of Merger Sub or Parent enforceable against Merger Sub or
Parent in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
SECTION 4.04 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Merger Sub or
Parent does not, and the consummation of the Transactions by Merger Sub or
Parent will not (i) conflict with or violate the charter documents, By-laws
or other organizational documents of Merger Sub or Parent, (ii) conflict
with or violate any Law applicable to Parent or Merger Sub or by which any
property or asset of Merger Sub or Parent is bound or affected, except for
such conflicts or violations which would not, individually or in the
aggregate, have a Merger Sub Material Adverse Effect, or (iii) result in a
violation or any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Merger Sub or Parent
is a party or by which Merger Sub or Parent or any property or asset of
Merger Sub or Parent is bound or affected, except for any such breaches or
defaults which, individually or in the aggregate, would not have a Merger
Sub Material Adverse Effect.
(b) The execution and delivery of this Agreement by Merger Sub or
Parent does not, and the consummation of this Agreement by Merger Sub or
Parent will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any government or subdivision thereof,
or any administration, governmental or regulatory authority, agency,
commission, tribunal or body, domestic, foreign or supranational, except
(i) for applicable requirements, if any, of the Exchange Act, the
Securities Act, Blue Sky Laws, the rules of any applicable stock exchange,
state takeover laws, the pre-merger notification requirements of the HSR
Act, and filing and recordation of appropriate merger documents as required
by the DGCL or any other applicable state law, and (ii) where the failure
to obtain such other consents, approvals, authorizations, or
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permits, or to make such filings or notifications, individually or in the
aggregate is not reasonably likely to have a Merger Sub Adverse Effect.
SECTION 4.05 Interim Operations of Merger Sub. Merger Sub was formed
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities (other than those incident to its
organization and the execution of this Agreement) and has conducted its
operations only as contemplated hereby.
SECTION 4.06 Information Supplied. None of the information supplied or
to be supplied by Merger Sub or Parent specifically for inclusion or
incorporation by reference in the Proxy Statement or the Other Filings, at the
respective time filed with the SEC or such other Governmental Authority, and, in
addition, in the case of the Proxy Statement, at the date it is first mailed to
the Company's shareholders or at the time of the Shareholders Meeting (as
defined below), contains or will contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
SECTION 4.07 Brokers. Except as disclosed in Section 4.07 of the Merger
Sub Disclosure Schedule, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the Merger
based upon arrangements made by or on behalf of Merger Sub or Parent.
SECTION 4.08 Litigation. There is no (i) claim, action, suit or
proceeding pending or, to the best knowledge of the Merger Sub and Parent,
threatened against Merger Sub or Parent, before any court, arbitrator or
Governmental Authority, or (ii) outstanding judgment, order, writ, injunction or
decree of any court, arbitrator or Governmental Authority in a proceeding to
which Merger Sub or any of its assets is subject except, in the case of clauses
(i) and (ii) above, such as would not, individually or in the aggregate, have a
Merger Sub Material Adverse Effect.
SECTION 4.09 Capitalization of Merger Sub. Immediately prior to the
Effective Time, the authorized capital stock of Merger Sub will consist solely
of 300,000 shares of Common Stock, par value $0.01 per share ("Merger Sub Common
Stock"). Immediately prior to the Effective Time, there will be 244,936.705
shares of Merger Sub Common Stock issued and outstanding all of which shall have
been issued to Parent in exchange for an aggregate capital contribution by
Parent of $244,936,705 in cash into Merger Sub), and no other shares of capital
stock of Merger Sub will be issued or outstanding. Immediately prior to the
Effective Time, each outstanding share of capital stock of Merger Sub will be
owned by Parent. Except as provided in, or contemplated by, this Agreement,
there are no authorized or outstanding options, warrants, convertible
securities, calls, rights, commitments, preemptive rights or agreements or
instruments or understandings of any character, to which Merger Sub is a party
or by which Merger Sub is bound, obligating Merger Sub to issue, deliver or
sell, or cause to be issued, delivered or sold, contingently or otherwise,
additional shares of capital stock of Merger Sub or any securities or
obligations convertible into or exchangeable for such shares or to grant, extend
or enter into any such option, warrant, convertible security, call, right
commitment, preemptive right or agreement.
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SECTION 4.10 Capitalization of Surviving Corporation. As of the
Effective Time, the authorized capital stock of the Surviving Corporation will
consist solely of 1,000,000 shares of Common Stock, par value $0.01 per share
("Surviving Corp. Common Stock"). As of the Effective Time, there will be
289,037.905 shares of Surviving Corp. Common Stock issued and outstanding, and
no other shares of capital stock of the Surviving Corporation shall be issued or
outstanding. Except as provided in, or contemplated by, this Agreement, as of
the Effective Time there shall be no authorized or outstanding options,
warrants, convertible securities, calls, rights, commitments, preemptive rights
or agreements or instruments or understandings of any character, to which the
Surviving Corporation shall be a party or by which the Surviving Corporation
shall be bound, or obligating the Surviving Corporation to issue, deliver or
sell, or cause to be issued, delivered or sold, contingently or otherwise,
additional shares of capital stock of the Surviving Corporation or any
securities or obligations convertible into or exchangeable for such shares or to
grant, extend or enter into any such option, warrant, convertible security,
call, right commitment, preemptive right or agreement.
SECTION 4.11 Financing. Parent has sufficient cash on hand to
consummate the Capital Contribution, the Merger, the repayment of indebtedness
of the Company, if any, required to be repaid as a result of the Merger, and the
other transactions contemplated hereby to be consummated at the Effective Time.
Such funds are, and at the Closing will be, available for such purposes.
SECTION 4.12 Share Ownership. Parent does not beneficially own any
Company Common Stock.
SECTION 4.13 Arrangements with Shareholders. There are no agreements,
arrangements or understandings between Parent and its affiliates, on the one
hand, and the Shareholders and their affiliates (other than the Company), on the
other hand, except as expressly referred to in this Agreement.
SECTION 4.14 Ownership of VCA. Parent is the owner of 50% of the issued
and outstanding shares of capital stock of Verrerie Cristallerie D'Arques.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder hereby severally but not jointly represents and
warrants to the Company that:
SECTION 5.01 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by such Shareholder
and the consummation of the Transactions by such Shareholder will not, (i)
violate any Law applicable to such Shareholder, (ii) prevent or materially
delay the consummation of the Merger or (iii) result in a violation or any
breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which any Shareholder is a party.
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(b) The execution and delivery of this Agreement by such Shareholder
does not, and the consummation of the Transactions by such Shareholder will
not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, except for applicable
requirements, if any, of the Exchange Act, the Securities Act, Blue Sky
Laws, the rules of any applicable exchange, state takeover laws, the
pre-merger notification requirements of the HSR Act, and filings and
recordation of appropriate merger and amendment documents as required by
the DGCL or any other applicable state law.
SECTION 5.02 Ownership of Shares. All record and beneficial owners of
the Owned Shares are listed on Exhibit B hereto, and such Owned Shares are owned
free and clear of any liens or encumbrances and free of any other limitation or
restriction (including, without limitation, any restriction on the right to
vote, sell or otherwise dispose of the Owned Shares or any interest therein)
except pursuant to this Agreement, the Support Agreement (as defined below) or
applicable securities Laws. The Owned Shares indicated on such Schedule
constitute all of the capital stock of the Company owned of record or
beneficially owned by such Shareholder.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 6.01 of the Company Disclosure
Statement or as otherwise expressly provided for in this Agreement, unless
Merger Sub shall otherwise agree in writing (which will not be unreasonably
withheld or delayed) the Company shall, and shall cause its subsidiaries to,
conduct its business in the ordinary course and in a manner consistent in all
material respects with past practice. The Company shall, and shall cause its
subsidiaries to, use commercially reasonable efforts to (i) preserve intact its
business organization, (ii) keep available the services of the current officers,
key employees and consultants of the Company and its subsidiaries, (iii)
preserve the current relationships of the Company and its subsidiaries with
customers, franchisees, distributors, suppliers, licensors, licensees,
contractors and other persons with which the Company or its subsidiaries has
significant business relations, (iv) maintain all assets in good repair and
condition (except for ordinary wear and tear) other than those disposed of in
the ordinary course of business, (v) maintain all insurance necessary to the
conduct of the Company's business as currently conducted, (vi) maintain its
books of account and records in the usual, regular and ordinary manner, and
(vii) maintain, enforce and protect all of the material Intellectual Property
Rights owned or used by the Company or its subsidiaries in a manner consistent
in all material respects with past practice. By way of amplification and not
limitation, except as contemplated by this Agreement, or as set forth in Section
6.01 of the Company Disclosure Statement, the Company shall not, and shall cause
its subsidiaries not to, between the date of this Agreement and the Effective
Time, directly or indirectly do, or propose to do, any of the following without
the prior written consent of Merger Sub (which shall not be unreasonably
withheld or delayed).
(a) amend or otherwise change its Certificate of Incorporation or
By-laws, except to the extent contemplated by the Preference Amendment;
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(b) issue, sell, pledge, dispose of, grant or encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of capital stock of any class of the Company (other than pursuant to
and in accordance with the Company Stock Option Plans and other stock
purchase plans, if any, and the agreements listed in Section 3.03 of the
Company Disclosure Statement or in connection with the Preference Exchange
or the Capital Contribution) or its subsidiaries, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
such capital stock, or any other ownership interest (including, without
limitation, any phantom interests), of the Company or its subsidiaries or
(ii) any assets of the Company or its subsidiaries, except for sales in the
ordinary course of business consistent with past practice and other asset
sales for consideration or having a fair market value aggregating not more
than $500,000;
(c) except any regular dividend paid in an amount and manner consistent
with past practice, declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock (other than between any wholly-owned subsidiary
of the Company and the Company);
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, or propose to redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock, other than in connection
with the Preference Exchange;
(e) acquire (including, without limitation, by merger, consolidation or
acquisition of stock or assets) or agree to acquire any corporation,
partnership, limited liability company, or other business organization or
division thereof;
(f) (i) incur or agree to incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or otherwise as
an accommodation become responsible for, the obligations of any person, or
make any loans, advances, or capital contributions to or investments in,
any other person, except in an amount not in excess of $500,000; or (ii)
authorize capital expenditures which are, in the aggregate, in excess of
$5,000,000;
(g) acquire, or agree to acquire, sell or dispose of any Real Property
or other material assets, other than sales or other dispositions of fixed
assets (other than Real Property) or sales or other dispositions of
inventory and the purchase of supplies and equipment, in each case, in the
ordinary course of business consistent with past practice;
(h) enter into, establish, adopt, amend or renew any material
employment, consulting, severance or similar agreement or arrangements with
any director or executive officer or grant any salary or wage increase to
any executive officer (other than in the ordinary course);
(i) establish, adopt, amend, or materially increase benefits under, any
material pension, retirement, stock option, stock purchase, savings, profit
sharing, deferred compensation, consulting, welfare benefit contract, plan
or arrangement (other than as
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may be required by applicable law), or terminate the Company's defined
benefit pension plan or take any action in respect thereof;
(j) except as required by Law, enter into any labor or collective
bargaining agreement, memorandum of understanding, grievance settlement or
any other agreement or commitment to or relating to any labor union;
(k) discharge or satisfy any material Lien or pay or satisfy any
material obligation or liability (fixed or contingent) except in the
ordinary course of business consistent with past practice, or commence any
voluntary petition, proceeding or action under any bankruptcy, insolvency
or other similar law;
(l) make or institute any change in accounting procedures or practices
in its accounting procedures and practices unless mandated by GAAP;
(m) enter into any material agreement or other arrangement with any
director, executive officer, employee or stockholder of the Company or its
subsidiaries or, to the Knowledge of the Company, any affiliate of the
foregoing, except in the ordinary course of business;
(n) enter into any agreement or other arrangement that is reasonably
likely to be material to the business of the Company or its subsidiaries,
except in the ordinary course of business consistent with past practice;
(o) make or change any election, change an annual accounting period,
adopt or change any accounting method, file any amended Tax Return, enter
into any material closing agreement, settle any material Tax claim or
material assessment relating to the Company or its subsidiaries, surrender
any right to claim a refund of Taxes, consent to any extension or waiver of
the limitation period applicable to any material Tax claim or material
assessment relating to the Company or its subsidiaries, fail to timely file
any Tax Return, take a position on a Tax Return not in keeping with prior
practice or take any other similar action, or omit to take any action
relating to the filing of any Tax Return or the payment of any Tax, if such
election, adoption, change, amendment, agreement, settlement, surrender,
consent or other action or omission could have the effect of materially
increasing the present or future Tax liability or materially decreasing any
present or future Tax asset of the Company or its subsidiaries;
(p) take any action or omit to take any action which would result in a
violation of any applicable Law or would cause a breach of any agreement,
contract or commitment, which violation or breach would have a Company
Material Adverse Effect;
(q) license, assign or otherwise transfer to any person or entity any
rights to any material Intellectual Property Rights owned or used by the
Company or its subsidiaries, except in the ordinary course of business
consistent with past practice;
(r) amend, extend, renew or terminate any Lease, and shall not enter
into any new lease, sublease, license or other agreement for the use or
occupancy of any real property, except in the ordinary course of business
consistent with past practice, for
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which annual rental payments do not exceed $250,000 or for any real
property used as a distribution center;
(s) settle or enter into any agreement or arrangement related to the
settlement of any action, suit, claim, controversy, investigation or
pending litigation arising in connection with or related to the
transactions contemplated by this Agreement;
(t) fail to maintain, enforce or protect any material Intellectual
Property Rights owned or used by the Company or its subsidiaries, except in
the ordinary course of business consistent with past practice; or
(u) authorize or propose, or agree to take, any of the foregoing
actions prohibited under Section 6.01.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Shareholders' Meeting.
(a) Subject to the provisions of Section 7.05 and Section 9.01, the
Company shall, consistent with applicable law, call and hold a meeting of
the holders of shares of Company Common Stock (the "Shareholders' Meeting")
as promptly as practicable for the purpose of voting upon the approval and
adoption of this Agreement and the Transactions. The Company, through its
Board of Directors or a committee thereof, shall recommend to its
shareholders approval and adoption of this Agreement and the Transactions,
which recommendation shall be contained in the Proxy Statement (as defined
below); provided, however, that the Board of Directors of the Company or a
committee thereof may fail to make its recommendation to the shareholders
of the Company or may withdraw, modify or change its recommendation to the
shareholders of the Company if the Board of Directors or the Special
Committee determines in good faith, following consultation with its outside
counsel as to legal matters, that its fiduciary duties require it to do so.
The Company shall use reasonable best efforts to solicit from the holders
of shares of Company Common Stock proxies in favor of the approval and
adoption of the Merger, and shall take all other action reasonably
necessary or advisable to secure the vote or consent of such holders
required by the DGCL unless the Board of Directors or the Special Committee
determines in good faith, following consultation with its outside counsel
as to legal matters, that its fiduciary duties require otherwise
(b) Each of Merger Sub, Parent and their subsidiaries shall vote (or
consent with respect to) any shares of Company Common Stock beneficially
owned by it, or with respect to which it has the power (by agreement, proxy
or otherwise) or cause to be voted (or to provide a consent), in favor of
the approval and adoption of this Agreement at any meeting of the
shareholders of the Company at which this Agreement shall be submitted for
approval and adoption and at all adjournments or postponements thereof (or,
if applicable, by any action of the shareholders of the Company by consent
in lieu of a meeting).
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SECTION 7.02 Preparation of Proxy Statement.
(a) The Company shall, as soon as practicable (and if all other parties
hereto comply with their obligations under this Section 7.02, within thirty
(30) days after the date hereof), prepare and file (after providing Merger
Sub with a reasonable opportunity to review and comment thereon)
preliminary proxy materials (including, without limitation, a Schedule
13E-3 filing, if required to be filed under the Exchange Act) relating to
the meeting of the holders of shares of Company Common Stock to be held in
connection with the Transactions (together with any amendments thereof or
supplements thereto, the "Proxy Statement") (or, if requested by Merger Sub
and permitted by Law, an information statement in lieu of a proxy statement
pursuant to Rule 14C under the Exchange Act, with all references herein to
the Proxy Statement being deemed to refer to such information statement, to
the extent applicable) with the SEC and shall use its commercially
reasonable efforts to respond to any comments of the SEC (after providing
Merger Sub with a reasonable opportunity to review and comment thereon) and
to cause the Proxy Statement to be mailed to the Company's shareholders as
promptly as practicable after responding to all such comments to the
satisfaction of the SEC staff. The Company shall notify Merger Sub promptly
of the receipt of any comments from the SEC and of any request by the SEC
for amendments or supplements to the Proxy Statement or for additional
information and shall supply Merger Sub with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the
SEC, on the other hand, with respect to the Proxy Statement or the
Transactions. The Company will cause the Proxy Statement (other than
portions relating to Parent or Merger Sub) to comply in all material
respects with the applicable provisions of the Exchange Act and the rules
and regulations thereunder applicable to the Proxy Statement and the
solicitation of proxies for the Shareholders' Meeting (including any
requirement to amend or supplement the Proxy Statement). Merger Sub and
Parent shall cooperate with the Company in the preparation of the Proxy
Statement, and without limiting the generality of the foregoing, each party
shall furnish to the other such information relating to it and its
affiliates and the Transactions and such further and supplemental
information as may be reasonably requested by the other party and shall
promptly notify the other party of any change in such information. If at
any time prior to the Shareholders Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement,
the Company shall promptly prepare and mail to its shareholders such an
amendment or supplement; provided, that no such amendment or supplement to
the Proxy Statement will be made by the Company without providing Merger
Sub a reasonable opportunity to review and comment thereon.
(b) Unless the Board of Directors or the Special Committee determines
in good faith, following consultation with its outside counsel as to legal
matters, that its fiduciary duties require otherwise, the Company agrees to
include in the Proxy Statement the unanimous recommendation of the voting
members of the Company's Board of Directors, subject to any modification,
amendment or withdrawal thereof, and represents that the Special Committee
Financial Advisor has, subject to the terms of its engagement letter with
the Company, consented to the inclusion of references to its opinion in the
Proxy Statement.
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SECTION 7.03 Appropriate Action; Consents; Filings; Further Assurances.
(a) Subject to Section 7.05 hereof, the Company and Merger Sub shall
use commercially reasonable efforts to (i) take, or cause to be taken, all
appropriate action and do, or cause to be done, all things necessary,
proper or advisable under applicable Law or otherwise to consummate the
Transactions and make effective the Merger as promptly as practicable, (ii)
obtain expeditiously from any Governmental Authorities any consents,
licenses, permits, waivers, approvals, authorizations or orders required to
be obtained or made by Merger Sub, or the Company or any of its
subsidiaries in connection with the authorization, execution and delivery
of this Agreement and the consummation of the Transactions, and (iii) as
promptly as practicable, make all necessary filings, and thereafter make
any other required submissions, with respect to this Agreement and the
Transactions required under (A) the Securities Act and the Exchange Act,
and any other applicable federal or state securities Laws, (B) the HSR Act
and any related governmental request thereunder and (C) any other
applicable Law; provided, that Merger Sub and the Company shall cooperate
with each other in connection with the making of all such filings,
including providing copies of all such documents to the non-filing party
and its advisors prior to filing. From the date of this Agreement until the
Effective Time, each party shall promptly notify the other party in writing
of any pending or, to the knowledge of the first party, threatened action,
proceeding or investigation by any Governmental Authority or any other
person (i) challenging or seeking material damages in connection with the
Merger or the conversion of the Company Common Stock into cash pursuant to
the Merger or (ii) seeking to restrain or prohibit the consummation of the
Transactions or otherwise limit the right of Surviving Corporation to own
or operate all or any portion of the businesses or assets of the Company or
its subsidiaries, which in either case would have a Company Material
Adverse Effect prior to or after the Effective Time, or a Surviving
Corporation Material Adverse Effect after the Effective Time. The term
"Surviving Corporation Material Adverse Effect" means, when used in
connection with the Surviving Corporation, any change, effect, event,
occurrence, condition or development that is or is reasonably likely to be
materially adverse to the business, assets, liabilities, value, properties,
results of operations, prospects or condition (financial or otherwise) of
the Surviving Corporation or its subsidiaries, taken as a whole, other than
effects due to (A) general economic, market or political conditions, (B)
matters generally affecting the industries in which such person operates or
(C) the announcement or expectation of this Agreement or the Transactions.
(b) The Company, the Shareholders, Parent and Merger Sub shall promptly
furnish to each other all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable
Law (including all information required to be included in the Proxy
Statement) in connection with the Transactions.
(c) (i) Merger Sub, Parent and the Company shall give (or shall cause
its respective subsidiaries to give) any notices to third parties and use,
and cause its respective subsidiaries to use, their reasonable efforts to
obtain any third party consents, (A) necessary, proper or advisable to
consummate the Transactions, (B) disclosed or required to be disclosed in
the Company Disclosure Statement or Merger Sub Disclosure
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Statement or (C) required to prevent a Company Material Adverse Effect from
occurring prior to or after the Effective Time or a Surviving Corporation
Material Adverse Effect from occurring after the Effective Time.
(ii) In the event that Merger Sub, Parent or the Company shall fail to
obtain any third party consent described in subsection (c)(i) above, it
shall use its commercially reasonable efforts, and shall take any such
actions reasonably requested by the other parties, to minimize any adverse
effect upon the Company, Parent and Merger Sub, their respective
subsidiaries, and their respective businesses resulting, or which could
reasonably be expected to result after the Effective Time, from the failure
to obtain such consent.
(d) If any state takeover statute or similar statute or regulation
becomes applicable to this Agreement or any of the Transactions, the
Company, Parent and Merger Sub will take all reasonable actions necessary
to ensure that the Merger and the other Transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the
Merger and the other Transactions.
(e) If at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement,
including the execution of additional documents, the proper officers and
directors of each party to this Agreement (including the Shareholders)
shall take all such reasonably necessary actions. At and after the
Effective Time, the officers and directors of the Surviving Corporation
will be authorized to execute and deliver, in the name and on behalf of the
Company, any other actions to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title and
interest in, to and under any of the rights, properties or assets of the
Company acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
SECTION 7.04 Access to Information; Confidentiality.
(a) The parties shall comply with, and shall cause their respective
Representatives (as defined below) to comply with, to the extent permitted
by applicable Law, all of their respective obligations under the
Confidentiality Agreement dated December 10, 1999 (the "Confidentiality
Agreement") between the Company and Parent.
(b) Subject to the Confidentiality Agreement, from the date hereof to
the Effective Time, the Company shall (and shall cause each of its
subsidiaries to) provide to Merger Sub (and its officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives, collectively, "Representatives") reasonable access to all
information and documents which Merger Sub may reasonably request regarding
the business, assets, liabilities, employees and other aspects of the
Company or its subsidiaries, except for attorney-client privilege
information and information that is attorney work product.
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(c) From the date hereof to the Effective Time, the Company shall (and
shall cause each of its subsidiaries to): (i) provide to Merger Sub and its
Representatives access at reasonable times upon prior notice to the
officers, employees, agents, properties, offices and other facilities of
the Company and its subsidiaries and to the books and records thereof and
(ii) reasonably promptly furnish such information concerning the business,
properties, contracts, assets, liabilities, personnel and other aspects of
the Company and its subsidiaries as Merger Sub or its Representatives may
reasonably request, except for attorney-client privilege information and
information that is attorney work product.
(d) No investigation by any party, whether prior to the execution of
this Agreement or pursuant to this Section 7.04, shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 7.05 No Solicitation.
(a) The Company and the Shareholders (solely in their capacity as such)
shall not, and the Company shall cause its subsidiaries not to, and the
Company agrees that it shall not authorize any of its directors, officers,
employees, agents or representatives to, directly or indirectly, solicit,
initiate or encourage (including by way of furnishing or disclosing
non-public information) any inquiries, discussions or the making of any
proposal with respect to any merger, consolidation or other business
combination involving the Company or the acquisition of any nature of a
material portion of the assets (including stock of subsidiaries) of the
Company and its subsidiaries taken as a whole or the capital stock of the
Company (a "Competing Transaction") or negotiate or discuss a proposal with
respect to a Competing Transaction with any person other than the Merger
Sub and Parent and directors, officers, employees and representatives of
Merger Sub, Parent and the Company; provided, however, that the Company and
its directors, officers, employees, agents or representatives may, to the
extent required by the fiduciary obligations of the Board of Directors or
the Special Committee as determined in good faith, following consultation
with its outside counsel as to legal matters, in response to an unsolicited
proposal for or request to discuss a Competing Transaction from any person
that was not solicited by the Company after the date hereof and that did
not otherwise result from the breach of this Section 7.05, (w) furnish
information with respect to the Company to such person pursuant to a
customary confidentiality agreement (which need not contain any
"standstill" provisions); (x) participate in discussions or negotiations
with such person regarding any Competing Transaction; (y) conduct or
participate in "due diligence" inquiries and (z) take all such other
actions as the Company's Board of Directors or the Special Committee
thereof determine are reasonably necessary in order to review or respond to
the proposed Competing Transaction.
(b) Neither the Company (or any of its subsidiaries) nor the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Merger
Sub, the approval, adoption or recommendation by the Board of Directors of
the Company or any such committee of this Agreement, the Merger or the
other Transactions, (ii) approve or
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recommend, or propose to approve or recommend, any Competing Transaction,
(iii) approve or recommend, or propose to approve or recommend, or execute
or enter into, any letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other relating to any
Competing Transaction or propose or agree to do any of the foregoing, or
(iv) submit any Competing Transaction at the Shareholder's Meeting for
purposes of voting upon approval and adoption of the Competing Transaction;
provided, however, that the Company may, to the extent required by the
fiduciary obligations of the Board of Directors of the Company, as
determined in good faith by a majority vote of the Board of Directors of
the Company or the Special Committee thereof following consultation with
its outside counsel as to legal matters, and after compliance with Section
7.05(d), (A) terminate this Agreement pursuant to Section 9.01(g), (B)
approve or recommend a Competing Transaction, (C) withdraw or modify its
recommendation of the Merger, (D) submit a Competing Transaction to the
stockholders of the Company or (E) take any other action consistent with
its fiduciary duties. Notwithstanding the foregoing or Section 7.05(a), the
Company and its Board of Directors at all times may take all such actions
as are reasonably necessary pursuant to Rule 14d-9 or Rule 14e-2 under the
Exchange Act. Notwithstanding anything in this Agreement to the contrary,
nothing herein shall (x) prevent or restrict the Board of Directors or the
Special Committee from withdrawing or modifying its recommendation of the
Merger to the extent the Board of Directors or the Special Committee
determines in good faith based upon advice of counsel that it is required
to do so in order to satisfy its fiduciary duties under applicable Law, (y)
limit the ability of the Board of Directors or the Special Committee to
make any disclosure to the Company's stockholders that the Board of
Directors or the Special Committee determines in good faith based upon
advice of counsel is required to be made in order to satisfy its fiduciary
duties under applicable Law or (z) limit the Company's ability to make any
disclosure required by applicable Law.
(c) Subject to the fiduciary obligations of the Board of Directors of
the Company or a committee thereof, as determined in good faith by a
majority vote of the Board of Directors of the Company or the Special
Committee thereof following consultation with its outside counsel as to
legal matters, the provisions of Sections 7.05(a) and (b) above and
compliance with applicable securities laws, (a) the Company promptly (and
in any event within 24 hours of the relevant event) shall advise Merger Sub
orally and in writing of any Competing Transaction and the identity of the
person making any such Competing Transaction, and, in each case, the
material terms and conditions thereof, including any material amendment or
other modifications to the terms of any such Competing Transaction or
inquiry and (b) the Company shall keep Merger Sub reasonably apprised of
the status of any proposal relating to a Competing Transaction on a current
basis.
(d) Prior to taking any action described in clauses (i), (ii), (iii) or
(iv) of Section 7.05(b), the Company shall terminate this Agreement under
Section 9.01(g), and pay the Merger Sub all amounts as provided in Section
9.03(c).
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SECTION 7.06 Indemnification and Insurance.
(a) Merger Sub and the Company agree that for six years from and after
the Effective Time, the indemnification obligations set forth in the
Company's or any subsidiary's Certificate of Incorporation and the
Company's By-Laws, as amended, or other organizational documents, in each
case as of the date of this Agreement, shall survive the Merger as
continuing obligations of the Surviving Corporation and shall not be
amended, repealed or otherwise modified after the Effective Time in any
manner that would adversely affect the rights thereunder of the individuals
who on or at any time prior to the Effective Time were entitled to
indemnification thereunder with respect to matters occurring prior to the
Effective Time. In addition, Merger Sub and the Company agree that the
indemnification obligations of the Company or any Subsidiary as set forth
in other indemnification agreements to which it is a party shall be
continuing obligations of the Surviving Corporation and shall not be
amended, repealed or otherwise modified after the Effective Time, except as
permitted by the terms and provisions of those agreements.
(b) The Surviving Corporation and the Company shall maintain in effect,
for six years or until the applicable statute of limitations expires, from
and after the Effective Time, directors' and officers' liability insurance
policies covering the persons who are currently covered in their capacities
as directors and officers (the "Covered Parties") by the Company's current
directors' and officers' policies and on terms not materially less
favorable than the existing insurance coverage with respect to matters
occurring prior to the Effective Time; provided, however, in the event the
annual premium for such coverage exceeds an amount equal to 200% of the
last annual premium paid immediately prior to the date hereof by the
Company for such coverage, the Surviving Corporation shall notify the
Covered Parties who shall then elect as a group either (i) to allow the
Surviving Corporation to obtain as much comparable insurance as possible
for an annual premium equal to 200% of the last annual premium paid
immediately prior to the date hereof by the Company, or (ii) to seek
coverage from another carrier, in which event the Surviving Corporation
shall reimburse the Covered Parties the cost of such alternate coverage up
to an amount equal to 200% of the last annual premium paid immediately
prior to the date hereof by the Company for such coverage.
(c) In addition to, and not in lieu of the foregoing, the Merger Sub
agrees that Surviving Corporation shall indemnify, defend (with mutually
acceptable counsel) and hold harmless all current and former officers and
directors of the Company and its subsidiaries (the "Indemnified Parties")
to the fullest extent permitted by the DGCL and in the Certificate of
Incorporation and By-laws of the Company, as in effect as of the date
hereof, from and against all liabilities, costs, expenses and claims
(including without limitation reasonable legal fees and disbursements,
which shall be paid, reimbursed or advanced by the Surviving Corporation in
a manner consistent with applicable provisions of the Company's By-laws as
in effect on the date hereof) arising out of actions taken prior to the
Effective Time in performance of their duties as directors or officers of
the Company or any subsidiary, in connection with the Merger and the other
Transactions contemplated hereby, which may be asserted against the
Indemnified Parties from and after the date of this Agreement other than in
respect of any Company Common Stock or
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Company Stock Options held by directors or officers prior to or after the
Effective Time; provided, however, that the Surviving Corporation's
obligations to the Indemnified Parties under this Section 7.06(c) shall not
be effective until consummation of the Merger; provided, further, that the
Surviving Corporation shall not have any obligation hereunder to any
Indemnified Party if the indemnification of such Indemnified Party in the
manner contemplated hereby is determined pursuant to a final non-appealable
judgment rendered by a court of competent jurisdiction to be prohibited by
applicable Law or if the indemnification of the Indemnified Party is not
within the power of the Surviving Corporation under the DGCL.
(d) In the event that any action, suit, proceeding or investigation
relating thereto or to the transactions contemplated by this Agreement is
commenced, whether before or after the Effective Time, the parties hereto
agree to cooperate and use their respective reasonable efforts to
vigorously defend against and respond thereto.
(e) Following the Effective Time Parent shall cause Merger Sub and the
Surviving Corporation to perform their obligations under this Section 7.06.
SECTION 7.07 Notification of Certain Matters. From and after the date
of this Agreement until the Effective Time, each party hereto shall promptly
notify the other parties hereto of:
(a) the occurrence, or non-occurrence, of any event the occurrence or
non-occurrence of which would be reasonably likely to cause any (i)
representation or warranty contained in this Agreement to be untrue or
inaccurate in any respect or (ii) any covenant or any condition to the
obligations of any party to effect the Merger not to be complied with or
satisfied;
(b) the failure of any party hereto to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
pursuant to this Agreement;
(c) the receipt of any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the Transactions;
(d) the receipt of any notice or other communication from any
Governmental Authority in connection with the Transactions; and
(e) any actions, suits, claims, investigations or proceedings commenced
or, to the knowledge of the party, threatened against, relating to or
involving or otherwise affecting the Company or Merger Sub, which relates
to the consummation of the Transactions;
in each case, to the extent such event or circumstance is or becomes known to
the party required to give such notice; provided, however, that the delivery of
any notice pursuant to this Section 7.07 shall not be deemed to be an amendment
of this Agreement or any Section in the Company Disclosure Statement or the
Merger Sub Disclosure Statement, as the case may be, and shall not cure any
breach of any representation or warranty requiring disclosure of such matter
prior to the date of this Agreement.
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SECTION 7.08 Public Announcements. Merger Sub, the Company and the
Shareholders shall use reasonable efforts to consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or any of the Transactions. Prior to the Closing, Merger Sub,
Parent, the Company and the Shareholders shall not issue any such press release
or make any such public statement without the prior consent of the other parties
(which consent shall not be unreasonably withheld), except as may be required by
Law or any listing agreement with the New York Stock Exchange or any national
securities exchange to which Merger Sub or the Company is a party and, in such
case, shall use reasonable efforts to consult with all the parties hereto prior
to such release or statement being issued. The parties shall agree on the text
of a joint press release by which Merger Sub and the Company will announce the
execution of this Agreement. Such initial press release announcing the execution
of this Agreement, which press release shall be issued in the manner that is
customary for issuing a press release for a transaction such as the Merger and
consistent with the past practices of the Company, may include the following
language and the inclusion of such language shall not be a breach of any
provision of this Agreement and shall not constitute solicitation of a Competing
Transaction or a proposal therefor:
"Notwithstanding its recommendation and
consistent with the terms of the Merger Agreement, the
Special Committee of the Company's Board of Directors has
requested that the Special Committee's financial advisor,
CIBC World Markets, be available to receive unsolicited
inquiries from any other parties interested in the possible
acquisition of the Company. If the Special Committee of the
Company's Board of Directors concludes that the failure to
provide information to, or engage in discussions or
negotiations with, such parties would be inconsistent with
its fiduciary duties to the Company's stockholders, CIBC
World Markets, in conjunction with the Special Committee of
the Company's Board of Directors, may provide information to
and engage in discussions and negotiations with such parties
in connection with any such indicated interest. Under
specified circumstances, the Company has the right to
terminate the merger agreement and to enter into an
agreement with a party proposing a competing transaction.
The obligation of certain shareholders to support the merger
agreement would also terminate upon the termination of the
merger agreement. The full text of the merger agreement,
which describes the obligations of the Company under such
circumstances, as well as the shareholder support agreement,
will be timely filed by the Company with the SEC and should
be available at no cost from the SEC's web site,
www.sec.gov."
SECTION 7.09 Employment Agreements; Stockholders' Agreement.
(a) Simultaneously herewith, the Company is entering into employment
agreements with each of Messrs. Blake, Dingman, Santarelli and Aratani
(collectively,
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the "Employment Agreements") in the forms of Exhibit C-1, Exhibit C-2,
Exhibit C-3 and Exhibit C-4, respectively, attached hereto. From and after
the Effective Time, Merger Sub and the Surviving Corporation shall have no
obligation to Alfred J. Blake under that certain Employment and Consulting
Agreement dated August 6, 1996 by and between Alfred J. Blake, American
Commercial Incorporated and the Company, and such agreement shall be hereby
terminated and of no further force or effect at and as of the Effective
Time.
(b) Simultaneously herewith, the Company, Parent and the Shareholders
are entering into a Stockholders' Agreement in the form attached as Exhibit
D hereto (the "Stockholders' Agreement").
SECTION 7.10 Certain Assistance.
(a) At or prior to Closing, the Company shall, and shall cause its
subsidiaries to, take such commercially reasonable steps as may be
requested by Merger Sub in connection with the following:
(i) At Merger Sub's reasonable request, with respect
to any material parcel of leased real property, the Company
shall use reasonable efforts to deliver to Merger Sub a
nondisturbance agreement, a consent and waiver and/or an
estoppel letter executed by the landlord, lessor, and/or
licensor of such leased real property, in each case, in form
and substance reasonably acceptable to Merger Sub;
(ii) At Merger Sub's reasonable request, the Company
shall furnish such financial statements as may be reasonably
requested by Merger Sub in connection with the financing of
the Transactions; and
(iii) At Merger Sub's reasonable request, the Company
shall take or cause to be taken any other reasonable actions
reasonably necessary to arrange financing for the Company or
obtain amendments or waivers to contracts and agreements
relating to indebtedness of the Company existing as of the
date of this Agreement.
(b) No actions taken at the direction of Merger Sub by or on behalf of
the Company in connection with its obligations under this Section 7.10 or
arising as a result of the taking of such action shall constitute a breach
of any representation or warranty of the Company contained in this
Agreement for any purpose hereunder. Notwithstanding anything to the
contrary set forth herein, the effectiveness of any such actions by the
Company shall be conditioned upon the consummation of the Merger. Nothing
contained in this Section 7.10 shall be deemed to constitute a condition to
any obligation of Parent or Merger Sub hereunder that Parent or Merger Sub
receive any financing in connection with the Transaction.
SECTION 7.11 Exchange Act and NYSE Filings. Unless an exemption shall
be expressly applicable, or unless Merger Sub or the Company, as the case may
be, agrees otherwise in writing, the Company and Merger Sub and their respective
affiliates will timely file
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with the SEC and the NYSE all reports required to be filed by it pursuant to the
rules and regulations of the SEC and NYSE (including, without limitation, all
required financial statements). Such reports and other information shall comply
in all material respects with all of the requirements of the SEC and NYSE rules
and regulations, and when filed, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
SECTION 7.12 Representations. Subject to the terms and conditions
hereof, each of the Company and the Merger Sub, except as required by Law, (a)
will use reasonable efforts to take all action necessary to render true and
correct as of the Closing its respective representations and warranties
contained in this Agreement to the extent necessary to satisfy any applicable
condition set forth in Article VIII hereof, (b) will refrain from taking any
action that would render any such representation or warranty untrue or incorrect
as of such time if such action would cause any applicable condition in Article
VIII hereof and fail to be satisfied and (c) will perform or cause to be
satisfied each agreement, covenant or condition to be performed or satisfied by
it to the extent necessary to satisfy any applicable condition set forth in
Article VIII hereof.
SECTION 7.13 Support Agreement. Each of the Shareholders and Merger Sub
shall comply with all of their respective obligations under the Support
Agreement.
SECTION 7.14 Incentive Compensation Plan; Employee Benefits.
(a) The Company has adopted the Mikasa, Inc. Incentive Compensation
Plan in the form attached as Exhibit E hereto ("Incentive Compensation
Plan"), with effect from and after the Effective Time.
(b) From the Effective Time and until at least December 31, 2003,
Parent shall, or shall cause the Surviving Corporation or its subsidiaries
to, either maintain the Benefit Plans or provide benefits to current and
former employees of the Company and its subsidiaries (together, "Company
Employees") that are in the aggregate comparable to the benefits provided
under such Benefit Plans immediately prior to the Effective Time (other
than equity based benefits). Without limiting the generality of the
foregoing, from the Effective Time and until at least December 31, 2003,
Parent shall, or shall cause the Surviving Corporation or its subsidiaries
to: (i) except as otherwise provided therein, maintain the Incentive
Compensation Plan and (ii) assume and honor any obligations of the Company
under any individual or group severance plans, programs or agreements for
Company Employees set forth on Section 7.14 of the Company Disclosure
Statement, as such plans, programs and agreements exist and are effective
as of the Effective Time.
(c) With respect to any employee benefit plans of Parent which become
applicable to Company Employees ("Parent Plans"), Parent shall, or shall
cause the Surviving Corporation or its subsidiaries to: (i) waive all
pre-existing conditions, exclusions, and waiting periods with respect to
participation and coverage requirements applicable to the Company Employees
under any Parent Plans in which such employees may be eligible to
participate after the Effective Time; (ii) provide each Company
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Employee with credit for any co-payments and deductibles paid prior to the
Effective Time (to the same extent such credit was given under the
analogous Benefit Plan prior to the Effective Time) in satisfying any
applicable deductible or out-of-pocket requirements under any Parent Plans
in which such employees may be eligible to participate after the Effective
Time; and (iii) recognize all service of the Company Employees with the
Company or any of its subsidiaries for purposes of eligibility and vesting
in any Parent Plan in which the Company Employees may be eligible to
participate after the Effective Time; provided, that the foregoing shall
not apply to the extent it would result in duplication of benefits.
SECTION 7.15 Application of Section 16(a) of the Exchange Act. Prior to
the Effective Time, Parent and the Company shall take all such steps as may be
required to cause the transactions contemplated by this Agreement, including any
dispositions of Company Common Stock (including derivative securities with
respect to the Company Common Stock) and acquisitions of New Preference Stock
(including derivative securities with respect to New Preference Stock) by each
Person who is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to the Company to be exempt under Rule 16b-3
promulgated under the Exchange Act.
SECTION 7.16 Performance by Merger Sub. Parent shall cause Merger Sub
to perform its obligations hereunder.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Obligations of Each Party. The
obligations of the Company, Merger Sub and the Shareholders to consummate the
Merger are subject to the satisfaction (or, if permitted by applicable Law,
waiver by the party for whose benefit such condition exist) of the following
conditions:
(a) this Agreement and the Transactions shall have been approved and
adopted by the affirmative vote of the holders of at least a majority of
the outstanding shares of Company Common Stock, in accordance with the DGCL
and the Company's Certificate of Incorporation;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(c) no order, statute, rule, regulation, executive order, stay, decree,
judgment or injunction shall have been enacted, entered, issued,
promulgated or enforced by any Governmental Authority or a court of
competent jurisdiction which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger or of limiting or
restricting the Surviving Corporation's or Merger Sub's conduct or
operation of the business of the Company after the Merger; and
(d) all other necessary and material governmental and regulatory
clearances, consents, or approvals shall have been received.
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SECTION 8.02 Conditions to the Obligations of Parent and Merger Sub.
The obligations of Merger Sub to consummate the Merger are subject to the
satisfaction or, if permitted by applicable Law, waiver by Merger Sub of the
following further conditions:
(a) (i) The Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Effective Time; (ii) the representations and warranties of the Company
contained in this Agreement shall, in the aggregate, be true and correct in
all respects material to the Company and its subsidiaries taken as a whole
on and as of the Closing Date as if made at and as of such time, except for
representations and warranties expressly made as of a specified date, which
shall (when taken together with all other representations and warranties of
the Company) have been true and correct in all respects material to the
Company and its subsidiaries taken as a whole as of such specified date;
and (iii) Merger Sub shall have received a certificate signed by an
executive officer of the Company as to compliance with the conditions set
forth in this paragraph 8.02(a);
(b) Since the date of this Agreement, no event shall have occurred and
be continuing which constitutes a Company Material Adverse Effect;
(c) The Company shall have amended its Certificate of Incorporation to
provide for the Preference Amendment or filed an appropriate Certificate of
Designation to provide for the Preference Stock;
(d) The Preference Exchange shall have been completed on the terms set
forth in this Agreement;
(e) The Company shall have obtained all consents, authorizations,
approvals and waivers from third parties, in form reasonably acceptable to
Merger Sub, which are necessary in order to enable (i) the consummation of
the Transactions by the Company, and (ii) the Surviving Corporation to
conduct its business in all material respects after the Closing Date on the
same basis as conducted prior to the date hereof, in each case, except for
those failure of which to obtain would not have a Company Material Adverse
Effect; and
(f) Not more than seven percent (7.0%) of the shares of Company Common
Stock outstanding immediately prior to the Effective Time shall be
Dissenting Shares.
SECTION 8.03 Conditions to the Obligations of the Company and the
Shareholders. The obligations of the Company and the Shareholders to consummate
the Merger are subject to the satisfaction or, if permitted by applicable Law,
waiver by the Company or the Shareholders, as the case may be, of the following
further conditions:
(a) (i) Merger Sub and Parent shall have performed in all material
respects all of their respective obligations hereunder required to be
performed by them at or prior to the Effective Time; (ii) each of the
representations and warranties of Merger Sub and Parent contained in this
Agreement shall be true and correct in all material respects, in each case
as of the Closing Date as if made at and as of such time; and (iii) the
Company and Shareholders shall have received a certificate signed by an
executive officer of
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Merger Sub and by an executive officer of Parent as to compliance with the
conditions set forth in this paragraph 8.03(a); and
(b) Parent shall have made the Capital Contribution in exchange for
common stock of Merger Sub.
SECTION 8.04 Conditions to the Obligations of the Shareholders. The
obligations of the Shareholders to consummate the Preference Exchange are
subject to the satisfaction, or if, permitted by applicable Law, waiver by the
Shareholders, of the following conditions:
(a) the conditions set forth in Section 8.01 of this Agreement;
(b) the conditions set forth in paragraph (c) of Section 8.02; and
(c) the conditions set forth in paragraphs (a) (other than clause
(iii)) and (b) of Section 8.03.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, notwithstanding
any requisite approval and adoption of this Agreement and the transactions
contemplated hereby by the shareholders of the Company:
(a) by written consent of the Company and Merger Sub;
(b) by Merger Sub or the Company if (i) the waiting period applicable
to the consummation of the Merger under the HSR Act shall not have expired
or been terminated prior to March 31, 2001, (ii) any court of competent
jurisdiction in the United States or other United States Governmental
Authority shall have issued an order (other than a temporary restraining
order), decree or ruling, or taken any other action, restraining, enjoining
or otherwise prohibiting the Merger (provided, however, that neither party
may terminate this Agreement pursuant to this Section 9.01(b)(ii) prior to
March 31, 2001 if the party subject to such order, decree or ruling is
using its reasonable efforts to have such order, decree or ruling removed,
unless such order, decree or ruling shall have become final and
non-appealable), or (iii) the Effective Time shall not have occurred on or
before March 31, 2001; provided, that the right to terminate this Agreement
under this Section 9.01(b) shall not be available to any party whose
failure to fulfill any material obligation under this Agreement has been
the cause of or resulted in the failure of the Effective Time to occur on
or before such date;
(c) by Merger Sub or the Company, if the Shareholders' Meeting shall
have been held and the holders of outstanding shares of Company Common
Stock shall have failed to approve and adopt this Agreement at such meeting
(including any adjournment or postponement thereof in accordance with
applicable Law); provided, that subject to Section 7.05, the right to
terminate this Agreement under this Section 9.01(c) shall not be
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available to the Company if its breach of any material obligation under
this Agreement has been the cause of or resulted in the failure to obtain
such shareholder approval; provided, further, that, if such breach is
curable by the Company through the exercise of its best efforts, and the
Company continues to exercise such best efforts, Merger Sub may not
terminate this Agreement under this Section 9.01(c) unless such breach
continues for a period of 30 days from the date on which Merger Sub
delivers to the Company written notice setting forth in reasonable detail
the circumstances giving rise to such breach; and provided, further, that
the right to terminate this Agreement under this Section 9.01(c) shall not
be available to Merger Sub unless it shall have used its commercially
reasonable efforts to enforce its rights to vote, or to cause the
Shareholders to vote, in favor of the Merger;
(d) by Merger Sub if the Board of Directors of the Company or any
committee thereof (i) shall withdraw, modify in a manner adverse to Merger
Sub, or refrain from giving its approval or recommendation of this
Agreement or any of the Transactions or (ii) recommends a Competing
Transaction with respect to the Company to the Company's stockholders
pursuant to Section 7.05;
(e) by the Company, upon a material breach of any representation,
warranty, or agreement set forth in this Agreement such that the condition
set forth in Section 8.03(a) would not be satisfied; provided, however,
that, if such breach is curable by Merger Sub through the exercise of its
best efforts and Merger Sub continues to exercise such best efforts, the
Company may not terminate this Agreement under this Section 9.01(e) unless
such breach continues for a period of 30 days from the date on which the
Company delivers to Merger Sub written notice setting forth in reasonable
detail the circumstances giving rise to such breach;
(f) by Merger Sub, upon (i) a material breach of any representation,
warranty, or agreement set forth in this Agreement such that the conditions
set forth in Section 8.02(a) or Section 8.02(b) would not be satisfied;
provided, however, that, if such breach is curable by the Company or the
Shareholders, as the case may be, through the exercise of their best
efforts and the Company or the Shareholders, as the case may be, continues
to exercise such best efforts, Merger Sub may not terminate this Agreement
under this Section 9.01(f)(i) unless such breach continues for a period of
30 days from the date on which Merger Sub delivers to the Company or the
Shareholders, as the case may be, written notice setting forth in
reasonable detail the circumstances giving rise to such breach, or (ii) the
occurrence of any change, effect, event, occurrence, condition or
development which (individually or in the aggregate) constitutes a Company
Material Adverse Effect; provided, however, that, if such Company Material
Adverse Effect is curable by the Company or the Shareholders, as the case
may be, through the exercise of their best efforts and the Company or the
Shareholders, as the case may be, continues to exercise such best efforts,
Merger Sub may not terminate this Agreement under this Section 9.01(f)(ii)
unless such Company Material Adverse Effect continues for a period of 30
days from the date on which Merger Sub delivers to the Company or the
Shareholders, as the case may be, written notice setting forth in
reasonable detail the circumstances giving rise to such Company Material
Adverse Effect; or
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(g) by the Company in accordance with Section 7.05(d).
SECTION 9.02 Method of Termination; Effect of Termination.
(a) Any such right of termination hereunder shall be exercised by
advance written notice of termination given by the terminating party to the
other parties hereto in the manner hereinafter provided in Section 10.02.
Any such right of termination shall not be an exclusive remedy hereunder
but shall be in addition to any other legal or equitable remedies that may
be available to any non-defaulting party hereto arising out of any default
hereunder by any other party hereto.
(b) Except as provided in Section 10.01, in the event of the
termination of this Agreement pursuant to Section 9.01, this Agreement
shall forthwith become void, there shall be no liability under this
Agreement on the part of any of the parties hereto or any of their
respective officers or directors and all rights and obligations of any
party hereto shall cease, except for (i) fraud and (ii) as set forth in
Section 9.03; provided, however, that nothing herein shall relieve any
party from liability for, or be deemed to waive any rights of specific
performance of this Agreement available to a party by reason of, any
intentional breach by the other party or parties of this Agreement.
SECTION 9.03 Fees and Expenses
(a) In the event that it is judicially determined that termination of
this Agreement was caused by an intentional breach of this Agreement, then,
in addition to the remedies at law or equity for breach of this Agreement,
the party so found to have intentionally breached this Agreement shall
indemnify and hold harmless the other parties for their respective
reasonable costs, fees and expenses of their counsel, accountants,
financial advisors and other experts and advisors as well as reasonable
fees and expenses incident to the negotiation, preparation and execution of
this Agreement and the attempted consummation of the Transactions, the
related documentation and the shareholders' meetings and consents
("Costs").
(b) In the event that this Agreement is terminated (i) pursuant to
paragraph 9.01(f) of Section 9.01 due to the intentional breach by the
Company or any Shareholder of any representation, warranty, covenant or
agreement contained herein, or (ii) pursuant to paragraph (c) of Section
9.01, the Company shall, within five business days of such termination, pay
Merger Sub by wire transfer of immediately available funds to an account
specified by Merger Sub an amount in cash equal to $1,445,000; provided,
however, that the Merger Sub shall have no right to receive any amount
pursuant to this Section 9.03(c) if Merger Sub's or Parent's material
failure to fulfill any obligation or breach of any representation, warranty
or covenant under this Agreement caused or resulted in the termination of
this Agreement.
(c) In the event that this Agreement is terminated by Merger Sub or the
Company pursuant to paragraphs (d) or (g) of Section 9.01, the Company
shall, within five business days after such termination, pay the Merger Sub
by wire transfer of immediately available funds to an account specified by
the Merger Sub a payment in an
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amount equal to $7,225,000; provided, however, that the Merger Sub shall
have no right to receive any amount pursuant to this Section 9.03(c) if
Merger Sub's or Parent's material failure to fulfill any obligation or
breach of any representation, warranty or covenant under this Agreement
caused or resulted in the termination of this Agreement.
(d) Except as provided in this Section 9.03, all expenses incurred by
the parties hereto shall be borne solely and entirely by the party which
has incurred the same; provided, however, that (i) the Company shall bear
all expenses related to printing, filing and mailing the Proxy Statement
and all SEC and other regulatory filing fees incurred in connection with
the Proxy Statement, and (ii) Merger Sub and the Company shall bear equally
all expenses incurred by the parties hereto and their respective
affiliates, if applicable, in connection with any filing under the HSR Act
due to the transactions contemplated herein.
SECTION 9.04 Amendment. This Agreement may be amended by the parties
hereto at any time prior to the Effective Time; provided, that after the
approval and adoption of this Agreement by the stockholders of the Company as
contemplated in Section 8.01(a), no amendment may be made which would (a) change
the amount or the type of Merger Consideration to be received by the
shareholders of the Company pursuant to the Merger, (b) change any other term or
condition of the Agreement if such change would materially and adversely affect
the Company or the holders of shares of Company Common Stock or New Preference
Stock or (c) without the vote of the stockholders entitled to vote on the
matter, change any term of the Certificate of Incorporation of the Company. This
Agreement may not be amended except by an instrument in writing signed by all of
the parties hereto.
SECTION 9.05 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties of the other party contained herein or in any document,
certificate or writing delivered by the other party pursuant hereto and (c)
waive compliance with any agreement or condition to its obligations (other than
the conditions set forth in paragraphs (a) and (b) of Section 8.01) contained
herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement and
any certificate delivered pursuant hereto by any person shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
9.01, as the case may be, except that the agreements set forth in Articles I and
II and Sections 7.03(e), 7.06, 7.09, 7.10, 7.12, 7.14, 7.15 and 7.16 shall
survive the Effective Time indefinitely, and those set forth in Sections
7.05(d), 7.08, 9.02 and 9.03 and this Article X shall survive termination
indefinitely.
SECTION 10.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have
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been duly given upon receipt) by delivery in person, by facsimile or by
registered or certified mail (postage prepaid, return receipt requested) or by a
nationally recognized overnight courier service to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 10.02):
if to Parent or Merger Sub:
c/o J. G. Durand Industries
38 rue Adrien Danvers
62510 Arques, France
Telecopy: 33 3 21 95 4774
Attention: Mr. Paul Fontaine
with copies to:
Kirkland & Ellis
Citigroup Center
153 East 53rd Street
New York, New York 10022
Telecopy: (212) 446-4900
Attention: Frederick Tanne, Esq.
if to the Company or any Shareholder:
Mikasa, Inc.
One Mikasa Drive
Secaucus, New Jersey 07096
Telecopy: (201) 867-2385
Attention: General Counsel
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019
Telecopy: (212) 259-6333
Attention: Frederick W. Kanner
and Richard D. Pritz
and to
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Telecopy: (212) 225-3999
Attention: Victor I. Lewkow, Esq.
David Leinwand, Esq.
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SECTION 10.03 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares means a person who
shall be deemed to be the beneficial owner of such shares which such person
beneficially owns, as defined in Rule 13d-3 under the Exchange Act;
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in New York, New York;
(d) "Code" means the Internal Revenue Code of 1986, as amended;
(e) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(f) "Environmental Laws" means any federal, state or local law,
statute, rule or regulation relating to releases, discharges, emissions or
disposals to air, water, land or groundwater of Hazardous Materials; to the
treatment, storage, disposal or management of Hazardous Materials; to
exposure to toxic, hazardous or other controlled, prohibited or regulated
substances; and to the transportation, release or any other use of
Hazardous Materials, including the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601, et seq. ("CERCLA"), the
Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq. ("RCRA"),
the Toxic Substances Control Act, 15 U.S.C. 2601, et seq. ("TSCA"), the
Occupational, Safety and Health Act, 29 U.S.C. 651, et seq., the Clean Air
Act, 42 U.S.C. 7401, et seq., the Federal Water Pollution Control Act, 33
U.S.C. 1251, et seq., the Safe Drinking Water Act, 42 U.S.C. 300f, et seq.,
the Hazardous Materials Transportation act, 49 U.S.C. 1802 et seq. ("HMTA")
and the Emergency Planning and Community Right to Know Act, 42 U.S.C. 11001
et seq. ("EPCRA");
(g) "Governmental Authority" means any United States (federal, state or
local), foreign or supra-national Government, or governmental, regulatory
or administrative authority, agency or commission;
(h) "Hazardous Materials" shall mean every element, compound, chemical
mixture, contaminant, pollutant, material, waste or other substance which
is specifically defined or identified as hazardous or toxic under
Environmental Laws or the release of which is specifically regulated under
Environmental Laws. Without limiting the generality of the foregoing, the
term includes: "hazardous substances" as defined in CERCLA; "extremely
hazardous substances" as defined in EPCRA; "hazardous waste"
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as defined in RCRA; "hazardous materials" as defined in HMTA; and "chemical
substance or mixture" as defined in TSCA;
(i) "Indebtedness" means any liability or obligation of the Company or
any of its subsidiaries, whether primary or secondary, absolute or
contingent for (i) borrowed money, (ii) evidenced by notes, bonds,
debentures or similar instruments, or (iii) secured by Liens on any assets
of the Company or any of its subsidiaries;
(j) "Intellectual Property Rights" means all patents, patent
applications and patent disclosures; all inventions (whether or not
patentable and whether or not reduced to practice); all trademarks, service
marks, trade dress, trade names and corporate names and all the goodwill
associated therewith; all mask works; all registered and unregistered
statutory and common law copyrights; all registrations, applications and
renewals for any of the foregoing; and all trade secrets, confidential
information, ideas, formulae, compositions, know-how, manufacturing and
production processes and techniques, research information, drawings,
specifications, designs, plans, improvements, proposals, technical and
computer data, documentation and software, financial business and marketing
plans, customer and supplier lists and related information, marketing
materials and all other proprietary rights;
(k) "Knowledge" with respect to the Company, means the actual
knowledge, after reasonable investigation, of Alfred Blake, Raymond
Dingman, Anthony Santarelli, Amy Tunis, and Brenda Flores;
(l) "Leased Real Property" means all leasehold or subleasehold estates
and other rights to use or occupy any land, buildings, structures,
improvements, fixtures or other interest in real property held by the
Company or any Subsidiary that is material to the Company and its
subsidiaries taken as a whole;
(m) "Leases" means all leases, subleases, licenses, concessions and
other agreements (written or oral) pursuant to which the Company or any
Subsidiary holds any Leased Real Property, including the right to all
security deposits and other amounts and instruments deposited by or on
behalf of the Company or any Subsidiary thereunder;
(n) "Lien" shall mean, with respect to any property or asset, any
mortgage, pledge, security interest, lien (statutory or other), charge,
encumbrance or other similar restrictions or limitations of any kind or
nature whatsoever on or with respect to such property or asset;
(o) "Owned Real Property" means all land, together with all buildings,
structures, improvements and fixtures located thereon, and all easements
and other rights and interests appurtenant thereto, owned by the Company or
any Subsidiary that is material to the Company and its subsidiaries taken
as a whole;
(p) "Owned Shares" means the aggregate shares of Company Common Stock
owned beneficially and of record by the Shareholders as of the date hereof
(as such number may be reduced as a result of the conversion of shares into
New Preference Stock as contemplated by this Agreement);
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(q) "Permits" shall mean all franchises, licenses, authorizations,
approvals, permits, consents or other rights granted by any Governmental
Authority and all certificates of convenience or necessity, immunities,
privileges, licenses, concessions, consents, grants, ordinances and other
rights, of every character whatsoever required for the conduct of business
and the use of properties by the Company as currently conducted or used;
(r) "person" means an individual, corporation, limited liability
company, partnership, limited partnership, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government;
(s) "Real Property" means, with respect to the Company or any
subsidiary, as applicable, all of the Owned Real Property and Leased Real
Property which is used by any such person in connection with the operation
of its business;
(t) "subsidiary" or "subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person
(either above or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests,
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity;
(u) "Support Agreement" means that certain Support Agreement, dated as
of the date hereof, by and among Merger Sub and the Shareholders in the
form of Exhibit F hereto;
(v) "Tax" or "Taxes" means federal, state, county, local, foreign or
other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications,
real or personal property, capital stock, license, payroll, wage or other
withholding, employment, social security (or similar), severance, stamp,
unemployment, disability, occupation, alternative or add-on minimum,
estimated and other taxes of any kind whatsoever (including deficiencies,
penalties, additions to tax, and interest attributable thereto) whether
disputed or not;
(w) "Tax Return" means any declaration, report, claim for refund,
return, information report or filing with respect to Taxes, including any
schedules or attachments thereto and including any amendments thereof; and
(x) "Transactions" means the Merger, the Preference Amendment and the
other transactions contemplated by this Agreement.
SECTION 10.04 Accounting Terms. All accounting terms used herein which
are not expressly defined in this Agreement shall have the respective meanings
given to them in accordance with GAAP.
SECTION 10.05 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other
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conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Merger is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the Merger be consummated
as originally contemplated to the fullest extent possible.
SECTION 10.06 Entire Agreement; Assignment. This Agreement (including
the Exhibits, the Merger Sub Disclosure Schedule and the Company Disclosure
Statement, which are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein), the Support Agreement and the
Confidentiality Agreement constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties, which shall not be unreasonably withheld, except that Merger Sub may
assign all or any of its rights and obligations hereunder to any affiliate of
Parent or Merger Sub; provided, that no such assignment shall change the amount
or nature of the Merger Consideration or relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
SECTION 10.07 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 7.06 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 10.08 Specific Performance. The parties hereto agree that
irreparable damage would occur in the vent any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to specific performance of the terms hereof, in addition to any other remedy
at law or in equity.
SECTION 10.09 Governing Law. The provisions of this agreement and the
documents delivered pursuant hereto shall be governed by and construed in
accordance with the laws of the State of Delaware (excluding any conflict of law
rule or principle that would refer to the laws of another jurisdiction). The
parties hereto agree that any suit, action or proceeding seeking to enforce any
provision of, or based on any mater arising out of, this Agreement may be
brought in the United States District Court for the District of Delaware or any
other Delaware State court (and in the appropriate appellate courts), and each
of the parties hereby (a) consents to the jurisdiction of such courts in any
such suit, action or proceeding, (b) irrevocably waives any objection which it
may now or hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding which
is brought in any such court has been brought in an inconvenient forum and (c)
agrees not to bring any action related to this agreement or the transactions
contemplated hereby in any other court (except to enforce the judgment of such
courts). Process in any such suit, action or proceeding
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may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party in the manner provided for notices
in Section 10.02 shall be deemed effective service of process on such party.
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT, ACTION
OR PROCEEDING ARISING HEREUNDER.
SECTION 10.10 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 10.11 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement.
SECTION 10.12 Construction. This Agreement and any documents or
instruments delivered pursuant hereto or in connection herewith shall be
construed without regard to the identity of the person who drafted the various
provisions of the same. Each and every provision of this Agreement and such
other documents and instruments shall be construed as though all of the parties
participated equally in the drafting of the same. Consequently, the parties
acknowledge and agree that any rule of construction that a document is to be
construed against the drafting party shall not be applicable either to this
Agreement or such other documents and instruments.
SECTION 10.13 Capacity. No Shareholder shall be deemed to make any
agreement or understanding hereunder in his capacity as a director, employee or
officer of the Company. Each Shareholder has executed this Agreement solely in
his capacity as the record holder and beneficial owner of, or the trustee of a
trust whose beneficiaries are the beneficial owners of, such Shareholder's
shares of Company Common Stock, and no obligation of a Shareholder set forth
herein shall limit or affect any actions taken by, or require that any action be
taken by, such Shareholder in his capacity as an officer, employee or director
of the Company.
SECTION 10.14 Company Disclosure Statement. The Company Disclosure
Statement is qualified in its entirety by reference to the specific provisions
of this Agreement, and the matters set forth therein are not intended to
constitute, and shall not be construed to constitute, representations or
warranties of the Company, except and to the extent provided in this Agreement.
Inclusion of information in the Company Disclosure Statement shall not be
construed as an admission that such information is material to the Company.
Matters disclosed in any numbered section of the Company Disclosure Statement
shall be deemed to be disclosed for purposes of all other numbered sections of
the Company Disclosure to the extent that it is reasonably apparent that such
matter is applicable to such other numbered sections.
* * * * *
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IN WITNESS WHEREOF, Merger Sub, the Shareholders, Parent and the
Company have caused this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized.
J. G. DURAND INDUSTRIES
By: /s/ A. Ibled
--------------------------------------
Name: A. Ibled
Title: President
MOUNTAIN ACQUISITION CORP.
By: /s/ P. Durand
---------------------------------------
Name: P. Durand
Title: Authorized Representative
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MIKASA, INC.
By: /s/ Amy Tunis
---------------------------------------
Name: Amy Tunis
Title: Secretary
FOR PURPOSES OF ARTICLES I, V, VIII AND X
AND SECTIONS 7.03, 7.05, 7.07, 7.08, 7.09,
7.12, 7.13, 9.04 AND 9.05 ONLY
SHAREHOLDERS
RAYMOND B. DINGMAN, on behalf of
himself, and
THE RAYMOND BURNETT DINGMAN
SEPARATE PROPERTY TRUST
/s/ Raymond B. Dingman
------------------------------------------
Address: c/o One Mikasa Drive, Secaucus
New Jersey 07096-1549
ALFRED J. BLAKE
/s/ Alfred J. Blake
------------------------------------------
Address: c/o One Mikasa Drive, Secaucus
New Jersey 07096-1549
ANTHONY F. SANTARELLI
/s/ Anthony F. Santarelli
------------------------------------------
Address: c/o One Mikasa Drive, Secaucus
New Jersey 07096-1549
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GEORGE T. ARATANI, on behalf of
himself, and
THE GEORGE T. ARATANI AND
SAKAYE I. ARATANI
REVOCABLE LIVING TRUST
/s/ George T. Aratani
------------------------------------------
Address: c/o One Mikasa Drive, Secaucus
New Jersey 07096-1549
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APPENDIX B
SUPPORT AGREEMENT
This SUPPORT AGREEMENT, is entered into as of September 10, 2000, among J.
G. Durand Industries, S.A., a societe anonyme organized under the law of France
("Diamond"), Mountain Acquisition Corp., a Delaware corporation ("MAC"), and the
persons listed on Schedule A hereto (each a "Shareholder", and, collectively,
the "Shareholders"). Capitalized terms not otherwise defined herein have the
meanings set forth in the Merger Agreement (defined below).
WHEREAS, Mikasa, Inc., a Delaware corporation (the "Company"), the
Shareholders, Diamond and MAC have, simultaneously with the execution and
delivery of this Agreement, entered into an Agreement and Plan of Merger (as the
same may be amended or supplemented, the "Merger Agreement") providing for the
merger of MAC with and into the Company (the "Merger"), which Merger Agreement
and Merger have been recommended by the Special Committee of the Company's Board
of Directors;
WHEREAS, each Shareholder is the record and beneficial owner of the number
of shares of Common Stock, par value $.01 per share, of the Company (the
"Company Common Stock") set forth opposite such Shareholder's name on Schedule A
hereto and under the heading "Total Shares" (such shares of the Company Common
Stock, as such shares may be adjusted by stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the Company, together
with shares of the Company Common Stock that may be acquired after the date
hereof by such Shareholder, including shares of the Company Common Stock
issuable upon the exercise of options to purchase the Company Common Stock (as
the same may be adjusted as aforesaid), being collectively referred to herein as
the "Shares"); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Diamond and MAC have requested that the Shareholders enter into this
Agreement.
NOW, THEREFORE, to induce Diamond and MAC to enter into, and in
consideration of it entering into, the Merger Agreement, and in consideration of
the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Shareholders. Each Shareholder
acting solely in its capacity as a holder of the shares and not as a director or
employee of the Company or in any other capacity, hereby, severally and not
jointly, represents and warrants to, and agrees with, Diamond and MAC as
follows:
(a) Authority. The Shareholder has all requisite power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions
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contemplated hereby have been duly authorized by the Shareholder. This Agreement
has been duly executed and delivered by the Shareholder and, assuming this
Agreement constitutes a valid and binding obligation of Diamond and MAC,
constitutes a valid and binding obligation of the Shareholder enforceable
against the Shareholder in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws now or hereafter in effect relating to creditors rights
generally and general principles of equity (regardless of whether enforcement is
considered in a proceeding in law or equity). Except for the expiration or
termination of the waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and filings with the
Securities and Exchange Commission, neither the execution, delivery or
performance of this Agreement by the Shareholder nor the consummation by the
Shareholder of the transactions contemplated hereby will (i) require any filing
with, or permit, authorization, consent or approval of, any federal, state,
local, municipal or foreign or other government or subdivision, branch,
department or agency thereof or any governmental or quasi-governmental authority
of any nature, including any court or other tribunal (a "Governmental Entity"),
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default under, or give rise to any right of
termination, amendment, cancellation or acceleration under, or result in the
creation of any lien, charge, security interest or other encumbrance of any
nature (a "Lien") upon any of the properties or assets of the Shareholder under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, permit, concession, franchise, contract, agreement or
other instrument or obligation (a "Contract") to which the Shareholder is a
party or by which the Shareholder or any of the Shareholder's properties or
assets, including the Shareholder's Shares, may be bound or (iii) violate any
judgment, order, writ, preliminary or permanent injunction or decree (an
"Order") or any statute, law, ordinance, rule or regulation of any Governmental
Entity (a "Law") applicable to the Shareholder or any of the Shareholder's
properties or assets, including the Shareholder's Shares.
(b) The Shares. The Shareholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by such Shareholder, or by a nominee or custodian for the benefit of
such Shareholder, and the Shareholder has good and marketable title to such
Shares, free and clear of any Liens, proxies, voting trusts or agreements,
understandings or arrangements with respect to the ownership, transfer or voting
of the Shares, except for any such Liens or proxies arising hereunder. The
Shareholder owns of record or beneficially no shares of the Company Common Stock
other than such Shareholder's Shares and shares of the Company Common Stock
issuable upon the exercise of Company stock options, as set forth on Schedule A
hereto.
(c) Merger Agreement. The Shareholder understands and acknowledges that
Diamond and MAC are entering into the Merger Agreement in reliance upon the
Shareholder's execution and delivery of this Agreement. The Shareholder
covenants and agrees that it will timely perform all of its obligations under
the Merger Agreement.
2. Representations and Warranties of Diamond and MAC. Diamond and MAC
hereby jointly and severally represent and warrant to, and agree with, the
Shareholders as follows:
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(a) Authority. Diamond and MAC each have the requisite organizational
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Diamond and MAC and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary organizational
action on the part of Diamond and MAC. This Agreement has been duly executed and
delivered by Diamond and MAC and, assuming this Agreement constitutes a valid
and binding obligation of the Shareholders, constitutes a valid and binding
obligation of Diamond and MAC enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws now or hereafter in effect relating to
creditors rights generally and general principles of equity (regardless of
whether enforcement is considered in a proceeding in law or equity). Except for
the expiration or termination of the waiting periods under the HSR Act, and
filings with the Securities and Exchange Commission, neither the execution,
delivery or performance of this Agreement by Diamond or MAC nor the consummation
by Diamond or MAC of the transactions contemplated hereby will (i) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (ii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default under, or give rise to any right
of termination, amendment, cancellation or acceleration under, or result in the
creation of any Lien, upon any of the properties or assets of Diamond or MAC
under, any of the terms, conditions or provisions of any Contract to which
Diamond or MAC is a party or by which Diamond or MAC or any of their respective
properties or assets may be bound or (iii) violate any Order or Law applicable
to Diamond or MAC or any of their respective properties or assets.
(b) Securities Act. The Shares will be acquired in compliance with, and
Diamond and MAC will not offer to sell or otherwise dispose of any Shares so
acquired by it in violation of the registration requirements of, the Securities
Act of 1933, as amended.
(c) Merger Agreement. Diamond and MAC each covenant and agree that it
will timely perform all of its obligations under the Merger Agreement.
3. Covenants of the Shareholders. Each Shareholder, severally and not
jointly, to the extent he has the capacity to vote, solely in his capacity as
holder of the Shares and not as a director or employee of the Company or in any
other capacity, agrees as follows:
(a) Such Shareholder shall not, except as contemplated by the terms of
this Agreement or the Merger Agreement, (i) sell, transfer, pledge, assign or
otherwise dispose of, or enter into any Contract, option or other arrangement
(including any profit sharing arrangement) or understanding with respect to the
sale, transfer, pledge, assignment or other disposition of his Shares to any
person other than Diamond, MAC or their designees, (ii) enter into any voting
arrangement, whether by proxy, voting agreement, voting trust, power-of-attorney
or otherwise, with respect to his Shares or (iii) take any other action that
would in any way materially restrict, limit, interfere with or frustrate the
performance of his obligations hereunder or the transactions contemplated
hereby.
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(b) At any meeting of shareholders 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, consent or other approval (including by
written consent) with respect to the Merger and the Merger Agreement is sought,
each Shareholder shall as requested by MAC (including, without limitation, by
cooperating with MAC with respect to the proxy granted to MAC pursuant to
Section 6 below), vote (or cause to be voted) such Shareholder's Shares in favor
of the Merger, the adoption by the Company of the Merger Agreement and the
approval 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 vote, consent or other approval of
stockholders of the Company is sought, such Shareholder shall as requested by
MAC as provided above vote (or cause to be voted) such Shareholder's Shares
against (i) any Competing Transaction (as defined in the Merger Agreement) or
(ii) 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 Agreement, the Merger or any of the
other transactions contemplated by the Merger Agreement (collectively,
"Frustrating Transactions").
4. Notice of Acquisition of Additional Shares. Each Shareholder hereby
agrees, while this Agreement is in effect, to promptly notify MAC of the number
of any new shares of Company Common Stock acquired by such Shareholder, if any,
after the date hereof.
5. Grant of Proxy Coupled with an Interest; Appointment of Proxy.
(a) Each Shareholder hereby grants to, and appoints, Paul Fontaine, and
any other individual who shall hereafter be designated by MAC, such
Shareholder's proxy and attorney-in-fact (with full power of substitution), for
and in the name, place and stead of such Shareholder, to vote such Shareholder's
Shares, or grant a consent or approval in respect of such Shares, at any meeting
of stockholders of the Company or at any adjournment thereof or in any other
circumstances upon which their vote, consent or other approval is sought, (i) in
favor of the Merger, the adoption by the Company of the Merger Agreement and the
approval of the other transactions contemplated by the Merger Agreement and (ii)
against any Competing Transaction or Frustrating Transaction.
(b) Each Shareholder represents that any proxies heretofore given in
respect of such Shareholder's Shares are not irrevocable, and that all such
proxies, if any, are hereby revoked.
(c) Each Shareholder hereby affirms that the proxy set forth in this
Section 5 is coupled with an interest and is irrevocable until the termination
of this Section 5 in accordance with Section 13 hereof. Each Shareholder hereby
further affirms that the proxy is given in connection with the execution of the
Merger Agreement, and that this proxy is given to secure the performance of the
duties of such Shareholder under this Agreement.
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6. Further Assurances. Each Shareholder will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as Diamond
or MAC may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement and to vest the power to vote such
Shareholder's Shares as contemplated by Section 3. Diamond and MAC each agree to
use reasonable efforts to take, or cause to be taken, all actions necessary to
comply promptly with all legal requirements that may be imposed with respect to
the transactions contemplated by this Agreement and the Merger Agreement
(including legal requirements of the HSR Act).
7. Competing Transaction Fee.
(a) Each Shareholder agrees, severally and not jointly, that in the
event the Company or such Shareholder consummates or participates in a Competing
Transaction (including, without limitation, by means of a tender offer) or
enters into definitive agreements related to a Competing Transaction at any time
during the twelve month period after the termination of the Merger Agreement (i)
pursuant to Sections 9.01(d)(ii) or 9.01(g) of the Merger Agreement or (ii)
pursuant to Sections 9.01(c), 9.01(d)(i) or 9.01(f)(i) of the Merger Agreement
(provided that in the case of this clause (ii), a proposal relating to any
Competing Transaction has been made to the Company or a Shareholder at or prior
to the time of the termination by Diamond and MAC of the Merger Agreement
pursuant to Sections 9.01(c), 9.01(d)(i) or 9.01(f)(i) thereof), such
Shareholder shall pay to Diamond an amount in cash equal to the Competing
Transaction Fee simultaneously with the closing of a Competing Transaction that
was consummated or participated in within such twelve month period following the
termination of the Merger Agreement or with respect to which a definitive
agreement was entered into as described above within such twelve month period
following the termination of the Merger Agreement.
(b) For purposes hereof, the "Competing Transaction Fee" shall mean,
with respect to each Shareholder, the product of (x) .50, multiplied by (y) (1)
the total number of Shares owned by such Shareholder as of the time of
termination of the Merger Agreement minus (2) the number of Shares (if any) that
such Shareholder rolls over in, or otherwise retains following, the Competing
Transaction (provided that if the number of Shares to be rolled over or
otherwise retained by such Shareholder in the Competing Transaction is greater
than the number of Shares to be rolled over by such Shareholder in the Merger,
the number of Shares for purposes of this clause (2) shall be the number of
Shares to be rolled over by such Shareholder in the Merger), multiplied by (z)
the excess, if any, of (1) the highest price per share of Company Common Stock
(whether paid to a Shareholder or any other holder of Company Common Stock) paid
in such Competing Transaction over (2) $16.50.
For purposes of clarity, if the Company or any Shareholder enters into any
agreement or understanding relating to any Competing Transaction prior to the
date which is twelve months after the termination of the Merger Agreement as
provided in paragraph (a) above and such Competing Transaction is consummated at
anytime thereafter, the Competing Transaction Fee will be payable upon
consummation of such Competing Transaction regardless of whether such
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Competing Transaction is consummated prior to or after the date which is twelve
months after the termination of the Merger Agreement as provided in paragraph
(a) above. Notwithstanding anything in this Agreement to the contrary, no amount
shall be payable by a Shareholder pursuant to this Section 7 unless and until a
Competing Transaction is consummated as described in paragraph (a) above.
8. Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and assigns. Notwithstanding
the foregoing, Diamond and MAC shall each have the right to assign its rights,
interests and obligations hereunder to any of its affiliates at its sole option
and without the prior written consent of the other parties hereto; provided that
no such assignment shall relieve Diamond or MAC of its respective obligations
hereunder. Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective heirs, successors,
executors, administrators and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9. General Provisions.
(a) Payments. All payments required to be made to any party to this
Agreement shall be made by Wire Transfer to an account designated by the
recipient at least one business day prior to such payment.
(b) Expenses. Subject to the terms of the Merger Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.
(c) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if to Diamond or MAC, to
c/o J. G. Durand Industries
38 rue Adrien Danvers
62510 Arques, France
Telecopy: 33 3 21 95 4774
Attention: Mr. Paul Fontaine
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with a copy to:
Kirkland & Ellis
153 East 53rd Street
New York, NY 10022
Telecopy: (212) 446-4900
Attention: Frederick Tanne, Esq.
and
(ii) if to a Shareholder, to the address set forth under the
name of such Shareholder on Schedule A hereto
with a copy to:
Cleary, Gottlieb, Steen and Hamilton
One Liberty Plaza
New York, NY 10006
Telecopy: (212) 225-3999
Attention: Victor I. Lewkow, Esq.
David Leinwand, Esq.
(e) Interpretation. 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 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".
(f) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
(g) Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law principles.
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(i) Publicity. Diamond and MAC on the one hand and the Shareholders on
the other hand shall consult with each other and the Company before issuing any
press release or otherwise making any public statements with respect to this
Agreement or any of the transactions contemplated by the Merger Agreement. Prior
to the closing of the Merger, Diamond, MAC and the Shareholders shall not issue
any such press release or make any such public statement without the prior
consent of the other (which consent shall not be unreasonably withheld), except
as may be required by Law or any listing agreement with the NYSE or any
securities exchange to which Diamond, MAC or the Company is a party and, in such
case, shall use reasonable effects to consult with all the parties hereto prior
to such release or statement being issued. The parties shall agree on the text
of a joint press release by which Diamond, MAC and the Company will announce the
execution of this Agreement.
10. Shareholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director, employee or officer of the Company
makes any agreement or understanding herein in his or her capacity as a
director, employee or officer of the Company. Each Shareholder signs solely in
his capacity as the record holder and beneficial owner of, or the trustee of a
trust whose beneficiaries are the beneficial owners of, such Shareholder's
Shares and nothing herein shall limit or affect any actions taken by, or
requires that any actions be taken by, such Shareholder in his capacity as an
officer, employee or director of the Company.
11. Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in a court of the United States in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto 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.
12. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
13. Termination. The provisions of Sections 3, 4 and 5 hereof shall
terminate automatically and be of no further force and effect on the earlier to
occur of (a) the consummation of the Transactions (as defined in the Merger
Agreement) and (b) the termination of the Merger Agreement, and the other
provisions (including, without limitation, Section 7) of this Agreement shall
survive any termination of the Merger Agreement.
* * * * *
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IN WITNESS WHEREOF, Diamond, MAC and each Shareholder have caused this
Agreement to be duly authorized, executed and delivered, all as of the date
first written above.
J.G. DURAND INDUSTRIES
By: /s/ A. Ibled
------------------------------------
Its: President
MOUNTAIN ACQUISITION CORP.
By: /s/ P. Durand
------------------------------------
Its: Authorized Representative
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SHAREHOLDERS:
RAYMOND B. DINGMAN, on behalf of
himself, and
THE RAYMOND BURNETT DINGMAN
AND SUSAN VOGEL DINGMAN
COMMUNITY PROPERTY TRUST,
and
THE RAYMOND BURNETT DINGMAN
SEPARATE PROPERTY TRUST
/s/ Raymond B. Dingman
------------------------------------------
Address: c/o One Mikasa Drive
Secaucus, New Jersey 07096-1549
ALFRED J. BLAKE
/s/ Alfred J. Blake
------------------------------------------
Address: c/o One Mikasa Drive
Secaucus, New Jersey 07096-1549
ANTHONY F. SANTARELLI
/s/ Anthony F. Santarelli
------------------------------------------
Address: c/o One Mikasa Drive
Secaucus, New Jersey 07096-1549
GEORGE T. ARATANI, on behalf
of himself, and
THE GEORGE T. ARATANI
AND SAKAYE I. ARATANI REVOCABLE
LIVING TRUST
/s/ George T. Aratani
------------------------------------------
Address: c/o One Mikasa Drive
Secaucus, New Jersey 07096-1549
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SCHEDULE A
Options to Purchase
Shareholder Common Shares Common Shares
---------- ------------- -------------------
Alfred J. Blake 3,956,353 247,500
---------------
Raymond B. Dingman 0 497,500
------------------
Raymond Burnett Dingman and Susan
Vogel Dingmanperty Trust 109,845 0
Raymond Burnett Dingman Separate
Property Trust 1,184,192 0
Anthony F. Santarelli 1,587,038 240,000
---------------------
George T. Aratani 0 0
-----------------
George T. Aratani and Sakaye I.
Aratani Revocable Living Trust 2,488,469 0
--------- ---------
Total 9,325,897 985,000
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APPENDIX C
STOCKHOLDERS' AGREEMENT (this "Agreement"), dated September 10, 2000,
between Mikasa, Inc. (the "Company"), J.G. Durand Industries, S.A. (the
"Majority Stockholder") and the persons and trusts listed on Annex A hereto.
Each such person listed on Annex A hereto (together with the trust listed on
Annex A hereto with respect to such person) is sometimes referred to herein as a
"Management Stockholder" and together, the "Management Stockholders."
WHEREAS, the Company, the Majority Stockholder, the Management
Stockholders and Mountain Acquisition Corp., a Delaware corporation
("MergerCo"), have entered into an Agreement and Plan of Merger, dated the date
hereof (the "Merger Agreement"), providing for the merger of MergerCo with and
into the Company, with the Company as the surviving corporation (the "Merger");
WHEREAS, immediately following the consummation of the transactions
contemplated by the Merger Agreement, the Majority Stockholder and the
Management Stockholders will together own all of the shares of the outstanding
common stock, par value of $0.01 per share (the "Common Stock"), of the Company
(as the surviving corporation in the Merger); and
WHEREAS, the Company, the Majority Stockholder and each of the
Management Stockholders desire, for their mutual benefit and protection, to
enter into this Agreement to set forth their respective rights and obligations
with respect to the shares of Common Stock, whether issued or acquired in
connection with the Merger or issued or acquired thereafter, and any securities
that may be issued or distributed or be issuable in respect of any such shares
of Common Stock by way of stock dividend, stock split or other distribution,
merger, consolidation, exchange offer, recapitalization or reclassification or
similar transaction (the "Shares");
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following capitalized terms
shall have the meanings set forth below.
"Accounting Firm" has the meaning set forth in Section 3.14(i).
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
For purposes of this Agreement, the term "control," (including, with correlative
meanings, the terms "controlling," "controlled by," and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities
or by contract or otherwise.
"Agreement" has the meaning set forth in the recitals hereto.
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"Annual Dividend" has the meaning set forth in Section 3.14(iii).
"Beneficial Owner" has the meaning set forth in Rule 13d-3 promulgated
under the Exchange Act as in effect on the date hereof. The terms "Beneficial
Ownership" and "Beneficially Own" shall have correlative meanings.
"Board" has the meaning set forth in Section 8.1.
"Business Day" means any day that is not a Saturday, Sunday or legal
holiday in the City of New York.
"Call" has the meaning set forth in Section 3.1.
"Cause" means, with respect to the termination of employment of a Senior
Manager by the Company, (i) any willful violation by the Senior Manager of this
Agreement or his Employment Agreement, if any, that has a material adverse
effect on the Company or its Affiliates; (ii) any willful engaging by the Senior
Manager, in the Senior Manager's capacity as an employee of the Company, in
gross misconduct that has, or is intended to have, a material adverse effect on
the Company or its Affiliates; or (iii) any conviction of the Senior Manager of
a felony or other serious crime involving moral turpitude; provided, that any
act or failure to act of the Senior Manager shall not be considered "willful"
unless done or omitted to be done by the Senior Manager not in good faith and
without reasonable belief that the Senior Manager's action or omission was in
the best interest of the Company.
"Change in Management Date" means, with respect to a Put or Call exercised
pursuant to Section 3.7 or Section 3.8, any date prior to the end of Fiscal Year
2003 on which the employment of the second of two Senior Managers with the
Company is terminated for any reason.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" has the meaning set forth in the recitals hereto.
"Company" has the meaning set forth in the recitals hereto.
"Control Transaction" means a transaction resulting in: (i) the JGD Group
ceasing to Beneficially Own at least 50% of the Voting Power of the Voting
Securities of the Majority Stockholder or the Company then outstanding; (ii) the
Majority Stockholder ceasing to Beneficially Own 50% of the Voting Power of the
Voting Securities of the Company; (iii) the merger, consolidation or other
business combination of the Majority Stockholder or the Company with any other
Person other than, in the case of the Majority Stockholder, any member of the
JGD Group; (iv) the Majority Stockholder or the Company selling, leasing or
otherwise transferring 50% or more of its assets to any Person(s); or (v) the
liquidation, dissolution or winding-up of the Majority Stockholder or the
Company.
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"Control Transaction Date" means, with respect to any Put exercised
pursuant to Section 3.12, any date prior to the end of Fiscal Year 2003 on which
a definitive agreement with respect to a Control Transaction is executed or
announced.
"Cumulative Net Income Per Share" means, with respect to any Fiscal Year,
the net after-tax income of the Company (excluding (i) the amortization of any
pushed-down goodwill resulting from the Merger, (ii) any ongoing financing or
interest charges (including any fees associated therewith) incurred as a result
of a change in the Company's pre-Merger capital structure resulting from the
Merger and any one time or extraordinary charges resulting from the Merger,
(iii) any one time or extraordinary charges resulting from any acquisition or
disposition of a business, Person or assets by the Company or any of its
subsidiaries or any merger, consolidation or other business combination
involving the Company after the Effective Time other than acquisition or
disposition of assets in the ordinary course of business consistent with past
practice, (iv) the impact of any change in the Company's accounting policies or
procedures and (v) any expense related to the Incentive Compensation Plan)
calculated on a cumulative basis with respect to such Fiscal Year and all the
Fiscal Years completed prior to such Fiscal Year, if any, beginning with Fiscal
Year 2001, divided by the number of Shares of Common Stock issued and
outstanding immediately following the Effective Time.
"Delivery Date" has the meaning set forth in Section 4.2.
"Disability" means the physical disability or mental incapacity of a Senior
Manager which entitles such Senior Manager to benefits under a long term
disability plan of the Company or which would entitle such Senior Manager to
benefits if he were a participant in such plan or which would otherwise qualify
such Senior Manager for social security disability insurance benefits.
"Dividend Gross Up" has the meaning set forth in Section 3.14(iii).
"Drag-Along Notice" has the meaning set forth in Section 4.1.
"Drag-Along Sale" has the meaning set forth in Section 4.1.
"Effective Time" has the meaning set forth in the Merger Agreement.
"Elected Shares" has the meaning set forth in Section 5.2.
"Employment Agreement" means, with respect to a Senior Manager, the
Employment Agreement, if any, between him and the Company, dated the date
hereof, and/or any subsequent employment agreement mutually agreed upon between
such Senior Manager and the Company.
"Equity Securities" of any Person, means any and all common stock,
preferred stock and any other class of capital stock of, and any partnership or
limited liability company interests in, such Person or any other similar
interests of any Person that is not a corporation, partnership or limited
liability company.
"Excess Pro Rata Portion" has the meaning set forth in Section 5.2.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Family Member" has the meaning set forth in Section 2.4.
"First Six Months Fiscal Year" has the meaning set forth in Section 3.9.
"Fiscal Year" means a fiscal year of the Company.
"General Put-Call Price" has the meaning set forth in Section 3.9.
"Good Reason" means (i) the assignment to the Senior Manager of any duties
or responsibilities which are materially inconsistent with the Senior Manager's
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by such Senior Manager's
Employment Agreement, if any, or as in effect at the time of expiration of such
Employment Agreement, if any, or any other action by the Company which results
in a material diminution in such position, authority, duties or
responsibilities; (ii) a significant reduction by the Company in the
compensation (including salary and bonuses) and/or benefits provided to the
Senior Manager under his Employment Agreement, if any, or as in effect at the
time of expiration of such Employment Agreement, if any; (iii) any material
breach or violation of any material provision of this Agreement or the Senior
Manager's Employment Agreement, if any, by the Company or the Majority
Stockholder which is not cured promptly after receipt by the Company or the
Majority Stockholder of written notice from the Senior Manager setting forth the
specific breach or violation; or (iv) the Company's requiring the Senior Manager
to be based at any office or location outside of northern New Jersey.
"Incentive Compensation Plan" means the Mikasa, Inc. Incentive Compensation
Plan, adopted as of the date hereof.
"Indemnified Party" shall have the meaning set forth in Section 6.7(ii).
"Indemnifying Party" shall have the meaning set forth in Section 6.7(ii).
"JGD Group" means J.G. Durand Industries, S.A., and its Affiliates.
"Losses" means claims, damages, liabilities, costs (including, without
limitation, costs of preparation, investigation and reasonable attorneys' fees
and disbursements in connection with any action) and expenses.
"Majority Stockholder" has the meaning set forth in the recitals hereto.
"Management Stockholder" has the meaning set forth in the recitals hereto.
"Merger" has the meaning set forth in the recitals hereto.
"MergerCo" has the meaning set forth in the recitals hereto.
"Merger Agreement" has the meaning set forth in the recitals hereto.
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"Merger Consideration" has the meaning set forth in the Merger Agreement.
"Minimum Guaranteed Amount" means, with respect to a Share, the sum of (i)
(a) the Merger Consideration (as equitably adjusted to reflect changes in the
number of Shares resulting from transactions agreed to by the parties that take
place as of, or immediately prior to, the Effective Time) minus (b) the
aggregate amount of any dividends in respect of such Share the record date for
which is following the Effective Time and prior to the payment of the price for
the applicable Put or Call and (ii) the Dividend Gross Up, if any, in respect of
such Share.
"Nominee" has the meaning set forth in Section 8.2.
"Non-Elected Shares" has the meaning set forth in Section 5.2.
"Notice" has the meaning set forth in Section 3.14.
"Opinion" has the meaning set forth in Section 4.1.
"Other Holders" has the meaning set forth in Section 6.l(ii).
"Other Manager" means George F. Aratani.
"Period One" has the meaning set forth in Section 3.12.
"Period One Control Transaction Price" has the meaning set forth in Section
3.12.
"Period Two" has the meaning set forth in Section 3.12.
"Permitted Transferee" has the meaning set forth in Section 2.4.
"Person" means an individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Piggyback Registration" means a registration by the Company of Registrable
Shares under the Securities Act pursuant to Section 6.1.
"Pro Rata Portion" has the meaning set forth in Section 5.2.
"Public Offering Event" has the meaning set forth in Section 9.1.
"Put" has the meaning set forth in Section 3.1.
"Registrable Shares" means any Shares; provided, however, that any such
securities shall cease to be Registrable Shares to the extent (i) a registration
statement with respect to the offer and sale of such securities has been
declared effective under the Securities Act and such securities have been
disposed of in accordance with the plan of distribution set forth in such
registration statement, (ii) such securities have been distributed pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act,
(iii) such securities shall have been
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otherwise transferred and new certificates for them not bearing a legend
restricting transfer under the Securities Act shall have been delivered by the
Company and they may be publicly resold without registration or qualification of
them under the Securities Act or any state securities or blue sky law then in
force, or (iv) such securities may be sold by a Management Stockholder pursuant
to Rule 144 under the Securities Act (or any similar provision then in force)
within any three-month period.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Second Six Months Fiscal Year" has the meaning set forth in Section 3.9.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Selling Holder" means, with respect to a registration statement under the
Securities Act in connection with a Piggyback Registration, a holder of Shares
whose Registrable Shares are included therein.
"Senior Manager" means Alfred J. Blake, Raymond B. Dingman or Anthony F.
Santarelli, as the case may be.
"Shares" has the meaning set forth in the recitals hereto.
"Tag-Along Allotment" has the meaning set forth in Section 5.2.
"Tag-Along Notice Date" has the meaning set forth in Section 5.3.
"Tag-Along Sale" has the meaning set forth in Section 5.1.
"Tag-Along Sale Date" has the meaning set forth in Section 5.3.
"Tag-Along Sale Notice" has the meaning set forth in Section 5.3.
"Target Cumulative Net Income Per Share" means, at the end of (i) Fiscal
Year 2001, US$26,000,000, (ii) Fiscal Year 2002, US$52,000,000 and (iii) Fiscal
Year 2003, US$78,000,000, in each case divided by the number of Shares issued
and outstanding immediately following the Effective Time; provided, that in each
case, such figures are subject to reasonable adjustment as mutually agreed by
the Majority Stockholder, the Company and the Management Stockholders if
necessary to preserve the economic benefits to the parties contemplated by this
Agreement in the event (a) any transaction or corporate event occurs which
affects the Company's capitalization or (b) any other transaction or corporate
event (other than the Merger), including without limitation any other
transactions with the Majority Stockholder or any of its Affiliates, outside of
the ordinary course of business occurs which could reasonably be expected to
have a substantial impact on the Company's Cumulative Net Income Per Share.
"Taxes" has the meaning set forth in Section 3.14(iii).
"Terminating Nominee" has the meaning set forth in Section 8.4.
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"Termination Date" means the date upon which a Senior Manager's employment
with the Company is terminated for any reason.
"Transfer" means, with respect to any property, to directly or indirectly
sell, hypothecate, give, bequeath, transfer, assign, pledge or in any other way
whatsoever encumber or dispose of such property, whether for or without
consideration, and whether voluntarily or involuntarily or by operation of law.
"Transferee" has the meaning set forth in Section 2.1.
"2003 Put-Call Price" means, with respect to any Share, the sum of (i) the
Minimum Guaranteed Amount plus (ii) the product of 8.7 multiplied by a fraction
the numerator of which is (a) and the denominator of which is (b), where (a)
equals the excess, if any, of (A) Cumulative Net Income Per Share for Fiscal
Year 2003 over (B) Target Cumulative Net Income Per Share for Fiscal Year 2003
and (b) equals 3.
"Voting Power" means, with respect to any Voting Securities, the aggregate
number of votes attributable to such Voting Securities that could generally be
cast by the holders thereof for the election of directors or similar managing
persons at the time of determination (assuming such election were then being
held).
"Voting Securities" means, (i) with respect to the Company, the Equity
Securities of the Company entitled to vote generally for the election of
directors of the Company, (ii) with respect to the Majority Stockholder, the
Equity Securities of the Majority Stockholder entitled to vote generally for the
election of directors of the Majority Stockholder, and (iii) with respect to any
other Person, any securities of or interests in such Person entitled to vote
generally for the election of directors or any similar managing person of such
Person.
1.2 Construction and Interpretation.
(a) The words "hereof," "herein" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not any particular provision of this Agreement.
(b) Where the context so indicates or requires, the masculine, feminine or
neuter gender, and the singular or plural number, shall be deemed to be or
include the other genders or number, as the case may be.
(c) Except as otherwise indicated, references herein to any "Article,"
"Section," "Annex" or "Schedule" mean an Article or Section of, or an Annex or
Schedule to, this Agreement, as the case may be. Except as otherwise indicated,
references herein to a "party" or the "parties" refers to a party or the
parties, as the case may be, to this Agreement.
(d) Unless otherwise expressly provided herein, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including", the words "to" and "until" each mean "to but
excluding," and the word "within" means "from and excluding a specified date and
to and including a later specified date."
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(e) All Annexes and Schedules attached to this Agreement or expressly
identified herein are incorporated herein by reference and made a part hereof.
ARTICLE II
STOCK TRANSFERS
2.1 General Restrictions on Transfer. The Management Stockholders agree
that they will not Transfer any Shares Beneficially Owned by them (or any
interest therein) to another Person (any such Person, a "Transferee"), other
than in accordance with all applicable provisions of this Agreement. The Company
shall not transfer on its books any Shares to any Person if the relevant
Transfer is not made in accordance with all applicable provisions of this
Agreement, and any purported Transfer in violation hereof shall be null and void
ab initio and of no effect.
2.2 Agreement to Be Bound. No Transfer of Shares by a Management
Stockholder to a Permitted Transferee shall be effective (and the Company shall
not transfer on its books any Shares) unless the certificates representing such
Shares issued to the Permitted Transferee shall bear the legend provided in
Section 2.3, if such a legend is required by Section 2.3. By accepting any
Transfer of Shares, any Permitted Transferee shall be deemed to have agreed to
be bound by the terms of this Agreement and to have accepted the rights and
obligations set forth hereunder as if it were the transferor of the relevant
Shares, and upon the request of the Company such Permitted Transferee shall
execute and deliver to the Company an instrument or instruments in form and
substance reasonably satisfactory to the Company and the Majority Stockholder
confirming that the Permitted Transferee agrees to be bound by the terms of this
Agreement and accepts the rights and obligations set forth hereunder as if it
were the transferor of the relevant Shares.
2.3 Legend. In addition to any other legend which may be required by
applicable law, each share certificate representing Shares which are
Beneficially Owned by the Management Stockholders shall have endorsed on its
face the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO (I) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT, OR (II)
ANY EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER COMPLIES WITH
THE PROVISIONS OF A STOCKHOLDERS' AGREEMENT, DATED SEPTEMBER
10, 2000 (THE "STOCKHOLDERS' AGREEMENT"), A COPY OF WHICH IS
ON FILE AND MAY BE
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INSPECTED AT THE PRINCIPAL OFFICE OF THE COMPANY. NO TRANSFER
OF THE SECURITIES WILL BE MADE ON THE BOOKS OF THE COMPANY
UNLESS SUCH TRANSFER IS MADE IN COMPLIANCE WITH THE TERMS OF
SUCH STOCKHOLDERS' AGREEMENT. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE ALSO SUBJECT TO OTHER RIGHTS AND
OBLIGATIONS SET FORTH IN SUCH STOCKHOLDERS' AGREEMENT.
To the extent the Company shall be satisfied, in its reasonable discretion, that
the circumstances or provisions requiring any of the above legends have ceased
to be effective, the Company will upon request reissue certificates without the
applicable legend or legends.
2.4 Permitted Transfers. Each Management Stockholder may only Transfer
Shares (i) on such Management Stockholder's death by bequest or inheritance to
such Management Stockholder's executors, administrators, testamentary trustees,
heirs, legatees or beneficiaries, (ii) to such Management Stockholder's spouse
or such Management Stockholder's lineal descendants (by blood or adoption)
(hereinafter, a "Family Member"), (iii) to a trust or custodianship the
beneficiaries of which may include only such Management Stockholder or Family
Members, (iv) to a trust or foundation which is tax-exempt pursuant to Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, and which is
organized and operated exclusively for charitable purposes (each Person
designated in clauses (i) through (iv), a "Permitted Transferee"), (v) to the
Majority Stockholder and any of its Affiliates or (vi) as required by applicable
law. Each Management Stockholder may also Transfer Shares in accordance with
Article III, Article IV and Article V hereof.
ARTICLE III
PUT-CALL RIGHTS
3.1 Put-Call Terms. The Majority Stockholder shall have the right (but not
the obligation) to purchase the Shares Beneficially Owned by the Management
Stockholders (a "Call"), and the Management Stockholders shall have the right
(but not the obligation) to cause the Majority Stockholder to purchase such
Shares (a "Put"), at the times, upon the terms and subject to the conditions set
forth in this Article III.
3.2 2003 Put-Call. Notwithstanding any other provision of this Article III,
following the end of Fiscal Year 2003, the Majority Stockholder shall have the
right to Call all (but not less than all) of the Shares Beneficially Owned by
any one or more Management Stockholders and each Management Stockholder shall
have the right to Put all (but not less than all) of the Shares Beneficially
Owned by such Management Stockholder; provided, that the Notice in respect of
each such Call and Put must be given to the Majority Stockholder or Management
Stockholder, as applicable, during the sixty-day period following the completion
of the audit of the Company's financial statements for Fiscal Year 2003; and
provided, further, that each such Call and Put shall be exercised for a price
per Share equal to the 2003 Put-Call Price.
3.3 Death or Disability Termination. If, prior to the end of Fiscal Year
2003, a Senior Manager's employment with the Company shall be terminated as a
result of his death or
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Disability, (i) the Majority Stockholder shall have the right to Call all (but
not less than all) of the Shares Beneficially Owned by such Senior Manager and
(ii) such Senior Manager shall have the right to Put all (but not less than all)
of the Shares Beneficially Owned by such Senior Manager; provided, that the
Notice in respect of each such Call and Put must be given to the Majority
Stockholder or Senior Manager, as applicable, during the 180-day period
following the Termination Date; and provided, further, that each such Call and
Put shall be exercised for a price per Share equal to the General Put-Call
Price.
3.4 Without Cause Termination. If, prior to the end of Fiscal Year 2003, a
Senior Manager's employment with the Company shall be terminated by the Company
without Cause:
(i) such Senior Manager shall have the right to Put all (but not less than
all) of the Shares Beneficially Owned by such Senior Manager; provided, that the
Notice in respect of such Put must be given to the Majority Stockholder during
the sixty-day period following the Termination Date; and provided, further, that
the Put shall be exercised for a price per Share equal to the General Put-Call
Price; and
(ii) the Majority Stockholder shall have the right to Call all (but not
less than all) of the Shares Beneficially Owned by such Senior Manager;
provided, that the Call shall be exercised for a price per Share equal to the
General Put-Call Price; and provided, further, that the Notice in respect of
such Call must be given to such Senior Manager:
(a) during the sixty-day period following the completion of the audit of
the Company's financial statements for Fiscal Year 2001, if the Termination Date
occurs during Fiscal Year 2001; provided, however, that the Majority Stockholder
shall have no such right to Call such Shares if Cumulative Net Income Per Share
for Fiscal Year 2001 is at least 70% of Target Cumulative Net Income Per Share
for Fiscal Year 2001;
(b) during the sixty-day period following the Termination Date, if the
Termination Date occurs during the first six months of Fiscal Year 2002;
provided, however that the Majority Stockholder shall have no such right to Call
such Shares if Cumulative Net Income Per Share for Fiscal Year 2001 is at least
70% of Target Cumulative Net Income Per Share for Fiscal Year 2001;
(c) during the sixty-day period following the completion of the audit of
the Company's financial statements for Fiscal Year 2002, if the Termination Date
occurs during the second six months of Fiscal Year 2002; provided, however that
the Majority Stockholder shall have no such right to Call such Shares if
Cumulative Net Income Per Share for Fiscal Year 2002 is at least 75% of Target
Cumulative Net Income Per Share for Fiscal Year 2002;
(d) during the sixty-day period following the Termination Date, if the
Termination Date occurs during the first six months of Fiscal Year 2003;
provided, however, that the Majority Stockholder shall have no such right to
Call such Shares if Cumulative Net Income Per Share for Fiscal Year 2002 is at
least 75% of Target Cumulative Net Income Per Share for Fiscal Year 2002; and
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(e) during the sixty-day period following the completion of the audit of
the Company's financial statements for Fiscal Year 2003, if the Termination Date
occurs during the second six months of Fiscal Year 2003; provided, however, that
the Majority Stockholder shall have no such right to Call such Shares if
Cumulative Net Income Per Share for Fiscal Year 2003 is at least 85% of Target
Cumulative Net Income Per Share for Fiscal Year 2003.
3.5 Good Reason Termination. If, prior to the end of Fiscal Year 2003, a
Senior Manager terminates his employment with the Company for Good Reason, such
Senior Manager shall have the right to Put all (but not less than all) of the
Shares Beneficially Owned by such Senior Manager; provided, that the Notice in
respect of such Put is given to the Majority Stockholder during the sixty-day
period following the Termination Date; and provided, further, that such Put
shall be exercised for a price per Share equal to the General Put-Call Price.
3.6 Without Good Reason Termination. If, prior to the end of Fiscal Year
2003, a Senior Manager terminates his employment with the Company without Good
Reason, the Majority Stockholder shall have the right to Call all (but not less
than all) of the Shares Beneficially Owned by such Senior Manager; provided,
that the Notice in respect of such Call must be given to the Senior Manager
during the sixty-day period following the Termination Date; and provided,
further, that such Call shall be exercised for a price per Share equal to the
General Put-Call Price.
3.7 Change in Senior Management Termination. If, prior to the end of Fiscal
Year 2003, any two Senior Managers cease to be employed by the Company for any
reason other than as a result of the termination of each such Senior Manager's
employment by the Company for Cause, each Other Manager shall have the right to
Put all (but not less than all) of the Shares Beneficially Owned by such Other
Manager; provided, that the Notice in respect of such Put must be given to the
Majority Stockholder during the sixty-day period following the Change in
Management Date; and provided, further, that such Put shall be exercised for a
price per Share equal to the General Put-Call Price.
3.8 Change in Senior Management For Cause. If, prior to the end of Fiscal
Year 2003, any two Senior Managers cease to be employed by the Company as a
result of the termination of each such Senior Manager's employment by the
Company for Cause, (i) the Majority Stockholder shall have the right to Call all
(but not less than all) of the Shares Beneficially Owned by each Other Manager
and (ii) each Other Manager shall have the right to Put all (but not less than
all) of the Shares Beneficially Owned by such Other Manager; provided, that the
Notice in respect of each such Call and Put must be given to the Majority
Stockholder or Other Manager, as applicable, during the sixty-day period
following the Change in Management Date; and provided, further, that each such
Call and Put shall be exercised for a price per Share equal to the General
Put-Call Price.
3.9 Calculation of the General Put-Call Price. The General Put-Call Price
of a Share in respect of a Put or Call exercised pursuant to Section 3.3,
Section 3.4, Section 3.5, Section 3.6, Section 3.7 or Section 3.8 with respect
to a Termination Date or Change in Management Date, as applicable, occurring
within the first six months of any Fiscal Year shall equal the sum of (i) the
Minimum Guaranteed Amount plus (ii) the product of 8.7 multiplied by a fraction,
the numerator of which is (a) and the denominator of which is (b), where (a)
equals the excess, if any, of (A)
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Cumulative Net Income Per Share for the last completed Fiscal Year which began
after Fiscal Year 2000 and ended prior to the Termination Date or Change in
Management Date, as applicable (the "First Six Months Fiscal Year"), over (B)
Target Cumulative Net Income Per Share for the First Six Months Fiscal Year and
(b) equals the number of completed Fiscal Years taken into account in the
calculation of Cumulative Net Income Per Share pursuant to (A) above.
The General Put-Call Price of a Share in respect of a Put or Call exercised
pursuant to Section 3.3, Section 3.4, Section 3.5, Section 3.6, Section 3.7 or
Section 3.8 with respect to a Termination Date or Change in Management Date, as
applicable, occurring within the second six months of any Fiscal Year following
Fiscal Year 2000 shall equal the sum of (i) the Minimum Guaranteed Amount plus
(ii) the product of 8.7 multiplied by a fraction, the numerator of which is (a)
and the denominator of which is (b), where (a) equals the excess, if any, of (A)
Cumulative Net Income Per Share for the Fiscal Year in which the Termination
Date or Change in Management Date, as applicable, occurs (the "Second Six Months
Fiscal Year") over (B) Target Cumulative Net Income Per Share for the Second Six
Months Fiscal Year and (b) equals the number of completed Fiscal Years taken
into account in the calculation of Cumulative Net Income Per Share pursuant to
(A) above.
3.10 For Cause Termination. If, prior to the end of Fiscal Year 2003, a
Senior Manager's employment with the Company shall be terminated by the Company
for Cause, the Majority Stockholder shall have the right to Call all (but not
less than all) of the Shares Beneficially Owned by such Senior Manager;
provided, that the Notice in respect of such Call must be given to the Senior
Manager during the sixty-day period following the Termination Date; and
provided, further, that such Call shall be exercised for a price per Share equal
to the Minimum Guaranteed Amount.
3.11 Failure to Renew Employment Agreement. If a Senior Manager and the
Company fail to execute an agreement with respect to the employment by the
Company of such Senior Manager after December 31, 2002, such Senior Manager
shall have the right to Put all (but not less than all) of the Shares
Beneficially Owned by such Senior Manager; provided, that the Notice in respect
of such Put must be given to the Majority Stockholder during the sixty-day
period following the completion of the audit of the Company's financial
statements for Fiscal Year 2002; and provided, further, that such Put shall be
exercised for a price per Share equal to the sum of (i) the Minimum Guaranteed
Amount plus (ii) the product of 8.7 multiplied by a fraction, the numerator of
which is (a) and the denominator of which is (b), where (a) equals the excess,
if any, of (A) Cumulative Net Income Per Share for Fiscal Year 2002 over (B)
Target Cumulative Net Income Per Share for Fiscal Year 2002 and (b) equals 2.
3.12 Control Transaction. Subject to the provisions of Articles IV and V,
if, prior to the end of Fiscal Year 2003, a definitive agreement with respect to
a Control Transaction is executed or announced, each Management Stockholder
shall have the right to Put all (but not less than all) of the Shares
Beneficially Owned by such Management Stockholder; provided, that the Notice in
respect of such Put must be given to the Majority Stockholder either (x) during
the sixty-day period following the Control Transaction Date ("Period One") or
(y) during the sixty-day period following the completion of the Company's audit
for the Fiscal Year in which the Control Transaction Date occurs ("Period Two");
provided, however, that if the Notice is given to the Majority Stockholder on a
day that is within both Period One and Period Two, the
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Management Stockholder shall determine the period in which the Notice was given;
and provided, further, that such Put shall be exercised for a price per Share
equal to the Minimum Guaranteed Amount plus:
(i) in the event Notice of such Put is given during Period One, the product
of 8.7 multiplied by a fraction, the numerator of which is (a) and the
denominator of which is (b), where (a) equals the excess, if any, of (A)
Cumulative Net Income Per Share for the last completed Fiscal Year which began
after Fiscal Year 2000 and ended prior to the Control Transaction Date over (B)
Target Cumulative Net Income Per Share for such Fiscal Year and (b) equals the
number of completed Fiscal Years taken into account in the calculation of
Cumulative Net Income Per Share pursuant to (A) above (the "Period One Control
Transaction Price"), or
(ii) in the event Notice of such Put is given during Period Two, the
product of 8.7 multiplied by a fraction, the numerator of which is (a) and the
denominator of which is (b), where (a) equals the excess, if any, of (A)
Cumulative Net Income Per Share for the Fiscal Year in which the Control
Transaction occurs over (B) Target Cumulative Net Income Per Share for such
Fiscal Year and (b) equals the number of completed Fiscal Years taken into
account in the calculation of Cumulative Net Income Per Share pursuant to (A)
above.
3.13 Purchase Right. Unless otherwise agreed in writing by the applicable
Management Stockholder, in the event that any Management Stockholder continues
to Beneficially Own Shares on the sixty-first day following the completion of
the audit of the Company's financial statements for Fiscal Year 2003 and no
Notice has been given pursuant to this Article III or Section 4.5 during the
immediately preceding sixty-day period with respect to such Management
Stockholder's Shares, all of such Management Stockholder's Shares shall be
automatically purchased by the Majority Stockholder within five Business Days
thereafter for a price per Share equal to the 2003 Put-Call Price and the
aggregate purchase price for such Management Stockholder's Shares shall be paid
to such Management Stockholder in a lump sum cash payment on such date of
purchase.
3.14 General. The parties agree that the following terms shall be
applicable to the exercise of a Put or Call pursuant to Section 3.2 through
Section 3.12 and Section 4.5 hereof and any purchase of Shares pursuant to
Section 3.13 hereof:
(i) The audit of the Company's financial statements for any Fiscal Year
shall be completed as soon as reasonably practicable and in no event later than
ninety days following the end of the relevant Fiscal Year and must be performed
by a nationally recognized accounting firm mutually agreed upon by the Senior
Managers, the Company and the Majority Stockholder (the "Accounting Firm");
provided, that if the Senior Managers, the Company and the Majority Stockholder
cannot agree upon an accounting firm, the Senior Managers, the Company and the
Majority Stockholder shall each appoint a nationally recognized accounting firm
which firms shall select a nationally recognized accounting firm which shall
then be the Accounting Firm.
(ii) A party exercising a Put or Call pursuant to this Article III or
Section 4.5 shall exercise such right by giving to the other party a written
notice (the "Notice") in accordance with the relevant provisions hereof
specifying such party's intent to Put or Call Shares Beneficially Owned by the
relevant Management Stockholder.
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The effective date on which a Put or Call is exercised pursuant to such Notice
shall be the tenth Business Day following the later of (a) the date on which
such Notice is given to the Majority Stockholder or Management Stockholder, as
applicable, and (b) the completion of the audit of the Company's financial
statements for the last Fiscal Year with respect to which the exercise price for
such Put or Call is calculated, if any; provided, however, that the effective
date of exercise of a Put exercised pursuant to Section 4.5 must be prior to the
Drag-Along Sale Date. Notwithstanding the prior sentence, the effectiveness of,
and the obligation of the Majority Stockholder to honor, the exercise of a Put
exercised pursuant to Section 3.12 shall be subject to the consummation of the
Control Transaction and the effective date of such Put shall be the later of (x)
the date determined pursuant to the immediately preceding sentence and (y) the
date of the consummation of the Control Transaction; provided, however, that a
Management Stockholder may exercise any other Put right he may have pursuant to
this Article III or Section 4.5 prior to the effectiveness of a Put exercised
pursuant to Section 3.12 notwithstanding any Notice he may have given under
Section 3.12. The aggregate exercise price shall be paid to the relevant
Management Stockholder in a lump sum cash payment on the effective date of
exercise of a Put or Call pursuant to this Article III or Section 4.5.
(iii) (a) The term "Dividend Gross Up" means, with respect to a Share, the
amount equal to the sum of (A) the excess, if any, of (I) all U.S. federal,
state and local income taxes and/or any foreign taxes applicable because of the
residence or citizenship of the Management Stockholder ("Taxes") required to be
paid by the Management Stockholder with respect to any and all Annual Dividends
on such Share over (II) the Taxes the Management Stockholder would have been
required to pay if an amount equal to such Annual Dividends had been paid to the
Management Stockholder as part of the purchase price for such Share pursuant to
the applicable Put or Call and (B) an additional amount such that the net amount
retained by the Management Stockholder after the payment of all Taxes on the
amounts described in this Section 3.14(iii) is equal to the amount described in
clause (A) of this Section 3.14(iii).
(b) The Dividend Gross Up shall be determined by the Accounting Firm. The
tax rate to be used to determine the Dividend Gross Up shall be each Management
Stockholder's actual marginal tax rate for each applicable tax year.
(c) The term "Annual Dividend" means, with respect to a Share, the
aggregate dividends received by a Management Stockholder in any one Fiscal Year
on or after the Effective Time and prior to the payment of the price for the
applicable Put or Call in excess of $.20 per Share (as equitably adjusted to
reflect changes in the number of Shares resulting from transactions agreed to by
the parties that take place as of, or immediately prior to, the Effective Time).
(iv) The Management Stockholders, the Majority Stockholder and the Company
shall provide the Accounting Firm with all information reasonably required by
the Accounting Firm to make any determination required to be made by it under
this Agreement. Any assumptions not specified herein required to be used by the
Accounting Firm in determining the Dividend Gross Up shall be made by the
Accounting Firm in a reasonable manner that is intended to effectuate the
purposes of this Agreement. In making such determination, with respect to any
matter which is uncertain, the Accounting Firm shall adopt the position which it
believes more likely than not would be adopted by the Internal Revenue Service.
The Accounting Firm shall provide detailed supporting calculations with respect
to its determination to the Company, the Majority
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Stockholder and the relevant Management Stockholder; provided, that the
Accounting Firm shall not provide the Company or the Majority Stockholder with
the actual tax returns of the Management Stockholder or any information
concerning the Management Stockholder that it is not reasonably necessary for
the Company to fully understand the basis for such determination. All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
determination by the Accounting Firm hereunder shall be final, binding and
conclusive upon the Company, the Majority Stockholder and the Management
Stockholder, absent manifest error.
(v) Any amounts payable pursuant to this Article III shall be subject to
such income or employment tax withholding as may be required under any provision
of U.S. federal, state or local tax law or any foreign tax law applicable
because of the residence or citizenship of the applicable Management
Stockholder, if any.
(vi) The Accounting Firm shall determine the exercise price with respect to
any Put or Call exercised pursuant to Section 3.2 through Section 3.12 and
Section 4.5 hereof and the purchase price with respect to any purchase of Shares
pursuant to Section 3.13 hereof.
ARTICLE IV
DRAG-ALONG RIGHTS
4.1 Drag-Along Rights. Subject to the provisions of Section 4.3 and Section
4.4, if the Majority Stockholder desires to sell more than 85% of the Shares
Beneficially Owned by it in good faith to an independent purchaser that is not
an Affiliate of the Majority Stockholder in an arms'-length negotiated
transaction, and said Transferee desires to acquire all or substantially all of
the issued and outstanding Shares upon the same terms and conditions as such
Transferee agreed to with the Majority Stockholder, each Management Stockholder
agrees to sell (a "Drag-Along Sale"), at the Majority Stockholder's request, a
proportion of the Shares Beneficially Owned by him to said Transferee (or to
vote all of such Shares in favor of any merger or other transaction which would
effect a sale of such Shares and waive all applicable dissenters or similar
rights) equal to the proportion of Shares Beneficially Owned by the Majority
Stockholder which are to be sold in the relevant transaction as specified in the
applicable Drag-Along Notice, at the same price, at the same time and on the
same terms and conditions as the Majority Stockholder shall have agreed to with
such Transferee with respect to the Majority Stockholder's Shares. In the event
a Drag-Along Sale is to be required, the Majority Stockholder shall give written
notice (the "Drag-Along Notice") of such sale to the Management Stockholders not
more than thirty or less than fifteen days prior to the proposed date of the
Drag-Along Sale (the "Drag-Along Sale Date") including (i) the proposed amount
of consideration to be received by the Beneficial Owners of Shares, (ii) the
name and address of the Transferee, (iii) the date of the proposed Transfer,
(iv) the number of Shares Beneficially Owned as of the close of business on the
day immediately prior to the date of delivery of the Drag-Along Notice by the
Management Stockholder to whom the notice is sent, (v) confirmation that the
Transferee has agreed to purchase the Management Stockholders' Shares in
accordance with the terms hereof, (vi) the Opinion and (vii) any other material
terms and conditions of the proposed Transfer.
4.2 Delivery of Certificates. On the date that is at least one Business Day
before the Drag-Along Sale Date (the "Delivery Date"), each Management
Stockholder shall deliver a
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certificate or certificates for all of his Shares to be included in such
Drag-Along Sale duly endorsed for Transfer, free and clear of any lien, claim,
encumbrance, charge or security interest of any kind to such Transferee in the
manner and at the address indicated in the Drag-Along Notice against delivery of
the purchase price for such Management Stockholder's Shares.
4.3 Consideration. The provisions of this Article IV shall only apply if
cash is one of the forms of consideration to be received in the Drag-Along Sale
and the Management Stockholder has the right, in his sole discretion, to receive
cash as the sole form of consideration he will receive for his Shares.
4.4 Cooperation. Each Management Stockholder participating in a Drag-Along
Sale shall make commercially reasonable efforts to cooperate in good faith with
the Majority Stockholder in connection with the consummation of a Drag-Along
Sale; provided, that a Management Stockholder shall not be required to (i) make
any representations or warranties other than standard representations concerning
ownership of his Shares or (ii) agree to indemnify any Person except with
respect to such Management Stockholder's own actions and disclosures; and
provided, further, that a Management Stockholder's total liability pursuant to
any such indemnity in connection with a Drag-Along Sale shall not exceed the net
proceeds received by such Management Stockholder in such Drag-Along Sale.
4.5 Put Right. Notwithstanding any other provision of this Article IV, in
the event the Majority Stockholder's sale to which the Drag-Along Sale relates
would constitute a Control Transaction, each Management Stockholder shall have
the right to Put all (but not less than all) of the Shares Beneficially Owned by
such Management Stockholder; provided, that the Notice in respect of such Put
must be given to the Majority Stockholder during the period beginning on the
date of the Management Stockholder's receipt of the Drag-Along Notice and ending
on the fifth Business Day immediately prior to the Delivery Date; and provided,
further, that the Put shall be exercised for a price per Share equal to the
Period One Control Transaction Price.
ARTICLE V
TAG-ALONG RIGHTS
5.1 Right to Participate in Sale. In the event that the Majority
Stockholder shall determine to sell Shares Beneficially Owned by it to a third
party or third parties excluding any member of the JGD Group, each Management
Stockholder shall have the right to sell in such transaction, on the same terms
and conditions as apply to the sale of the Majority Stockholder's Shares (a
"Tag-Along Sale"), a number of such Management Stockholder's Shares not to
exceed such Management Stockholder's Tag-Along Allotment.
5.2 Tag-Along Allotment. The maximum number of Shares that a Management
Stockholder shall be entitled to include in such Tag-Along Sale pursuant to
Section 5.1 (the "Tag-Along Allotment") shall be the sum of (i) the Pro Rata
Portion and (ii) the Excess Pro Rata Portion of his Shares. For purposes of this
Article V, "Pro Rata Portion" shall mean, with respect to Shares Beneficially
Owned by a Management Stockholder or Majority Stockholder, as the case may be, a
number equal to the product of (a) the total number of such Shares then
Beneficially Owned by the Management Stockholder or the Majority Stockholder, as
the case
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may be, and (b) a fraction, the numerator of which shall be the total number of
such Shares proposed to be acquired by the Transferee as set forth in the
Tag-Along Sale Notice and the denominator of which shall be the total number of
such Shares then issued and outstanding (including such Shares proposed to be
sold by the Majority Stockholder); provided, however, that any fraction of a
Share resulting from such calculation shall be disregarded for purposes of
determining the Pro Rata Portion. For purposes of this Article V, "Excess Pro
Rata Portion" shall mean, with respect to Shares Beneficially Owned by a
Management Stockholder or the Majority Stockholder, as the case may be, a number
equal to the product of (x) the number of Non-Elected Shares and (y) a fraction,
the numerator of which shall be such Management Stockholder's Pro Rata Portion
with respect to such Shares, and the denominator of which shall be the sum of
(1) the aggregate Pro Rata Portions with respect to the shares of Common Stock
of all of the Management Stockholders that have elected to exercise in full
their rights to sell their Pro Rata Portion of Shares, and (2) the Majority
Stockholder's Pro Rata Portion of Shares (the aggregate amount of such
denominator is hereinafter referred to as the "Elected Shares"). For purposes of
this Article V, "Non-Elected Shares" shall mean the excess, if any, of the total
number of Shares proposed to be acquired by a Transferee as set forth in the
Tag-Along Sale Notice, less the amount of Elected Shares. Notwithstanding the
foregoing, if the consummation of the sale by the Majority Stockholder to which
the Tag-Along Sale relates would result in the proportion of issued and
outstanding Shares Beneficially Owned by the Majority Stockholder equaling less
than 50% of the proportion of issued and outstanding Shares Beneficially Owned
by the Majority Stockholder immediately following the Effective Time (before
application of the provisions of this Section 5.2), each Management
Stockholder's Tag-Along Allotment with respect to such Tag-Along Sale shall be
deemed to be equal to 100% of the number of Shares Beneficially Owned by such
Management Stockholder as of the close of business on the day immediately prior
to the Tag-Along Notice Date.
5.3 Sale Notice. The Majority Stockholder shall provide each Management
Stockholder with written notice (the "Tag-Along Sale Notice") not more than
sixty days nor less than twenty days prior to the proposed date (the "Tag-Along
Sale Date") of the Tag-Along Sale. Each Tag-Along Sale Notice shall be
accompanied by a copy of any written agreement relating to the Tag-Along Sale
and shall set forth (i) the name and address of each proposed Transferee of
Shares in the Tag-Along Sale; (ii) the number of Shares proposed to be sold by
the Majority Stockholder; (iii) the proposed amount and form of consideration to
be paid for such Shares and the terms and conditions of payment offered by the
proposed Transferees; (iv) the aggregate number of Shares Beneficially Owned by
the Management Stockholder as of the close of business on the day immediately
prior to the date of delivery of the Tag-Along Sale Notice (the "Tag-Along Sale
Notice Date"); (v) the Management Stockholder's Tag-Along Allotment assuming
such Management Stockholder elected to include the maximum number of Shares
possible in the Tag-Along Sale; (vi) confirmation that the Transferee has been
informed of the rights provided for in this Article V and has agreed to purchase
Shares in accordance with the terms hereof; and (vii) the Tag-Along Sale Date.
5.4 Tag-Along Notice. (i) Any Management Stockholder wishing to participate
in the Tag-Along Sale shall provide written notice (the "Tag-Along Notice") to
the Majority Stockholder no more than fifteen days after delivery of the
Tag-Along Sale Notice. The Tag-Along Notice shall set forth the number of Shares
that such Management Stockholder elects to
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include in the Tag-Along Sale, which shall not exceed such Management
Stockholder's Tag-Along Allotment. The Tag-Along Notice given by any Management
Stockholder shall constitute such Management Stockholder's binding agreement to
sell the Shares specified in the Tag-Along Notice on the terms and conditions
applicable to the Tag-Along Sale; provided, however, that in the event that
there is any material change in the terms and conditions of such Tag-Along Sale
applicable to a Management Stockholder after such Management Stockholder gives
his Tag-Along Notice, then, notwithstanding anything herein to the contrary,
such Management Stockholder shall have the right to withdraw from participation
in the Tag-Along Sale with respect to all of the Shares referred to in his
Tag-Along Notice. If the Transferee does not consummate the purchase of all of
the Shares requested to be included in the Tag-Along Sale by any Management
Stockholder on the same terms and conditions applicable to the Majority
Stockholder, then the Majority Stockholder shall not consummate the Tag-Along
Sale of any of its Shares to such Transferee, unless the Shares of all
Management Stockholders and the Majority Stockholder in the Tag-Along Sale are
reduced or limited pro rata in proportion to the respective number of Shares
actually sold in any such Tag-Along Sale and all other terms and conditions of
the Tag-Along Sale are the same for each Management Stockholder participating
therein and the Majority Stockholder.
(ii) If a Tag-Along Notice from any Management Stockholder is not given to
the Majority Stockholder within the fifteen day period specified above, the
Majority Stockholder shall have the right to consummate the Tag-Along Sale
without the participation of such Management Stockholder, but only on terms and
conditions which are no more favorable in any material respect to the Majority
Stockholder than as stated in the Tag-Along Sale Notice and only if such
Tag-Along Sale occurs on a date within 120 days of the Tag-Along Sale Notice
Date.
5.5 Delivery of Certificates. On the Tag-Along Sale Date, each
participating Management Stockholder shall deliver a certificate or certificates
for the Shares to be sold by such Management Stockholder in connection with the
Tag-Along Sale, duly endorsed for transfer free and clear of any lien, claim,
encumbrance, charge or security interest of any kind to the Transferee in the
manner and at the address indicated in the Tag-Along Notice against delivery of
the purchase price for such participating Management Stockholder's Shares.
5.6 Not Applicable to Drag-Along Sales. The provisions of this Article V
shall not apply to any transaction in connection with which the Majority
Stockholder exercises its rights pursuant to Section 4.1.
5.7 Cooperation. Each Management Stockholder participating in a Tag-Along
Sale shall make commercially reasonable efforts to cooperate in good faith with
the Majority Stockholder in connection with the consummation of the Tag-Along
Sale, including, without limitation, by executing an agreement in respect of the
Tag-Along Sale containing customary representations, warranties, indemnities and
agreements.
5.8 Put Right. Notwithstanding any other provision of this Article V, in
the event the Majority Stockholder's sale to which the Tag-Along Sale relates
would constitute a Control Transaction, each Management Stockholder shall have
the right to exercise either his rights pursuant to this Article V, his rights
pursuant to Section 3.12 or his rights under both Article V
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and Section 3.12 (in the latter case, with respect to the Shares not included in
the Tag-Along Sale pursuant to Article V), in his sole discretion.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Piggyback Registration. (i) If the Company at any time proposes to
register any securities under the Securities Act, whether or not for sale for
its own account, on a form and in a manner which would permit registration of
Registrable Shares for a public offering under the Securities Act (other than a
registration statement on Form S-4 or Form S-8 or any successor form thereto),
the Company shall give written notice of the proposed registration to each
Management Stockholder at least fifteen days prior to the filing thereof, and
each Management Stockholder shall have the right to request that all or any part
of his Registrable Shares of the same class or series of the securities proposed
to be registered by the Company be included in such registration by giving
written notice to the Company within fifteen days after the delivery of such
notice by the Company. If the registration statement is to cover an underwritten
offering, such Registrable Shares shall be included in the underwriting on the
same terms and conditions as the securities otherwise being sold through the
underwriters.
(ii) Priority on Piggyback Registrations. If a Piggyback Registration
relates to an underwritten primary offering of securities and the underwriters
of such offering determine in their good faith judgment that the aggregate
number of securities which the Company, the Selling Holders and all other
eligible security holders of the Company (the "Other Holders") propose to
include in such offering exceeds the maximum number of securities that can
reasonably be expected to be sold within a price range acceptable to the
Company, the Company will include in such registration, first, the securities
which the Company proposes to sell and, second, the securities of such Selling
Holders and Other Holders on a pro-rata basis among all such Selling Holders and
Other Holders, taken together, based on the number of securities of the Company
requested to be included by all Selling Holders and Other Holders who have
requested that securities owned by them be so included (it being agreed and
understood, however, that such managing underwriters shall have the right to
eliminate entirely the participation in such offering by all Selling Holders and
Other Holders).
(iii) Underwriters. Shares proposed to be registered and sold for the
account of any Selling Holder pursuant to a Piggyback Registration shall be sold
to prospective underwriters selected or approved by the Company, on the terms
and subject to the conditions of one or more underwriting agreements negotiated
between the Company, the Selling Holders and Other Holders participating in such
registration, and such prospective underwriters. The Selling Holders shall be
permitted to withdraw all or a part of the securities held by such Selling
Holders which were to be included in such Piggyback Registration at any time
prior to the effective date of the registration.
(iv) Compliance. Notwithstanding any other provisions hereof, the Company
shall use its best efforts to ensure that (a) any registration statement filed
in connection with a Piggyback Registration, and any amendment thereto, and any
prospectus forming a part thereof, and any supplement thereto, complies in all
material respects with the Securities Act, (b) any
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registration statement filed in connection with a Piggyback Registration, and
any amendment thereto, does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(c) any prospectus forming part of any registration statement filed in
connection with a Piggyback Registration, and any supplement to such prospectus,
does not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading.
6.2 Registration Statement. In connection with any Piggyback Registration
pursuant to this Agreement, the Company will furnish each Selling Holder and
each underwriter, if any, with a copy of the registration statement and all
amendments thereto and will supply each such Selling Holder with copies of any
prospectus included therein (including a preliminary prospectus and all
amendments and supplements thereto), in each case including all exhibits, and
such other documents as may be reasonably requested, in such quantities as may
be reasonably necessary for the purposes of the proposed offer and sale covered
by such registration (the Company hereby consenting to the use in accordance
with all applicable law of each such registration statement or amendment or
post-effective amendment thereto, and each such prospectus or preliminary
prospectus or supplement thereto). In connection with any Piggyback
Registration, the Company will, at the request of the managing underwriter with
respect thereto or, if not an underwritten offering, at the request of the
Selling Holders, use its best efforts to register or qualify the Registrable
Shares covered by such Piggyback Registration for sale under the securities laws
of such states as is required to permit the offer and sale of such Registrable
Shares as contemplated by the applicable registration statement and to keep each
such registration or qualification effective during the period such registration
statement is required to be kept effective and to do such other acts or things
reasonably necessary to enable the disposition in such jurisdictions of the
securities covered by the applicable registration statement in accordance with
the securities laws of such jurisdictions. In connection with any offering of
Registrable Shares registered pursuant to this Agreement, the Company shall (i)
furnish each Selling Holder, at the Company's expense and at least three
Business Days prior to the sale of any Registrable Shares, with unlegended
certificates in a form eligible for deposit with The Depository Trust Company
representing ownership of the Registrable Shares which are sold pursuant to the
registration statement, in such denominations and registered in such names as
the managing underwriter, if any, or such Selling Holder shall reasonably
request, and (ii) instruct the transfer agent and registrar of the Shares to
release any stop transfer orders with respect to the Registrable Shares so sold.
6.3 Registration Procedures. In connection with the Company's obligations
to effect a Piggyback Registration pursuant to Section 6.1, the Company will as
expeditiously as is practicable:
(i) prepare and file with the Commission such amendments and post-effective
amendments to the registration statement with respect to such Shares and such
supplements to the prospectus used in connection therewith as may be necessary
to keep such registration statement effective and to comply with the provisions
of the Securities Act with respect to the offer and sale of all securities
covered by such registration statement, in accordance with the terms hereof;
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(ii) cause all Registrable Shares covered by the registration statement to
be listed on each securities exchange on which identical securities issued by
the Company are then listed or are to be listed if requested by the Selling
Holders holding a majority in number of the Registrable Shares covered by such
registration statement or the managing underwriters, if any, and cooperate and
assist in any filings required to be made with any such securities exchange or
other regulatory body in connection therewith or otherwise;
(iii) notify each Selling Holder and the managing underwriter, if any,
promptly (and in any event within two Business Days): (a) when any registration
statement, prospectus or any supplement or amendment thereto has been filed, and
with respect to the registration statement or any post-effective amendment, when
the same has become effective; (b) of any request by the Commission or any other
federal or state governmental authority for any amendments or supplements to any
registration statement or prospectus or for additional information; (c) of the
issuance by the Commission of any stop order suspending the effectiveness of any
registration statement or the initiation of any proceedings for that purpose;
(d) if, at any time prior to the closing contemplated by an underwriting
agreement entered into in connection with such registration statement, that the
representations and warranties of the Company contained in such agreement cease
to be true and correct; (e) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (f) of the happening of any event which makes any statement made in the
registration statement, the prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue or which requires the making of any
changes in the registration statement, the prospectus or any document
incorporated therein by reference in order to make the statements therein not
misleading; and (g) of the Company's reasonable determination that a
post-effective amendment to any registration statement would be required;
(iv) use its best efforts to prevent the issuance of any order suspending
the effectiveness of the registration statement or of any order preventing or
suspending the use of a prospectus or suspending the qualification of any of the
Shares included therein for sale in any jurisdiction and, in the event of the
issuance of any stop order suspending the effectiveness of the registration
statement, or of any order suspending or preventing the use of any related
prospectus or suspending the qualification of any Shares included in such
registration statement for sale in any jurisdiction, use its best efforts to
promptly obtain the withdrawal of any such order;
(v) furnish to each Selling Holder and the managing underwriters, if any,
at the Company's expense, one signed copy of the registration statement and any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(vi) as promptly as practicable, if required, based on the advice of the
Company's counsel, or, if necessary, upon the occurrence of any event
contemplated by Section 6.3(iii) hereof, prepare and file a supplement or
post-effective amendment to the registration statement, the related prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Shares, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
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(vii) provide and cause to be maintained a transfer agent and registrar for
all Registrable Shares covered by such registration statement from and after a
date not later than the effective date of such registration statement;
(viii) use its reasonable best efforts to provide a CUSIP number for the
Registrable Shares covered by such registration statement, not later than the
effective date of such registration statement;
(ix) use its reasonable best efforts to (a) obtain opinions of counsel to
the Company (which counsel and opinions shall be reasonably satisfactory to the
managing underwriters, if any, and the Selling Holders), and updates thereof
addressed to the managing underwriters, if any, and the Selling Holders,
covering the matters customarily covered in opinions provided in underwritten
offerings and such other matters as may be reasonably requested by the
underwriters, if any, or the Selling Holders; and (b) obtain "cold comfort"
letters and updates thereof (which letters and updates shall be reasonably
satisfactory to the managing underwriters, if any, and the Selling Holders) from
the Company's independent certified public accountants addressed to the Selling
Holders and managing underwriters, if any (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the registration
statement), such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by accountants in connection
with underwritten offerings and such other matters as the underwriters, if any,
or the Selling Holders shall reasonably request. The above shall be done at each
closing under such underwriting or similar agreement or as and to the extent
required thereunder or, if not an underwritten offering, as otherwise reasonably
requested by the Selling Holders;
(x) make available for inspection by a representative of the holders of a
majority of the Registrable Shares being sold and any attorneys or accountants
retained by such holders (and, to the extent reasonably requested, furnish
copies), in connection with the preparation of a registration statement pursuant
to this Agreement, all financial and other records and pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative(s), attorney(s) or accountant(s) in connection with such
registration;
(xi) enter into such agreements reasonably requested by the Selling Holders
(including, as applicable, an underwriting agreement in form, scope and
substance as is customary in similar offerings and is reasonably satisfactory to
the Company) and take all such other customary and reasonable actions in
connection therewith (including such customary and reasonable actions as may be
requested by the managing underwriters, if any) in order to expedite or
facilitate the disposition of the Registrable Shares, and in such connection,
whether or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration:
(a) make such representations and warranties to the Selling Holders and the
underwriters, if any, with respect to the business of the Company and the
registration statement, prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to
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underwriters in underwritten offerings and confirm the same, if and when
reasonably requested; and
(b) deliver such documents and certificates as may be reasonably requested
by the holders of a majority of the Registrable Shares being included in the
registration statement or the managing underwriters, if any, to evidence
compliance with clause (a) above and with any provisions contained in the
underwriting agreement or other similar agreement entered into by the Company.
The above shall be done at each closing under such underwriting or similar
agreement or, if not an underwritten offering, when otherwise reasonably
requested by the Selling Holders.
(xiii) if requested by the managing underwriter in an underwritten offering
of Registrable Shares, use reasonable efforts to cause each holder of ten
percent (10%) or more of the securities of the same class as the securities
included in such underwritten offering, or any securities convertible into or
exchangeable or exercisable for such securities, in each case purchased from the
Company at any time after the date of this Agreement (other than in a registered
public offering) to agree not to effect any public or private sale or
distribution or otherwise dispose (including sales pursuant to Rule 144
promulgated under the Securities Act) of any such securities during the ten days
prior to and the ninety days after such underwritten offering has been completed
(except as part of such underwritten registration, if otherwise permitted),
unless the underwriters managing such registration otherwise agree;
(xiv) if requested, furnish each Selling Holder with a copy (or a
reasonable number of copies, as requested) of the registration statement
(together with the exhibits thereto) and each amendment thereto prior to the
filing thereof with the Commission;
(xv) if requested by the managing underwriters, if any, or a Selling
Holder, promptly incorporate in a prospectus, supplement or post-effective
amendment such information as the managing underwriters, if any, or such Selling
Holder reasonably requests to be included therein relating to the sale of the
Registrable Shares, including, without limitation, information with respect to
the number of Registrable Shares being sold to underwriters, the purchase price
being paid therefor by such underwriters or such Selling Holders and with
respect to any other terms of the underwritten offering of the Registrable
Shares to be sold in such offering; and make all required filings of such
prospectus, supplement or post-effective amendment promptly following
notification of the matters to be incorporated in such supplement or
post-effective amendment;
(xvi) upon the occurrence of any event that would cause a registration
statement (a) to contain a material misstatement or omission or (b) to be not
effective and usable for the offer and sale of Registrable Shares, the Company
shall promptly file an amendment to such registration statement, in the case of
clause (a), correcting any such misstatement or omission and, in the case of
either clause (a) or (b), use its commercially reasonable efforts to cause such
amendment to be declared effective and such registration statement to become
usable as soon as reasonably practicable thereafter;
(xvii) otherwise use its reasonable best efforts to (a) comply with all
applicable rules and regulations of the Commission and to take all other steps
reasonably necessary to effect the
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registration of the Registrable Shares covered by such registration statement as
contemplated hereby, and (b) make available to its security holders an earnings
statement which satisfies the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder (or any successor rule thereto) no later than forty-five
days after the end of any twelve-month period (or ninety days after the end of
any twelve-month period if such period is a fiscal year) (or in each case within
such extended period of time as may be permitted by the Commission for filing
the applicable report with the Commission) (A) commencing at the end of any
fiscal quarter in which Shares are sold to underwriters in a firm commitment or
best efforts underwritten offering and (B) if not sold to underwriters in such
an offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a registration statement, which statements
shall cover said twelve-month periods; and
(xviii) in connection with any underwritten offering, cooperate with all
marketing efforts reasonably requested by the managing underwriter or managing
underwriters in connection with the sale of the Shares, including, without
limitation, participation in a reasonable number of road-show presentations and
other marketing activity by members of the Company's senior management and other
employees of the Company requested by such managing underwriter or managing
underwriters.
6.4 Holdback Agreements. The Company and each Management Stockholder
agrees, if requested (pursuant to a timely written notice) by the managing
underwriter or underwriters in an underwritten offering effected in connection
with a Piggyback Registration, not to effect any public sale or distribution of
any of the Company's Shares, including a sale pursuant to Rule 144, except as
part of such underwritten offering, during the period beginning ten days prior
to, and ending one hundred and eighty days after, the closing date of the
underwritten offering made pursuant to such registration statement. The
foregoing provisions shall not apply to the Company or any holder of Registrable
Shares if such Person is prevented by applicable law or regulation from entering
into any such agreement; provided, however, that any such Person shall undertake
not to effect any public sale or distribution of the class of securities covered
by such registration statement (except as part of such underwritten offering)
during such period unless it has provided sixty days' prior written notice of
such sale or distribution to the managing underwriter.
6.5 Registration Expenses. All expenses, disbursements and fees incurred by
the Company and the Selling Holders in connection with carrying out their
obligations under this Article VI, including, but not limited to, (i) the
reasonable and documented fees and expenses of one law firm (plus local counsel)
for the Selling Holders, (ii) all registration, filing fees and expenses
(including fees with respect to filings made with any securities exchange and
the fees and expenses of any "qualified independent underwriter" and its
counsel, as may be required by the rules and regulations of any securities
exchange), (iii) fees and expenses of compliance with state securities or blue
sky laws (including fees and disbursements of counsel for the underwriters or
Selling Holders in connection with blue sky qualifications of the Registrable
Shares and determinations of their eligibility for investment under the laws of
such jurisdiction as the managing underwriters or holders of a majority of the
Registrable Shares being sold may designate), (iv) printing expenses (including
printing certificates for the Registrable Shares to be sold and the registration
statements and prospectuses), messenger and delivery expenses, duplication, word
processing, and telephone expenses, (v) fees and disbursements of counsel for
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the Company, (vi) fees and disbursements of all independent certified public
accountants of the Company incurred in connection with such registration
(including the expenses of any special audit and "cold comfort" letters incident
to such registration) and fees and disbursements of underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals relating to the distribution of the
Registrable Shares which shall be borne by the seller thereof) and other Persons
retained by the Company, (vii) internal expenses of the Company, including all
salaries and expenses of its officers and employees performing legal or
accounting duties, (viii) expenses of any annual audit or quarterly review,
including the fees and expenses of any Person, including special experts,
retained by the Company with regard to such annual audit or quarterly review,
(ix) the expense of any liability insurance, and (x) the expenses and fees for
listing the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed or to be listed will be
borne by the Company regardless of whether a registration statement becomes
effective.
6.6 Conditions to Selling Holders' Piggyback Registration Rights. It shall
be a condition of each Selling Holder's rights hereunder that:
(i) Cooperation. Such Selling Holder shall cooperate with the Company by
supplying information and executing documents relating to such Selling Holder or
the securities of the Company owned by such Selling Holder in connection with
the relevant registration that are reasonably requested by the Company;
(ii) Undertakings. Such Selling Holder shall enter into any undertakings
and take such other action relating to the conduct of the proposed offering
which the Company or the underwriters may reasonably request as being necessary
to insure compliance with federal and state securities laws and the rules or
other requirements of any securities exchange or which the Company or the
underwriters may reasonably request to otherwise effectuate the offering; and
(iii) Indemnification. Such Selling Holder shall execute and deliver an
agreement to indemnify to the fullest extent permitted by law and hold harmless
the Company, each of its directors, each of its officers who has signed the
registration statement, any underwriter (as defined in the Securities Act), and
each Person, if any, who controls the Company or such underwriter within the
meaning of the Securities Act, against such Losses to which the Company or any
such director, officer, underwriter or controlling person may become subject
under the Securities Act or otherwise, in such manner as is customary for
registrations of the type then proposed, but only with respect to written
information about or pertaining to such Selling Holder furnished by such Selling
Holder specifically for inclusion in a registration statement filed in
connection with a registration made under this Article VI.
6.7 Indemnification.
(i) Indemnification by the Company. In the case of any offering registered
under the Securities Act pursuant to this Agreement, the Company agrees to
indemnify to the fullest extent permitted by law and hold harmless each Selling
Holder against any and all Losses, to which they or any of them may become
subject under the Securities Act or any other statute or under common law or
otherwise, insofar as any such Losses shall arise out of, be caused by or shall
be
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based upon (a) any untrue statement or alleged untrue statement of a material
fact contained in a registration statement relating to the offer or sale of the
Registrable Shares covered thereby, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (b) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus (as amended
or supplemented if the Company shall have filed with the Commission any
amendment thereof or supplement thereto) or prospectus (as amended or
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereto, including the information deemed part of such
registration statement pursuant to Rule 430A promulgated under the Securities
Act), or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the indemnification agreement contained in this Section 6.7 shall not apply
to such Losses which shall arise from the sale of Registrable Shares to any
Person if such Losses shall arise out of, shall be caused by or shall be based
upon any such untrue statement or alleged untrue statement, or any such omission
or alleged omission, (x) if such statement or omission shall have been made in
reliance upon and in conformity with information furnished in writing to the
Company by and about such Selling Holder specifically for use in connection with
the preparation of the registration statement or any preliminary prospectus or
prospectus contained in the registration statement or any such amendment thereof
or supplement thereto; (y) if such untrue statement or omission was made in any
preliminary prospectus to the extent that (A) the prospectus corrected such
untrue statement or such omission and (B) the Selling Holder was legally
required to and failed to send or deliver a copy of the prospectus with or prior
to the delivery of written confirmation of the sale by such Selling Holder of
Registrable Shares to the Person asserting the claim from which such Losses
arise and the Company made the prospectus available to such Selling Holder in
accordance with the terms of the Agreement; or (z) if any such Losses arise out
of, are caused by or are based upon an untrue statement or omission in the
prospectus, to the extent that (A) such untrue statement or omission is
corrected in an amendment or supplement to the prospectus and (B) having
previously been furnished by or on behalf of the Company with copies of the
prospectus as so amended or supplemented, such Selling Holder was legally
required but failed to deliver such prospectus as so amended or supplemented,
prior to or concurrently with the sale of Shares to the Person asserting the
claim from which such Losses arise. This indemnity shall be in addition to any
other indemnification arrangements to which the Company may otherwise be a
party.
(ii) Conduct of Indemnification Proceedings. Any Person entitled to
indemnity under this Agreement (an "Indemnified Party") shall give prompt
written notice to the party from which such indemnity is sought (the
"Indemnifying Party") of any claim or of the commencement of any proceeding with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure so to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any obligation
or liability except to the extent that the Indemnifying Party has been actually
and materially prejudiced by such failure. The Indemnifying Party shall have the
right exercisable by giving written notice to an Indemnified Party promptly
after the receipt of written notice from such Indemnified Party of such claim or
proceeding to assume, at the Indemnifying Party's expense, the defense of any
such claim or proceeding, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that under such circumstances an
Indemnified Party shall have the right to
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employ separate counsel in any such claim or proceeding and to participate in
the defense thereof; provided further, however, that the fees and expenses of
such separate counsel shall be at the expense of such Indemnified Party unless:
(a) the Indemnifying Party agrees to pay such fees and expenses; or (b) the
Indemnifying Party fails promptly to assume the defense of such claim or
proceeding or fails to employ counsel reasonably satisfactory to such
Indemnified Party; or (c) the Indemnified Party shall have been advised by
counsel that (A) there may be one or more material defenses available to such
Indemnified Party that are different from or additional to those available to
the Indemnifying Party or its Affiliates, or (B) a conflict of interest likely
exists if one counsel represents such Indemnified Party and such Indemnifying
Party or its Affiliate, in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof, it being understood, however, that the
Indemnifying Party shall not, in connection with any one such claim or
proceeding, or separate but substantially similar or related claims or
proceedings arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel which such counsel shall be designated
by the Indemnified Party and be reasonably acceptable to the Indemnifying Party)
at any time for such Indemnified Party, or for fees and expenses that are not
reasonable. Whether or not such defense is assumed by the Indemnifying Party,
such Indemnifying Party will not be subject to any liability for any settlement
made without its consent (which consent shall not be unreasonably withheld). The
Indemnifying Party shall not consent to entry of any judgment or settle or
compromise any pending or threatened claim, action or proceeding, unless it
contains as an unconditional term thereof the giving by the claimant or
plaintiff to the Indemnified Party of a release, in form and substance
satisfactory to such Indemnified Party, from all liability in respect of such
claim or litigation for which such Indemnified Party would be entitled to
indemnification hereunder.
(iii) Contribution. (a) If the indemnification provided for in this Section
6.7 is unavailable to an Indemnified Party in respect of any Losses or is
insufficient to hold such Indemnified Party harmless, then, except to the extent
that contribution is not permitted under Section 11(f) of the Securities Act,
each applicable Indemnifying Party shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party, on
the one hand, and such Indemnified Party, on the other hand, in connection with
the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations appropriate under the circumstances. The
relative fault of such Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, shall be determined by reference to, among other
things, whether any action in question, including any untrue statement of a
material fact or omission to state a material fact, has been taken or made by,
or relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties' relative intent, knowledge, access to information
concerning the matter with respect to which the claim was asserted and
opportunity to correct or prevent such action, statement or omission. The amount
paid or payable by a party as a result of any Losses shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
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(b) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.7 were determined by pro-rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6.7, no Indemnifying Party that
is a Selling Holder shall be required to contribute any amount in excess of the
amount by which the net proceeds received by such Selling Holder from the sale
of Shares exceeds the amount of any damages that such Selling Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11 (f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(iv) Underwriting Agreement to Govern. At such time as an underwriting
agreement with respect to a particular underwriting is entered into, the terms
of any such underwriting agreement shall govern with respect to the matters set
forth therein to the extent inconsistent with this Section 6.7; provided,
however, that the indemnification provisions of such underwriting agreement as
they relate to Selling Holders are customary for registrations of the type then
proposed and provide for indemnification by such Selling Holders only with
respect to written information regarding such Selling Holder furnished by such
Selling Holders.
6.8 Rule 144. Following a Public Offering Event, the Company shall file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the Commission thereunder and will take
such further action as any holder of Registrable Shares may reasonably request,
all to the extent required from time to time to enable such holder to sell
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144. Upon the request of any Management
Stockholder, the Company will deliver to such Management Stockholder a written
statement as to whether it has complied with such requirements.
6.9 Termination of Registration Rights. The rights of a Management
Stockholder pursuant to this Article VI shall terminate with respect to Shares
held by such Management Stockholder to the extent such Shares may be sold by
such Management Stockholder pursuant to Rule 144 under the Securities Act (or
any similar provision then in force) within any three-month period.
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
7.1 Representations and Warranties of the Company .
The Company represents and warrants to the Management Stockholders and the
Majority Stockholder as follows:
(i) Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
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(ii) Authority. The Company has full corporate power and authority to
execute, deliver and perform all of its obligations under Agreement and to
consummate the transactions contemplated hereby.
(iii) Binding Obligation. The execution, delivery and performance of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on its part, and, assuming the due execution by the party
seeking enforcement against the Company, this Agreement constitutes a binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except insofar as enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws which may affect creditors rights and
remedies generally and by principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iv) No Conflict. The execution, delivery and performance of this Agreement
by the Company and the consummation by it of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, (a) violate any provision of law, statute, rule or regulation to which it
is subject, (b) violate any order, judgment or decree applicable to it, or (c)
conflict with, or result in a breach or default under, any term or condition of
its certificate or articles of incorporation or its bylaws or any material
agreement or other material instrument to which it is a party or by which it or
its property is bound.
7.2 Representations and Warranties of the Majority Stockholder. The
Majority Stockholder represents and warrants to each Management Stockholder and
to the Company as follows:
(i) Organization. It is a societe anonyme duly organized, validly existing
and in good standing under the laws of France.
(ii) Authority. It has full power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
(iii) Binding Obligation. The execution, delivery and performance of this
Agreement by it and the consummation by it of the transactions contemplated
hereby have been duly and validly authorized by all necessary action on its
part, and, assuming the due execution by the party seeking enforcement against
it, this Agreement constitutes its binding obligation, enforceable against it in
accordance with its terms, except insofar as enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws which may affect creditors'
rights and remedies generally and by principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iv) No Conflict. The execution, delivery and performance of this Agreement
by it and the consummation by it of the transactions contemplated hereby will
not, with or without the giving of notice or the lapse of time, or both, (a)
violate any provision of law, statute, rule or regulation to which it is
subject, (b) violate any order, judgment or decree applicable to it, or (c)
conflict with, or result in a breach or default under, any term or condition of
its certificate of incorporation, bylaws, trust or equivalent governing document
or any material agreement or other material instrument to which it is a party or
by which it or its property is bound.
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(v) Ownership of VCA. The Majority Stockholder is the owner of 50% of the
issued and outstanding shares of capital stock of Verrerie Cristallerie
D'Arques.
7.3 Representations and Warranties of the Management Stockholders. Each of
the Management Stockholders represents and warrants to each other, to the
Company and to the Majority Stockholder as follows:
(i) Valid Trust. If a trust, the trust agreement creating such trust is a
legal, valid and binding trust agreement, and such trust is a valid trust under
the laws of the jurisdiction in which it was created.
(ii) Authority. If a trust, such trust has the requisite power and
authority to execute, deliver, and perform all of its obligations under, this
Agreement and to consummate the transactions contemplated hereby.
(iii) Binding Obligation. Assuming the due execution by the party seeking
enforcement against him, this Agreement constitutes his binding obligation,
enforceable against him in accordance with its terms, except insofar as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws which may affect creditors' rights and remedies generally and by principles
of equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
(iv) No Conflict. The execution, delivery and performance of this Agreement
by him and the consummation by him of the transactions contemplated hereby will
not, with or without the giving of notice or the lapse of time, or both, (a)
violate any provision of law, statute, rule or regulation to which he is
subject, (b) violate any order, judgment or decree applicable to him, or (c)
conflict with, or result in a breach or default under, any term or condition of
any material agreement or other material instrument to which he is a party or by
which he or his property is bound.
7.4 Additional Representations and Warranties of the Management
Stockholders and the Majority Stockholder Each of the Management Stockholders
represents and warrants to the Majority Stockholder and to the Company, and the
Majority Stockholder represents and warrants to each of the Management
Stockholders and the Company that the Shares Beneficially Owned by him or it
were acquired for investment only and not with a view to any public distribution
thereof, and there is not any current plan or intention on such party's part to
offer to sell, exchange or otherwise dispose of the Shares Beneficially Owned by
him or it in violation of any of the requirements of the Securities Act.
7.5 Additional Agreements of the Company, the Majority Stockholder and the
Management Stockholders
(i) Each of the Majority Stockholder and the Company agree to give notice
in writing to each of the Other Managers of the termination of employment with
the Company of a Senior Manager for any reason no later than three Business Days
after the Termination Date.
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(ii) Each of the Majority Stockholder and the Company agree to give notice
in writing to each of the Management Stockholders of the execution or
announcement of a definitive agreement with respect to a Control Transaction no
later than three Business Days after the Control Transaction Date.
(iii) The Majority Stockholder hereby agrees to guarantee absolutely and
unconditionally all of the obligations of the Company to the Management
Stockholders under Article III and Section 4.5 of this Agreement irrespective of
any circumstances whatsoever which might otherwise constitute a legal or
equitable discharge or defense of the liabilities of a surety or guarantor or
that otherwise limit recourse against the Majority Stockholder, other than
performance; provided, that the obligations of the Majority Stockholder under
this Section 7.5(iii) are independent of the obligations of the Company and a
separate action or actions may be brought and prosecuted against the Majority
Stockholder whether or not action is brought against the Company and whether or
not the Company is joined in any such action or actions.
(iv) Each of the Majority Stockholder, the Company and each Management
Stockholder agree that with respect to any Shares Beneficially Owned by a
Management Stockholder which are held in a trust, such Shares shall be treated
for all purposes under this Agreement as Shares held directly by such Management
Stockholder.
ARTICLE VIII
BOARD OF DIRECTORS
8.1. Board Composition. Commencing as of the Effective Time and so long as
any Senior Manager continues to Beneficially Own any Shares, the Senior Managers
who then Beneficially Own Shares shall have the right to nominate a number of
persons as candidates for election as members of the Board of Directors of the
Company (the "Board") equal to the number of Senior Managers who then
Beneficially Own Shares. The Majority Stockholder shall be entitled to nominate
any number of candidates for election in its sole discretion. As used herein,
the term "Nominees" refers to each person nominated to be elected to the Board.
The Majority Stockholder may cause the total number of members of the Board to
be increased at any time in its discretion, and the Management Stockholders
shall take all necessary actions reasonably requested by the Majority
Stockholder to effectuate the foregoing.
8.2. Board Action. Except as otherwise expressly provided herein or as
required by law, all actions to be taken by the Board will require the
affirmative vote of a majority of the members of the Board.
8.3. Election of Nominees. Each party hereto will use his or its best
efforts to cause the Nominees to be elected in any and all elections of
directors of the Company held during the period specified in Section 8.1 hereof.
Without limiting the generality of the foregoing, each of the Management
Stockholders and the Majority Stockholder will vote, grant a consent with
respect to, or cause to be voted for the election of the Nominees, in all
elections of directors of the Company held, or written consents in lieu thereof
given, during the period specified in Section 8.1 hereof, all securities
entitled to vote or consent in such election that such Person has the power to
vote or with respect to which such Person has the power to grant a consent (or
in
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respect of which such Person has the power to direct the vote or grant a
consent) in accordance with the terms of this Section 8.3.
8.4. Vacancies. Each Nominee will hold his or her office as a director of
the Company until the earlier of (i) the expiration of his or her term as
provided in the Company's certificate of incorporation, by-laws or applicable
law and (ii) his or her death, resignation, incapacity or removal from the Board
in accordance with Section 8.5. If any Nominee designated pursuant to Section
8.1 ceases to serve as a director of the Company for any reason during his or
her term (a "Terminating Nominee"), a Nominee for the vacancy resulting
therefrom may be designated by the party who originally designated the
Terminating Nominee.
8.5. Removal of Nominees. Only the Senior Managers may remove a Nominee
designated by the Senior Managers from the Board and only the Majority
Stockholder may remove a Nominee designated by the Majority Stockholder from the
Board. Any such Nominee may be removed by the Senior Managers or the Majority
Stockholder, as applicable, at any time, for any reason. If at any time the
Senior Managers or the Majority Stockholder, as applicable, shall desire to have
a Nominee removed from the Board pursuant to this Section 8.5, the Senior
Managers or the Majority Stockholder, as applicable, shall so notify the
Company, and each party hereto shall use its best efforts to take or cause to be
taken all such action as may be required to remove such Nominee from the Board.
8.6. Committees. Commencing as of the Effective Time and so long as any
Senior Manager continues to Beneficially Own any Shares, each committee of the
Board established by the Board shall have at least one director designated by
the Senior Managers, unless such committee is required by the Company's
certificate of incorporation, by-laws or applicable law to be composed entirely
of non-executive directors.
8.7. Compensation. The directors shall not receive any compensation for
their services, but shall be entitled to be reimbursed for reasonable
out-of-pocket expenses incurred in connection therewith.
ARTICLE IX
GENERAL
9.1 Public Offering. In the event the Company effects a bona fide offering
of Shares to the public (a "Public Offering Event"), (i) at the election of a
Management Stockholder, the provisions of Article II hereof shall cease to be
effective with respect to such Management Stockholder's Shares, (ii) the
purchase provisions of Section 3.13 shall cease to be effective with respect to
the Shares of the Management Stockholders, (iii) the right of the Majority
Stockholder to Call the Shares of any Management Stockholder pursuant to Article
III hereof shall cease to be effective and (iv) the right of each Management
Stockholder to Put his Shares to the Majority Stockholder pursuant to Article
III or Section 4.5 hereof shall cease to be effective at the time that more than
50% of the issued and outstanding Shares are held by members of the public
unrelated to the Majority Stockholder or any of its Affiliates or any of the
Management Stockholders. Upon any Transfer of Shares by a Management Stockholder
following any Public
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Offering Event, any remaining provisions of this Agreement relating to such
Shares shall cease to be effective.
9.2 Anti-Dilution Adjustments. In the event the Company changes the number
of Shares issued and outstanding as a result of a stock split, stock dividend,
recapitalization, subdivision, reclassification, combination, exchange of
shares, issuance of Shares for less than fair value or similar transaction with
respect to the issued and outstanding Shares, adjustments shall be made to the
provisions set forth herein so as to preserve, as nearly as practicable, the
economic benefits to the parties contemplated hereby.
9.3 Recapitalization, Exchanges, Etc., Affecting the Shares. The provisions
of this Agreement shall apply to the full extent set forth herein with respect
to (i) the Shares and (ii) any and all Common Stock or any common stock of any
successor or assign of the Company which may be issued in respect of, in
exchange for, or in substitution for any Shares, as a result of a
recapitalization, reclassification, merger, consolidation or other transaction.
9.4 Injunctive Relief. It is hereby agreed and acknowledged that it will be
impossible to measure in money the damages that would result from a failure by
any party to comply with any of the terms of this Agreement. Any party hereto
shall, therefore, be entitled to injunctive relief, including specific
performance, to enforce the terms of this Agreement, without the posting of any
bond. If an action should be brought in equity to enforce any of the provisions
of this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law.
9.5 Notices. (i) Except as otherwise expressly provided herein, any and all
notices, demands or other communications required or permitted hereunder shall
be in writing and shall be made by hand delivery, or by first-class, registered
or certified mail with postage prepaid or by facsimile or telecopy, addressed to
the relevant party at the address set forth below:
(a) If to the Company, to:
Mikasa, Inc.
One Mikasa Drive
Secaucus, NJ 07096
Attention: Chief Executive Officer
General Counsel
with a copy (which shall not constitute notice) to:
Kirkland & Ellis
Citigroup Center
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne, Esq.
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
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(b) If to the Majority Stockholder, to:
J.G. Durand Industries, S.A.
38 rue Adrien Danvers
62510 Arques, France
Telecopy: 33 3 21 95 4774
Attention: Mr. Paul Fontaine
with a copy (which shall not constitute notice) to:
Kirkland & Ellis
Citigroup Center
153 East 53rd Street
New York, New York 10022
Attention: Frederick Tanne, Esq.
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
(c) If to any of the Management Stockholders, to the address and/or
telephone number set forth below such Management Stockholder's name on the
signature pages hereto or to such other address as such Management Stockholder
shall have provided.
with a copy (which shall not constitute notice) to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Attention: Victor I. Lewkow, Esq.
David Leinwand, Esq.
Telephone: (212) 225-2000
Facsimile: (212) 225-3999
(ii) Any party may change its address for notice by notice given to each
other party in accordance with the foregoing. No objection may be made to the
method of delivery of any notice actually and timely given.
9.6 Permitted Transferees Bound. All Shares Beneficially Owned by a
Permitted Transferee shall, for all purposes, be subject to the terms of this
Agreement, whether or not such Permitted Transferee has executed a consent to be
bound by this Agreement. Notwithstanding anything to the contrary contained
herein, any Person who purchases Shares from a Management Stockholder pursuant
to a Tag-Along Sale or Drag-Along Sale shall not be bound by this Agreement.
9.7 Effectiveness; Amendment; Waiver. Except as otherwise expressly set
forth herein, this Agreement may be amended, modified, supplemented or
terminated only by a written agreement of the Majority Stockholder, the Company
and such Management Stockholders as Beneficially Owned in the aggregate at least
80% of all Shares Beneficially Owned by all
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Management Stockholders at the time of the execution of such written agreement;
provided, however, that all parties hereto agree that this Agreement and all
other related agreements (including the Merger Agreement) shall be amended to
the extent required in order to provide for the addition of Management
Stockholders as parties to this Agreement and such other relevant agreements in
accordance with Annex A hereto. Other than this Section 9.7, which shall be
effective upon execution of this Agreement, the other provisions of this
Agreement shall become effective immediately following the Effective Time and
shall not be in full force or effect prior thereto.
9.8 Additional Documents; Further Assurances. Each party hereto agrees to
execute any and all further documents and writings and to perform such other
reasonable actions which may be or become necessary to effect the terms of this
Agreement.
9.9 No Third-Party Benefits. Nothing in this Agreement shall confer any
rights upon any Person other than the parties hereto and their respective
permitted successors and assigns.
9.10 Successors and Assigns. Except as otherwise expressly set forth
herein, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto, and their respective successors and permitted assigns;
provided, however, (i) neither this Agreement nor any rights or obligations
hereunder may be assigned by the Company or the Majority Stockholder, except
that the Majority Stockholder may assign its rights and obligations (except its
obligations under Section 7.5(iii)) hereunder (including the rights and
obligations to purchase Shares and pay the exercise price pursuant to any Put or
Call exercised hereunder or the purchase right pursuant to Section 3.13) to the
Company or any member of the JGD Group, provided, that any such assignment shall
not relieve the Majority Stockholder of its obligations hereunder, and (ii) no
rights or obligations of any Management Stockholder under this Agreement may be
transferred or assigned except that any Management Stockholder shall be
permitted to transfer its rights and obligations hereunder in connection with a
Transfer of Shares made to a Permitted Transferee in compliance with all of the
provisions of this Agreement.
9.11 Severability. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein; provided, however, that the parties hereto shall
use their reasonable best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
invalid, illegal or unenforceable term, provision, covenant or restriction.
9.12 Integration. This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof. There are no restrictions,
agreements, promises, representations, warranties, covenants or undertakings
with respect to the subject matter hereof other than those expressly set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject matter.
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9.13 Governing Law. THE RIGHTS AND LIABILITIES OF THE PARTIES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED IN SUCH STATE.
9.14 Attorneys' Fees. If a Management Stockholder prevails in any
litigation or arbitration commenced (including any proceedings in a bankruptcy
court) between the parties hereto concerning any provision of this Agreement or
the rights and duties of any Person hereunder, in addition to such other relief
as may be granted, the Majority Stockholder shall reimburse the Management
Stockholder for his attorneys' fees and court costs incurred by reason of such
litigation or arbitration.
9.15 Headings. The headings and table of contents in this Agreement are
inserted only as a matter of convenience, and in no way define, limit, or extend
or interpret the scope of this Agreement or of any particular Section.
9.16 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.17 Consent to Jurisdiction. Each party hereto agrees that any proceeding
arising out of or relating to this Agreement or the breach or threatened breach
of this Agreement may be commenced and prosecuted in a court in the State of New
York. Each party hereto hereby irrevocably and unconditionally consents and
submits to the non-exclusive personal jurisdiction of any court in the State of
New York in respect of any such proceeding. Each party hereto consents to
service of process upon it with respect to any such proceeding by registered
mail, return receipt requested, and by any other means permitted by applicable
laws and rules. Each party hereto waives any objection that it may now or
hereafter have to the laying of venue of any such proceeding in any court in the
State of New York and any claim that it may now or hereafter have that any such
proceeding in any court in the State of New York has been brought in an
inconvenient forum.
9.18 No Inconsistent Agreements. No party will hereafter enter into any
agreements with respect to the Shares which are inconsistent with or violate or
limit in any material respects the rights granted to the other parties in this
Agreement.
9.19 Inclusion of Trusts. Reference to any Management Stockholder made
herein, including by use of the term "him" or the possessive "his" with respect
to such Management Stockholder, shall be deemed to include any trust referred to
on Annex A hereof with respect to such Management Stockholder. Unless otherwise
transferred in accordance with the terms hereof, a Management Stockholder shall
be deemed to Beneficially Own any Shares held by any trust referred to on Annex
A hereto with respect to such Management Stockholder.
* * * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MIKASA, INC.
By: /s/ Amy Tunis
--------------------------
Name: Amy Tunis
Title: Secretary
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J.G. DURAND INDUSTRIES, S.A.
By: /s/ A. Ibled
--------------------------
Name: A. Ibled
Title: President
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MANAGEMENT STOCKHOLDERS
RAYMOND B. DINGMAN, on behalf of
himself, and
THE RAYMOND BURNETT DINGMAN
SEPARATE PROPERTY TRUST
/s/ Raymond B. Dingman
------------------------------------------
Address: c/o One Mikasa Drive
Secaucus, New Jersey 07096-1549
ALFRED J. BLAKE
/s/ Alfred J. Blake
------------------------------------------
Address: c/o One Mikasa Drive
Secaucus, New Jersey 07096-1549
ANTHONY F. SANTARELLI
/s/ Anthony F. Santarelli
------------------------------------------
Address: c/o One Mikasa Drive
Secaucus, New Jersey 07096-1549
GEORGE T. ARATANI, on behalf of
himself, and
THE GEORGE T. ARATANI AND
SAKAYE I. ARATANI REVOCABLE
LIVING TRUST
/s/ George T. Aratani
------------------------------------------
Address: c/o One Mikasa Drive
Secaucus, New Jersey 07096-1549
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ANNEX A
MANAGEMENT STOCKHOLDERS
Raymond B. Dingman, together with the
Raymond Burnett Dingman Separate Property
Trust
Alfred J. Blake
Anthony F. Santarelli
George T. Aratani, together with the
George T. Aratani and Sakaye I. Aratani
Revocable Living Trust
Prior to September 24, 2000, a certain other holder of Common Stock may exchange
up to 318,000 shares of Common Stock for shares of New Preference Stock (as
defined in the Merger Agreement).
C-40
APPENDIX D
SECTION 262 OF THE
DELAWARE GENERAL CORPORATION LAW
262. APPRAISAL RIGHTS.-- (a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to Section 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date
fixed to determine the stockholders entitled to receive notice of
and to vote at the meeting of stockholders to act upon the agreement
of merger or consolidation, were either (i) listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by
more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or
series of stock of a constituent corporation if the holders thereof
are required by the terms of an agreement of merger or consolidation
pursuant to Sections 251, 252, 254, 257, 258, 263 and 264 of this
title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts
in respect thereof) or depository
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receipts at the effective date of the merger or consolidation
will be either listed on a national securities exchange or
designated as a national market system security on an interdealer
quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of
this paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c.
of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not
owned by the parent corporation immediately prior to the merger,
appraisal rights shall be available for the shares of the subsidiary
Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days
prior to the meeting, shall notify each of its stockholders who was
such on the record date for such meeting with respect to shares for
which appraisal rights are available pursuant to subsections (b) or
(c) hereof that appraisal rights are available for any or all of the
shares of the constituent corporations, and shall include in such
notice a copy of this section. Each stockholder electing to demand
the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such
stockholder's shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation
shall notify each stockholder of each constituent corporation who
has complied with this subsection and has not voted in favor of or
consented
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to the merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section 228
or Section 253 of this title, each constituent corporation, either
before the effective date of the merger or consolidation or within
ten days thereafter, shall notify each of the holders of any class
or series of stock of such constituent corporation who are entitled
to appraisal rights of the approval of the merger or consolidation
and that appraisal rights are available for any or all shares of
such class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section; provided that,
if the notice is given on or after the effective date of the merger
or consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of
stock of a constituent corporation that are entitled to appraisal
rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation.
Any stockholder entitled to appraisal rights may, within 20 days
after the date of mailing of such notice, demand in writing from the
surviving or resulting corporation the appraisal of such holder's
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such holder's
shares. If such notice did not notify stockholders of the effective
date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the
holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the effective
date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided,
however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need
only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance
with this subsection. An affidavit of the secretary or assistant
secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given
shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders
entitled to receive either notice, each constituent corporation may
fix, in advance, a record date that shall be not more than 10 days
prior to the date the notice is given, provided, that if the notice
is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective
date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and
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(d) hereof and who is otherwise entitled to appraisal rights, may file a
petition in the Court of Chancery demanding a determination of the value of the
stock of all such stockholders. Notwithstanding the foregoing, at any time
within 60 days after the effective date of the merger or consolidation, any
stockholder shall have the right to withdraw such stockholder's demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after such stockholder's written
request for such a statement is received by the surviving or resulting
corporation or within 10 days after expiration of the period for delivery of
demands for appraisal under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of
a copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest that the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion,
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<PAGE>
permit discovery or other pretrial proceedings and may proceed to trial upon the
appraisal prior to the final determination of the stockholder entitled to an
appraisal. Any stockholder whose name appears on the list filed by the surviving
or resulting corporation pursuant to subsection (f) of this section and who has
submitted such stockholder's certificates of stock to the Register in Chancery,
if such is required, may participate fully in all proceedings until it is
finally determined that such stockholder is not entitled to appraisal rights
under this section.
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be simple or
compound, as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith, and the
case of holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Court's decree may
be enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of such
stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding
in the Court of Chancery shall be dismissed as to any stockholder without the
approval of the Court, and such approval may be conditioned upon such terms as
the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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<PAGE>
APPENDIX E
September 10, 2000
Special Committee of the Board of Directors
Mikasa, Inc.
One Mikasa Drive
Secaucus, New Jersey 07096
Members of the Special Committee:
You have asked CIBC World Markets Corp. ("CIBC World Markets") to render a
written opinion ("Opinion") to the Special Committee of the Board of Directors
as to the fairness, from a financial point of view, to the holders of the common
stock of Mikasa, Inc. ("Mikasa"), other than the Roll-over Shareholders (defined
below), of the Merger Consideration (defined below) to be received pursuant to
the Agreement and Plan of Merger, dated as of September 10, 2000 (the "Merger
Agreement"), among Mountain Acquisition Corp. ("Merger Sub"), an entity newly
formed by J.G. Durand Industries, S.A. ("Durand"), Mikasa, the Roll-over
Shareholders (for purposes of certain of the provisions therein) and Durand. The
Merger Agreement provides for, among other things, the merger of Merger Sub with
and into Mikasa (the "Merger") pursuant to which each outstanding share of the
common stock, par value $0.01 per share, of Mikasa (the "Mikasa Common Stock")
will be converted into the right to receive $16.50 in cash (the "Merger
Consideration"). We have been advised by representatives of Mikasa that certain
stockholders will, immediately prior to the consummation of the Merger, convert
a certain number of their shares of Mikasa Common Stock as set forth in an
Exhibit attached to the Merger Agreement into shares of preferred stock of
Mikasa which preferred stock will, immediately after the consummation of the
Merger, be convertible into the common stock of the surviving corporation of the
Merger (the "Roll-over Shareholders").
In arriving at our Opinion, we:
(a) reviewed the Merger Agreement;
(b) reviewed audited financial statements of Mikasa for the fiscal years ended
December 31, 1997, December 31, 1998 and December 31, 1999;
(c) reviewed unaudited financial statements of Mikasa for the six-month period
ended June 30, 2000;
(d) reviewed financial projections of Mikasa prepared by the management of
Mikasa;
(e) reviewed the historical market prices and trading volume for Mikasa Common
Stock;
(f) held discussions with the senior management of Mikasa with respect to the
business and prospects for future growth of Mikasa;
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(g) reviewed and analyzed certain publicly available financial data for certain
companies we deemed comparable to Mikasa;
(h) reviewed and analyzed certain publicly available information for
transactions that we deemed comparable to the Merger;
(i) performed discounted cash flow analyses of Mikasa using certain assumptions
of future performance provided to us by the management of Mikasa;
(j) reviewed public information concerning Mikasa; and
(k) performed such other analyses, reviewed such other information and
considered such other factors as we deemed appropriate.
In rendering our Opinion, we relied upon and assumed, without independent
verification or investigation, the accuracy and completeness of all of the
financial and other information provided to or discussed with us by Mikasa and
its employees, representatives and affiliates. With respect to forecasts of the
future financial condition and operating results of Mikasa provided to or
discussed with us, we assumed, at the direction of the management of Mikasa,
without independent verification or investigation, that such forecasts were
reasonably prepared on bases reflecting the best available information,
estimates and judgments of the management of Mikasa. We have neither made nor
obtained any independent evaluations or appraisals of the assets or liabilities
(contingent or otherwise) of Mikasa or affiliated entities. We are not
expressing any opinion as to the underlying valuation, future performance or
long-term viability of Mikasa, or the price at which the Mikasa Common Stock
will trade or otherwise be transferable subsequent to announcement of the
proposed Merger. In connection with our engagement, we were not requested to,
and we did not, solicit third party indications of interest in the acquisition
of all or a part of Mikasa. We express no view as to, and our Opinion does not
address, the relative merits of the Merger as compared to any alternative
business strategies that might exist for Mikasa or the effect of any other
transaction in which Mikasa may engage. Our Opinion is necessarily based on the
information available to us and general economic, financial and stock market
conditions and circumstances as they exist and can be evaluated by us on the
date hereof. It should be understood that, although subsequent developments may
affect this Opinion, we do not have any obligation to update, revise or reaffirm
the Opinion.
As part of our investment banking business, we are regularly engaged in
valuations of businesses and securities in connection with acquisitions and
mergers, underwritings, secondary distributions of securities, private
placements and valuations for other purposes.
We have acted as financial advisor to the Special Committee in connection with
the Merger and in rendering this Opinion and will receive a fee for our
services, a significant portion of which is payable upon delivery of this
Opinion. In the ordinary course of business, CIBC World Markets and its
affiliates may actively trade securities of Mikasa for their own account and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
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Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Merger Consideration to the received by the holders of Mikasa Common
Stock (other than the Roll-over Shareholders) in the Merger is fair from a
financial point of view to such holders. This Opinion is for the use of the
Special Committee of the Board of Directors of Mikasa, and does not constitute a
recommendation to any stockholder as to how such stockholder should vote on any
matters relating to the proposed Merger.
Very truly yours,
/s/ CIBC World Markets Corp.
-----------------------------
CIBC WORLD MARKETS CORP.
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ANNEX A
MIKASA, INC.
ONE MIKASA DRIVE
SECAUCUS, NEW JERSEY 07096-1549
SPECIAL MEETING OF STOCKHOLDERS
MIKASA, INC. , 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Raymond B. Dingman and Amy Tunis, Esq. and
each or either of them, as proxy holders with power to appoint his or her
substitute and hereby authorizes the proxy holders to represent and vote, as
designated on the reverse side of this proxy card, all the shares of Common
Stock of Mikasa, Inc. which the undersigned is entitled to vote at the
special meeting of stockholders to be held on , 2000 at
:00 a.m. local time or any adjournment or postponement thereof, upon the
matter set forth in the Notice of Special Meeting dated ,
2000, and the related proxy statement, copies of which have been received by
the undersigned, and in their discretion upon any adjournment or postponement
of the meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD AS
SOON AS POSSIBLE.
Please Detach and Mail in the Envelope Provided
[x] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
The Board of Directors recommends a vote FOR the approval and adoption of the
merger agreement and the transactions contemplated by the merger agreement.
1. To approve and adopt the Agreement and Plan of Merger, dated September 10,
2000, among Mountain Acquisition Corp., the Shareholders Named Therein, Mikasa,
Inc. and J.G. Durand Industries, S.A., and the transactions contemplated by the
merger agreement, pursuant to which Mountain Acquisition Corp. will be merged
into Mikasa, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and any and all adjournments or
postponements thereof.
This proxy will be considered a vote for the approval and adoption of the merger
agreement and the transactions contemplated by the merger agreement, unless the
contrary is indicated in the appropriate place. Please complete, date, sign and
mail this proxy promptly in the enclosed postage paid reply envelope.
--------------------------------------------
SIGNATURE OF STOCKHOLDER
DATE
----------------------------------------
--------------------------------------------
SIGNATURE IF HELD JOINTLY
DATE
---------------------------------------
NOTE: (Please sign exactly as name(s)
appear(s) hereon. Joint tenants should each
sign. Persons signing as executor,
administrator, trustee, guardian, etc. will
please so indicate when signing.)
