Exhibit 10.16
AGREEMENT AND PLAN OF MERGER
DATED AS OF May 29, 2003
AMONG
PHOENIX GROUP OF FLORIDA, INC., PHOENIX ACQUISITION CORP. and
WILLIAM A. WILKERSON
AND BCT INTERNATIONAL, INC.
TABLE OF CONTENTS
ARTICLE I THE MERGER .......................................................................................... 2
1.1 The Merger ....................................................................................... 2
1.2 Closing .......................................................................................... 2
1.3 Effective Time of the Merger ..................................................................... 2
1.4 Effects of the Merger ............................................................................ 3
1.5 Certificate of Incorporation; Bylaws ............................................................. 3
1.6 Directors; Officers .............................................................................. 3
ARTICLE II CANCELLATION OF THE CAPITAL STOCK OF THE COMPANY AND PAYMENT WITH RESPECT THERETO .................. 3
2.1 Effect on Capital Stock .......................................................................... 3
2.2 Delivery of Merger Consideration ................................................................. 4
2.3 Stock Options with Respect to Company Common Stock ............................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES .................................................................... 6
3.1 Representations and Warranties of the Company .................................................... 6
3.2 Representations and Warranties of Wilkerson, Phoenix and Merger Sub .............................. 14
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS .......................................................... 16
4.1 Covenants of Company ............................................................................. 16
4.2 Covenants of Wilkerson, Phoenix and Merger Sub ................................................... 19
4.3 Competing Transactions ........................................................................... 19
ARTICLE V ADDITIONAL AGREEMENTS ............................................................................... 20
5.1 Preparation of the Proxy Statement and Schedule 13E-3 ............................................ 20
5.2 Stockholders' Meeting ............................................................................ 20
5.3 Legal Conditions to Merger ....................................................................... 21
5.4 Brokers or Finders ............................................................................... 21
5.5 Indemnification; Directors' and Officers' Insurance .............................................. 21
5.6 Shareholder Lists ................................................................................ 22
5.7 Shareholder Litigation ........................................................................... 22
5.8 Communication to Employees ....................................................................... 22
5.9 Vote of the Acquisition Group .................................................................... 22
5.10 Agreement with Respect to Certain Option Shares ................................................. 22
ARTICLE VI CONDITIONS PRECEDENT ............................................................................... 22
6.1 Conditions to Each Party's Obligation To Effect the Merger ....................................... 22
6.2 Conditions to Obligations of Wilkerson, Phoenix and Merger Sub ................................... 23
6.3 Conditions to Obligations of Company ............................................................. 24
ARTICLE VII TERMINATION AND AMENDMENT ......................................................................... 25
7.1 Termination ...................................................................................... 25
7.2 Effect of Termination .......................................................................... 26
7.3 Fees, Expenses and Other Payments .............................................................. 27
7.4 Amendment ...................................................................................... 28
7.5 Extension; Waiver .............................................................................. 28
ARTICLE VIII GENERAL PROVISIONS ............................................................................. 28
8.1 Survival of Representations, Warranties and Agreements ......................................... 28
8.2 Notices ........................................................................................ 28
8.3 Certain Definitions ............................................................................ 29
8.4 Interpretation ................................................................................. 31
8.5 Counterparts ................................................................................... 32
8.6 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership ............................ 32
8.7 Governing Law; Consent to Jurisdiction ......................................................... 32
8.8 Severability; No Remedy in Certain Circumstances ............................................... 32
8.9 Publicity ...................................................................................... 33
8.10 Assignment .................................................................................... 33
8.11 Adjustment .................................................................................... 33
8.12 Headings ...................................................................................... 33
8.13 Waiver ........................................................................................ 33
8.14 Enforcement of Agreement ...................................................................... 33
EXHIBIT A Certificate of Incorporation of Merger Sub ........................................................ A-1
EXHIBIT B Bylaws of Merger Sub .............................................................................. B-1
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 29,
2003, among Phoenix Group of Florida, Inc., a Nevada corporation ("Phoenix"),
Phoenix Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Phoenix ("Merger Sub"), William A. Wilkerson ("Wilkerson") and BCT
International, Inc., a Delaware corporation (the "Company").
RECITALS
WHEREAS, Phoenix together with its affiliates, including Wilkerson, are the
beneficial owners of 2,690,282 shares of Common Stock, par value $.04 per share,
of the Company (the "Company Common Stock"), which represents approximately
52.6% of the outstanding shares of Company Common Stock (not including
outstanding shares held by the Company in its treasury or by its Subsidiaries).
WHEREAS, Phoenix has proposed that Phoenix acquire (the "Acquisition") all
of the issued and outstanding shares of Company Common Stock not beneficially
owned (within the meaning of Rule 13d-3 of the Exchange Act (as defined below))
(the "Shares") by Phoenix, Merger Sub, Wilkerson or any other Affiliate (as
hereinafter defined), other than the Company, of Phoenix (collectively, the
"Acquisition Group").
WHEREAS, in furtherance of the Acquisition, it is proposed that Merger Sub
shall be merged with and into the Company, with the Company continuing as the
surviving corporation (the "Merger"), in accordance with the General Corporation
Law of the State of Delaware (the "DGCL") and upon the terms and subject to the
conditions set forth herein.
WHEREAS, a special committee of the Board of Directors of the Company (the
"Board"), consisting entirely of non-management directors of the Company who are
not Affiliates (as defined below) of the Acquisition Group (the "Independent
Committee"), was established for, among other purposes, the purpose of
evaluating the Acquisition and making a recommendation to the Board with regard
to the Acquisition.
WHEREAS, the Independent Committee has received the opinion of Capitalink,
L.C. (the "Independent Advisor") an independent financial advisor to the
Independent Committee, which was selected by it, that, as of May 27, 2003, the
consideration to be received by the holders of Shares pursuant to the Merger is
fair to such holders from a financial point of view.
WHEREAS, the Independent Committee, has, after consultation with the
Independent Advisor and independent legal counsel selected by the Independent
Committee, and in light of and subject to the terms and conditions set forth
herein, (i) determined that (x) the Merger Consideration (as defined below), is
fair to the holders of Shares and (y) the Merger is advisable and in the best
interests of the Company and the holders of Shares; (ii) approved, and declared
the advisability of, this Agreement and (iii) determined to recommend that the
Board and the stockholders of the Company vote to adopt this Agreement.
WHEREAS, the Board, based on the unanimous recommendation and approval of
the Independent Committee, has, in light of and subject to the terms and
conditions set forth herein, (i) determined that (x) the Merger Consideration
(as defined below), is fair to the holders of Shares and (y) the Merger is
advisable and in the best interests of the Company and the holders of Shares;
(ii) approved, and declared the advisability of, this Agreement and (iii)
determined to recommend that the stockholders of the Company vote to adopt this
Agreement. The Board also has consulted with Mitrani, Rynor, Adamsky & Macaulay,
P.A., as counsel for the Company.
WHEREAS, the respective boards of directors of Phoenix and Merger Sub have
approved this Agreement; and Phoenix as the sole stockholder of Merger Sub, has
adopted this Agreement.
WHEREAS, the Company, Phoenix and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL, Merger Sub shall be merged with
and into the Company at the Effective Time. At the Effective Time, the separate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall continue under the
name "BCT International, Inc."
1.2 Closing. Unless this Agreement shall have been terminated pursuant to
Section 7.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "Closing") will take place
as promptly as practicable (and in any event within five business days)
following satisfaction or waiver of the conditions set forth in Article VI (the
"Closing Date"), at the offices of Adorno & Yoss, P.A., 2601 S. Bayshore Drive,
Suite 1600, Miami, Florida 33133, unless another date, time or place is agreed
to in writing by the parties hereto.
1.3 Effective Time of the Merger. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VI, the Surviving
Corporation shall file a certificate of merger conforming to the requirements of
Subchapter IX of the DGCL (the "Certificate of Merger") with the Secretary of
State of the State of Delaware and make all other filings or recordings required
by the DGCL in connection with the Merger. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Secretary of State
of the State of Delaware, or such other time thereafter as is provided in the
Certificate of Merger in accordance with the DGCL (the "Effective Time").
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1.4 Effects of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the DGCL.
1.5 Certificate of Incorporation; Bylaws. (a) The certificate of
incorporation of Merger Sub which is attached as Exhibit A hereto, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law; provided that Article I of the
certificate of incorporation of the Surviving Corporation shall be amended by
the Certificate of Merger to read as follows: "The name of the corporation is:
BCT International, Inc."
(b) The bylaws of Merger Sub which are attached as Exhibit B hereto
shall be the bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
1.6 Directors; Officers. (a) The directors of Merger Sub at 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.
(b) The officers of Merger Sub at the Effective Time shall be
the officers 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.
ARTICLE II
CANCELLATION OF THE CAPITAL STOCK OF THE COMPANY AND PAYMENT
WITH RESPECT THERETO
2.1 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger, and without any action on the part of the holder thereof:
(a) subject to Section 2.1(e), each Share issued and outstanding
immediately prior to the Effective Time, shall be converted into the right to
receive an amount in cash, without interest, equal to $2.00 (the "Merger
Consideration") in the manner provided in Section 2.2 hereof;
(b) each share of Company Common Stock issued and held in the
Company's treasury or held by any Subsidiary of the Company immediately prior to
the Effective Time, shall, by virtue of the Merger, cease to be outstanding and
shall be cancelled and retired without payment of any consideration therefor;
(c) each share of Company Common Stock held by any member of the
Acquisition Group immediately prior to the Effective Time shall remain
outstanding;
(d) each share of common stock, par value $.01 per share, of Merger
Sub ("Merger Sub Common Stock") issued and outstanding immediately prior to the
Effective Time shall be converted
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into and become one fully paid and nonassessable share of common stock of the
SurvivingCorporation; and
(e) notwithstanding anything in this Agreement to the contrary, to
the extent provided by the DGCL, Phoenix will not make any payment of Merger
Consideration with respect to Shares held by any person (a "Dissenting
Stockholder") who elects to demand appraisal of such Dissenting Stockholder's
Shares and duly and timely complies with all the provisions of the DGCL
concerning the right of holders of Shares to require appraisal of their shares
("Dissenting Shares"), but such Dissenting Stockholders shall have the right to
receive such consideration as may be determined to be due such Dissenting
Stockholders pursuant to the laws of the State of Delaware. If, after the
Effective Time, a Dissenting Stockholder withdraws such Dissenting Stockholder's
demand for appraisal or fails to perfect or otherwise loses such Dissenting
Stockholder's right of appraisal, in any case pursuant to the DGCL, such
Dissenting Stockholder's Shares will be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration pursuant to
Section 2.1(a). The Company will give Phoenix (i) prompt notice of any demands
for appraisal of Dissenting Shares received by the Company and (ii) the
opportunity to participate in and direct all negotiations and proceedings with
respect to any such demands. The Company will not, without the prior written
consent of Phoenix, make any payment with respect to, or enter into any
negotiations or discussions or a binding settlement agreement or make an offer,
written or oral, to settle, any such demands.
2.2 Delivery of Merger Consideration.
(a) Payment Agent. As of the Effective Time, Phoenix shall deposit,
or shall cause to be deposited, with a bank or trust company designated by
Phoenix and satisfactory to the Independent Committee (the "Payment Agent"), for
the benefit of the holders of Shares, for payment in accordance with this
Article II through the Payment Agent, the Merger Consideration to be paid in
respect of all Shares (such funds deposited with the Payment Agent, the "Payment
Fund").
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, the Payment Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented Shares (the "Certificates"), the following documents: (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 Payment Agent and shall be in such form and have such other
provisions as Phoenix may reasonably specify); and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment with respect
thereto. Upon surrender of a Certificate for cancellation to the Payment Agent
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration payable with respect to the Shares represented by such Certificate
pursuant to the provisions of this Article II, and the Certificate so
surrendered shall forthwith be cancelled. In the event that a holder has lost or
misplaced a Certificate, an affidavit of loss thereof (together with an
appropriate indemnity and/or bond if Phoenix so requires by notice in writing to
the holder of such Certificate) satisfactory in form and substance to the
Company's transfer agent and the Payment Agent shall accompany such letter of
transmittal in lieu of the applicable Certificate. In
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the event of a transfer of ownership of Shares which is not registered in the
transfer records of the Company, payment of the applicable Merger Consideration
may be made to a transferee if the Certificate representing such Shares is
presented to the Payment Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger Consideration
with respect thereto as contemplated by this Section 2.2. No interest shall
accrue or be paid to any beneficial owner of Shares or any holder of any
Certificate with respect to the Merger Consideration payable upon the surrender
of any Certificate.
(c) No Further Ownership Rights in the Shares. The Merger
Consideration paid with respect to the cancellation of Shares in accordance with
the terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to such Shares and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II,
subject to applicable law in the case of Dissenting Shares.
(d) Termination of Payment Fund. Any portion of the Payment Fund
which remains undistributed to the stockholders of the Company for six months
after the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any stockholders of the Company who have not theretofore complied
with this Article II shall thereafter look only to the Surviving Corporation for
payment of their claim for the Merger Consideration. Upon termination of the
Payment Fund pursuant to this subsection and upon delivery to the Surviving
Corporation of the balance thereof, the Surviving Corporation shall have the
right to invest any such amount delivered to it in its sole discretion.
(e) No Liability. If any Certificates shall not have been
surrendered prior to one year after the Effective Time (or immediately prior to
such earlier date on which the Merger Consideration in respect of such
certificate would otherwise escheat to or become the property of any
Governmental Entity (as hereinafter defined)), any cash or other property
payable in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
Notwithstanding the foregoing, none of the Surviving Corporation, Phoenix or the
Payment Agent shall be liable to any holder of a Certificate or the shares
represented thereby for any Merger Consideration delivered in respect of such
Certificate or the shares represented thereby to a public official pursuant to
any abandoned property, escheat or other similar law.
(f) Investment of Payment Fund. The Payment Agent shall invest any
cash included in the Payment Fund as directed by the Surviving Corporation, in
(i) obligations of or guaranteed by the United States, and (ii) certificates of
deposit, bank repurchase agreements and bankers' acceptances of any bank or
trust company organized under federal law or under the law of any state of the
United States or of the District of Columbia that has capital, surplus and
undivided profits of at least $500 million or in money market funds which are
invested substantially in such investments, none of
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which shall have maturities of greater than one year. Any interest or other
income resulting from such investments shall be paid to the Surviving
Corporation. The Surviving Corporation shall replace any net losses incurred by
the Payment Fund as a result of investments made pursuant to this Section
2.2(f).
(g) Withholding Rights. Phoenix or the Payment Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Certificates or Shares represented
thereby such amounts (if any) as Phoenix or the Payment Agent is required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Phoenix or the Payment Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Shares in
respect of which such deduction and withholding was made by Phoenix or the
Payment Agent.
2.3 Stock Options with Respect to Company Common Stock. The Company
shall take all actions necessary pursuant to the terms and provisions of any
outstanding options to acquire shares of Company Common Stock, to cause the
following: all outstanding options to acquire shares of Company Common Stock
granted under the 1995 Stock Option Plan (the "Company Stock Plan") or otherwise
(the "Company Stock Options") will terminate and expire as of the Effective
Time. The Company shall give written notice to the holders of all Company Stock
Options of the foregoing and each such Company Stock Option shall thereafter be
canceled. All actions required to be taken pursuant to this Section 2.3(a) with
respect to Company Stock Options has been, or prior to the Effective Time will
be, taken by the Company. Notwithstanding the foregoing no consideration shall
be paid with respect to Company Stock Options beneficially owned by Wilkerson.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company
represents and warrants to Phoenix and Merger Sub that, except as specifically
disclosed in the letter dated the date hereof and delivered by the Company to
Phoenix simultaneously with the execution and delivery of this Agreement (the
"Company Disclosure Letter"):
(a) Organization, Standing and Power. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite power and authority and all necessary governmental approvals to own,
lease and operate its properties and assets and to conduct its business as it is
now being conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties and assets makes such qualification necessary, other
than in such jurisdictions where the failure so to qualify would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect on the Company. The Company has made available to Phoenix true
and complete copies of its certificate of incorporation and bylaws and the
certificate of incorporation and bylaws (or equivalent organizational documents)
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of each Subsidiary of the Company, each as amended to date. Such certificates of
incorporation, bylaws or equivalent organizational documents are in full force
and effect, and neither the Company nor any Subsidiary of the Company is in
violation of any provision of its certificate of incorporation, bylaws or
equivalent organizational documents.
(b) Subsidiaries. The Company owns, directly or indirectly, all of
the outstanding capital stock or other equity interests in each of its
Subsidiaries free and clear of any claim, lien, encumbrance, security interest
or agreement with respect thereto. Other than the capital stock or other
interests held by the Company in such Subsidiaries, neither the Company nor any
such Subsidiary owns any direct or indirect equity interest in any person,
domestic or foreign. All of the outstanding shares of capital stock in each of
its corporate Subsidiaries are duly authorized, validly issued, fully paid and
non-assessable and were issued free of preemptive rights and in compliance with
applicable securities laws and regulations. There are no irrevocable proxies or
similar obligations with respect to such capital stock of such Subsidiaries and
no equity securities or other interests of any of its Subsidiaries are or may
become required to be issued or purchased by reason of any options, warrants,
rights to subscribe to, puts, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of any capital stock or any other equity interest of any such Subsidiary,
and there are no agreements, contracts, commitments, understandings or
arrangements by which any such Subsidiary is bound to issue additional shares of
its capital stock or other equity interests, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock or other equity
interests or securities convertible into or exchangeable for such shares or
other equity interests.
(c) Capital Structure. (i) The authorized capital stock of the
Company consists of 25,000,000 shares of Company Common Stock. As of the date
hereof, (A) 5,127,721 shares of Company Common Stock were outstanding, (B)
1,209,335 Company Stock Options were outstanding, each such option entitling the
holder thereof to purchase one share of Company Common Stock, (C) 1,209,335
shares of Company Common Stock are authorized and reserved for issuance upon the
exercise of outstanding Company Stock Options, and (D) 706,987 shares of Company
Common Stock were held by the Company in its treasury or by its Subsidiaries.
(ii) No bonds, debentures, notes or other indebtedness having
the right to vote (or convertible into or exercisable for securities having the
right to vote) on any matters on which stockholders may vote ("Voting Debt") of
the Company are issued or outstanding.
(iii) All outstanding shares of the Company's capital stock
are validly issued, fully paid and non-assessable and free of preemptive rights
and were issued in compliance with applicable securities laws and regulations.
All shares of Company Common Stock subject to issuance upon the exercise of
Company Stock Options, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable and free of preemptive rights and
will be issued in compliance with applicable securities laws and regulations.
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(iv) Except for this Agreement and the Company Stock Plan and
as set forth in the Company's annual report on Form10-K for the fiscal year
ended February 28, 2003, there are no options, warrants, calls, rights,
convertible securities, subscriptions, stock appreciation rights, phantom stock
plans or stock equivalents, or other rights, commitments or agreements of any
character to which the Company or any Subsidiary of the Company is a party or by
which it is bound obligating the Company or any Subsidiary of the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or any Voting Debt of the Company or of any Subsidiary
of the Company or obligating the Company or any Subsidiary of the Company to
grant, extend or enter into any such option, warrant, call, right, commitment or
agreement for consideration per share of less than the Merger Consideration.
There are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its Subsidiaries.
(d) Authority. (i) The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to approval by the
stockholders of the Company, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, other than such approval by the
stockholders of the Company. This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law). The
affirmative vote at a duly called and held meeting of stockholders (the
"Stockholders' Meeting") of a majority of the outstanding shares of Company
Common Stock entitled to vote (the "Company Shareholder Approval") is the only
vote of the Company's stockholders necessary to approve this Agreement, the
Merger and the other transactions contemplated by this Agreement. The
Independent Committee has been duly authorized and constituted and the Board,
based on the approval and recommendation of the Independent Committee at a
meeting duly called and held, has (1) determined that (x) the Merger
Consideration is fair to the holders of Shares and (y) the Merger is advisable
and in the best interests of the Company and the holders of Shares, and (2)
approved and declared the advisability of this Agreement in accordance with the
provisions of the DGCL. The Independent Committee has received the written
opinion (the "Fairness Opinion") of the Independent Advisor to the effect that,
as of the date of this Agreement the Merger Consideration to be paid to holders
of Shares is fair to such holders from a financial point of view, and, as of the
date hereof, such Fairness Opinion has not been withdrawn.
(ii) Subject to compliance with the applicable requirements of
the Exchange Act and the filing of the Certificate of Merger as contemplated by
Section 1.3, the execution and delivery of this Agreement and the Certificate of
Merger, the consummation of the transactions contemplated hereby and thereby,
and compliance of the Company with any of the provisions hereof or thereof will
not breach, constitute an ultra vires act under, or result in any violation of,
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or the loss of a material benefit under, or the creation of a lien, pledge,
security interest, charge or other encumbrance on assets (any such breach, ultra
vires act, violation,
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default, right of termination, cancellation, acceleration, loss or creation, a
"Violation") pursuant to, (x) any provision of the certificate of incorporation
or bylaws of the Company or the governing instruments of any Subsidiary of the
Company or (y) subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in paragraph
(iii) below or in the Company Disclosure Letter, any loan or credit agreement,
note, mortgage, indenture, lease, or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any Subsidiary of the
Company or their respective properties or assets except Violations under clause
(y) which would not be reasonably expected to have a Material Adverse Effect on
the Company.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a "Governmental Entity"), is required by or with respect to the Company
or any Subsidiary of the Company in connection with the execution and delivery
of this Agreement and the Certificate of Merger by the Company, the consummation
by the Company of the transactions contemplated hereby and thereby, and
compliance of the Company with any of the provisions hereof or thereof, the
failure to obtain which would be reasonably expected to have a Material Adverse
Effect on the Company, except for (A) the filing with the Securities and
Exchange Commission (the "SEC") of (1) a Proxy Statement in definitive form
relating to the meeting of the Company's stockholders to be held in connection
with the Merger, (2) a Transaction Statement on Schedule 13E-3 (as hereinafter
defined) and (3) such other filings under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby, (B) the
filing of the Certificate of Merger as contemplated by Section 1.1 and
appropriate documents with the relevant authorities of states in which the
Company is qualified to do business, and (c) filings pursuant to the rules of
the OTC Bulletin Board System.
(e) SEC Documents. All the documents (other than preliminary
material) that the Company was required to file with the SEC for the past three
years including, without limitation, each report, schedule, registration
statement and definitive proxy statement filed by the Company (as such documents
have since the time of their filing been amended, the "Company SEC Documents"),
have been timely filed. As of their respective dates, (i) the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents, and (ii) none of the Company SEC
Documents contained any untrue statement of a material fact or omitted 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. Except as disclosed in the Company Disclosure Letter, the
consolidated financial statements of the Company included in the Company SEC
Documents (including, without limitation, the audited balance sheet and related
statements of operations, stockholders' equity and cash flows of the Company and
its Subsidiaries for the fiscal year ended February 28, 2003, as audited by
PricewaterhouseCoopers LLP (such balance sheet is referred to hereinafter as the
"Balance Sheet" and the Balance Sheet and related statements are referred to
hereinafter as the "Year-End Financial Statements")), complied in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with
9
respect thereto, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved and fairly present the consolidated financial positionof the Company
and its consolidated Subsidiaries as at the dates thereof and the consolidated
results of their operations, stockholders' equity and cash flows for the periods
then ended in accordance with GAAP. As of February 28, 2003, neither the Company
nor any of its Subsidiaries had any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would be required by GAAP
to be reflected on a consolidated balance sheet of the Company and its
Subsidiaries (including the notes thereto) and which were not reflected on the
Balance Sheet. Since February 28, 2003, except as and to the extent set forth in
the Company SEC Documents and except for liabilities or obligations incurred in
the ordinary course of business consistent with past practice and of
substantially the same character, type and magnitude as incurred in the past,
neither the Company nor any of its Subsidiaries has incurred any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be reasonably expected to have a Material Adverse Effect on the Company.
All agreements, contracts and other documents required to be filed as exhibits
to any of the Company SEC Documents have been so filed. No Subsidiary of the
Company is required to file any form, report or other document with the SEC.
(f) Information Supplied. None of the information included or
incorporated by reference in the Proxy Statement or the Schedule 13E-3 (other
than information concerning Wilkerson, Phoenix or Merger Sub provided in writing
by Phoenix or Merger Sub or their counsel specifically for inclusion or
incorporation by reference therein) will, at the date of mailing to stockholders
of the Company and at the time of the meeting of stockholders to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Proxy Statement and Schedule 13E-3 (except
for information concerning Wilkerson, Phoenix or Merger Sub provided in writing
by Wilkerson, Phoenix or Merger Sub or their counsel specifically for inclusion
or incorporation by reference therein) will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
(g) Absence of Certain Changes or Events. Except as contemplated by
this Agreement or as disclosed in the Company Disclosure Letter or in the
Company SEC Documents, since February 28, 2003, the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary course and
consistent with prior practice and there has not been any event, occurrence,
fact, condition, change, development or effect that has had or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Company.
(h) Compliance with Applicable Laws. The Company and its
Subsidiaries have been operating at all times in compliance with all applicable
laws and regulations, and are not in default or violation of any notes, bonds,
mortgages, indentures, contracts, agreements, leases, licenses, permits,
franchises, or other instruments or obligations to which the Company or any of
its Subsidiaries is a party or by which any of their property or assets is
bound, except where any such noncompliance, conflicts, defaults or violations
would not have a Material Adverse Effect on the Company. As of the date hereof,
no investigation by any Governmental Entity with respect to the Company or any
of its
10
Subsidiaries is pending or, to the Company's best knowledge, threatened.
(i) Litigation. There are no material claims, actions, suits or
legal or administrative arbitrations or other proceedings or investigations
("Litigation") pending against the Company or any of its Subsidiaries, or, to
the Company's knowledge, threatened against or affecting the Company or any of
its Subsidiaries, or to which the Company or any of its Subsidiaries is a party,
before or by any Federal, foreign, state, local or other governmental or
non-governmental department, commission, board, bureau, agency, court or other
instrumentality, or by any private person or entity. There are no existing or,
to the best knowledge of the Company, threatened material orders, judgments or
decrees of any court or other Governmental Entity which specifically apply to
the Company, any of its Subsidiaries or any of their respective properties or
assets.
(j) Environmental. Except for any matters which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Company, (i) the Company and each of its Subsidiaries is and at
all times has been in compliance with all applicable laws relating to
Environmental Matters; (ii) the Company and each of its Subsidiaries has
obtained, and is in compliance with, all permits, licenses or approvals required
by applicable laws for the use, storage, treatment, transportation, release,
emission and disposal of raw materials, by-products, wastes and other
substances, including, without limitation, hazardous substances and wastes, used
or produced by or otherwise relating to the operations of any of them; and (iii)
there are no past or present events, conditions, activities or practices that
would prevent compliance or continued compliance with any law or give rise to
any Environmental Liability. There are no claims either by any Governmental
Entity or any third party pending, or to the Company's knowledge, threatened,
against the Company or any of its Subsidiaries arising from any Environmental
Matter.
(k) Taxes. Each Tax Entity has timely filed all Tax Returns required
to be filed by any of them (subject to permitted extensions). All such Tax
Returns were true, correct and complete when filed, except for such instances
which individually or in the aggregate could not have a Material Adverse Effect
on the Company. All Taxes of each Tax Entity which are (i) shown as due on such
Tax Returns, (ii) otherwise due and payable or (iii) claimed or asserted by any
taxing authority to be due, have been paid, except for those Taxes being
contested in good faith and for which adequate reserves have been established in
the financial statements included in the Company SEC Documents in accordance
with GAAP. The Company does not know of any proposed or threatened Tax claims or
assessments which, if upheld, could individually or in the aggregate have a
Material Adverse Effect on the Company. Each Tax Entity has withheld and paid
over to the relevant taxing authority all Taxes required to have been withheld
and paid in connection with payments to employees, independent contractors,
creditors, shareholders or other third parties, except for such Taxes which
individually or in the aggregate could not have a Material Adverse Effect on the
Company. No material deficiencies for any Taxes have been proposed, asserted or
assessed against any Tax Entity that are not adequately reserved for, no audit
of any Tax Return of any Tax Entity is being conducted by a tax authority, and
no extension of the statute of limitations on the assessment of any taxes has
been granted to any Tax Entity and is currently in effect. For purposes of this
Agreement, (a) "Tax" (and, with correlative meaning, "Taxes") means any federal,
state, local or foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, premium, withholding,
11
alternative or added minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty,imposed by any
Governmental Entity; (b) "Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax; and (c) "Tax Entity"
means the Company, each of the Company's Subsidiaries, and each consolidated,
combined, unitary or similar group of which the Company or any of its
Subsidiaries is now, or within the preceding eight (8) years has been, a member.
(l) Employee Benefit Plans. All employee benefit plans, compensation
arrangements and other benefit arrangements covering employees of the Company or
any of its subsidiaries (the "Company Benefit Plans") and all employee
agreements providing compensation, severance or other benefits to any employee
or former employee of the Company or any of its Subsidiaries which are not
disclosed in the Company SEC Documents and which exceed $50,000 per annum are
set forth in the Company Disclosure Letter. True and complete copies of the
Company Benefit Plans have been made available to Phoenix To the extent
applicable, the terms of the Company Benefit Plans comply in all material
respects with the requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the Code, and any Company Benefit Plan intended
to be qualified under Section 401(a) of the Code has received a determination
letter and, to the knowledge of the Company, continues to satisfy the
requirements for such qualification. Neither the Company nor any of its
Subsidiaries nor any ERISA Affiliate of the Company maintains, contributes to or
is obligated to contribute to or has maintained or contributed or been obligated
to contribute to in the past six (6) years to any benefit plan which is covered
by Title IV of ERISA or Section 412 of the Code or a "multi-employer plan"
within the meaning of Section 3(37) of ERISA or Section 4001(a)(3) of the Code.
No Company Benefit Plan nor the Company nor any Subsidiary has incurred any
liability or penalty under Section 4975 of the Code or Section 502(i) of ERISA
or, to the knowledge of the Company, engaged in any transaction that would
reasonably be expected to result in any such liability or penalty. Each Company
Benefit Plan has been maintained and administered in compliance with its terms
and with ERISA and the Code to the extent applicable thereto, except for such
non-compliance which individually or in the aggregate would not have a Material
Adverse Effect on the Company. There is no pending or, to the knowledge of the
Company, anticipated or threatened, Litigation against or otherwise involving
any of the Company Benefit Plans and no Litigation (excluding claims for
benefits incurred in the ordinary course of Company Benefit Plan activities) has
been brought against or with respect to any such Company Benefit Plan. All
contributions required to be made as of the date hereof to the company Benefit
Plans have been made or provided for. Except as described in the Company SEC
Documents or as required by law, neither the Company nor any of its Subsidiaries
maintains or contributes to any plan or arrangement which provides or has any
liability to provide life insurance or medical or other employee welfare
benefits to any employee or former employee upon his retirement or termination
of employment, and neither the Company nor any of its Subsidiaries has ever
represented, promised or contracted (whether in oral or written form) to any
employee or former employee that such benefits would be provided. No Company
Benefit Plan is under investigation or audit by either the United States
Department of Labor or the Internal Revenue Service. Except as provided of in
this Agreement, the execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon
12
the occurrence of any additional or subsequent events) constitute an event under
any benefit plan, policy, arrangement or agreement or any trust or loan that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee. No payment
or benefit which will or may be made by the Company or any of its Subsidiaries
with respect to any employee of the Company or any of its Subsidiaries will
constitute an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Code.
(m) Section 203 of the DGCL and the Certificate of Incorporation.
The Board and the Independent Committee has approved the Merger and this
Agreement, and such approval is sufficient to comply with or render inapplicable
to the Merger and this Agreement, and the transactions contemplated by this
Agreement, the provisions of Section 203 of the DGCL. No other state takeover
statute or similar statute or regulation applies or purports to apply to the
Merger, this Agreement or the transactions contemplated by this Agreement. No
provision of the certificate of incorporation, bylaws and/or other governing
instruments of the Company or any of its Subsidiaries would restrict or impair
the ability of Phoenix to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of the Company and any of its Subsidiaries
that may be acquired or controlled by Phoenix.
(n) Opinion of Financial Advisor. The Independent Committee has
received the opinion of the Independent Advisor dated as of May 27, 2003, to the
effect that, as of such date, the consideration to be received by the holders of
the Shares pursuant to this Agreement is fair to holders of the Shares from a
financial point of view, a signed copy of which opinion has been delivered to
Phoenix.
(o) Disclosure. No representation or warranty by the Company in this
Agreement, and no statement contained in any document, certificate, or other
writing furnished or to be furnished by the Company to Phoenix pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
taken as a whole, contains or will contain any untrue statement of material fact
or omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading. To the best knowledge of the Company and its Affiliates
(but without having undertaken any inquiry specifically for the purpose of this
statement), there is no reason to believe that any of the representations or
warranties of Phoenix set forth in this Agreement are not true and correct in
all respects (ignoring for purposes of this statement any materiality or
Material Adverse Effect qualifications contained within individual
representations and warranties).
3.2 Representations and Warranties of Wilkerson, Phoenix and Merger
Sub. Wilkerson, Phoenix and Merger Sub jointly and severally represent and
warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Phoenix and Merger Sub
is a corporation, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, has all requisite power and
authority and all necessary governmental approvals
13
to own, lease and operate its properties and to carry on its business as it is
now being conducted, and is duly qualified and in good standing to do business
in each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Phoenix
or Merger Sub.
(b) Authority. (i) Phoenix and Merger Sub have all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Phoenix or Merger
Sub, as the case may be. This Agreement has been duly executed and delivered by
Wilkerson, Phoenix and Merger Sub and constitutes a valid and binding obligation
of Wilkerson, Phoenix or Merger Sub, as the case may be, enforceable in
accordance with its terms, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
(ii) Subject to compliance with the applicable requirements of
the Exchange Act and the filing of the Certificate of Merger, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not result in any Violation pursuant to (x) any provision of the
certificate of incorporation or bylaws of Phoenix, any provision of the
certificate of incorporation or bylaws of Merger Sub, or the governing
instruments of any other Subsidiary of Phoenix or (y) except as disclosed in the
letter dated the date hereof and delivered by Phoenix to the Company
simultaneously with the execution and delivery of this Agreement (the "Phoenix
Disclosure Letter") and subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings referred to in
paragraph (iii) below or in the Phoenix Disclosure Letter, any loan or credit
agreement, note, mortgage, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Wilkerson,
Phoenix, Merger Sub or any other Subsidiary of Phoenix or their respective
properties or assets except Violations under clause (y) above which do not or
would not reasonably be expected to have a Material Adverse Effect on Phoenix.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Wilkerson, Phoenix, Merger Sub or any other Subsidiary of
Phoenix in connection with the execution and delivery of this Agreement by
Wilkerson, Phoenix and Merger Sub, the consummation by Wilkerson, Phoenix or
Merger Sub, as the case may be, of the transactions contemplated hereby, and
compliance by Wilkerson, Phoenix and Merger Sub with any of the provisions
hereof, the failure to obtain which would reasonably be expected to have a
Material Adverse Effect on Phoenix except for (A) such filings under the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby, including the filing of the Schedule 13E-3,
and (B) the filing of the Certificate of Merger as contemplated by Section 1.3
and appropriate documents with the relevant authorities of states in which
Phoenix and Merger Sub are qualified to do business.
14
(c) Information Supplied. None of the information concerning
Wilkerson, Phoenix or Merger Sub provided by or on behalf of Phoenix or Merger
Sub specifically for inclusion or incorporation by reference in the Proxy
Statement or the Schedule 13E-3 will, at the date of mailing to stockholders and
at the times of the meetings of stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) Interim Operations of Merger Sub. Merger Sub was incorporated on
November 26, 2001, has engaged in no other business activities and has conducted
its operations only as contemplated hereby.
(e) Proceeds. Phoenix has sufficient funds available to pay the
Merger Consideration.
(f) Disclosure. No representation or warranty by Phoenix in this
Agreement, and no statement contained in any document, certificate, or other
writing furnished or to be furnished by Phoenix to the Company pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
taken as a whole, contains or will contain any untrue statement of material fact
or omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading. To the best knowledge of Phoenix and its Affiliates (but
without having undertaken any inquiry specifically for the purpose of this
statement), there is no reason to believe that any of the representations or
warranties of the Company set forth in this Agreement are not true and correct
in all respects (ignoring for purposes of this statement any materiality or
Material Adverse Effect qualifications contained within individual
representations and warranties).
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Company. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement or to the extent that Phoenix shall otherwise consent in
writing):
(a) Ordinary Course. The Company and its Subsidiaries shall carry on
their respective businesses in the usual, regular and ordinary course and use
commercially reasonable efforts to preserve intact their present business
organizations, maintain their rights and preserve their relationships with
employees, officers, customers, suppliers and others having business dealings
with them. The Company and its Subsidiaries shall maintain in force all
insurance policies and Consents (as defined in Section 6.1) with respect to the
Company and its Subsidiaries and shall maintain all assets and properties of the
Company and its Subsidiaries in customary repair, order and condition,
reasonable wear and tear excepted. The Company shall not, nor shall it permit
any of its Subsidiaries
15
to, (i) enter into any new material line of business or (ii) incur or commit to
any significant capital expenditures or any obligations or liabilities other
than capital expenditures and obligations or liabilities incurred or committed
to as disclosed in the Company Disclosure Letter. The Company and its
Subsidiaries will comply with all applicable laws and regulations wherever its
business is conducted, including without limitation the timely filing of all
reports, forms or other documents with the SEC required pursuant to the
Securities Act or the Exchange Act, except where such noncompliance would not be
reasonably expected to have a Material Adverse Effect on the Company.
(b) Dividends; Changes in Stock. The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall the Company propose to, (i) declare
or pay any dividends on or make other distributions in respect of any of its
capital stock, other than cash dividends payable by a Subsidiary of the Company
to the Company or one of its Subsidiaries, (ii) split, combine or reclassify any
of its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) repurchase, redeem or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire any shares of its capital stock or
any securities convertible into or exercisable for any shares of its capital
stock.
(c) Issuance of Securities. The Company shall not, nor shall it
permit any of its Subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock of
any class, any Voting Debt or any securities convertible into or exercisable for
(including any stock appreciation rights, phantom stock plans or stock
equivalents), or any rights, warrants or options to acquire, any such shares or
Voting Debt, or enter into any agreement with respect to any of the foregoing,
other than issuances of Company Common Stock pursuant to exercises of Company
Stock Options or Company Common Stock awards to directors listed in the Company
Disclosure Letter.
(d) Governing Documents. The Company shall not amend or propose to
amend, nor shall it permit any of its Subsidiaries to amend, their respective
certificates of incorporation, bylaws or other governing instruments.
(e) No Acquisitions. The Company shall not, nor shall it permit any
of its Subsidiaries to, (i) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, limited liability company, partnership, association or other
business organization or division thereof or (ii) other than in the ordinary
course of business, otherwise acquire or agree to acquire any assets which, in
the case of this clause (ii), are material, individually or in the aggregate, to
the Company.
(f) No Dispositions. The Company shall not, nor shall it permit any
of its Subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree
to sell, lease, encumber or otherwise dispose of any of its assets (including
capital stock of Subsidiaries), except as disclosed in the Company Disclosure
Letter and for dispositions in the ordinary course of business and consistent
with past practice and of substantially the same character, type and magnitude
as dispositions in the past.
16
(g) Indebtedness. The Company shall not, nor shall it permit any of
its Subsidiaries to, (i) incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or warrants or rights
to acquire any long-term debt securities of the Company or any of its
Subsidiaries or guarantee any long-term debt securities of others or enter into
or amend any contract, agreement, commitment or arrangement with respect to any
of the foregoing, other than (x) in replacement for existing or maturing debt,
(y) indebtedness of any Subsidiary of the Company to the Company or to another
Subsidiary of the Company or (z) other borrowing under existing lines of credit
in the ordinary course of business consistent with prior practice and of
substantially the same character, type and magnitude as borrowings made in the
past or (ii) make any loans, advances or capital contributions to any person.
(h) Other Actions. The Company shall not, nor shall it permit any of
its Subsidiaries to, take any action that would, or might reasonably be expected
to, result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any of the
conditions to the Merger set forth in Article VI not being satisfied, or which
would adversely affect the ability of any of them to obtain any of the Requisite
Regulatory Approvals without imposition of a condition or restriction of the
type referred to in Section 6.2(e) and the Company shall, in the event of, or
promptly after the occurrence of, or promptly after obtaining knowledge of the
occurrence of or the impending or threatened occurrence of, any fact or event
which would cause or constitute a breach of any of the representations and
warranties set forth in this Agreement, the non-satisfaction of any of the
conditions to the Merger set forth in Article VI or the failure to obtain the
Requisite Regulatory Approvals, in each case at any time after the date hereof
and through the Closing Date, give detailed notice thereof to Phoenix, and the
Company shall use its best efforts to prevent or promptly to remedy such breach,
non-satisfaction or failure, as the case may be.
(i) Advice of Changes; Government Filings. The Company shall confer
on a regular basis with Phoenix, report on operational matters and promptly
advise Phoenix, orally and in writing, of any material change or event or any
change or event which would cause or constitute a material breach of any of the
representations, warranties or covenants of the Company contained herein. The
Company shall file all reports required to be filed by the Company with the SEC
between the date of this Agreement and the Effective Time and shall deliver to
Phoenix copies of all such reports promptly after the same are filed. The
Company shall cooperate with Phoenix in determining whether any filings are
required to be made with, or consents required to be obtained from, or fees or
expenses required to be paid to, any third party or Governmental Entity prior to
the Effective Time in connection with this Agreement or the transactions
contemplated hereby, and shall cooperate in making any such filings promptly and
in seeking to obtain timely any such consents and, subject to Phoenix's
approval, paying any such fees or expenses. The Company shall promptly provide
Phoenix with copies of all other filings made by the Company with any
Governmental Entity in connection with this Agreement, the Merger or the other
transactions contemplated hereby.
17
(j) Accounting Methods. The Company shall not change its methods of
accounting in effect at March 1, 2003, except as required by changes in GAAP as
concurred in by the Company's independent auditors.
(k) Benefit Plans. During the period from the date of this Agreement
and continuing until the Effective Time, the Company agrees as to itself and its
Subsidiaries that it will not, without the prior written consent of Phoenix
except as set forth in the Company Disclosure Letter or contemplated by this
Agreement, (i) enter into, adopt, amend (except as may be required by law) or
terminate any employee benefit plan or any agreement, arrangement, plan or
policy between the Company or any of its Subsidiaries, on the one hand, and one
or more of its or their directors or officers, on the other hand, (ii) except
for normal increases in the ordinary course of business and consistent with past
practice and of substantially the same character, type and magnitude as
increases in the past that in the aggregate, do not result in a material
increase in benefits or compensation expense to the Company or any of its
Subsidiaries, increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof (including, without limitation,
the granting of stock options, stock appreciation rights, restricted stock,
restricted stock units or performance units or shares) or enter into any
contract, agreement, commitment or arrangement to do any of the foregoing, or
(iii) enter into or renew any contract, agreement, commitment or arrangement
providing for the payment to any director, officer or employee of the Company or
any of its Subsidiaries of compensation or benefits contingent, or the terms of
which are materially altered, upon the occurrence of any of the transactions
contemplated by this Agreement.
(l) Tax Elections. Except in the ordinary course of business and
consistent with past practice and of substantially the same character, type and
magnitude as elections made in the past, the Company shall not make any material
tax election or settle or compromise any material federal, state, local or
foreign income tax claim or liability or amend any previously filed tax return
in any respect.
4.2 Covenants of Wilkerson, Phoenix and Merger Sub. Except as expressly
contemplated by this Agreement, after the date hereof and prior to the Effective
Time, without the prior written consent of the Company:
(a) Other Actions. Neither Wilkerson, Phoenix nor Merger Sub shall,
nor shall Phoenix or Merger Sub permit any of their respective Subsidiaries to,
take any action that would, or might reasonably be expected to, result in any of
their or the Company's representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any of the
conditions to the Merger set forth in Article VI not being satisfied, or which
would adversely affect the ability of any of them or of the Company to obtain
any of the Requisite Regulatory Approvals without imposition of a condition or
restriction of the type referred to in Section 6.2(e). Without limiting the
generality of the foregoing, Phoenix and Wilkerson agree to vote all shares of
Company Common Stock as required by Section 5.9, below.
18
(b) Government Filings. Phoenix shall cooperate with the Company in
determining whether any filings are required to be made with, or consents
required to be obtained from, any third party or Governmental Entity prior to
the Effective Time in connection with this Agreement or the transactions
contemplated hereby, and shall cooperate in making any such filings promptly and
in seeking to obtain timely any such consents. Phoenix shall promptly provide
the Company with copies of all other filings made by the Phoenix with any state
or Federal Governmental Entity in connection with this Agreement, the Merger or
the other transactions contemplated hereby.
4.3 Competing Transactions. Nothing contained in this Agreement shall
prohibit the Company from, prior to the date of the Stockholder's Meeting (i)
furnishing information to, or entering into discussions or negotiations with,
any person that makes an unsolicited written, bona fide proposal to the Company
with respect to a Competing Transaction which could reasonably be expected to
result in a Superior Proposal, if, (A) the failure to take such action would be
inconsistent with the Board's and the Independent Committee's fiduciary duties
to the Company's stockholders under applicable law, and (B) prior to furnishing
such information to, or entering into discussions or negotiations with, such
person, the Company (x) provides reasonable notice to Phoenix to the effect that
it is furnishing information to, or entering into discussions or negotiations
with, such person and (y) receives from such person a fully executed
confidentiality agreement, (ii) complying with Rule 14d-9 or Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer, or
(iii) failing to make or withdrawing or modifying its recommendation referred to
in Section 5.2, or recommending an unsolicited, bona fide proposal with respect
to a Competing Transaction which could reasonably be expected to result in a
Superior Proposal, following the receipt of such a proposal, if the failure to
take such action would be inconsistent with the Board's and the Independent
Committee's fiduciary duties to the Company's stockholders under applicable law.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of the Proxy Statement and Schedule 13E-3. (a) The
Company shall as promptly as practicable prepare and file a proxy or information
statement relating to the Stockholders' Meeting (together with all amendments,
supplements and exhibits thereto, the "Proxy Statement") with the SEC and will
use its best efforts to respond to the comments of the SEC and to cause the
Proxy Statement to be mailed to the Company's stockholders at the earliest
practical time. The Company will notify Phoenix promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Phoenix with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to the Stockholders'"Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
Company will promptly prepare and mail to its stockholders such an amendment or
supplement. The Company will not mail any Proxy Statement, or any amendment or
supplement thereto, to which Phoenix reasonably objects. The Company hereby
consents to the inclusion in the
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Proxy Statement of the recommendation of the Board described in Section 5.2,
subject to any modification, amendment or withdrawal thereof, and represents
that the Independent 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.
(b) The Company, Phoenix, and Merger Sub shall together prepare and
file a Transaction Statement on Schedule 13E-3 (together with all amendments and
exhibits thereto, the "Schedule 13E-3") under the Exchange Act. Each of
Wilkerson, Phoenix and Merger Sub shall furnish all information concerning it,
its affiliates and the holders of its capital stock required to be included in
the Schedule 13E-3 and, after consultation with each other, shall respond
promptly to any comments made by the SEC with respect to the Schedule 13E-3.
5.2 Stockholders' Meeting. The Company shall call the Stockholders'
Meeting to be held as promptly as practicable for the purpose of voting upon the
approval of this Agreement, the Merger and the other transactions contemplated
hereby. The Company will, through its Board and the Independent Committee,
recommend to its stockholders approval of such matters, unless the taking of
such action would be inconsistent with the Board's and the Independent
Committee's fiduciary duties to stockholders under applicable laws. The Company
shall, at the direction of Phoenix, solicit from Company stockholders entitled
to vote at the Stockholders' Meeting proxies in favor of such approval and shall
take all other action necessary or, in the judgment of Phoenix, helpful to
secure the vote or consent of such holders required by the DGCL or this
Agreement to effect the Merger. The Company shall coordinate and cooperate with
Phoenix with respect to the timing of such meeting.
5.3 Legal Conditions to Merger. Each of the Company, Wilkerson and
Phoenix shall, and shall cause its Subsidiaries to, use all reasonable best
efforts (i) to take, or cause to be taken, all actions necessary to comply
promptly with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and to consummate the transactions
contemplated by this Agreement, subject to the approval of stockholders of the
Company described in Section 6.1 (a), and (ii) to obtain (and to cooperate with
the other party to obtain) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity and of any other public or private
third party which is required to be obtained or made by such party or any of its
Subsidiaries in connection with the Merger and the transactions contemplated by
this Agreement; provided, however, that a party shall not be obligated to take
any action pursuant to the foregoing if the taking of such action or such
compliance or the obtaining of such consent, authorization, order, approval or
exemption is likely, in such party's reasonable opinion, (x) to be materially
burdensome to such party and its Subsidiaries taken as a whole or to impact in a
materially adverse manner the economic or business benefits of the transactions
contemplated by this Agreement so as to render uneconomic the consummation of
the Merger or (y) in the case of the Company, to result in the imposition of a
condition or restriction on the Company, the Surviving Corporation or any of
their respective Subsidiaries of the type referred to in Section 6.2(e). Each of
the Company and Phoenix will promptly cooperate with and furnish information to
the other in connection with any such burden suffered by, or requirement imposed
upon, any of them or any of their Subsidiaries in connection with the foregoing.
20
5.4 Brokers or Finders. Except as disclosed to the other party in
writing prior to the date hereof, each of Phoenix and the Company represents, as
to itself, its Subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement,
except the Independent Advisor, whose fees and expenses will be paid by the
Company in accordance with the Company's agreement with such firm (a copy of
which has been delivered by the Company to Phoenix prior to the date of this
Agreement), and each party agrees to indemnify the other party and hold the
other party harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such first party or its affiliates.
5.5 Indemnification; Directors' and Officers' Insurance. (a) As of the
Effective Time, the certificate of incorporation of the Surviving Corporation
shall contain provisions no less favorable with respect to indemnification than
are set forth in the certification of incorporation of the Company, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were directors,
officers, employees or agents of the Company. From and after the Effective Time,
for a period of six years, Phoenix and the Surviving Corporation, jointly and
severally, shall indemnify the directors and officers of the Company on terms no
less favorable than the provisions with respect to indemnification that are set
forth in the certificate of incorporation of the Company as of the Effective
Time. Phoenix and the Company agree that the directors, officers and employees
of the Company covered thereby are intended to be third party beneficiaries
under this Section 5.5 and shall have the right to enforce the obligations of
the Surviving Corporation and the Phoenix.
(b) The Surviving Corporation shall maintain in effect from the
Effective Time until their expiration the current policies of the directors' and
officers' liability insurance maintained by the Company.
5.6 Shareholder Lists. The Company shall promptly upon request of
Phoenix, or shall cause its transfer agent to promptly, furnish Phoenix with
mailing labels containing the names and addresses of all record holders of
Company Common Stock and with security position listings of Company Common Stock
held in stock depositories, each as of the most recent practicable date,
together with all other available listings and computer files containing names,
addresses and security position listings of record holders and beneficial owners
of Company Common Stock. The Company shall furnish Phoenix with such additional
information, including, without limitation, updated listings and computer files
of stockholders, mailing labels and security position listings, and such other
assistance as Phoenix or its agents may reasonably request.
5.7 Shareholder Litigation. The Company shall give Phoenix the
opportunity to participate in the defense or settlement of any shareholder
litigation against the Company and its directors relating to the transactions
contemplated by this Agreement; provided, however, that no such settlement shall
be agreed to without the Company's and Phoenix's consent, which shall not be
21
unreasonably withheld.
5.8 Communication to Employees. The Company and Phoenix will cooperate
with each other with respect to, and endeavor in good faith to agree in advance
upon the method and content of, all written or oral communications or disclosure
to employees of the Company or any of its Subsidiaries with respect to the
Merger and any other transactions contemplated by this Agreement. Upon
reasonable notice, the Company shall provide Phoenix access to the Company's and
its Subsidiaries' employees and facilities.
5.9 Vote of the Acquisition Group. The Acquisition Group shall vote all
of its shares of Company Common Stock at the Stockholders' Meeting in accordance
with the vote of the majority of the outstanding shares of Company Common Stock,
not owned by any member of the Acquisition Group, entitled to vote at the
Stockholders' Meeting.
5.10 Agreement with Respect to Certain Option Shares. Prior to the
Closing Date: (a) the members of the Acquisition Group shall not exercise any
outstanding options to acquire additional shares of Company Common Stock, or
otherwise acquire any additional shares of Company Common Stock; (b) the Company
will not exercise any option to acquire any shares of Company Common Stock from
any member of the Acquisition Group; and (c) if there is presented a Competing
Proposal or a proposal that the Special Committee determines to be a Superior
Proposal, Phoenix shall grant to the Independent Committee a proxy in the form
attached as Exhibit C to vote 454,036 of the shares of Company Common Stock
currently held by Phoenix (which are subject to an option held by the Company to
purchase such shares at an exercise price of $0.90 per share pursuant to that
certain Agreement dated August 9, 2001, as extended by that certain letter
agreement dated April 25, 2003).
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect theMerger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Stockholder Approval. The Company Shareholder Approval shall
have been obtained and the vote in favor of approval of this Agreement, the
Merger and the other transactions contemplated by this Agreement, of a majority
of the outstanding shares of Company Common Stock not owned by any member of the
Acquisition Group and entitled to vote thereon shall have been obtained.
(b) Other Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, and all expirations or early
terminations of waiting periods imposed by, any Governmental Entity (all the
foregoing, "Consents") which are necessary for the consummation of the Merger
shall have been filed, occurred or been obtained (all such permits, approvals,
filings and
22
consents and the lapse of all such waiting periods being referred to
as the "Requisite Regulatory Approvals") and all such Requisite Regulatory
Approvals shall be in full force and effect.
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding by any Governmental Entity seeking any of the foregoing be pending.
There shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, which makes the
consummation of the Merger illegal.
6.2 Conditions to Obligations of Wilkerson, Phoenix and Merger Sub. The
obligations of Wilkerson, Phoenix and Merger Sub to effect the Merger are
subject to the satisfaction of the following conditions unless waived by
Wilkerson, Phoenix and Merger Sub:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all respects as of the Effective Time as though made on or as of such time
(ignoring for purposes of this determination any materiality or Material Adverse
Effect qualifiers contained within individual representations and warranties),
except for (i) those representations and warranties that address matters only as
of a particular date or only with respect to a specific period of time which
need only be true and correct as of such date or with respect to such period,
(ii) such failures to be true and correct as would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on the
Company and (iii) such failures to be true and correct that Wilkerson had actual
knowledge of as of the date of this Agreement.
(b) Performance of Obligations of Company. The Company shall have
performed and complied in all material respects with all obligations required to
be performed or complied with by it under this Agreement at or prior to the
Closing Date, and Phoenix shall have received a certificate signed on behalf of
the Company by the President and Chief Executive Officer of the Company and by
the Chief Financial Officer of the Company to such effect.
(c) Appraisal Rights. Dissenting Shares shall constitute less than
25% of all shares of Company Common Stock outstanding immediately prior to the
Effective Time.
(d) Consents Under Agreements. The Company shall have obtained the
consent or approval of, except for those consents or approvals for which failure
to obtain such consents or approvals could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, each Person (other than the Requisite Regulatory Approvals) whose
consent or approval shall be required in order to permit the succession by the
Surviving Corporation pursuant to the Merger to any obligation, right or
interest of the Company or any Subsidiary of the Company under any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement
or instrument.
23
(e) Burdensome Condition. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, by any Governmental Entity which, in connection with
the grant of a Requisite Regulatory Approval, imposes any requirement upon
Phoenix, the Surviving Corporation or their respective Subsidiaries which would
so materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement as to render uneconomic the
consummation of the Merger, or which would require Phoenix or any of its
Subsidiaries to dispose of any asset which is material to Phoenix prior to the
Effective Time.
(f) Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any Material Adverse Effect with respect to the Company
and no facts or circumstances arising after the date of this Agreement shall
have occurred which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect with respect to the Company.
(g) Proceedings. All proceedings to be taken on the part of the
Company in connection with the transactions contemplated by this Agreement and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Phoenix, and Phoenix shall have received copies of all such
documents and other evidences as Phoenix may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
(h) No Action. No action, suit or proceeding shall have been
instituted, or shall be pending or threatened (i) seeking to restrain in any
material respect or prohibit the consummation of the Merger, (ii) seeking to
obtain from the Company, Phoenix or Merger Sub any damages which would
reasonably be expected to result in a Material Adverse Effect or (iii) seeking
to impose the restrictions, prohibitions or limitations referred to in
subsection (e) above.
6.3 Conditions to Obligations of Company. The obligation of the Company
to effect the Merger is subject to the satisfaction of the following conditions
unless waived by the Company:
(a) Representations and Warranties. The representations and
warranties of Wilkerson, Phoenix and Merger Sub set forth in this Agreement
shall be true and correct in all respects as of the Effective Time as though
made on or as of such time (ignoring for purposes of this determination any
materiality or Material Adverse Effect qualifiers contained within individual
representations and warranties), except for (i) those representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and correct as of
such date or with respect to such period and (ii) such failures to be true and
correct as would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect on Phoenix.
(b) Performance of Obligations of Wilkerson, Phoenix and Merger Sub.
Wilkerson, Phoenix and Merger Sub shall have performed and complied in all
material respects with all obligations required to be performed by them under
this Agreement at or prior to the Closing Date, and the Company shall have
received a certificate signed on behalf of Phoenix by the President and Chief
Executive Officer of Phoenix or a Corporate Vice President of Phoenix, and by
the Senior
24
Vice President and Chief Financial Officer of Phoenix or the Corporate Vice
President and Treasurer of Phoenix to such effect.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company:
(a) by mutual consent of Phoenix and the Company in a written
instrument, whether or not the Merger has been approved by the stockholders of
the Company;
(b) by Phoenix on behalf of itself, Wilkerson and Merger Sub, upon a
material breach of any representation, warranty, covenant or agreement on the
part of the Company set forth in this Agreement, or if any representation or
warranty of the Company shall have become untrue such that the conditions set
forth in Section 6.2, would be incapable of being satisfied by December 31, 2003
(or such later date as Phoenix may agree to in writing), in each case only if
Wilkerson did not have actual knowledge of, and did not cause, such breach or
untruth;
(c) by the Company, upon a material breach of any representation,
warranty, covenant or agreement on the part of Phoenix or Merger Sub set forth
in this Agreement, or if any representation or warranty of Phoenix or Merger Sub
shall have become untrue such that the conditions set forth in Section 6.3,
would be incapable of being satisfied by December 31, 2003;
(d) by either Phoenix or the Company, if any permanent injunction or
action by any Governmental Entity preventing the consummation of the Merger
shall have become final and non-appealable;
(e) by either Phoenix or the Company if the Merger shall not have
been consummated on or prior to December 31, 2003 (or such later date as may be
agreed to in writing by the Company and Phoenix) (other than due to the
circumstances described in Section 7.1(f) or the failure of the party seeking to
terminate this Agreement to perform its obligations under this Agreement
required to be performed at or prior to the Effective Time);
(f) by either Phoenix or the Company, if any approval of the
stockholders of the Company required for the consummation of the Merger shall
not have been obtained by reason of the failure to obtain the required vote at a
Stockholders' Meeting or at any adjournment thereof or by Phoenix if the
condition set forth in Section 6.2(c) is not satisfied; provided that if the
Acquisition Group has breached Section 5.9 hereof, Phoenix shall not have the
right to terminate this Agreement under this Section 7.1(f);
25
(g) by Phoenix, if the Independent Committee or the Board shall have
(i) withdrawn, modified or changed its approval or recommendation of this
Agreement, the Merger or any of the other transactions contemplated herein in
any manner which is adverse to Phoenix or Merger Sub, or shall have resolved to
do the foregoing; or (ii) approved or have recommended to the stockholders of
the Company a Competing Transaction or a Superior Proposal, or entered into an
agreement with respect to a Competing Transaction or Superior Proposal, or shall
have resolved to do the foregoing;
(h) by Phoenix, if (i) a tender offer or exchange offer or a
proposal by a third party to acquire the Company or the Shares pursuant to a
merger, consolidation, share exchange, business combination, tender or exchange
offer or similar transaction shall have been commenced or publicly proposed
which contains a proposal as to price (without regard to the specificity of such
price proposal) and (ii) the Company shall not have made a recommendation to the
stockholders of the Company to reject such proposal within 10 business days of
its commencement or the date such proposal first becomes publicly disclosed, if
sooner;
(i) by the Company, if the Independent Committee and the Board
authorize the Company to enter into a written agreement with respect to a
Competing Transaction that the Independent Committee and the Board have
determined is a Superior Proposal; provided however, that, the Company shall not
terminate this Agreement pursuant to this Section 7.1(i) and enter into an
agreement for such a Competing Transaction until the expiration of five business
days following Phoenix's receipt of a written notice advising Phoenix that the
Company has received a Superior Proposal specifying the material terms and
conditions of such Superior Proposal (and including a copy thereof with all
accompanying written documentation) and identifying the Person making such
Superior Proposal. After providing such notice, the Company shall provide a
reasonable opportunity to Phoenix during such five business day period to make
such adjustments in the terms and conditions of this Agreement as would enable
Phoenix to proceed with the Merger on such adjusted terms.
7.2 Effect of Termination. In the event of termination of this
Agreement and abandonment of the Merger by either the Company or Phoenix as
provided in Section 7.1, this Agreement shall forthwith terminate and there
shall be no liability or obligation on the part of Phoenix, Merger Sub,
Wilkerson or the Company or their respective officers or directors except with
respect to Sections 5.5 and 7.3; provided, however, that, subject to the
provisions of Section 8.8, nothing herein shall relieve any party of liability
for any breach hereof, except that in the event of a termination of this
Agreement, no party shall have any right to the recovery of expenses except as
provided in Section 7.3.
7.3 Fees, Expenses and Other Payments. (a) Except as otherwise provided
in this Section 7.3, whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, fees and disbursements of
counsel, financial advisors and accountants) shall be borne solely and entirely
by the party which has incurred such costs and expenses (with respect to such
party, its "Expenses").
26
(b) The Company agrees that if this Agreement shall be terminated
pursuant to:
(i) Section 7.1(b) and such termination is the result of
material breach of any covenant, agreement, representation or warranty contained
herein, or Section 7.1(e) if the Agreement shall have been terminated by the
Company and in each such event at any time during the period commencing on the
date hereof and ending twelve months after the date of termination of this
Agreement, a Competing Transaction shall have been consummated or the Company
shall have entered into a definitive agreement providing for a Competing
Transaction;
(ii) Section 7.1(f) because the Agreement and the Merger shall
fail to receive the requisite vote for approval and adoption by the stockholders
of the Company at a meeting of the stockholders of the Company called to vote
thereon, and at the time of such meeting there shall exist a proposal with
respect to a Competing Transaction which either (x) the Board or the Independent
Committee has not publicly opposed or (y) is consummated, or a definitive
agreement with respect to which is entered into, at any time during the period
commencing on the date hereof and ending twelve months after the date of
termination of this Agreement; or
(iii) Section 7.1(e), Section 7.1(g), Section 7.1(h) or
Section 7.1(i);
then in each such event the Company shall pay to Phoenix an amount equal to all
of Phoenix's reasonable Expenses incurred in connection with the transactions
contemplated hereby; provided, that in the event of a termination pursuant to
Section 7.1(e), such Expenses shall not exceed $125,000.00.
(c) The Company agrees that if this Agreement shall be terminated
pursuant to Section 7.1(d), then the Company shall pay to Phoenix an amount
equal to all of Phoenix's reasonable Expenses; provided that the Company shall
not be obligated to make any payment pursuant to this Section 7.3(c) if the
Company shall be obligated to make a payment to Phoenix pursuant to Section
7.3(b).
(d) Phoenix, Wilkerson and Merger Sub agree that if this Agreement
shall be terminated pursuant to Section 7.1(c), then they shall pay to the
Company an amount equal to its reasonable expenses.
(e) Any payment required to be made pursuant to this Section 7.3
shall be made as promptly as practicable but not later than five business days
after termination of this Agreement and shall be made by wire transfer of
immediately available funds to an account designated by Phoenix, except that any
payment to be made as the result of an event described in Section 7.3(b)(i) or
clause (y) of Section 7.3(b)(ii) shall be made as promptly as practicable but
not later than five business days after the date on which a Competing
Transaction shall have been consummated.
7.4 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors and the
Independent Committee, at any time before or after approval of the matters
presented in connection with the Merger by the stockholders
27
of the Company or of Phoenix, but, after any such approval, no amendment shall
be made which by law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
7.5 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors and the Independent Committee, may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival of Representations, Warranties and Agreements. The
representations and warranties made by the parties contained in this Agreement
and any other agreement delivered pursuant hereto or made in writing by or on
behalf of the parties shall not survive beyond the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Wilkerson, Phoenix or Merger Sub, to:
Phoenix Group of Florida, Inc.
3000 Northeast 30th Place, Fifth Floor
Fort Lauderdale, Florida 33306
Attention: William A. Wilkerson
Facsimile: 954-565-0742
With a copy to:
Adorno & Yoss, P.A.
2601 South Bayshore Drive, Suite 1600
Miami, Florida 33133
Attention: Dennis J. Olle, Esq.
Facsimile: 305-858-4777
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(b) if to the Company, to:
BCT International, Inc.
3000 Northeast 30th Place, Fifth Floor
Fort Lauderdale, Florida 33306
Attention: Jeffrey Hewson
Facsimile: 954-565-0742
With a copy to:
Mitrani, Rynor, Adamsky & Macaulay, P.A.
One Southeast Third Avenue
Suite 2200
Miami, Florida 33131
Attention: Robert Macaulay
Facsimile: 305-358-9617
8.3 Certain Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities, means having "beneficial ownership" of such securities in accordance
with the provisions of Rule 13d-3 under the Exchange Act. Without duplicative
counting of the same securities by the same holder, securities beneficially
owned by a person include securities beneficially owned by all other persons
with whom such person would constitute a group;
(c) "Competing Transaction" shall mean any of the following (other
than the transactions contemplated by this Agreement) involving the Company: (i)
any merger, consolidation, share exchange, exchange offer, business combination,
recapitalization, liquidation, dissolution or other similar transaction
involving the Company resulting in the Company's current shareholders owning
less than a majority of the capital stock of the surviving corporation in such
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets representing 20% or more of the total assets of the
Company and its Subsidiaries, in a single transaction or series of transactions;
(iii) any tender offer or exchange offer for 20% or more of the outstanding
Shares or the filing of a registration statement under the Securities Act in
connection therewith; (iv) any person or group acquiring Beneficial Ownership of
15% or more, or such person or group having increased its Beneficial Ownership
beyond 15%, of the outstanding Shares; or (v) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing;
29
(d) "Environmental Matters" shall mean any matter arising out of or
relating to pollution or protection of the environment, human safety or health,
or sanitation, including, without limitation, matters relating to food
preparation and handling, emissions, discharges, releases, exposures or
threatened releases of pollutants, contaminants or hazardous or toxic materials
or wastes including petroleum and its fractions, radiation, polychlorinated
byphenols, biohazards and all toxic agents of whatever type or nature into
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes including petroleum and its fractions, radiation, biohazards
and all toxic agents of whatever type or nature. "Environmental Liability" means
any liability or obligation arising under any law or under any other theory of
law or equity (including, without limitation, any liability for personal injury,
property damage or remediation) arising from or relating to any Environmental
Matters.
(e) "ERISA Affiliate" shall mean any business or entity which is a
member of the same "controlled group of corporations," under "common control" or
an "affiliated service group" with the Company within the meaning of Sections
414(b), (c) or (m) of the Code, as required to be aggregated with the Company
under Section 414(o) of the Code, or is under "common control" with the Company,
within the meaning of Section 4001(a)(14) of ERISA, or any regulations
promulgated or proposed under any of the foregoing Sections.
(f) "Group" means two or more persons acting together for the
purpose of acquiring, holding, voting or disposing of any securities, which
persons would be required to file a Schedule 13D or Schedule 13G with the SEC as
a "person" within the meaning of Section 13(d)(3) of the Exchange Act if such
persons beneficially owned a sufficient amount of such securities to require
such a filing under the Exchange Act;
(g) "Material" with respect to any entity means an event, change or
effect which is material in relation to the condition (financial or otherwise),
properties, assets, liabilities, businesses or operations of such entity and its
Subsidiaries taken as a whole;
(h) "Material Adverse Effect" means, with respect to the Company or
Phoenix, any change, event or effect shall have occurred that, when taken
together with all other adverse changes, events or effects that have occurred
would or would reasonably be expected to (i) be materially adverse to the
business, assets, properties, results of operations or condition (financial or
otherwise) of such party and its Subsidiaries taken as a whole, or (ii) prevent
or materially delay the consummation, or increase the cost to Phoenix or Merger
Sub, of the Merger;
(i) "Person" means an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other legal entity;
(j) a "Subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
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person;
(k) "Superior Proposal" means any bona fide written proposal to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, all of the shares of Company Common Stock then outstanding or all or
substantially all of the assets of the Company and the assumption of the
liabilities and obligations of the Company to be followed by a pro rata
distribution of the sale proceeds to stockholders of the Company, that (i) is
not subject to any financing conditions or contingencies, (ii) provides holders
of Company Common Stock with per share consideration that the Independent
Committee determines in good faith, after receipt of advice of its financial
advisor, is more favorable from a financial point of view than the consideration
to be received by holders of Company Common Stock in the Merger, (iii) is
determined by the Independent Committee in its good faith judgment, after
receipt of advice of its financial advisor and outside legal counsel, to be
likely of being completed (taking into account all legal, financial, regulatory
and other aspects of the proposal, the Person making the proposal and the
expected timing to complete the proposal), (iv) does not, in the definitive
agreement, contain any "due diligence" conditions, and (v) has not been obtained
by or on behalf of the Company in violation of Section 4.3 hereof; and
(l) Any accounting term that is used in the context of describing or
referring to an accounting concept and that is not specifically defined herein
shall be construed in accordance with GAAP as applied in the preparation of the
financial statements of the Company included in the Company SEC Documents
(including, without limitation, the Year-End Financial Statements and the
Balance Sheet).
8.4 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated. The recitals hereto constitute an integral
part of this Agreement. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement", "the date hereof" and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to
___________, 2003.
8.5 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.
8.6 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments referred
to herein) (a) 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 except for the letter agreement of April
25, 2003; and
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(b) except as provided in Sections 2.2, 2.3 and 5.5, is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
The parties hereby acknowledge that, except as hereinafter agreed to in writing,
no party shall have the right to acquire or shall be deemed to have acquired
shares of common stock of the other party pursuant to the Merger until
consummation thereof.
8.7 Governing Law; Consent to Jurisdiction. (a) This Agreement shall be
governed by and construed in accordance with the laws of the State of Florida
without regard to the principles of conflicts of laws thereof.
(b) Each of the parties hereto (i) consents to submit itself to the
exclusive personal jurisdiction of any Florida state court or any federal court
located in the State of Florida in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement and (ii)
agrees that it shall not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court.
8.8 Severability; No Remedy in Certain Circumstances. Any term or
provision of this Agreement that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.
If the final judgment of a court of competent jurisdiction declares that any
term or provision hereof is invalid or unenforceable, the parties agree that the
court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed. Except as
otherwise contemplated by this Agreement, to the extent that a party hereto took
an action inconsistent herewith or failed to take action consistent herewith or
required hereby pursuant to an order or judgment of a court or other competent
authority, such party shall incur no liability or obligation unless such party
did not in good faith seek to resist or object to the imposition or entering of
such order or judgment.
8.9 Publicity. Except as otherwise required by any applicable law or
rules or regulations promulgated thereunder, so long as this Agreement is in
effect, neither the Company, Wilkerson nor Phoenix shall, or shall permit any of
its Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to the transactions contemplated by this
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
8.10 Assignment. 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
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
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8.11 Adjustment. All dollar amounts and share numbers set forth herein,
including without limitation the Merger Consideration, shall be subject to
equitable adjustment in the event of any stock split, stock dividend, reverse
stock split or similar event affecting the Company Common Stock, between the
date of this Agreement and the Effective Time, to the extent appropriate.
8.12 Headings. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only and shall be given no substantive or
interpretive effect whatsoever.
8.13 Waiver. All waivers must be in writing. Except as provided in this
Agreement, no action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
8.14 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Phoenix, Merger Sub, Wilkerson and the Company have
caused this Agreement, to be signed by their respective officers thereunto duly
authorized, all as of May 29, 2003.
PHOENIX GROUP OF FLORIDA, INC.
By: /s/ William A. Wilkerson
------------------------------------------
William A. Wilkerson
President
PHOENIX ACQUISITION CORP.
By: /s/ William A. Wilkerson
------------------------------------------
William A. Wilkerson
President
BCT INTERNATIONAL, INC.
By: /s/ Jeffrey K. Hewson
---------------------------------------
Name: Jeffrey K. Hewson
---------------------------------------
Title: Director
---------------------------------------
/s/ William A. Wilkerson
---------------------------------------------
William A. Wilkerson
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