Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
by and among:
ROADWAY CORPORATION,
a Delaware corporation
LION CORP.,
a Pennsylvania corporation
and
ARNOLD INDUSTRIES, INC.,
a Pennsylvania corporation
Dated as of August 21, 2001
Table of Contents
Page
ARTICLE 1 THE MERGER.................................................................................1
Section 1.1 The Merger............................................................................1
Section 1.2 Closing...............................................................................1
Section 1.3 Effective Time........................................................................2
Section 1.4 Effects of the Merger.................................................................2
Section 1.5 Articles of Incorporation and Bylaws..................................................2
Section 1.6 Directors and Officers of the Surviving Corporation...................................2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
SURRENDER OF CERTIFICATES AND PAYMENT......................................................2
Section 2.1 Effect on Capital Stock...............................................................2
Section 2.2 Payment and Surrender of Certificates.................................................3
Section 2.3 Company Equity Plans.................................................................4
Section 2.4 Dissenters' Rights....................................................................5
Section 2.5 Further Assurances....................................................................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES.............................................................6
Section 3.1 Representations and Warranties of Company.............................................6
Section 3.2 Representations and Warranties of Parent and Merger Sub..............................22
ARTICLE 4 COVENANTS RELATING TO CONDUCT OF BUSINESS.................................................24
Section 4.1 Conduct of Business..................................................................24
Section 4.2 No Solicitation......................................................................26
ARTICLE 5 ADDITIONAL AGREEMENTS.....................................................................29
Section 5.1 Preparation of Proxy Statement; Shareholders Meeting.................................29
Section 5.2 Access to Information; Confidentiality...............................................29
Section 5.3 Efforts; Cooperation.................................................................30
Section 5.4 Indemnification......................................................................30
Section 5.5 Employee Benefits....................................................................31
Section 5.6 Public Announcements.................................................................31
Section 5.7 Fees and Expenses....................................................................32
Section 5.8 Credit Agreement.....................................................................32
Section 5.9 Shareholder Litigation...............................................................32
Section 5.10 Transition...........................................................................32
Section 5.11 Section 16(b)........................................................................33
Section 5.12 Financing............................................................................33
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Table of Contents
(continued)
Page
ARTICLE 6 CONDITIONS PRECEDENT......................................................................33
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger...........................33
Section 6.2 Conditions to Obligation of Parent and Merger Sub....................................34
Section 6.3 Conditions to Obligation of the Company..............................................34
Section 6.4 Frustration of Closing Conditions....................................................35
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER.........................................................35
Section 7.1 Termination..........................................................................35
Section 7.2 Effect of Termination................................................................36
ARTICLE 8 GENERAL PROVISIONS........................................................................37
Section 8.1 Amendment............................................................................37
Section 8.2 Extension; Waiver....................................................................37
Section 8.3 Nonsurvival of Representations and Warranties........................................38
Section 8.4 Notices..............................................................................38
Section 8.5 Interpretation.......................................................................38
Section 8.6 Counterparts.........................................................................39
Section 8.7 Entire Agreement; No Third-Party Beneficiaries.......................................39
Section 8.8 Governing Law........................................................................39
Section 8.9 Assignment...........................................................................40
Section 8.10 Consent to Jurisdiction..............................................................40
Section 8.11 Specific Enforcement.................................................................40
Section 8.12 Severability.........................................................................40
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TABLE OF DEFINED TERMS
1987 Plan.........................................5
1997 Plan.........................................5
affiliate........................................44
Acquisition Proposal.............................10
Acquisition Transaction..........................33
Agreement.........................................1
Articles of Merger................................2
Business Day......................................2
Certificate.......................................3
Closing...........................................1
Closing Date......................................2
Code.............................................11
Commitment Letter................................28
Common Stock......................................1
Company...........................................1
Company Benefit Plans............................11
Company Disclosure Letter.........................7
Company Entities..................................7
Company Entities Proprietary Asset...............21
Company Entity Contract..........................24
Company Material Adverse Effect...................6
Company Subsidiaries..............................6
Company Subsidiary................................6
Confidentiality Agreement........................34
Continuing Employees.............................36
Contract..........................................6
control..........................................44
Defects..........................................37
Dissenting Shares.................................3
Effective Time....................................2
Environmental Claim..............................18
Environmental Laws...............................18
Equity Plans......................................5
ERISA............................................11
ERISA Affiliate..................................12
Exchange Act......................................9
Financial Statements..............................9
Foreign Antitrust Laws............................9
Foreign Plan.....................................11
GAAP..............................................9
Governmental Entity...............................9
Hazardous Substance..............................18
HSR Act...........................................9
knowledge........................................44
Laws.............................................44
Leased Real Property.............................24
Leases...........................................24
Legal Proceeding.................................44
Liens.............................................7
Material Contract................................21
Merger............................................1
Merger Consideration..............................3
Merger Sub........................................1
Multiemployer Plan...............................13
Multiple Employer Plan...........................13
Option............................................5
Option Consideration..............................5
Owned Real Property..............................24
Parent............................................1
Paying Agent......................................3
Payment Fund......................................3
PBCL..............................................1
Permits..........................................10
Permitted Exceptions.............................37
person...........................................44
Policy...........................................37
Preliminary Report...............................37
Proprietary Asset................................20
Proxy Statement...................................9
Real Property....................................25
Real Property Documents..........................25
Recent SEC Documents.............................16
Release..........................................18
Restraints.......................................39
Returns..........................................14
SEC...............................................9
SEC Documents.....................................9
Securities Act....................................9
Shareholder Approval.............................16
Shareholders Meeting.............................34
Subsidiary.......................................44
Superior Proposal................................33
Survey...........................................37
Surviving Corporation.............................1
taxes............................................16
Taxing Authority.................................14
Termination Fee..................................42
Title Company....................................37
Voting Agreement..................................1
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), is dated
as of August 21, 2001, by and among Roadway Corporation, a Delaware corporation
("Parent"), Lion Corp., a Pennsylvania corporation and a wholly-owned subsidiary
of Parent ("Merger Sub"), and Arnold Industries, Inc., a Pennsylvania
corporation (the "Company").
R E C I T A L S
1. Parent, Merger Sub and the Company intend to effect a merger (the
"Merger") of Merger Sub with and into the Company in accordance with this
Agreement and the Pennsylvania Business Corporation Law (the "PBCL"). Upon
consummation of the Merger, Merger Sub will cease to exist and the Company will
become a wholly-owned subsidiary of Parent.
2. The respective Boards of Directors of Parent, Merger Sub and the
Company have approved this Agreement and the Merger.
3. In order to induce Parent to enter into this Agreement and to
consummate the Merger, concurrently with the execution and delivery of this
Agreement, Edward H. Arnold and the Parent are entering into a voting agreement
(the "Voting Agreement") pursuant to which Edward H. Arnold has agreed to, among
other things, vote his shares of common stock, par value $1.00 per share, of the
Company ("Common Stock") in favor of the Merger.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the PBCL, Merger Sub will be
merged with and into the Company at the Effective Time (as defined in Section
1.3) and the separate corporate existence of Merger Sub will thereupon cease.
Following the Effective Time, the Company will be the surviving corporation (the
"Surviving Corporation").
Section 1.2. Closing. The closing of the Merger (the "Closing") will
take place at a time and on a date to be specified by the parties, which is to
be no later than the second Business Day after satisfaction or waiver (subject
to applicable Law (as defined in Section 8.5(e))) of the conditions (excluding
conditions that, by their terms, cannot be satisfied until the Closing Date, but
subject to the satisfaction or waiver of such conditions) set forth in Article
6, unless another time or date is agreed to by the parties to this Agreement.
The Closing will be held at the offices of Jones, Day, Reavis & Pogue, 901
Lakeside Avenue, Cleveland, Ohio 44114, or such other location as the parties to
this Agreement agree to in writing. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date." "Business Day" means any day
other than Saturday, Sunday or any federal holiday.
Section 1.3. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall (i) file the articles of merger (the "Articles of Merger") in such form as
is required by and executed in accordance with the relevant provisions of the
PBCL and (ii) make all other filings or recordings required under the PBCL. The
Merger will become effective at such time as the Articles of Merger are duly
filed with the Department of State of the Commonwealth of Pennsylvania, or at
such subsequent date or time as the Company and Merger Sub agree and specify in
the Articles of Merger (the date and time the Merger becomes effective is
hereinafter referred to as the "Effective Time").
Section 1.4. Effects of the Merger. The Merger will have the effects
set forth in Section 1929 of the PBCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company and Merger Sub will be vested
in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub will become the debts, liabilities and duties of the
Surviving Corporation.
Section 1.5. Articles of Incorporation and Bylaws. The Articles of
Incorporation of the Company, as in effect immediately before the Effective
Time, will be the Articles of Incorporation of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable Law; provided
that, at the Effective Time, the Articles of Incorporation of the Company shall
be amended as provided in Exhibit A attached hereto. The Bylaws of Merger Sub,
as in effect immediately before the Effective Time, will be the Bylaws of the
Surviving Corporation, until thereafter changed or amended as provided therein
or by applicable Law.
Section 1.6. Directors and Officers of the Surviving Corporation. The
directors of Merger Sub immediately prior to the Effective Time will be the
directors of the Surviving Corporation, until the earlier of their death,
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be. The officers of the Company immediately prior to
the Effective Time will be the officers of the Surviving Corporation, until the
earlier of their death, resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
SURRENDER OF CERTIFICATES AND PAYMENT
Section 2.1. Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of Parent, Merger Sub, the
Company or any shareholder of the Company:
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(a) Cancellation of Treasury Stock and Parent and Merger Sub Owned
Common Stock. Each share of Common Stock that is owned by Parent or Merger Sub
or any other wholly-owned subsidiary of Parent (other than shares of Common
Stock in trust accounts, managed accounts, custodial accounts and the like that
are beneficially owned by third parties) and any Common Stock then held by the
Company or wholly-owned subsidiary of the Company (or held in the Company's
treasury) will automatically be canceled and retired and will cease to exist,
and no consideration will be delivered in exchange therefor.
(b) Conversion of Common Stock. Each issued and outstanding share of
Common Stock (other than shares to be canceled in accordance with Section 2.1(a)
and shares of Common Stock that are owned by shareholders that have properly
exercised dissenters rights pursuant to Sections 1571 through 1580 and Section
1930 of the PBCL (the "Dissenting Shares")) will be converted into the right to
receive $21.75, without interest, in cash (the "Merger Consideration"). At the
Effective Time, all such shares of Common Stock will no longer be outstanding
and will automatically be canceled and retired and will cease to exist, and each
holder of a certificate representing immediately prior to the Effective Time
such share of Common Stock (the "Certificate") will cease to have any rights
with respect thereto, except the right to receive the Merger Consideration upon
surrender of such Certificate in accordance with Section 2.2.
(c) Capital Stock of Merger Sub. At the Effective Time, each share of
common stock of Merger Sub issued and outstanding immediately prior to the
Effective Time will be converted into and become one fully-paid and
nonassessable share of common stock of the Surviving Corporation.
Section 2.2. Payment and Surrender of Certificates.
(a) Paying Agent. Prior to the Effective Time, Merger Sub shall appoint
a paying agent mutually agreeable to the Company and Parent to act as paying
agent (the "Paying Agent") for the payment of the Merger Consideration. On the
Closing Date, Parent shall deposit or shall cause to be deposited with the
Paying Agent, in a separate fund established for the benefit of the holders of
shares of Common Stock for payment in accordance with this Article 2 through the
Paying Agent (the "Payment Fund"), immediately available funds in amounts
necessary to make the payments pursuant to Section 2.1(b) and this Section 2.2
to holders of shares of Common Stock entitled thereto.
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each holder of
record of a Certificate or Certificates whose shares were converted into the
right to receive the Merger Consideration pursuant to Section 2.1(b), (i) a
letter of transmittal (which shall specify that delivery will be effected, and
risk of loss and title to the Certificates will pass, only upon delivery of the
Certificates to the Paying Agent and will be in such form and have such other
provisions as the Company and Parent may reasonably specify) and (ii)
instructions for use in surrendering the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent, together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Paying Agent, the holder of such
Certificate will be entitled to receive in exchange therefor cash in an amount
equal to the product of (i) the number of shares of Common Stock represented by
such Certificate multiplied by (ii) the Merger Consideration, and the
Certificate so surrendered will forthwith be canceled. No interest will be paid
or accrued on the Merger Consideration payable upon the surrender of any
Certificate. If payment is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it will be a condition of
payment that the Certificate so surrendered will be properly endorsed or
otherwise be in proper form for transfer and that the person requesting such
payment shall (i) pay any transfer or other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the surrendered Certificate or (ii) establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable.
3
(c) Stock Transfer Books. After the Effective Time, there will be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of shares of Common Stock. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Paying Agent for
any reason, they will be canceled and exchanged as provided in this Article 2,
except as otherwise provided by applicable Law. Until surrendered as
contemplated by this Section 2.2, each Certificate (other than Certificates
representing Dissenting Shares and shares cancelled pursuant to Section 2.1(a))
will be deemed at any time after the Effective Time to represent only the right
to receive upon surrender the Merger Consideration, without interest, that the
holder thereof has the right to receive in respect of such Certificate pursuant
to the provisions of this Article 2.
(d) Termination of Payment Fund. Any portion of the Payment Fund that
remains undistributed to holders of the Certificates for six months after the
Effective Time is to be delivered to the Surviving Corporation, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article 2 shall thereafter look only to the Surviving Corporation for payment of
their claim for the Merger Consideration.
(e) No Liability. None of Merger Sub, the Company, the Surviving
Corporation or the Paying Agent will be liable to any person in respect of any
amount properly delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. Immediately prior to the date on
which any payment pursuant to this Article 2 would otherwise escheat to or
become the property of any Governmental Entity, such payment will, to the extent
permitted by applicable Law, become the property of the Surviving Corporation,
free and clear of all claims or interests of any person previously entitled
thereto.
(f) Lost Certificates. If any Certificate has been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Paying Agent
shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration due to such person pursuant to this Agreement.
(g) Withholding Rights. Parent or the Paying Agent will be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Common Stock such amounts as Parent or the
Agent is required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld and paid over to the appropriate taxing
authority by Parent or the Paying Agent, such withheld amounts will be treated
for all purposes of this Agreement as having been paid to the holder of the
shares of Common Stock in respect of which such deduction and withholding was
made by Parent or the Paying Agent.
4
Section 2.3. Company Equity Plans.
(a) Option Payments. Each individual who held an option to purchase
shares of Common Stock under the Company's 1997 Stock Option Plan (the "1997
Plan"), and the Company's 1987 Stock Option Plan (the "1987 Plan", and together
with the 1997 Plan, the "Equity Plans"), and had such option cancelled upon the
Effective Time pursuant to the terms of the applicable Equity Plan, whether or
not then exercisable (an "Option"), will be entitled to receive, at the
Effective Time, for each share subject to such Option an amount (subject to any
applicable withholding tax) in cash equal to the difference between the Merger
Consideration and the per share exercise price of such Option to the extent such
difference is a positive number (such amount is hereinafter referred to as the
"Option Consideration"). The Surviving Corporation or Parent shall pay the
Option Consideration within one Business Day following the Effective Time
(provided the Company has delivered by the Effective Time a list of outstanding
Options as of the Effective Time). Pursuant to the terms of the Equity Plans,
upon the Effective Time, the Options will be canceled.
(b) Termination of Plans. Prior to the Effective Time, the Company
shall use its reasonable efforts to obtain all necessary consents or releases
from holders of Options under the Equity Plans and take all such other lawful
action as may be necessary (which includes, but is not limited to, satisfying
the requirements of Rule 16b-3(e) promulgated under Section 16 of the Exchange
Act, without incurring any liability in connection therewith) to provide for and
give effect to the transactions contemplated by this Section 2.3. Except as
otherwise agreed to in writing by the parties, (i) the Equity Plans will
terminate as of the Effective Time, and (ii) the Company shall assure that
following the Effective Time no participant in the Equity Plans, or other plans,
programs or arrangements, will have any right thereunder to acquire equity
securities of the Company, the Surviving Corporation or any subsidiary thereof.
Section 2.4. Dissenters' Rights. Notwithstanding anything in this
Agreement to the contrary, shares of Common Stock that are issued and
outstanding immediately prior to the Effective Time and that are held by
shareholders of the Company who have complied with all procedures necessary to
assert dissenters rights in the manner provided in Chapter 15 of the PBCL will
not be canceled and converted into the right to receive the Merger
Consideration, unless and until such shareholder has failed to perfect, or
effectively has withdrawn or lost, such shareholder's right to appraisal and
payment under the PBCL, but rather, such shareholder will be entitled to payment
of the fair value of their shares determined and payable in accordance with the
provisions of Chapter 15, Subchapter D of the PBCL. If such shareholder has so
failed to perfect, or effectively has withdrawn or lost such right, the Common
Stock owned by such shareholder will thereupon be deemed to have been canceled
and converted as described in Section 2.1(b) at the Effective Time, and each
share of Common Stock owned by such shareholder will represent solely the right
to receive the Merger Consideration, without interest. From and after the
Effective Time, no shareholder who has exercised dissenters rights as provided
in Chapter 15, Subchapter D of the PBCL will be entitled to vote his or her
shares of Common Stock for any purpose or to receive payment of dividends or
other distributions with respect to such shares (except dividends and other
distributions payable to shareholders of record at a date that is prior to the
Effective Time). The Company shall give Parent prompt notice of and copies of
any written demands for appraisal, attempted withdrawals of such demands and any
other instruments received by the Company relating to shareholders' rights of
appraisal. Parent shall conduct all negotiations and proceedings with respect to
demand for appraisal under the PBCL and the Company will be entitled to
participate therein only as and to the extent requested by Parent. The Company
shall not, except with the prior written consent of Parent, make any payment
with respect to any demands for appraisals of Dissenting Shares, offer to settle
or settle any such demands or approve any withdrawal of any such demands.
5
Section 2.5. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of Company. Except as set
forth in the disclosure letter delivered by the Company to the Merger Sub prior
to the execution of this Agreement (the "Company Disclosure Letter") (each
section of which qualifies the correspondingly numbered representation and
warranty or covenant to the extent specified therein), and except as disclosed
in the SEC Documents (as defined in Section 3.1(e)) filed with the SEC prior to
the date hereof, the Company hereby represents and warrants to Parent and Merger
Sub as follows:
(a) Organization, Standing and Corporate Power. The Company and each of
the Company Subsidiaries (as defined in Section 3.1(b)) is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has the requisite
corporate or other power, as the case may be, and authority: (i) to conduct its
business in the manner in which its business is currently being conducted; (ii)
to own and use its assets in the manner in which its assets are currently owned
and used; and (iii) to perform its obligations under all Contracts by which it
is bound, except any failure to be in good standing that would not reasonably be
expected to have a Company Material Adverse Effect (as defined below). The
Company and each of the Company Subsidiaries is duly qualified or licensed to do
business and is in good standing (with respect to jurisdictions that recognize
such concept) in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions where the failure to be so
qualified or licensed or to be in good standing individually or in the aggregate
has not had or would not reasonably be expected to have a Company Material
Adverse Effect (as defined below). "Contract" means any written or oral
agreement, contract, subcontract, lease, instrument, note, option, warranty,
purchase order, license, sublicense or legally binding commitments or
undertakings. An event, inaccuracy, circumstance, change, state of facts, effect
or other matter will be deemed to have a "Company Material Adverse Effect" if
such event, inaccuracy, circumstance, change, state of facts, effect or other
matter had or would reasonably be expected to have a material adverse effect on
(i) the business, financial condition or results of operations of the Company
Entities taken as a whole, or (ii) the ability of the Company to consummate the
Merger or any of the other transactions contemplated by this Agreement or to
perform any of its obligations under this Agreement; provided, however, that any
change, event, inaccuracy, circumstance, state of facts, effect or other matter
relating to the following will not be taken into account in determining whether
there has been or would be a Company Material Adverse Effect: (i) the economy or
financial markets in general; (ii) conditions generally affecting the industry
(or industries) in which any of the Company Entities participates, (iii) the
announcement or pendency of this Agreement, or the transactions contemplated
hereby, and (iv) any changes in GAAP (as defined in Section 3.1(e)).
6
(b) Subsidiaries. Section 3.1(b) of the Company Disclosure Letter sets
forth all the subsidiaries (as defined in Section 8.5(d)) of the Company (each a
"Company Subsidiary," collectively, the "Company Subsidiaries," and together
with the Company, the "Company Entities"). All outstanding shares of capital
stock of, or other equity interests in, each Company Subsidiary (i) have been
validly issued and are fully paid and nonassessable, (ii) are free and clear of
all pledges, adverse claims, liens, options, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens") and (iii) are
free of any other restriction (including preemptive rights or any restriction on
the right to vote, sell or otherwise dispose of such capital stock or other
ownership interests). All outstanding shares of capital stock (or equivalent
equity interests of entities other than corporations) of each of the Company
Subsidiaries are owned, directly or indirectly, by the Company. The Company does
not, directly or indirectly, own less than 100% of the capital stock or other
equity interest in any person. None of the Company Entities has agreed to make
or is obligated to make, or is bound by any Contract under which it may become
obligated to make, any future investment in or capital contribution to any other
person. None of the Company Entities has, at any time, been a general partner of
any general partnership, limited partnership or other person.
(c) Capital Structure. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock. At the close of business on
August 10, 2001: (i) 24,800,816 shares of Common Stock were issued and
outstanding (excluding 5,141,812 shares of Common Stock held in the treasury of
the Company); and (ii) 3,625,000 shares of Common Stock were reserved for
issuance under the Equity Plans. Section 3.1(c) of the Company Disclosure Letter
sets forth the holders of all outstanding Options, and the number of shares that
each holder is entitled to purchase and exercise prices of each grant to such
holders. The Company has delivered to Parent accurate and complete copies of all
stock option plans pursuant to which the Company has stock options outstanding
as of the date hereof and the forms of all stock option agreements evidencing
such options. All outstanding shares of Common Stock have been duly authorized
and are validly issued, fully paid and nonassessable and not subject to or
issued in violation of preemptive rights. All outstanding shares of Common
Stock, all outstanding Options and all outstanding shares of capital stock of
each Company Subsidiary have been issued and granted, as the case may be, in
compliance with (i) all applicable securities Laws and other applicable Laws,
and (ii) all requirements set forth in applicable Contracts. Except (i) as set
forth above, and (ii) for shares of Common Stock issued pursuant to Options
outstanding on August 21, 2001 that are described on Schedule 3.1(c) of the
Company Disclosure Letter, (x) there are not issued, reserved for issuance or
outstanding (A) any shares of capital stock or other voting securities of the
Company, (B) any securities convertible into or exchangeable or exercisable for
shares of capital stock or voting securities of the Company, or (C) any
warrants, calls, options or other rights to acquire from the Company, and no
obligation of the Company or any Company Subsidiary to issue, any capital stock,
voting securities or securities convertible into or exchangeable or exercisable
for capital stock or voting securities of the Company and (y) there are no
outstanding obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any such securities or to issue, deliver or sell, or
cause to be issued, delivered or sold, any such securities. Neither the Company
nor any Company Subsidiary is a party to any voting agreement with respect to
the voting of any such securities. There are no outstanding (A) securities
convertible into or exchangeable or exercisable for shares of capital stock or
other voting securities or ownership interests in any Company Subsidiary, (B)
warrants, calls, options or other rights to acquire from the Company or any
Company Subsidiary, and no obligation of the Company or any Company Subsidiary
to issue, any capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable or exercisable for any
capital stock, voting securities or ownership interests in, any Company
Subsidiary, or (C) obligations of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any such outstanding securities of
Company Subsidiaries or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. There are no agreements, arrangements or
commitments of any character (contingent or otherwise) entered into in
connection with acquisitions pursuant to which any person is or may be entitled
to receive any payment based on the revenues, earnings or financial performance
of the Company or any Company Subsidiary or any of their respective assets or
calculated in accordance therewith.
7
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to enter into this Agreement, and, subject to the
Shareholder Approval (as defined in Section 3.1(k)), to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of the Merger,
to the Shareholder Approval. This Agreement has been duly executed and delivered
by the Company, and, assuming the due authorization, execution and delivery by
Merger Sub and Parent, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar Laws relating to or affecting creditors generally or by
general equity principles (regardless of whether such enforceability is
considered in a proceeding inequity or at law). The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated by
this Agreement will not, (i) conflict with the articles of incorporation or
bylaws or comparable organizational documents of any of the Company Entities,
(ii) result in any breach, violation or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
creation or acceleration of any obligation or right of a third party or loss of
a benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Company Entities under, any Contract applicable to,
affecting or relating in any way to, the Company Entities or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, conflict with or violate any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company Entities or their respective properties, assets or businesses,
other than, in the case of clauses (ii) and (iii) any such conflicts,
violations, defaults, rights, losses or Liens that, individually or in the
aggregate, do not have or would not reasonably be expected to have a Company
Material Adverse Effect or that would not prevent or materially delay
consummation of the transactions contemplated by this Agreement. No consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any federal, state, or local, foreign
or supra-national government, any court, administrative, regulatory or other
governmental agency, commission or authority or any non-governmental United
States or foreign self-regulatory agency, commission or authority or any
arbitral tribunal (each, a "Governmental Entity") is required by the Company in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby, except
for: (i) the filing with the Securities and Exchange Commission (the "SEC") of
(A) a proxy statement relating to the Shareholders Meeting (such proxy
statement, as amended or supplemented from time to time, the "Proxy Statement")
and (B) such reports under Section 13(a), 13(d), 15(d) or 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the transactions contemplated
hereby; (ii) the filing of the Articles of Merger with the Department of State
of the Commonwealth of Pennsylvania; (iii) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("HSR Act"); (iv) the filing and
consents as may be required by the antitrust and competition laws of foreign
countries ("Foreign Antitrust Laws"); and (v) such consents, approvals, orders
or authorizations the failure of which to be made or obtained, individually or
in the aggregate, would not have or would not reasonably be expected to have a
Company Material Adverse Effect.
8
(e) SEC Reports and Financial Statements. The Company has filed all
required reports, schedules, forms, statements and other documents (including
exhibits and all other information incorporated therein) under the Securities
Act of 1933, as amended (the "Securities Act"), and the Exchange Act, with the
SEC (as such reports, schedules, forms, statements and documents have been
amended since the time of their filing, collectively, the "SEC Documents"). As
of their respective dates, or if amended or superseded prior to the date hereof,
as of the date of the last such amendment or filing, the SEC Documents complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents when filed, or as so amended, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents (the "Financial
Statements") (i) comply as to form, as of their respective date of filing with
the SEC, in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, (ii) have
been prepared in accordance with United States generally accepted accounting
principles ("GAAP") (except, in the case of unaudited statements) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto), and (iii) fairly present in all material respects the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and the consolidated statement of income, cash flows and
stockholders' equity for the periods then ended (subject, in the case of
unaudited statements, to normal recurring year-end audit adjustments).
9
(f) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, since December 31, 2000, (i) the Company Entities have conducted their
respective operations only in the ordinary course consistent with past practice,
(ii) there has not been a Company Material Adverse Effect and no event has
occurred or circumstance has arisen that, in combination with any other events
or circumstances, would reasonably be expected to have a Company Material
Adverse Effect, (iii) the Company Entities have not taken action that if taken
after the date of this Agreement would constitute a violation of Section 4.1,
and (iv) none of the Company Entities has received any Acquisition Proposal.
"Acquisition Proposal" means any offer, proposal, inquiry or indication of
interest (other than an offer, proposal, inquiry or indication of interest by
Parent) contemplating or otherwise relating to any Acquisition Transaction (as
defined in Section 4.2(e)).
(g) Compliance with Applicable Laws; Litigation; Orders.
(i) Except for violations of Environmental Laws (which are the
subject of Section 3.1(m)), each of the Company Entities is in
compliance in all material respects with all applicable Laws and the
operations of the Company Entities have not been and are not being
conducted in violation of any Permit (as defined below). None of the
Company Entities has received any notice, or has knowledge, of any
claim regarding any actual or possible violation of, or failure to
comply with, any applicable Law.
(ii) The Company Entities hold all material licenses, permits,
variances, consents, authorizations, waivers, grants, franchises,
concessions, exemptions, orders, registrations and approvals of
Governmental Entities or other persons necessary for the conduct of
their respective businesses as currently conducted ("Permits"). All
such Permits are valid and in full force and effect. Each Company
Entity is in substantial compliance with the terms and requirements of
such Permits. None of the Company Entities has received notice that any
Permit will be terminated or modified or cannot be renewed in the
ordinary course of business, and the Company has no knowledge of any
reasonable basis for any such termination, modification or nonrenewal.
The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will
not violate any Permit, or result in any termination, modification or
nonrenewals thereof.
(iii) (a) no Legal Proceeding involving a claim alleging
damages in excess of $100,000 is pending or, to the knowledge of the
Company, threatened and (b) none of the Company Entities (or any of
their respective properties) is subject to any order, writ, injunction,
judgment or decree with respect to the Company or any Company
Subsidiary or any of their respective properties.
10
(h) ERISA Compliance.
(i) Schedule 3.1(h)(i) of the Company Disclosure Letter sets
forth a true and complete list of each United States collective
bargaining agreement and any United States bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement,
vacation, employment, disability, death benefit, hospitalization,
medical, life, severance or other plan, agreement, arrangement or
understanding, or change of control agreement providing benefits to any
current or former employee, officer or director of the Company or any
Company Subsidiary or to which the Company or any Company Subsidiary
contributes or is obligated to contribute (collectively, the "Company
Benefit Plans"). For purposes of this Agreement, the term "Foreign
Plan" means each plan, agreement, arrangement or understanding that is
subject to or governed by the laws of any jurisdiction other than the
United States, and which would have been treated as a Company Benefit
Plan had it been a United States plan, agreement, arrangement or
understanding. Schedule 3.1(h)(i) sets forth a true and complete list
of each Foreign Plan. Other than pursuant to the terms of the Company
Benefit Plans or under applicable Laws, the Company has no material
liability with respect to any plan, arrangement or practice of the type
described in this paragraph that is not appropriately disclosed on the
Company Financial Statements.
(ii) Each Company Benefit Plan has been administered in all
material respects in accordance with its terms, all applicable laws,
including the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and the Internal Revenue Code of 1986, as amended
(the "Code"), and the terms of all applicable collective bargaining
agreements. Each Company Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service. To the Company's Knowledge,
no fact or event has occurred that is reasonably likely to materially
adversely affect the qualified status of any such Company Benefit Plan
or the exempt status of any such trust, and all contributions to, and
payments from, such Company Benefit Plans that are required to be made
in accordance with such Company Benefit Plans, ERISA or the Code have
been timely made, or are appropriately reflected on the Company's
Financial Statements. Each Company Benefit Plan intended to meet the
requirements of Section 501(c)(9) of the Code meets such requirements
in all material respects and provides no disqualified benefits (as
defined in Section 4976(b) of the Code.
(iii) Neither the Company nor any trade or business, whether
or not incorporated, which, together with the Company, would be deemed
to be a "single employer" within the meaning of Section 4001(b) of
ERISA (an "ERISA Affiliate") has incurred any liability under Title IV
of ERISA or 4971 of the Code, or has a current failure to meet the
minimum funding standards of Section 302 of ERISA or Section 412 of the
Code.
11
(iv) No Company Benefit Plan provides medical benefits
(whether or not insured) with respect to current or former employees or
officers or directors after retirement or other termination of service
except as required by applicable Laws.
(v) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event,
(A) entitle any current or former employee, officer or director of the
Company to severance pay, unemployment compensation or any other
payment, except as expressly provided in this Agreement, or (B)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee, officer or director.
(vi) Neither the Company nor any Company Subsidiary is a party
to any agreement, contract or arrangement (including this Agreement)
that could result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of
the Code. No Company Benefit Plan provides for the reimbursement of
excise taxes under Section 4999 of the Code or any income taxes under
the Code.
(vii) With respect to each Company Benefit Plan, the Company
has delivered or made available to Parent a true and complete copy of:
(A) each writing constituting a part of such Company Benefit Plan,
including, without limitation, all Company Benefit Plan documents, and
trust agreements; (B) the most recent Annual Report (Form 5500 Series)
and accompanying schedule, if any; (C) the most recent annual financial
report, if any; (D) the most recent actuarial report, if any; and (E)
the most recent determination letter from the Internal Revenue Service,
if any. Except as specifically provided in the foregoing documents
delivered or made available to Parent, there are no amendments to any
Company Benefit Plan that have been adopted or approved nor has the
Company or any Company Subsidiary undertaken to make any such
amendments or to adopt or approve any new Company Benefit Plan.
(viii) No Company Benefit Plan is a multiemployer plan (as
defined in Section 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a
plan that has two or more contributing sponsors at least two of whom
are not under common control, within the meaning of Section 4063 of
ERISA (a "Multiple Employer Plan"). None of the Company, the Company
Subsidiaries nor any of their respective ERISA Affiliates has, at any
time during the last six years, contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer Plan. None of
the Company, the Company Subsidiaries nor any ERISA Affiliates has
incurred any material withdrawal liability under a Multiemployer Plan
that has not been satisfied in full.
(ix) There are no pending or threatened claims (other than
claims for benefits in the ordinary course), lawsuits or arbitrations
that have been asserted or instituted, or to the Company's knowledge,
no set of circumstances exists that may reasonably give rise to a claim
or lawsuit, against the Company Benefit Plans, any fiduciaries thereof
with respect to their duties to the Company Benefit Plans or the assets
of any of the trusts under any of the Company Benefit Plans that have
resulted in or could reasonably be expected to result in any material
liability of the Company or any Company Subsidiaries to the Pension
Benefit Guaranty Corporation, the United States Department of Treasury,
the United States Department of Labor, any Multiemployer Plan, any
Company Benefit Plan or any participant in a Company Benefit Plan.
12
(x) With respect to each Foreign Plan: (A) all amounts
required to be reserved under each book reserved Foreign Plan have been
so reserved in accordance with reasonable accounting practices
prevailing in the country where such Foreign Plan is established; (B)
each Foreign Plan required to be registered with a Governmental Entity
has been registered, has been maintained in good standing with the
appropriate Governmental Entities, and has been maintained and operated
in accordance with its terms and applicable Law; and (C) the fair
market value of the assets of each funded Foreign Plan that is a
defined pension plan (or termination indemnity plan), and the liability
of each insurer for each Foreign Plan that is a defined benefit pension
plan (or termination indemnity plan) and is funded through insurance or
the book reserve established for each Foreign Plan that is a defined
benefit pension plan (or termination indemnity plan) that utilizes book
reserves, together with any accrued contributions, is sufficient to
procure or provide for the liability for accrued benefits with respect
to those current and former employees of the Company and the Company
Subsidiaries that participate in such Foreign Plan according to the
reasonable actuarial or other applicable assumptions and valuations
most recently used to determine employer contributions to or the funded
status or book reserve of such Foreign Plans.
(i) Taxes. Except to the extent that it would constitute a Company
Material Adverse Effect (taking all years described in this Section 3.1(i) as a
whole)
(A) All tax returns, statements, reports and forms (including
estimated tax or information returns and reports) due to be filed with
any Governmental Entity responsible for the imposition of any tax (a
"Taxing Authority") with respect to any tax period (or portion thereof)
ending on or before the date hereof by or on behalf of the Company and
Company Subsidiary (collectively, the "Returns") have, to the extent
required to be filed on or before the date hereof, been filed when due
in accordance with all applicable Laws.
(B) All taxes due with respect to all periods (or portions
thereof) covered by the Returns (whether or not shown as due and
payable on the Returns that have been filed) have been timely paid,
withheld and remitted to the appropriate Taxing Authority or provided
for in the Financial Statements.
(C) There is no action, suit or proceeding now pending and no
claim, audit or investigation now pending or, any action, suit, claim,
audit or investigation threatened against or with respect to the
Company or the Company Subsidiaries in respect of any tax.
(D) There are no liens for taxes upon the assets of the
Company and its Company Subsidiaries, except liens for current taxes
not yet due.
(E) The Company and the Company Subsidiaries have withheld and
paid all taxes required to have been withheld and paid in connection
with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party.
13
(F) Neither the Company nor any Company Subsidiary has ever
been a party to any transaction characterized as a "safe harbor" lease
under the Internal Revenue Code or has ever filed an election under
section 341(f) of the Code.
(G) There is no basis on which the Internal Revenue Service
could successfully require the Company or any Company Subsidiary to
change any of the accounting methods it uses in determining its taxable
income or liability for taxes, and there has been no such change in the
five years preceding the date hereof.
(H) Neither the Company nor any Company Subsidiary has, within
four years of the date hereof, been either the distributing corporation
or the controlled corporation in a transaction intended to qualify as a
tax-free transaction under section 355 of the Code.
(I) Neither the Company nor any of the Company Subsidiaries
has any liability for taxes of any person (other than the Company and
the Company Subsidiaries under Treasury Regulation Section 1.1502-6 (or
any comparable provision of state or local or foreign Law)), and
(J) Neither the Company nor any Company Subsidiary is a party
to any agreement relating to the allocation or sharing of taxes.
As used in this Agreement, "tax" or "taxes" include all federal, state
or local or foreign net and gross income, alternative or add-on minimum,
environmental, gross receipts, ad valorem, value added, goods and services,
capital stock, profits, license, single business, employment, severance, stamp,
unemployment, customs, property, sales, excise, use, occupation, service,
transfer, payroll, franchise, withholding and other taxes or similar
governmental duties, charges, fees, levies or other assessments, including any
interest, penalties or additions with respect thereto.
(j) State Takeover Statutes. The Board of Directors of the Company (at
a meeting duly called and held) has (i) unanimously determined that the Merger
is fair and in the best interests of the Company and its shareholders, (ii)
unanimously authorized and approved the execution, delivery and performance of
this Agreement by the Company and unanimously approved the Merger, and (iii)
unanimously recommended the adoption of this Agreement by the holders of Common
Stock and directed that this Agreement and the Merger be submitted for
consideration by the Company's shareholders at the Shareholders Meeting (as
defined in Section 5.1(b)). The Board of Directors of the Company authorized
this Agreement and the transactions contemplated hereby and thereby, including
the Merger, prior to Parent or Merger Sub becoming an "interested shareholder"
as defined in Section 2553 of the PBCL. Other than opting out of any of the
subchapters of the PBCL, the Company has taken all action necessary to render
the provisions of any anti-takeover statute, rule or regulation that may be
applicable to the transactions contemplated by this Agreement (including Section
2538 and Subchapters E, F, G, H, I and J of Chapter 25 of the PBCL but excluding
the provisions of Subchapter D of Chapter 15) inapplicable to Parent, Merger Sub
and their respective affiliates, and to the Merger and this Agreement and the
transactions contemplated hereby and thereby. As a result of the foregoing
actions, the only corporate action required to authorize the Merger is the
Shareholder Approval and no further action is required to authorize the Merger
and the transactions contemplated by this Agreement.
14
(k) Voting Requirement. The affirmative vote of a majority of the votes
cast by all shareholders entitled to vote at the Shareholders Meeting (the
"Shareholder Approval") is the only vote of the holders of any class or series
of the Company's capital stock necessary to adopt and approve this Agreement,
the Merger and the transactions contemplated hereby.
(l) Brokers. Except for Morgan Stanley Dean Witter, whose fees,
commissions and expenses are the sole responsibility of the Company, no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has furnished to
Parent accurate and complete copies of all agreements under which any such fees,
commissions or other amounts have been paid to or may become payable to Morgan
Stanley Dean Witter and all indemnification and other agreements related to the
engagement of Morgan Stanley Dean Witter.
(m) Environmental Matters.
(i) The Company Entities are in compliance in all material
respects with all applicable Environmental Laws.
(ii) There are no written (or, to the knowledge of the
Company, other) Environmental Claims pending or, to the knowledge of
the Company, threatened, against the Company or any of the Company
Subsidiaries.
(iii) Prior to and during the period of ownership, lease or
operation by the Company or the Company Subsidiaries, to the knowledge
of the Company, no Hazardous Substance was released onto or from or
disposed of on to any currently or previously owned, leased or operated
property.
(iv) None of the Company or the Company Subsidiaries has
received from any Governmental Entity or other third party any written
(or, to the knowledge of the Company, oral) notice that any of them is
or may be a potentially responsible party in respect of or may
otherwise bear liability for any actual or threatened Release of
Hazardous Substance at any site or facility that is or has been listed
on the National Priorities List, the Comprehensive Environmental
Response, Compensation and Liability Information System or any similar
or analogous federal, state, provincial, territorial, municipal,
county, or local list, schedule, inventory or database of Hazardous
Substance sites or facilities.
(v) None of the Company or the Company Subsidiaries has
transported wastes or spent materials for recycling, treatment, storage
or disposal.
(vi) None of the property owned by the Company or the Company
Subsidiaries contains any asbestos-containing material, equipment or
containers containing polychlorinated biphenyls, or underground storage
tank systems, nor is the Company or the Company Subsidiaries
responsible for the repair, removal or replacement of such material,
equipment, containers or tank systems at any other property.
15
(vii) As used in this Agreement:
(A) the term "Environmental Claim" means any written demand,
lawsuit, action, proceeding, arbitration, investigation or notice to
any of the Company Entities by any person alleging any potential
liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs,
natural resource damages, or penalties) arising out of any
Environmental Law;
(B) the term "Environmental Laws" means all Laws relating to
protection of the environment or human health, including any Law
relating to Releases or threatened Releases of Hazardous Substances, or
to the manufacture, generation, processing, distribution, use, sale,
treatment, receipt, storage, disposal, transport or other handling of
Hazardous Substances, including the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource Conversation
and Recovery Act, and the Occupational Safety and Health Act;
(C) the term "Hazardous Substance" means (1) pollutants,
contaminants, hazardous wastes, toxic substances, and oil and petroleum
products, (2) any substance that is or contains friable asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon gas, (3) any substance
that is defined, listed or identified as a "hazardous waste" or
"hazardous substance" or as toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise
hazardous under any Environmental Law;
(D) the term "Release" means any releasing, disposing,
discharging, injecting, spilling, leaking, pumping, dumping, emitting,
escaping, emptying, migration, transporting or placing, including into
or upon, any land, soil, surface water, ground water or air, or
otherwise entering into the environment.
(n) No Company Rights Agreement. The Company is not subject to a
shareholder rights agreement, poison pill or similar obligation, agreement, plan
or arrangement.
(o) Proxy Statement. The Proxy Statement at the date mailed to Company
shareholders and at the time of the Shareholders Meeting (i) will not 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 the light of the circumstances under which they are made, not
misleading and (ii) will comply in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder; except that no
representation is made by the Company with respect to statements made in the
Proxy Statement based on information supplied in writing by Parent or Merger Sub
specifically for inclusion in the Proxy Statement.
16
(p) Proprietary Assets. Except as would not reasonably be expected to
have a Company Material Adverse Effect: (a) the Company and each of the Company
Subsidiaries owns, or is licensed to use (in each case, free and clear of any
Liens), any Intellectual Property (as defined below) necessary for the conduct
of its business as currently conducted; (b) to the knowledge of the Company, the
use of any Intellectual Property by the Company and the Company Subsidiaries
does not infringe on or otherwise violate the rights of any Person and is in
accordance with any applicable license pursuant to which the Company or any
Company Subsidiary acquired the right to use any Intellectual Property; (c) to
the knowledge of the Company, no person is challenging, infringing on or
otherwise violating any right of the Company or any of the Company Subsidiaries
with respect to any Intellectual Property owned by and/or licensed to the
Company or any Company Subsidiaries; and (d) neither the Company nor any Company
Subsidiaries has received any written notice of any pending claim with respect
to any Intellectual Property used by the Company and any Company Subsidiaries
and to its knowledge no Intellectual Property owned and/or licensed by the
Company or any Company Subsidiary is being used or enforced in a manner that
would result in the abandonment, cancellation or unenforceability of such
Intellectual Property. For purposes of this Agreement, "Intellectual Property"
means trademarks, service marks, brand names, certification marks, trade dress
and the goodwill associated with the foregoing and registrations in any
jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such
registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in part
and renewal applications), and any renewals, extensions or reissues thereof, in
any jurisdiction; trade secrets and rights in any jurisdiction to limit the use
or disclosure thereof by any person; copyrights in any jurisdiction;
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; and any claims or causes
of action arising out of or relating to any infringement or misappropriation of
any of the foregoing.
(q) Opinion of Financial Advisor. The Company's Board of Directors has
received the opinion of Morgan Stanley Dean Witter, dated the date of this
Agreement, to the effect that, as of such date, the Merger Consideration is fair
from a financial point of view to holders of shares of Common Stock. A signed
copy of such opinion will be made available to Parent promptly after the date
hereof.
(r) Labor Agreements. Schedule 3.1(r) of the Company Disclosure Letter
sets forth a true and complete list of each collective bargaining agreement or
other labor agreement with any union or labor organization to which the Company
or any of the Company Subsidiaries is a party in the United States. To the
knowledge of the Company, neither the Company nor any Company Subsidiary knows
of any activity or proceeding of any labor organization (or representative
thereof) to organize any of its or their employees. Except as would not
reasonably be expected to have a Material Adverse Effect, the Company and the
Company Subsidiaries are not, and have not been, subject to any pending, or to
the knowledge of the Company, threatened (i) unfair labor practice, employment
discrimination or other complaint, (ii) strike, lockout or dispute, slowdown or
work stoppage or (iii) claim, suit, action or governmental investigation, in
respect of which any director, officer, employee or agent of the Company or any
of the Company Subsidiaries is or may be entitled to claim indemnification from
the Company or any Company Subsidiary. To the knowledge of the Company, no event
has occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute other than stoppages or disputes that would not
reasonably be expected to have a Company Material Adverse Effect. The Company
and each Company Subsidiary has complied in all material respects with all Laws
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closing other than such noncompliance that would not reasonably be expected to
have a Company Material Adverse Effect. Neither the Company nor any Company
Subsidiary is liable for the payment of any compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for failure to comply with any
of the foregoing other than the payment of amounts that would not reasonably be
expected to have a Company Material Adverse Effect.
17
(s) Contracts. As of the date hereof, neither the Company nor any
Company Subsidiary is a party to or bound by (i) any "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) or (ii)
any non-competition agreement or any other agreement or arrangement that limits
or otherwise restricts the Company or any Company Subsidiary or that would,
after the Effective Time, to the knowledge of the Company, limit or restrict the
Surviving Corporation or any of its subsidiaries from engaging or competing in
any line of business or in any geographic area.
(t) Real Property; Assets.
(i) Section 3.1(t)(i) of the Company Disclosure Letter
contains a true and complete list of each parcel of real property owned
by the Company and the Company Subsidiaries (the "Owned Real
Property"). The Company or a Company Subsidiary has good and marketable
fee simple title to all such Owned Real Property. The Company has made
available to Parent true and complete copies of all documents
evidencing the ownership interest of the Company in the Owned Real
Property.
(ii) Section 3.1(t)(ii) of the Company Disclosure Letter
contains a true and complete list and brief description of all material
real property leased by the Company and the Company Subsidiaries, all
of which are hereinafter referred to as the "Leased Real Property." The
Company or a Company Subsidiary has a valid leasehold interest in or
valid rights to all Leased Real Property. The Company has made
available to Parent true and complete copies of all leases of the
Leased Real Property (the "Leases"). No option, extension or renewal
has been exercised under any Lease except options, extensions or
renewals whose exercise has been evidenced by a written document, a
true and complete copy of which has been made available to Parent with
the corresponding Lease. Each of the Company and the Company
Subsidiaries has complied in all material respects with and is not in
material default under the terms of all Leases to which it is a party
and under which it is in occupancy, and all such Leases are valid and
in full force and effect. The lessors under the Leases to which the
Company or a Company Subsidiary is a party have complied in all
material respects with and are not in material default under the terms
of their respective Leases. Each of the Company and the Company
Subsidiaries enjoys peaceful and undisturbed possession under all such
Leases.
18
(iii) None of the Owned Real Property Leases or Leased Real
Property is subject to any Liens (whether absolute, accrued, contingent
or otherwise) except for Permitted Liens. "Permitted Liens" means,
collectively, (i) liens or other encumbrances securing real estate
taxes and assessments, all of which are not yet due and payable or
which are currently being contested in good faith or (ii) liens or
other encumbrances of a character that do not materially detract from
the value of the real property subject thereto, or materially impair
the operation of the Company or its subsidiaries or detract from its
business.
(iv) The Company has good and valid title to all material
personal property, improvements on the Owned Real Property, assets and
rights relating to or used or held for use in connection with the
business of the Company and the Company Subsidiaries and such material
personal property, improvements, assets and rights comprise all of the
assets required for the conduct of the business of the Company and the
Company Subsidiaries as currently being conducted.
(v) With respect to the Owned Real Property and the Leased
Real Property (collectively, the "Real Property"):
(A) Regarding all documents which evidence, secure or
otherwise relate to the Real Property (collectively, the "Real
Property Documents"): (a) there is no material default (or
alleged default) thereunder by any of the parties thereto, nor
has any event occurred which, with the passage of time or
notice, or both, would constitute a material default
thereunder or a violation of the terms (or permit the
termination) thereof; and (b) none of the transactions or
documents required or contemplated by this Agreement will
constitute or create a default or event of default thereunder
(or permit the termination thereof or require third party
approval or other action pursuant thereto); and none of the
Real Property Documents will be amended or terminated by any
of the Company Entities without the prior written consent of
Parent;
(B) None of the Company Entities has leased or
sublet, as lessor or sublessor, and no third party is in
possession of, or has the right of use of occupancy of any
portion of, any of the Real Property, and neither the whole
nor any portion of any tract of the Real Property has been
condemned, requisitioned or otherwise taken by any
Governmental Entity and, to the knowledge of each of the
Company Entities, no such condemnation, requisition or taking
is threatened or contemplated;
(C) Each Real Property comprises a single contiguous
parcel of land with no intervening strips, parcels or
easements between such Real Property and the public roads
adjacent to such Real Property;
(D) No written notice of any increase in the assessed
valuation of the Real Property, and no written notice of any
contemplated special assessment, has been received by any of
the Company Entities and, to the knowledge of each of the
Company Entities, there is no threatened special assessment
pertaining to any of the Real Property;
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(E) There are no contracts or agreements to which any
of the Company Entities is a party, or by which any of the
Real Property is bound, granting to any person the right of
use or occupancy of any portion of the Real Property; and
(F) All accounts for work and services performed and
materials placed or furnished upon or in respect of the Real
Property at the request of any of the Company Entities are
fully paid and satisfied and no person is entitled to a claim
of any mechanics or materialman's liens.
(u) Liabilities. None of the Company Entities has any accrued,
contingent or other liabilities of any nature, either matured or unmatured,
other than those liabilities that would not reasonably be expected to have a
Company Material Adverse Effect, except for: (i) liabilities, as and to the
extent disclosed or reserved against, on the Company's audited December 31, 2000
balance sheet incorporated by reference in its Annual Report of Form 10-K filed
with the SEC for the fiscal year ended December 31, 2000 or the notes thereto;
and (ii) liabilities that have been incurred by the Company Entities since
December 31, 2000 in the ordinary course of business and consistent with past
practices.
(v) Certain Business Practices. None of the Company Entities nor any
director, officer, agent or employee of any of the Company Entities has (i) used
any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or (iii) made any other unlawful payment
other than those payments that would not reasonably be expected to have a
Company Material Adverse Effect.
(w) Insurance. The Company has delivered to Parent a copy of all
material insurance policies and all material self insurance programs and
arrangements relating to the business, assets and operations of the Company
Entities. Each of such insurance policies is in full force and effect. Since
January 1, 2000, none of the Company Entities has received any notice or other
communication regarding any actual or possible (i) cancellation or invalidation
of any insurance policy, (ii) refusal of any coverage or rejection of any
material claim under any insurance policy, or (iii) material adjustment in the
amount of the premiums payable with respect to any insurance policy. There is no
pending workers' compensation or other claim under or based upon any insurance
policy of any of the Company Entities.
(x) Transactions with Affiliates. Between the date of the Company's
last proxy statement filed with the SEC and the date of this Agreement, no event
has occurred that would be required to be reported by the Company pursuant to
Item 404 of Regulation S-K promulgated by the SEC.
20
(y) No Existing Discussions. None of the Company Entities, and no
representative of any of the Company Entities, is engaged, directly or
indirectly, in any discussions or negotiations with any other person relating to
an Acquisition Proposal.
Section 3.2 Representations and Warranties of Parent and Merger Sub.
Parent and Merger Sub hereby represent and warrant to the Company as follows:
(a) Organization and Standing. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, in the case of Parent, and the Commonwealth of
Pennsylvania, in the case of Merger Sub.
(b) Authority; Noncontravention. Parent and Merger Sub have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Parent and Merger Sub, and the consummation by
Parent and Merger Sub of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub. This Agreement has been duly executed and delivered by Parent and Merger
Sub, and, assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of Parent and Merger
Sub, as applicable, enforceable against Parent and Merger Sub in accordance with
its terms. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement, will not conflict with the respective
certificate of incorporation or bylaws or comparable organizational documents of
Parent and Merger Sub. No consent, approval, order or authorization of, action
by or in respect of, or registration, declaration or filing with, any
Governmental Entity is required by Parent and Merger Sub in connection with the
execution and delivery of this Agreement by Parent and Merger Sub or the
consummation by Parent and Merger Sub of the transactions contemplated hereby,
except for (i) the filing of a premerger notification and report form under the
HSR Act; (ii) the filing of the Articles of Merger with the Department of State
of the Commonwealth of Pennsylvania; (iii) the filings and consents as may be
required by Foreign Antitrust Laws; and (iv) such consents, approvals, orders or
authorizations the failure of which to be made or obtained, individually or in
the aggregate, would not reasonably be expected to prevent or delay the
consummation by Parent or Merger Sub of the transactions contemplated by this
Agreement.
(c) Brokers. Except for Credit Suisse First Boston, whose fees,
commissions and expenses are the sole responsibility of Parent and Merger Sub,
no broker, investment banker, financial advisor or other person is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Merger Sub or Parent.
(d) Financing. Parent and Merger Sub, collectively, have obtained
written commitments (the "Commitment Letter") from Credit Suisse First Boston to
provide any required financing in an amount not less than the full amount of the
Merger Consideration and the Option Consideration, a copy of which has been
provided by Parent to the Company. As of the date of this Agreement, neither
Parent nor Merger Sub is aware of any facts or circumstances that (i) contradict
or are in conflict with the terms and conditions set forth in the Commitment
Letter or (ii) create a reasonable basis for either Parent or Merger Sub to
believe that it will not be able to obtain financing in accordance with the
terms of the Commitment Letter.
21
(e) Information in Proxy Statement. None of the information supplied by
Parent or Merger Sub for inclusion in the Proxy Statement will, on the date the
Proxy Statement is mailed to shareholders and at the time of the Shareholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
(f) Parent SEC Reports and Financial Statements. Parent has filed all
required reports, schedules, forms, statements and other documents (including
exhibits and all other information incorporated therein) under the Securities
Act, and the Exchange Act, with the SEC (as such reports, schedules, forms,
statements and documents have been amended since the time of their filing,
collectively, the "Parent SEC Documents"). As of their respective dates, or if
amended or superseded prior to the date hereof, as of the date of the last such
amendment or filing, the Parent SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to such Parent SEC Documents, and none of the Parent SEC Documents when filed,
or as so amended, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. The financial statements of Parent included in the
Parent SEC Documents (i) comply as to form, as of their respective date of
filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, (ii) have been prepared in accordance with GAAP (except, in the case of
unaudited statements applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto), and (iii) fairly present in
all material respects the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and the consolidated statement
of income, cash flows and stockholders' equity for the periods then ended
(subject, in the case of unaudited statements, to normal recurring year-end
audit adjustments).
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.1 Conduct of Business.
(a) Conduct of Business by the Company. Except as consented to in
writing by Parent, during the period from the date of this Agreement to the
Effective Time, the Company shall carry on its business, and shall cause the
Company Subsidiaries to carry on their respective businesses, in the ordinary
course consistent with past practice and, to the extent consistent therewith,
use all reasonable efforts to keep available the services of its current
officers and other key employees and preserve its relationships with customers,
suppliers, distributors and other persons having business dealings with them.
Without limiting the generality of the foregoing (but subject to the above
exceptions), during the period from the date of this Agreement to the Effective
Time, the Company shall not, and shall not permit any Company Subsidiary, to:
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(i) (A) other than dividends and distributions by a direct or indirect
wholly-owned Company Subsidiary to its parent or the Company's regularly
scheduled quarterly dividend in accordance with past practice, declare, set
aside or pay any dividends on, or make any other distributions in respect of,
any of its capital stock, or (B) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, except for
issuances of Common Stock upon the valid exercise of the Options or other rights
under the Equity Plans, in each case which are disclosed on Schedule 3.1(c) of
the Company Disclosure Letter as outstanding on the date hereof;
(ii) issue, deliver, sell, pledge or otherwise encumber or subject to
any Lien any shares of its capital stock, any other voting securities or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities, other than the issuance of shares of Common Stock upon the valid
exercise of the Options or other rights under the Equity Plans or in connection
with other awards under the Equity Plans, in each case, which are disclosed on
Schedule 3.1(c) of the Company Disclosure Letter as outstanding on the date
hereof and in accordance with their present terms, or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or other
securities;
(iii) amend its articles of incorporation, bylaws or other comparable
organizational documents, form any subsidiary or acquire any equity interest or
other interest in any other person, or effect or be a party to any merger,
consolidation, share exchange, business combination, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(iv) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets other than in
the ordinary course of business consistent with past practice;
(v) enter into commitments for capital expenditures other than in the
ordinary course of business except as may be necessary for the maintenance of
existing facilities, machinery and equipment in good operating condition and
repair in the ordinary course of business as reflected in the capital plan of
the Company previously provided to Parent;
(vi) (A) incur any long-term indebtedness (whether evidenced by a note
or other instrument, pursuant to a financing lease, sale-leaseback transaction,
guarantee or otherwise) or (B) incur short-term indebtedness in the ordinary
course of business consistent with past practice under lines of credit existing
on the date hereof;
(vii) (A) except for normal increases in salary and wages in the
ordinary course of business consistent with past practice or as set forth on
Schedule 4.1 of the Company Disclosure Letter, grant any increase in the
compensation or benefits payable or to become payable by the Company or any
Company Subsidiary to any current or former director, officer, employee or
consultant; (B) adopt, enter into, amend or otherwise increase, reprice or
accelerate the payment or vesting of the amounts, benefits or rights payable or
accrued or to become payable or accrued under any bonus, incentive compensation,
deferred compensation, severance, termination, change in control, retention,
hospitalization or other medical, life, disability, insurance or other welfare,
profit sharing, stock option, stock appreciation right, restricted stock or
other equity-based, pension, retirement or other employee compensation or
benefit plan, program, agreement or arrangement; (C) enter into or amend any
employment or collective bargaining agreement or, except as required in
accordance with the existing written policies of the Company or contracts or
agreements entered into or approved (and previously disclosed to Parent) on or
prior to the date of this Agreement, grant any severance or termination pay to
any officer, director, consultant or employee of the Company or any Company
Subsidiaries; or (D) pay or award any pension, retirement, allowance or other
non-equity incentive awards, or other employee benefit not required by any
outstanding employee benefit plan or arrangement;
23
(viii) change the accounting principles used by it unless required by
GAAP (or, if applicable with respect to foreign subsidiaries, foreign generally
accepted accounting principles);
(ix) except as otherwise expressly permitted in this Agreement, acquire
by merging or consolidating with, by purchasing any equity interest in or a
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof, or otherwise acquire any material amount of assets of any other person
(other than the purchase of assets from suppliers or vendors in the ordinary
course of business consistent with past practice);
(x) except in the ordinary course of business consistent with past
practice, make or rescind any express or deemed election or settle or compromise
any claim or action relating to U.S. federal, state or local taxes, or change
any of its methods of accounting or of reporting income or deductions for U.S.
federal income tax purposes;
(xi) satisfy any claims or liabilities, other than the satisfaction, in
the ordinary course of business consistent with past practice, in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes thereto) of
the Company included in the Recent SEC Documents or incurred in the ordinary
course of business consistent with past practice;
(xii) make any loans, advances or capital contributions to, or
investments in, any other person, except for loans, advances, capital
contributions or investments between any wholly-owned Company Subsidiary and the
Company or another wholly-owned Company Subsidiary;
(xiii) other than in the ordinary course of business consistent with
past practice, (A) modify, amend or terminate any Contract, (B) waive, release,
relinquish or assign any Contract (or any of the Company's rights thereunder),
right or claim, (C) cancel or forgive any indebtedness owed to the Company or
any Company Subsidiary or (D) commence or settle any Legal Proceeding (as
defined in Section 8.5(f)); provided, however, that the Company may not under
any circumstance waive or release any of its rights under any confidentiality or
standstill agreement to which it is a party;
24
(xiv) except in the ordinary course of business consistent with past
practice, write off as uncollectible or establish an extraordinary reserve with
respect to any account receivable or any indebtedness; or
(xv) authorize, or commit or agree to take, any of the foregoing
actions.
(b) Other Actions. Except as required by law, the Company and Parent
shall not, and shall not permit any of their respective Subsidiaries to,
voluntarily take any action that would, or that could reasonably be expected to,
result in (i) any of the representations and warranties of such party set forth
in this Agreement that are qualified as to materiality becoming untrue, (ii) any
of such representations and warranties that are not so qualified becoming untrue
in any material respect or (iii) any of the conditions to the consummation of
the transactions contemplated hereby not being satisfied.
(c) Advice of Changes. The Company and Parent shall promptly advise the
other party of any change or event having, or which, insofar as can reasonably
be foreseen, could reasonably be expected to have, a material adverse effect on
such party or on the truth of their respective representations and warranties or
the ability of the conditions to the consummation of the transactions
contemplated hereby to be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties (or remedies with respect thereto) or the conditions
to the obligations of the parties under this Agreement.
Section 4.2 No Solicitation.
(a) The Company shall immediately cease all existing activities,
discussions and negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal.
(b) The Company shall not, and shall not authorize or permit any of the
Company Subsidiaries or any of its or their directors, officers, employees,
agents or representatives (including any investment banker, financial advisor,
attorney or accountant), directly or indirectly, to (i) solicit, initiate,
encourage, induce or knowingly facilitate, or furnish or disclose non-public
information in connection with or in furtherance of, any inquiries or the
making, submission or announcement of an Acquisition Proposal or take any action
that would reasonably be expected to lead, directly or indirectly, to an
Acquisition Proposal, or (ii) negotiate, explore or otherwise engage in
discussions with any person (other than Parent, Merger Sub or their respective
directors, officers, employees, agents and representatives) with respect to any
Acquisition Proposal or (iii) enter into any letter of intent or similar
document or any Contract contemplating or otherwise relating to any Acquisition
Proposal or (iv) subject to Section 4.2(c) below, approve, endorse or recommend
any Acquisition Proposal; provided that, at any time prior to the Shareholder
Approval, if the Board of Directors of the Company determines in good faith,
after consultation with and receipt of written advice from its outside counsel
as to the nature of the fiduciary duties of the Board of Directors under
applicable Law, that such action is consistent with the fiduciary obligations of
the Board of Directors of the Company under applicable Law, the Company may
furnish, pursuant to a customary confidentiality agreement with terms not
substantially more favorable to such third party than the Confidentiality
Agreement (as defined in Section 5.2) (and which shall not contain any
exclusivity provisions that would prohibit the Company from complying with the
obligations under this Section 4.2 or otherwise under this Agreement),
information to or enter into discussions with, any third party who delivers a
Superior Proposal that did not result from a breach of this Section 4.2(b) of
this Agreement. Without limiting the foregoing, the Company shall advise its
directors and officers of the restrictions set forth in this Section 4.2, and
shall use reasonable best efforts to cause such persons to comply with such
restrictions.
25
(c) If prior to the Shareholder Approval, the Board of Directors of the
Company receives a Superior Proposal that did not result from a breach of
Section 4.2(b) of this Agreement, the Board of Directors of the Company may
(subject to this and the following sentences), if it determines in good faith,
after consultation with and receipt of written advice from its outside counsel
as to the nature of the fiduciary duties of the Board of Directors under
applicable Law, that such action is consistent with the fiduciary obligations of
the Board of Directors of the Company under applicable Law, withdraw, modify or
change, in a manner adverse to Parent, its recommendation of this Agreement
and/or recommend a Superior Proposal to the shareholders of the Company and/or
comply with Rule 14e-2 promulgated under the Exchange Act with respect to any
Acquisition Proposal, provided that it (i) gives Parent four Business Days prior
written notice of its intention to do so (provided that the foregoing in no way
limits or otherwise affects Parent's right to terminate this Agreement pursuant
to Section 7.1(e) at such time as the requirements of such subsection have been
met) and (ii) during such four Business Day period, the Company otherwise
cooperates with Parent with respect to the Acquisition Proposal that constitutes
a Superior Proposal with the intent of enabling Parent to engage in good faith
negotiations so that the transactions contemplated hereby may be consummated.
Any such withdrawal, modification or change of the recommendation of the Board
of Directors of the Company of this Agreement will not change the approval of
the Board of Directors of the Company of this Agreement or the Merger,
including, without limitation, for purposes of causing any state takeover
statute or other Law to be inapplicable to the transactions contemplated hereby,
including the Merger. Nothing in this Section 4.2 (i) permits the Company to
terminate this Agreement, (ii) permits the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
("Acquisition Agreement") with respect to any Acquisition Proposal (whether or
not it constitutes a Superior Proposal) or (iii) affects any other obligation of
the Company under this Agreement.
(d) From and after the execution of this Agreement, the Company shall
promptly advise Parent, orally and in writing, of the receipt, directly or
indirectly, of any inquiries, discussions, negotiations or proposals relating to
an Acquisition Proposal (including the specific terms thereof and the identity
of the other party or parties involved) and promptly furnish to Parent a copy of
any such written proposal in addition to any information, including
correspondence and draft agreements, provided to or by any third party relating
thereto. In addition, the Company shall promptly advise Parent, orally and in
writing, if the Board of Directors of the Company makes any determination as to
any Acquisition Proposal as contemplated by the proviso to the first sentence of
Section 4.2(b).
(e) As used herein, the term (i) "Acquisition Transaction" means any
transaction or series of transactions involving: (A) any merger, consolidation,
share exchange, business combination, issuance of securities, acquisition of
securities, tender offer, exchange offer or other similar transaction (1) in
which any of the Company Entities is a constituent corporation, (2) in which a
person or "group" (as defined in the Exchange Act and the rules promulgated
thereunder) of persons directly or indirectly acquires beneficial or record
ownership of securities representing more than 10% of the outstanding securities
of any class of voting securities of any of the Company Entities, or (3) in
which any of the Company Entities issues or sells securities representing more
than 10% of the outstanding securities of any class of voting securities of any
of the Company Entities; or (B) any sale (other than sales of inventory in the
ordinary course of business), lease (other than in the ordinary course of
business), exchange, transfer (other than sales of inventory in the ordinary
course of business), license (other than nonexclusive licenses in the ordinary
course of business), acquisition or disposition of any business or businesses or
assets that constitute or account for 10% or more of the consolidated net
revenues, net income or assets of the Company Entities; and (ii) "Superior
Proposal" means an unsolicited, bona fide written Acquisition Proposal on terms
that the Board of Directors of the Company determines in its good faith
judgment, would be (A) after consulting with and receipt of advice from a
nationally recognized investment banking firm, superior to the shareholders of
the Company from a financial point of view than the transactions contemplated by
this Agreement (including any adjustment to the terms and conditions proposed by
Parent or Merger Sub in response to such written offer) and (B) more favorable
to the Company and the shareholders of the Company (taking into account all
financial and strategic considerations, including relevant legal, financial,
regulatory and other aspects of such proposal, the third party making such
proposal, the conditions of such proposal and all constituencies and pertinent
factors permitted under the PBCL) and for which financing, to the extent
required, is then committed, and that the Board of Directors reasonably expects
a transaction pursuant to such proposal could be consummated.
26
(f) The Company agrees not to release or permit the release of any
person from, or to waive or permit the waiver of any provision of, any
confidentiality, "standstill" or similar agreement to which any of the Company
Entities is a party, and will use its best efforts to enforce or cause to be
enforced each such agreement at the request of Parent.
ARTICLE 5
ADDITIONAL AGREEMENTS
Section 5.1 Preparation of Proxy Statement; Shareholders Meeting.
(a) As soon as reasonably practicable following the date of this
Agreement, the Company shall prepare and file with the SEC, and Parent and
Merger Sub shall cooperate with the Company in such preparation and filing of,
the Proxy Statement. The Company shall use reasonable best efforts to cause the
Proxy Statement to be mailed to the Company's shareholders as promptly as
practicable after the Proxy Statement is cleared by the staff of the SEC for
mailing to the Company's shareholders.
(b) The Company shall, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Shareholders Meeting") in accordance with applicable Law and
the Company's articles of incorporation and bylaws for the purpose of obtaining
Shareholder Approval with respect to this Agreement and the Merger and shall,
through the Board of Directors of the Company, subject to Section 4.2(c),
recommend to its shareholders the approval and adoption of this Agreement, the
Merger and the other transactions contemplated hereby. Without limiting the
generality of the foregoing, but subject to its rights under Section 4.2, the
Company agrees that its obligations pursuant to the first sentence of this
Section 5.1(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to the Company of any Acquisition Proposal.
Notwithstanding any withdrawal, modification or change in any approval or
recommendation of the Board of Directors of the Company, the Company shall hold
the Shareholders Meeting pertaining to this Section 5.1(b). The Company shall
ensure that all proxies solicited in connection with the Shareholders Meeting
are solicited in compliance with all applicable Laws.
27
(c) Parent shall (i) provide the Company with all information
concerning Parent or the Merger Sub reasonably requested by the Company to be
included in the Proxy Statement and (ii) at the Shareholders Meeting, if held,
or any postponement or adjournment thereof (or at any other meeting at which the
Merger or this Agreement are considered by shareholders), vote, or cause to be
voted, all of the shares of Common Stock then owned by it, the Merger Sub or any
of its other subsidiaries, if any, in favor of the approval and adoption of this
Agreement and the transactions contemplated hereby.
Section 5.2 Access to Information; Confidentiality. To the extent
permitted by applicable Law and subject to the Agreement dated April 19, 2000,
between the Company and Parent (the "Confidentiality Agreement"), and any
confidentiality or similar agreement binding on any Company Entity, upon
reasonable notice, the Company shall afford to Parent and to the officers,
employees, accountants, counsel, financial advisors and other representatives of
Parent, reasonable access during normal business hours during the period prior
to the Effective Time to all of the Company's properties, books, contracts,
commitments, personnel and records, consistent with its legal obligations, and
all other information concerning its business, properties and personnel as
Parent may reasonably request. Each of the Company and Merger Sub shall hold,
and shall cause its respective officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold, any
nonpublic information in accordance with the terms of the Confidentiality
Agreement.
Section 5.3 Efforts; Cooperation.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement and to obtain satisfaction or waiver of the conditions precedent to
the Merger, including (i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all consents,
approvals or waivers from third parties necessary for the consummation of the
Merger, (iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. Nothing set forth in this
Section 5.5(a) will limit or affect actions permitted to be taken pursuant to
Section 4.2.
28
(b) Parent and the Company shall (i) make the filings required of such
party under the HSR Act with respect to the Merger and the other transactions
contemplated by this Agreement within ten days after the date of this Agreement,
(ii) comply at the earliest practicable date with any request under the HSR Act
for additional information, documents or other materials received by such party
from the Federal Trade Commission or the Department of Justice or any other
Governmental Entity in respect of such filings or the Merger and the other
transactions contemplated by this Agreement, and (iii) cooperate with the other
party in connection with making any filing under the HSR Act and in connection
with any filings, conferences or other submissions related to resolving any
investigation or other inquiry by any such Governmental Authority under the HSR
Act with respect to the Merger and the other transactions contemplated by this
Agreement; provided, however, that in no event will Parent by required to
prosecute any litigation instituted by the Federal Trade Commission or the
Department of Justice or any other Governmental Entity which seeks to restrain
or prohibit the consummation of the Merger or which seeks to impose material
limitations on the ability of Buyer, the Surviving Corporation or any of their
respective affiliates or Subsidiaries to acquire, operate or hold, or to require
Parent, Surviving Corporation or any of their respective affiliates or
Subsidiaries to dispose of or hold separate, any material portion of their
assets or business or the Company's assets or business.
Section 5.4 Indemnification.
(a) For six years after the Effective Time, the Surviving Corporation
shall indemnify and hold harmless, and provide advancement of expenses to, all
past and present directors, officers and employees of the Company and any of the
Company Subsidiaries to the same extent such persons are indemnified or have the
right to advancement of expenses as of the date of this Agreement by the Company
and any of the Company Subsidiaries pursuant to the Company's or any such
Company Subsidiary's certificate of incorporation, by-laws or other constituent
documents and indemnification agreements, if any, in existence on the date
hereof with any such directors, officers and employees for acts or omissions
occurring at or prior to the Effective Time (including for acts or omissions
occurring in connection with the approval of this Agreement and the consummation
of the transactions contemplated hereby).
(b) For six years after the Effective Time, the Surviving Corporation
or Parent shall maintain in effect directors' and officers' liability insurance
and fiduciary liability insurance covering acts or omissions occurring on or
prior to the Effective Time (including for acts or omissions occurring in
connection with the approval of this Agreement and the consummation of the
transactions contemplated hereby) with respect to those persons who are
currently covered by the Company's directors' and officers' liability insurance
policy (a copy of which has been heretofore delivered to Parent) on terms with
respect to such coverage and amount no less favorable to the insured than those
of such current insurance coverage; provided, however, that in no event will
Parent be required to expend in any one year an amount in excess of 200% of the
annual premiums currently paid by the Company for such insurance; and provided,
further, that, if the annual premiums of such insurance coverage exceed such
amount, Parent shall obtain a policy with the greatest coverage available for a
cost not exceeding such amount.
29
(c) The provisions of this Section 5.4 are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives and are in addition to, and not in substitution
for, any other right to indemnification or contribution that any such person may
have by contract or otherwise.
Section 5.5 Employee Benefits. Parent agrees that all employees of the
Company Entities who continue employment with Parent, the Surviving Corporation
or any Subsidiary of the Surviving Corporation after the Effective Time
("Continuing Employees") will be eligible to participate in employee benefit
programs of the Surviving Corporation, any Subsidiary of the Surviving
Corporation or the Parent on the same basis and subject to the same terms and
conditions as similarly situated employees of the Parent. Nothing in this
Section 5.5 or elsewhere in this Agreement limits the right of the Parent, the
Surviving Corporation or any Subsidiary of the Surviving Corporation to
terminate any such employee benefit plan. Nothing in this Section 5.5 or
elsewhere in this Agreement is to be construed to create a right in any employee
to employment with Parent, the Surviving Corporation or any other subsidiary of
Parent and, subject to any other Contract between an employee and Parent, the
Surviving Corporation or any other subsidiary of Parent, the employment of each
Continuing Employee will be "at will" employment.
Section 5.6 Public Announcements. Unless otherwise required by
applicable Laws or applicable exchange rules (and, in that event, only if time
does not permit), at all times prior to the earlier of the Effective Time or
termination of this Agreement pursuant to Section 7.1, (a) Parent, Merger Sub
and the Company shall consult with each other before holding any press
conferences, analysts calls or other meetings or discussions and before issuing
any press release or other public announcements with respect to the transactions
contemplated by this Agreement, including the Merger; and (b) the parties shall
provide each other the opportunity to review and comment upon any press release
or other public announcement or statement with respect to the transactions
contemplated by this Agreement, including the Merger, and shall not issue any
such press release or other public announcement or statement prior to such
consultation. The parties shall mutually agree upon the initial press release or
releases to be issued with respect to the transactions contemplated by this
Agreement prior to the issuance thereof. In addition, the Company shall, and
shall cause the Company Subsidiaries to, (a) coordinate with Parent and Merger
Sub regarding communications with customers, shareholders and employees relating
to the transactions contemplated hereby, and (b) allow and facilitate Parent
contact with customers, shareholders and employees of the Company.
Section 5.7 Fees and Expenses. Except as provided in Section 7.2(b),
all fees and expenses incurred in connection with the Merger, this Agreement and
the transactions contemplated hereby are to be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated; provided, however,
that Parent and the Company shall share equally all fees and expenses, other
than attorneys' fees, incurred in connection with the filing of the premerger
notification and report forms relating to the Merger under the HSR Act and the
filing of any notice or other document under any applicable Foreign Antitrust
Laws.
30
Section 5.8 Credit Agreement. Prior to the Effective Time, the Company
shall terminate its bank credit facility or, at the option of the Company,
obtain a waiver of such credit facility (so long as such waiver would prevent a
cross default under any other agreements).
Section 5.9 Shareholder Litigation. The parties to this Agreement shall
cooperate and consult with one another, to the fullest extent possible, in
connection with any shareholder litigation against any of them or any of their
respective directors or officers with respect to the transactions contemplated
by this Agreement. In furtherance of and without in any way limiting the
foregoing, each of the parties shall use its respective reasonable best efforts
to prevail in such litigation so as to permit the consummation of the
transactions contemplated by this Agreement in the manner contemplated by this
Agreement. Notwithstanding the foregoing, the Company shall not compromise or
settle any litigation commenced against it or its directors or officers relating
to this Agreement or the transactions contemplated hereby (including the Merger)
without Parent's prior written consent, which consent Parent shall not
unreasonably withhold.
Section 5.10 Transition. In order to facilitate an orderly transition
of the management of the business of the Company and the Company Subsidiaries to
Parent and in order to facilitate the integration of the operations of the
Company and Parent and its subsidiaries and to permit the coordination of their
related operations on a timely basis, and in an effort to accelerate to the
earliest time possible following the Effective Time the realization of
synergies, operating efficiencies and other benefits expected to be realized by
Parent and the Company as a result of the Merger, the Company shall and shall
cause the Company Subsidiaries to consult with Parent on all strategic and
operational matters to the extent such consultation is not in violation of
applicable Law, including Laws regarding the exchange of information and other
Laws regarding competition. The Company shall and shall cause the Company
Subsidiaries to make available to Parent at the facilities of the Company and
the Company Subsidiaries, where determined by Parent to be appropriate and
necessary, office space in order to assist it in observing all operations and
reviewing all matters concerning the Company's affairs. Without in any way
limiting the provisions of Section 5.3, Parent, its subsidiaries, officers,
employees, counsel, financial advisors and other representatives shall, upon
reasonable written notice to the Company, be entitled to review the operations
and visit the facilities of the Company and the Company Subsidiaries at all
times as may be deemed reasonably necessary by Parent in order to accomplish the
foregoing arrangements. Notwithstanding the foregoing, nothing contained in this
Agreement gives Parent, directly or indirectly, the right to control or direct
the Company's operations prior to the Effective Time. Prior to the Effective
Time, the Company shall exercise, consistent with the terms and conditions of
this Agreement, complete control and supervision over its and the Company
Subsidiaries' respective operations. The parties acknowledge that they have
discussed a key employee retention program to aid in the transition process.
Section 5.11 Section 16(b). Parent and the Company shall take all steps
reasonably necessary to cause the transactions contemplated hereby and any other
dispositions of equity securities of the Company (including derivative
securities) in connection with this Agreement by each individual who is a
director or officer of the Company to be exempt under Rule 16b-3 under the
Exchange Act.
31
Section 5.12 Financing. Parent shall use all reasonable best efforts to
obtain the financing contemplated by the Commitment Letter, or financing with a
different lender or lenders in an amount not less than the full amount of the
Merger Consideration and the Option Consideration, prior to the Closing.
ARTICLE 6
CONDITIONS PRECEDENT
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. The Shareholder Approval with respect to this
Agreement and the Merger shall have been obtained.
(b) Governmental and Regulatory Approvals. Other than the filing of the
Articles of Merger, all consents, approvals and actions of, filings with and
notices to any Governmental Entity required of Parent, Merger Sub, the Company
or any Company Subsidiary to consummate the Merger and the other transactions
contemplated hereby the failure of which to be obtained or taken would
reasonably be expected to have a Material Adverse Effect on the Surviving
Corporation or its subsidiaries shall have been obtained.
(c) No Injunctions or Restraints. No final and nonappealable judgment,
decree, Law or rule, order, injunction or ruling entered, enacted, promulgated,
enforced or issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect preventing the consummation of the Merger or
limiting the ownership or operation by Parent, the Company or any of their
respective subsidiaries of any material portion of the business or assets of
Parent or the Company.
(d) HSR Act; Foreign Antitrust Laws. The waiting period (including any
extension thereof) applicable to the consummation of the Merger under the HSR
Act and any applicable Foreign Antitrust Laws shall have expired or been
terminated.
Section 6.2 Conditions to Obligation of Parent and Merger Sub. The
obligation of Parent and Merger Sub to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained in Section 3.1(c) shall be true and correct in all
respects both when made and as of the Closing Date as though made on and as of
the Closing Date, and all other representations and warranties of the Company
set forth herein shall be true and correct in all respects (without giving
effect to any materiality or material adverse effect qualifications contained
therein) both when made and at and as of the Closing Date, as if made at and as
of such time (except to the extent expressly made as of an earlier date, in
which case as of such date), except where the failure of such representations
and warranties to be so true and correct have not had or resulted in or would
not reasonably be expected to have or result in, individually or in the
aggregate, a Company Material Adverse Effect.
32
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all of its obligations required to be
performed by it under this Agreement at or prior to the Closing Date.
(c) Officer's Certificate. The Company shall have furnished Parent and
Merger Sub with a certificate dated the Closing Date signed on its behalf by an
executive officer to the effect that the conditions set forth in Sections 6.2(a)
and (b) have been satisfied.
(d) Financing. Parent shall have consummated financing in an amount not
less than the full amount of the Merger Consideration and the Option
Consideration.
(e) Material Adverse Change. At any time after the date of this
Agreement, there shall not have occurred facts or circumstances resulting in or
reasonably expected to result in a Company Material Adverse Effect.
Section 6.3 Conditions to Obligation of the Company. The obligation of
the Company to effect the Merger is further subject to satisfaction or waiver of
the following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub set forth herein shall be true and correct in all
respects (without giving effect to any materiality or material adverse effect
qualifications contained therein) both when made and at and as of the Closing
Date, as if made at and as of such time (except to the extent expressly made as
of an earlier date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct have not had or
resulted in or would not reasonably be expected to have or result in,
individually or in the aggregate, a material adverse effect on Parent.
(b) Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the Closing
Date.
(c) Officer's Certificate. Each of Parent and Merger Sub shall have
furnished the Company with a certificate dated the Closing Date signed on its
behalf by an executive officer to the effect that the conditions set forth in
Section 6.3(a) and (b) have been satisfied.
Section 6.4 Frustration of Closing Conditions. None of Parent, Merger
Sub or the Company may rely on the failure of any condition set forth in
Sections 6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure
was caused by such party's failure to comply with its obligations to consummate
the Merger and the other transactions contemplated by this Agreement, as
required by and subject to Section 5.3.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Shareholder Approval:
33
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger has not been consummated by March 1, 2002; provided,
however, that the right to terminate this Agreement pursuant to this Section
7.1(b)(i) is not available to any party whose failure to perform any of its
obligations under this Agreement has been the cause of, or resulted in, the
failure of the Merger to be consummated by such time;
(ii) if the Shareholders Meeting (including any adjournment or
postponement thereof) has concluded and the Shareholder Approval has not been
obtained; provided, however, that the right to terminate this Agreement pursuant
to this Section 7.1(b)(ii) is not available to any party whose failure to
perform any of its obligations under this Agreement has been the cause of, or
resulted in, the failure to obtain such Shareholder Approval; or
(iii) if any Restraint having any of the effects set forth in Section
6.1(c) is in effect and has become final and nonappealable; provided, however,
that the right to terminate this Agreement pursuant to this Section 7.1(b)(iii)
is not available to any party whose failure to perform any of its obligations
under this Agreement has been the cause of, or resulted in, such Restraint;
(c) by Parent, if the Company has breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform (A)
would give rise to a failure of the conditions set forth in Sections 6.2(a) or
(b), and (B) is not cured within 30 days after written notice thereof or is
incapable of being cured by the Company;
(d) by the Company, if Parent or Merger Sub has breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) would give rise to a failure of the condition set forth
in Sections 6.3(a) or (b), and (B) is not cured within 30 days after written
notice thereof or is incapable of being cured by Parent or Merger Sub;
(e) by Parent, if the Board of Directors of the Company or any
committee thereof (i) withdraws or modifies or changes, or proposes or announces
any intention or resolves to withdraw or modify or change, in a manner adverse
to Parent or Merger Sub, the approval or recommendation by the Board of
Directors of the Company or committee thereof of this Agreement or the
transactions contemplated hereby, including the Merger, (ii) approves or
recommends, or proposes to or announce any intention to approve or recommend,
any Acquisition Transaction, or (iii) proposes or announces any intention to
enter into any agreement, with respect to any Acquisition Transaction, or if the
Company breaches the provisions of Section 4.2 or Section 5.1(b).
Section 7.2 Effect of Termination.
34
(a) In the event of termination of this Agreement by either the Company
or Parent as provided in Section 7.1, this Agreement will forthwith become void
and have no effect, without any liability or obligation on the part of Parent,
Merger Sub or the Company, other than the provisions of Section 5.2 as such
Section relates to confidentiality, Section 5.6, Section 5.7, this Section 7.2
and Article 8, which provisions survive such termination; provided, however,
that nothing herein will relieve any party from any liability for any willful
and material breach by such party of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
(b) (i) If this Agreement is terminated (A) by either the Company or
Parent pursuant to Section 7.1(b)(i) or (ii) and prior to the Shareholders
Meeting, an Acquisition Proposal has been made known to the Company or been made
directly to its shareholders generally or any person has publicly announced an
intention (whether or not conditional and whether or not such proposal shall
have been rejected or withdrawn prior to the time of such termination) to make
an Acquisition Proposal or solicited proxies or consents in opposition to the
Merger, or (B) by Parent pursuant to Section 7.1(e) then the Company shall
promptly, but in no event later than two days after the date of such
termination, pay Parent by wire transfer of same day funds a fee equal to
$15,000,000 (the "Termination Fee"); provided, however, that no Termination Fee
will be payable by -------- ------- the Company pursuant to clause (A) above
unless and until within 12 months of such termination the Company or any of its
Subsidiaries enters into an Acquisition Agreement, or consummates the
transactions, contemplated by such Acquisition Proposal, in which case such
Termination Fee shall be paid upon signing of the Acquisition Agreement or at
the closing (and as a condition for closing) of the transactions contemplated by
the Acquisition Proposal.
(ii) The Company acknowledges that the agreements contained in this
Section 7.2(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement.
(c) If the Company fails to pay when due any amount payable under
Section 7.2(b), then (i) the Company shall reimburse Parent for all costs and
expenses (including fees and disbursements of counsel) incurred in connection
with the collection of such overdue amount and the enforcement by Parent of its
rights under Section 7.2(b), and (ii) the Company shall pay to Parent interest
on such overdue amount (for the period commencing as of the date such overdue
amount was originally required to be paid and ending on the date such overdue
amount is actually paid to Parent in full) at a rate per annum equal to 3% over
the "prime rate" (as announced by Citibank N.A.) in effect on the date such
overdue amount was originally required to be paid.
ARTICLE 8
GENERAL PROVISIONS
Section 8.1 Amendment. This Agreement may be amended with the approval
of the respective Boards of Directors of the Company and Parent at any time
before or after the Shareholder Approval; provided, however, that, after such
Shareholder Approval, there is not to be made any amendment that by Law requires
further approval by the shareholders of the Company without further approval of
such shareholders. This Agreement may not be amended except by an agreement in
writing signed on behalf of each of the parties.
35
Section 8.2 Extension; Waiver. At any time prior to the Effective Time,
a party may (a) extend the time for the performance of any of the obligations or
other acts of the other party, (b) waive any inaccuracies in the representations
and warranties of the other party contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
8.1, waive compliance by the other party with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver will be valid only if set forth in an agreement in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise will not
constitute a waiver of such rights.
Section 8.3 Nonsurvival of Representations and Warranties. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument or certificate delivered pursuant to this Agreement will survive
the Effective Time, except the covenants and agreements contained in Article 2
and Article 8 and Section 5.4, each of which will survive in accordance with its
terms.
Section 8.4 Notices. All notices, requests, claims, demands and other
communications under this Agreement must be in writing and will be deemed given
if delivered personally, telecopied (which is confirmed) or sent by a nationally
recognized overnight courier service (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as is
specified by like notice):
(a) if to the Company, to: Arnold Industries, Inc.
625 South Fifth Avenue
P.O. Box 210
Lebanon, PA 17042-0210
Facsimile No.: (717) 253-0958
Attention: Kenneth F. Leedy
(b) with a copy to: Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
Facsimile No.: 215-963-5299
Attention: Howard L. Shecter, Esq.
(c) if to Parent or Roadway Corporation
Merger Sub, to: 1077 Gorge Blvd.
P.O. Box 471
Akron, OH 44309-0471
Facsimile No.: (330) 258-6082
Attention: John Gasparovic,
General Counsel
36
with a copy to: Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Facsimile No.: (216) 579-0212
Attention: Patrick J. Leddy, Esq.
Section 8.5 Interpretation. When a reference is made in this Agreement
to an Article, Section or Exhibit, such reference is to an Article or Section
of, or an Exhibit to, this Agreement unless otherwise indicated. The table of
contents, table of defined terms and headings contained in this Agreement are
for reference purposes only and do 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 will be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement. All terms
defined in this Agreement will have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. For purposes of this
Agreement, (a) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity (including its permitted successors and assigns);
(b) "knowledge" of any person that is not an individual means the knowledge
after due inquiry of such person's executive officers and officers with direct
responsibility for the subject matter to which such knowledge relates; (c)
"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, where "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of voting
securities, by contract or otherwise; (d) an entity shall be deemed a
"subsidiary" of another person if such person directly or indirectly owns,
beneficially or of record, (i) an amount of voting securities or other interests
in such entity that is sufficient to enable such person to elect at least a
majority of the members of such entity's board of directors or other governing
body or (ii) at least 50% of the outstanding equity or financial interests of
such entity; (e) "Laws" means any statute, ordinance, regulation, directive,
order or other legally enforceable requirement in effect as of the date hereof;
and (f) "Legal Proceeding" means any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving, any
court or other Governmental Entity or any arbitrator or arbitration panel. The
parties have participated jointly in the negotiation and drafting of this
Agreement. In the event of an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden or proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provision of this Agreement.
37
Section 8.6 Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and (b) are not intended to
confer upon any person other than the parties any rights or remedies.
Section 8.8 Governing Law. Except to the extent that the PBCL is
mandatorily applicable to the Merger and the rights of shareholders of the
Company, this Agreement is to be governed by, and construed in accordance with,
the laws of the State of New York, regardless of the laws that might otherwise
govern under applicable principles of conflict of laws thereof.
Section 8.9 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other party. Any assignment in violation of this
Section 8.9 will be void. Subject to the preceding two sentences, this Agreement
is binding upon, inures to the benefit of, and is enforceable by, the parties
and their respective successors and assigns.
Section 8.10 Consent to Jurisdiction. Each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of New York or any New York state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (c)
shall not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting
in the State of New York or a New York state court.
Section 8.11 Specific Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties will be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any federal court
located in the State of Ohio or an Ohio state court, this being in addition to
any other remedy to which they are entitled at Law or in equity.
Section 8.12 Severability.
(a) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement will nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
38
(b) The Company and Parent agree that the Termination Fee provided in
Section 7.2(b) is fair and reasonable in the circumstances, considering not only
the Merger Consideration but also the outstanding funded indebtedness (including
capital leases) of the Company and the Company Subsidiaries. If a court of
competent jurisdiction shall nonetheless, by a final, non-appealable judgment,
determine that the amount of the Termination Fee exceeds the maximum amount
permitted by Law, then the amount of the Termination Fee shall be reduced to the
maximum amount permitted by Law in the circumstances, as determined by such
court of competent jurisdiction.
39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
ROADWAY CORPORATION
By: /s/ Michael W. Wickham
--------------------------------------------
Name: Michael W. Wickham
Title: Chairman and Chief
Executive Officer
LION CORP.
By: /s/ Michael W. Wickham
--------------------------------------------
Name: Michael W. Wickham
Title: President
ARNOLD INDUSTRIES, INC.
By: /s/ Edward H. Arnold
--------------------------------------------
Name: Edward H. Arnold
Title: President
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