AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CARLTON COMMUNICATIONS PLC
NEPTUNE ACQUISITION CORP.
AND
NIMBUS CD INTERNATIONAL, INC.
Dated as of June 16, 1998
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I THE OFFER..........................................................2
1.1 The Offer............................................................2
1.2 Company Actions......................................................3
1.3 Composition of the Board of Directors................................5
ARTICLE II THE MERGER AND RELATED MATTERS....................................5
2.1 The Merger...........................................................5
2.2 Conversion of Stock..................................................6
2.3 Dissenting Stock.....................................................6
2.4 Surrender of Certificates............................................7
2.5 Payment..............................................................8
2.6 No Further Rights of Transfers.......................................9
2.7 Stock Option and Other Plans.........................................9
2.8 Certificate of Incorporation of the Surviving Corporation...........10
2.9 By-Laws of the Surviving Corporation................................10
2.10 Directors and Officers of the Surviving Corporation................10
2.11 Closing............................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................11
3.1 Representations and Warranties of the Company.......................11
(a) Due Organization, Good Standing and Corporate Power................11
(b) Authorization and Validity of Agreement............................11
(c) Capitalization.....................................................12
(d) Consents and Approvals; No Violations..............................13
(e) Company Reports and Financial Statements...........................14
(f) Absence of Certain Changes.........................................15
(g) Title to Properties; Encumbrances..................................15
(h) Compliance with Laws...............................................16
(i) Litigation.........................................................16
(j) Employee Benefit Plans.............................................17
(k) Taxes..............................................................19
(l) Liabilities........................................................19
(m) Intellectual Properties............................................20
(n) Material Contracts.................................................20
(o) Proxy Statement and Schedule l4D-9.................................22
(p) Broker's or Finder's Fee...........................................23
(q) Environmental Laws and Regulations.................................23
(r) State Takeover Statutes; Charter Provisions........................25
(s) Opinion of Financial Advisor.......................................25
(t) Rights Agreement...................................................25
(u) Voting Requirements................................................25
3.2 Representations and Warranties of Parent and Sub....................25
(a) Due Organization; Good Standing and Corporate Power................26
(b) Authorization and Validity of Agreement............................26
(c) Consents and Approvals; No Violations..............................26
(d) Offer Documents, Schedule l4D-9 and Proxy Statement................27
(e) Broker's or Finder's Fee...........................................27
(f) Financing..........................................................28
ARTICLE IV TRANSACTIONS PRIOR TO CLOSING DATE...............................28
4.1 Access to Information Concerning Properties and Records.............28
4.2 Confidentiality.....................................................28
4.3 Conduct of the Business of the Company Pending the Closing Date.....28
4.4 Proxy Statement.....................................................31
4.5 Stockholder Approval................................................31
4.6 Reasonable Efforts..................................................32
4.7 No Solicitation of Other Offers.....................................32
4.8 Notification of Certain Matters.....................................34
4.9 HSR Act.............................................................34
4.10 Employee Benefits..................................................35
4.11 Directors' and Officers' Insurance; Indemnification................35
4.12 Guaranty of Performance............................................36
4.13 Financing..........................................................36
ARTICLE V CONDITIONS PRECEDENT TO MERGER....................................36
5.1 Conditions Precedent to Obligations of Parent, Sub and the Company..36
(a) Approval of Company's Stockholders.................................37
(b) HSR Act............................................................37
(c) Injunction.........................................................37
(d) Statutes...........................................................37
(e) Payment for Common Stock...........................................37
ARTICLE VI TERMINATION AND ABANDONMENT......................................37
6.1 Termination.........................................................37
6.2 Effect of Termination...............................................40
ARTICLE VII MISCELLANEOUS...................................................40
7.1 Fees and Expenses...................................................40
7.2 Representations and Warranties......................................41
7.3 Extension; Waiver...................................................41
7.4 Public Announcements................................................41
7.5 Notices.............................................................42
7.6 Entire Agreement....................................................43
7.7 Binding Effect; Benefit; Assignment.................................43
7.8 Amendment and Modification..........................................43
7.9 Further Actions.....................................................44
7.10 Headings...........................................................44
7.11 Counterparts.......................................................44
7.12 Applicable Law; Jurisdiction.......................................44
7.13 Severability.......................................................44
7.14 Certain Definitions................................................45
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 16, 1998 (this
"AGREEMENT"), by and among Carlton Communications Plc, a company organized under
the laws of England ("PARENT"), Neptune Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("SUB"), and Nimbus CD
International, Inc., a Delaware corporation (the "COMPANY").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved and determined that it is in the best interests of their
respective companies and stockholders for Sub to acquire the Company;
WHEREAS, in contemplation thereof it is proposed that Sub will make a
tender offer (the "OFFER") to purchase all the issued and outstanding shares of
common stock, $0.01 par value, of the Company ("COMMON STOCK"), upon the terms
and subject to the conditions of this Agreement (including the conditions set
forth in Annex A hereto), at a price of 11.50 per share net to the seller in
cash (the "OFFER PRICE");
WHEREAS, to complete such acquisition, the respective Boards of
Directors of Parent, Sub and the Company, have approved the merger of Sub into
the Company, with the Company being the surviving corporation (the "MERGER"),
upon the terms and subject to the conditions of this Agreement;
WHEREAS, the Directors of the Company have unanimously determined that
each of the Offer and the Merger are fair to, and in the best interests of, the
holders of Common Stock, approved the Offer and the Merger and recommended the
acceptance of the Offer and approval and adoption of this Agreement by the
stockholders of the Company; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and inducement to Parent's and Sub's willingness to
enter into this Agreement, certain stockholders of the Company (the "SELLING
STOCKHOLDERS") are entering into an agreement with Parent and Sub (the
"STOCKHOLDER AGREEMENT"), pursuant to which, and upon the terms and subject to
the conditions of which, the Selling Stockholders have agreed to tender (and not
to withdraw) all of the shares of Common Stock currently owned and hereafter
acquired by them pursuant to the Offer.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
THE OFFER
1.1 The Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Article VI hereof and so long as none of the
events set forth in Annex A hereto (the "TENDER OFFER CONDITIONS") shall have
occurred and are continuing, as promptly as practicable, but in no event later
than the fifth business day after the date of this Agreement, Sub shall commence
(within the meaning of Rule 14d-2 promulgated under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT")) the Offer. The obligations of Sub to
accept for payment and to pay for any shares of Common Stock validly tendered
and not withdrawn prior to the expiration of the Offer shall be subject only to
the Tender Offer Conditions, any of which may be waived by Parent or Sub;
provided, however, that neither Parent or Sub shall waive the Minimum Condition
(as defined in Annex A) without the prior written consent of the Company. The
Tender Offer Conditions are for the sole benefit of Parent and Sub and may be
asserted by Parent and Sub regardless of the circumstances giving rise to any
such Tender Offer Conditions and, subject to the immediately preceding sentence,
may be waived by Parent and Sub in whole or in part. Parent and Sub expressly
reserve the right to modify the terms of the Offer, including without limitation
to extend the Offer beyond any scheduled expiration date; provided, however,
without the consent of the Company, Sub shall not (i) reduce the number of
shares of Common Stock to be purchased in the Offer, (ii) reduce the Offer
Price, (iii) add to the Tender Offer Conditions or otherwise modify the Tender
Offer Conditions in a manner that is adverse to the holders of Common Stock or
(iv) change the form of consideration payable in the Offer. Parent and Sub
covenant and agree that, subject to the terms and conditions of this Agreement,
including, but not limited to, the Tender Offer Conditions, unless the Company
otherwise consents in writing, Sub will accept for payment and pay for the
Common Stock in accordance with Rule 14e-1(c) of the Exchange Act; provided,
however, that unless (i) any Person has made an Acquisition Proposal (as
hereinafter defined), or (ii) any of the conditions of the Offer set forth in
Annex A hereto shall not have been satisfied, the expiration date may not be
extended beyond the 10th business day after the initial expiration date of the
Offer without the Company's prior written consent, such consent not to be
unreasonably withheld (it being expressly understood and agreed that, if all of
the conditions set forth in Annex A hereto shall have been satisfied and no
Person has made an Acquisition Proposal, Sub shall have the right, in its sole
discretion, to extend the expiration date (through one or more extensions)
through the 10th business day after the initial expiration date).
(b) As soon as reasonably practicable (and no more than five business
days) after the date hereof, Parent and Sub shall file, and Parent, if
necessary, shall cause Sub to file, with the Securities and Exchange Commission
(the "COMMISSION") a Tender Offer Statement on Schedule 14D-1 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-1") with respect to the
Offer. The Schedule 14D-1 shall contain (included as an exhibit) or shall
incorporate by reference an offer to purchase (the "OFFER TO PURCHASE") and a
form of the related letter of transmittal (the "LETTER OF TRANSMITTAL"), as well
as all other information and exhibits required by law (which Schedule 14D-1,
Offer to Purchase, Letter of Transmittal and such other information and
exhibits, together with any supplements or amendments thereto, are referred to
herein collectively as the "OFFER DOCUMENTS"). The Offer Documents will comply
in all material respects with the provisions of applicable federal securities
laws and, on the date filed with the Commission and the date first published,
sent or given to the Company's stockholders, shall 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 light of
the circumstances under which they are made, not misleading, except that no
representation is made by Parent or Sub with respect to any information supplied
by the Company in writing for inclusion in the Schedule 14D-1 or derived from
the Company's Commission Filings. Each of Parent and Sub agrees promptly to
correct any information provided by it for use in the Offer Documents that shall
be, or have become, false or misleading in any material respect, and Parent and
Sub further agree to take all steps necessary to cause the Schedule 14D-1 as so
corrected to be filed with the Commission and the other Offer Documents as so
corrected to be disseminated to holders of Common Stock, in each case as and to
the extent required by applicable federal securities laws. Each of Parent and
Sub agrees to provide the Company and its counsel with copies (which shall be
treated confidentially) of any written comments Parent and Sub or their counsel
may receive from the Commission or its staff with respect to the Offer Documents
promptly after the receipt of such comments and shall, to extent practicable,
provide the Company and its counsel an opportunity to comment on the proposed
response of Parent and Sub to such comments.
1.2 Company Actions. The Company hereby approves of and consents to
the Offer and the Merger and represents that (a) its Board of Directors (at a
meeting duly called and held) has (i) determined by the unanimous vote of the
Directors that each of the Offer and the Merger is fair to, and in the best
interests of, the holders of Common Stock, (ii) approved the Offer and the
Merger and approved and adopted this Agreement in accordance with the provisions
of the General Corporation Law of the State of Delaware (the "DGCL"), (iii)
recommended the acceptance of the Offer and the approval and adoption of this
Agreement by the stockholders of the Company, (iv) taken all other applicable
action necessary to render Section 203 of the DGCL and all other applicable
state takeover statutes, if any, inapplicable to the Offer, the Merger and the
acquisition of shares of Common Stock by Sub pursuant to the Stockholders
Agreement and the actions contemplated hereby and thereby; provided, however,
that such recommendation may be withdrawn, modified or amended at any time or
from time to time if the Board of Directors of the Company determines in its
good faith judgment after consulting with independent outside counsel to the
Company, that failing to take such action would constitute a breach of the
Board's fiduciary obligations under applicable law; and (b) Berenson Minella &
Company ("BERENSON MINELLA") has delivered to the Board of Directors of the
Company its opinion that the consideration per share of Common Stock to be
received by the holders of Common Stock (other than Parent and Sub) pursuant to
the Offer and the Merger is fair to the holders of Common Stock from a financial
point of view, subject to the assumptions and qualifications contained in such
opinion. The Company shall file with the Securities and Exchange Commission (the
"COMMISSION"), as soon as practicable after the date of the commencement of the
Offer, a Solicitation/Recommendation Statement on Schedule 14D-9 (the "SCHEDULE
L4D-9") containing the recommendations referred to in clause (a) of the
preceding sentence and shall disseminate the Schedule 14D-9 as required by Rule
14d-9 under the Exchange Act; provided, however, that such recommendation or
other action may be withdrawn, modified or amended at any time or from time to
time if the Board of Directors of the Company determines in its good faith
judgment, after consulting with independent outside counsel to the Company, that
failing to take such action would constitute a breach of the Board's fiduciary
obligations under applicable law. Parent and Sub and their counsel shall be
given the opportunity to review and comment upon the Schedule l4D-9 prior to its
filing with the Commission. The Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the Commission and on the date first published, sent or given to
the Company's stockholders, shall 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 light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information supplied by Parent or Sub in
writing for inclusion in the Schedule 14D-9. The Company agrees to provide
Parent and its counsel with any comments the Company or its counsel may receive
from the Commission or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments and shall, to the extent practicable, provide
Parent and its counsel an opportunity to comment on the proposed response of the
Company to such comments.
In connection with the Offer, the Company will promptly furnish Sub
with mailing labels, security position listings and any available listing or
computer list containing the names and addresses of the record holders of the
Common Stock as of the most recent practicable date and shall furnish Sub with
such additional information (including, but not limited to, updated lists of
holders of Common Stock and their addresses, mailing labels and lists of
security positions) and such other assistance as Sub or its agents may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent, Sub and their respective affiliates,
associates, agents, and advisors, shall keep confidential and use the
information contained in any such labels, listings and files only in connection
with the Offer and the Merger and, if this Agreement shall be terminated, will
deliver to the Company all copies of such information then in their possession.
1.3 Composition of the Board of Directors. Promptly upon the
acceptance for payment of, and payment by Sub in accordance with the Offer for,
any shares of Common Stock pursuant to the Offer, Sub shall be entitled to
designate such number of directors on the Board of Directors of the Company,
rounded up to the next whole number, as will give Sub, subject to compliance
with Section 14(f) of the Exchange Act, representation on such Board of
Directors equal to at least that number of directors which equals the product of
the total number of directors on the Board of Directors (giving effect to the
directors elected pursuant to this sentence) multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock so accepted for
payment and paid for or otherwise acquired or owned by Sub or Parent and the
denominator of which shall be the number of shares of Common Stock then issued
and outstanding, and the Company and its Board of Directors shall, at such time,
take any and all such action needed to cause Sub's designees to be appointed to
the Company's Board of Directors (including to cause directors to resign).
Subject to applicable law, the Company shall take all action requested by Parent
which is reasonably necessary to effect any such election, including mailing to
its stockholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company agrees to make such mailing with the mailing of the Schedule 14D-9,
so long as Sub shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
Sub's designees. In furtherance thereof, the Company will increase the size of
the Company's Board of Directors, or use its reasonable efforts to secure the
resignation of directors, or both, as is necessary to permit Sub's designees to
be elected to the Company's Board of Directors.
ARTICLE II
THE MERGER AND RELATED MATTERS
2.1 The Merger. (a) Subject to the terms and conditions of this
Agreement, at the time of the Closing (as defined in Section 2.11 hereof), a
certificate of merger (the "CERTIFICATE OF MERGER") shall be duly prepared,
executed and acknowledged by Sub and the Company in accordance with the DGCL and
shall be filed on the Closing Date (as defined in Section 2.11 hereof). The
Merger shall become effective upon the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware in accordance with the
provisions and requirements of the DGCL. The date and time when the Merger shall
become effective is hereinafter referred to as the "EFFECTIVE TIME."
(b) At the Effective Time, Sub shall be merged with and into the
Company and the separate corporate existence of Sub shall cease, and the Company
shall continue as the surviving corporation under the laws of the State of
Delaware (the "SURVIVING CORPORATION").
(c) From and after the Effective Time, the Merger shall have the
effects set forth in Section 259 of the DGCL.
2.2 Conversion of Stock. At the Effective Time:
(a) Each share of Common Stock then issued and outstanding (other than
(i) any shares of Common Stock which are held by any subsidiary of the
Company or in the treasury of the Company, or which are held, directly or
indirectly, by Parent or any direct or indirect subsidiary of Parent
(including Sub), all of which shall be cancelled and none of which shall
receive any payment with respect thereto and (ii) shares of Common Stock
held by Dissenting Stockholders (as defined in Section 2.03 hereof)) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and represent the right to receive an amount in
cash, without interest, equal to the price paid for each share of Common
Stock pursuant to the Offer (the "MERGER CONSIDERATION"); and
(b) Each share of common stock, par value $0.01 per share, of Sub then
issued and outstanding shall, by virtue of the Merger and without any
action on the part of the holder thereof, become one fully paid and
nonassessable share of common stock, $0.01 par value, of the Surviving
Corporation.
2.3 Dissenting Stock. Notwithstanding anything in this Agreement to
the contrary but only to the extent required by the DGCL, shares of Common Stock
that are issued and outstanding immediately prior to the Effective Time and are
held by holders of Common Stock who comply with all the provisions of Delaware
law concerning the right of holders of Common Stock to dissent from the Merger
and require appraisal of their shares of Common Stock ("DISSENTING
STOCKHOLDERS") shall not be converted into the right to receive the Merger
Consideration but shall become the right to receive such consideration as may be
determined to be due such Dissenting Stockholder pursuant to the law of the
State of Delaware; provided, however, that (i) if any Dissenting Stockholder
shall subsequently deliver a written withdrawal of his or her demand for
appraisal (with the written approval of the Surviving Corporation, if such
withdrawal is not tendered within 60 days after the Effective Time), or (ii) if
any Dissenting Stockholder fails to establish and perfect his or her entitlement
to appraisal rights as provided by applicable law or (iii) if within 120 days of
the Effective Time neither any Dissenting Stockholder nor the Surviving
Corporation has filed a petition demanding a determination of the value of the
shares of Common Stock outstanding at the Effective Time and held by Dissenting
Stockholders, in accordance with applicable law, then such Dissenting
Stockholder or Stockholders, as the case may be, shall forfeit the right to
appraisal of such shares and such shares shall thereupon be deemed to have been
converted into the right to receive, as of the Effective Time, the Merger
Consideration, without interest. The Company shall give Parent and Sub (A)
prompt notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other related instruments received by the Company, and (B) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal. The Company will not voluntarily make any payment with respect to
any demands for appraisal and will not, except with the prior written consent of
Parent, settle or offer to settle any demand.
2.4 Surrender of Certificates. (a) Concurrently with or prior to the
Effective Time, Parent shall designate a bank or trust company located in the
United States and reasonably acceptable to the Company to act as paying agent
(the "PAYING AGENT") for purposes of making the cash payments contemplated
hereby. As soon as practicable after the Effective Time, Sub shall (and if
necessary Parent shall cause Sub to) cause the Paying Agent to mail and/or make
available to each holder of a certificate theretofore evidencing shares of
Common Stock (other than those which are held by any subsidiary of the Company
or in the treasury of the Company or which are held directly or indirectly by
Parent or any direct or indirect subsidiary of Parent (including Sub)) a Letter
of Transmittal advising such holder of the effectiveness of the Merger and the
procedure for surrendering to the Paying Agent such certificate or certificates
which immediately prior to the Effective Time represented outstanding Common
Stock (the "CERTIFICATES") in exchange for the Merger Consideration deliverable
in respect thereof pursuant to this Article II. Upon the surrender for
cancellation to the Paying Agent of such Certificates, together with a Letter of
Transmittal, duly executed and completed in accordance with the instructions
thereon, and any other items specified by the Letter of Transmittal, the Paying
Agent shall promptly pay to the Person (as defined in Section 7.14 hereof)
entitled thereto the Merger Consideration deliverable in respect thereof. Until
so surrendered, each Certificate shall be deemed, for all corporate purposes, to
evidence only the right to receive upon such surrender the Merger Consideration
deliverable in respect thereof to which such Person is entitled pursuant to this
Article II. No interest shall be paid or accrued in respect of such cash
payments.
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of the Merger Consideration that the Certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
Person requesting such transfer pay to the Paying Agent any transfer or other
taxes payable by reason of the foregoing or establish to the satisfaction of the
Paying Agent that such taxes have been paid or are not required to be paid.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article II;
provided that, the Person to whom the Merger Consideration is paid shall, as a
condition precedent to the payment thereof, give the Surviving Corporation a
bond in such sum as it may direct or otherwise indemnify the Surviving
Corporation in a manner satisfactory to it against any claim that may be made
against the Surviving Corporation with respect to the Certificate claimed to
have been lost, stolen or destroyed.
2.5 Payment. Concurrently with or immediately prior to the Effective
Time, Sub or, if necessary, Parent shall deposit in trust with the Paying Agent
cash in United States dollars in an aggregate amount equal to the product of (i)
the number of shares of Common Stock outstanding immediately prior to the
Effective Time (other than shares of Common Stock which are held by any
subsidiary of the Company or in the treasury of the Company or which are held
directly or indirectly by Parent or any direct or indirect subsidiary of Parent
(including Sub) or a Person known at the time of such deposit to be a Dissenting
Stockholder) and (ii) the Merger Consideration (such amount being hereinafter
referred to as the "PAYMENT FUND"). The Payment Fund shall be invested by the
Paying Agent as directed by Sub in direct obligations of the United States,
obligations for which the full faith and credit of the United States is pledged
to provide for the payment of principal and interest, commercial paper rated of
the highest quality by Moody's Investors Services, Inc. or Standard & Poor's
Ratings Group or certificates of deposit, bank repurchase agreements or bankers'
acceptances of a commercial bank having at least $500,000,000 in assets
(collectively "PERMITTED INVESTMENTS") or in money market funds which are
invested in Permitted Investments, and any net earnings with respect thereto
shall be paid to Parent as and when requested by Parent. The Paying Agent shall,
pursuant to irrevocable instructions, make the payments referred to in Section
2.02(a) hereof out of the Payment Fund. The Payment Fund shall not be used for
any other purpose except as otherwise agreed to by Parent. Promptly following
the date which is six months after the Effective Time, the Paying Agent shall
return to the Surviving Corporation all cash, certificates and other instruments
in its possession that constitute any portion of the Payment Fund, and the
Paying Agent's duties shall terminate. Thereafter, each holder of a Certificate
may surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration, without interest, but shall have no greater
rights against the Surviving Corporation or Parent than may be accorded to
general creditors of the Surviving Corporation or Parent under applicable law.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to a holder of shares of Common Stock for any Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
2.6 No Further Rights of Transfers. At and after the Effective Time,
each holder of a Certificate shall cease to have any rights as a stockholder of
the Company, except for, in the case of a holder of a Certificate (other than
shares to be cancelled pursuant to Section 2.02(a) hereof and other than shares
held by Dissenting Stockholders), the right to surrender his or her Certificate
in exchange for payment of the Merger Consideration or, in the case of a
Dissenting Stockholder, to perfect his or her right to receive payment for his
or her shares pursuant to Delaware law if such holder has validly perfected and
not withdrawn his or her right to receive payment for his or her shares, and no
transfer of shares of Common Stock shall be made on the stock transfer books of
the Surviving Corporation. Certificates presented to the Surviving Corporation
after the Effective Time shall be cancelled and exchanged for cash as provided
in this Article II. At the close of business on the day of the Effective Time
the stock ledger of the Company with respect to Common Stock shall be closed.
2.7 Stock Option and Other Plans. Prior to the Effective Time, the
Board of Directors of the Company (or, if appropriate, any Committee thereof)
shall adopt appropriate resolutions and use its reasonable best efforts to take
all other actions necessary to (i) provide for the cancellation, effective at
the Effective Time of all the outstanding stock options and other rights to
purchase shares of Common Stock ("OPTIONS") and (ii) terminate, as of the
Effective Time, the Stock Option Plans and any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any of its subsidiaries (collectively,
the "STOCK INCENTIVE PLANS") and (iii) amend, as of the Effective Time, the
provisions in any U.S. or Foreign Employee Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any of its
subsidiaries or any interest in respect of any capital stock of the Company or
its subsidiaries to provide that there shall be no continuing rights to acquire,
hold, transfer or grant any capital stock of the company or its subsidiaries or
any interest in the capital stock of the Company or its subsidiaries.
Immediately prior to the Effective Time, the Company shall use its reasonable
best efforts to ensure that (i) each Option, whether or not then vested or
exercisable, shall no longer be exercisable for the purchase of shares of Common
Stock but shall entitle each holder thereof, in cancellation and settlement
therefor, to payments by the Company in cash (subject to any applicable
withholding taxes, the "CASH PAYMENT"), at the Effective Time, equal to the
product of (x) the total number of shares of Common Stock subject to such Option
whether or not then vested or exercisable and (y) the excess of the Merger
Consideration over the exercise price per share of Common Stock subject to such
Option, each such Cash Payment to be paid to each holder of an outstanding
Option at the Effective Time and (ii) each share of Common Stock previously
issued in the form of grants of restricted stock or grants of contingent shares
shall fully vest in accordance with their respective terms. In addition, any
outstanding stock appreciation rights or limited stock appreciation rights shall
be cancelled immediately prior to the Effective Time without any payment or
other consideration therefor. As provided herein, the Company shall use its
reasonable best efforts to ensure that the Stock Incentive Plans shall terminate
as of the Effective Time. The Company will take all necessary steps to ensure
that neither the Company nor any of its subsidiaries is or will be bound by any
Options, other options, warrants, rights or agreements which would entitle any
Person, other than Parent or its affiliates, to own any capital stock of the
Surviving Corporation or any of its subsidiaries or to receive any payment in
respect thereof. The Company will use its reasonable best efforts to obtain all
necessary consents to ensure that after the Effective Time, the only rights of
the holders of Options to purchase shares of Common Stock in respect of such
Options will be to receive the Cash Payment in cancellation and settlement
thereof. Notwithstanding any other provision of this Section 2.07 to the
contrary, payment of the Cash Payment may be withheld with respect to any Option
until the necessary consents are obtained.
2.8 Certificate of Incorporation of the Surviving Corporation. The
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation.
2.9 By-Laws of the Surviving Corporation. The By-Laws of Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation.
2.10 Directors and Officers of the Surviving Corporation. At the
Effective Time, the directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, each of such directors to
hold office, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Surviving Corporation, until the next annual
stockholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Company immediately prior to the Effective Time shall,
subject to the applicable provisions of the Certificate of Incorporation and
By-Laws of the Surviving Corporation, be the officers of the Surviving
Corporation until their respective successors shall be duly elected or appointed
and qualified.
2.11 Closing. The closing of the Merger (the "CLOSING") shall take
place at the offices of Sullivan and Cromwell, 125 Broad Street, New York, New
York, as soon as practicable after the last of the conditions set forth in
Article V hereof is fulfilled or waived (subject to applicable law) but in no
event later than the fifth business day thereafter, or at such other time and
place and on such other date as Parent and the Company shall mutually agree (the
"CLOSING DATE").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company
hereby represents and warrants to Parent and Sub as follows:
(a) Due Organization, Good Standing and Corporate Power. Each of the
Company and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and each such corporation has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Except as set forth in Section 3.01(a) of
the Company's disclosure letter (the "COMPANY DISCLOSURE LETTER") delivered
concurrently with the delivery of this Agreement, each of the Company and
its subsidiaries is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where such failure to be so qualified or
licensed and in good standing would not have a material adverse effect on
the business, operations or results of operations, financial condition (the
"CONDITION") of the Company and its subsidiaries taken as a whole, or would
not be reasonably likely to prevent or materially delay consummation of the
transactions contemplated by this Agreement. The Company has made available
to Parent and Sub complete and correct copies of the Certificate of
Incorporation and By-Laws of the Company and the comparable governing
documents of each of its subsidiaries, in each case as amended to the date
of this Agreement.
(b) Authorization and Validity of Agreement. The Company has the
corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by the Company, and the consummation by it of the transactions
contemplated hereby, have been duly authorized and unanimously approved by
its Board of Directors and no other corporate action on the part of the
Company is necessary to authorize the execution, delivery and performance
of this Agreement by the Company and the consummation of the transactions
contemplated hereby (other than the approval of this Agreement by the
holders of a majority of the outstanding shares of Common Stock entitled to
vote) or the consummation of the transactions contemplated by the
Stockholders Agreement. This Agreement has been duly executed and delivered
by the Company and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(c) Capitalization. (i) The authorized capital stock of the Company
consists of 60,000,000 shares of Common Stock and 2,000,000 shares of
preferred stock, par value $0.01. As of June 15, 1998, (1) 39,012,786
shares of Common Stock are issued of which 21,469,754 are outstanding, (2)
2,164,077 shares of Common Stock are reserved for issuance pursuant to
outstanding Options granted under the Stock Plans, (3) 17,543,032 shares of
Common Stock are held in the Company's treasury and (4) no shares of
preferred stock were issued and outstanding. All issued and outstanding
shares of Common Stock have been duly authorized, validly issued and are
fully paid and nonassessable and are not subject to, nor were they issued
in violation of any preemptive rights. Except as set forth in this Section
3.01(c) or in Section 3.01(c) of the Company Disclosure Letter, (i) there
are no shares of capital stock of the Company authorized, issued or
outstanding and (ii) there are not as of the date hereof, and at the
Effective Time there will not be, any outstanding or authorized options,
warrants, rights, subscriptions, claims of any character, agreements,
rights of redemption, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to Common Stock or any other
shares of capital stock of the Company, pursuant to which the Company is or
may become obligated to issue shares of Common Stock, any other shares of
its capital stock or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of the capital stock of
the Company. After the Effective Time, the Surviving Corporation will have
no obligation to issue, transfer or sell any shares of or common stock of
the Surviving Corporation pursuant to any Employee Benefit Plan (as defined
in Section 3.01(j)). Neither the Company nor any of its subsidiaries has
authorized or issued any bonds, debentures, notes or other indebtedness the
holders of which have the right to vote (or convertible or exchangeable
into or exercisable for securities having the right to vote) with the
stockholders of the Company or any of its subsidiaries on any matter.
(ii) Section 3.01(c)(ii) of the Company Disclosure Letter lists
all of the Company's subsidiaries. All of the outstanding shares of
capital stock of each of the Company's subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable, are
not subject to, nor were they issued in violation of, any preemptive
rights, and are owned, of record and beneficially, by the Company,
free and clear of all liens, security interests, rights of first
refusal, charges, security agreements, encumbrances, options, claims
or any other encumbrances of any kind whatsoever ("Encumbrance")
except as set forth in Section 3.01(c)(ii) of the Company Disclosure
Letter. No shares of capital stock of any of the Company's
subsidiaries are reserved for issuance or are held in the treasury of
such subsidiary and there are no outstanding or authorized options,
warrants, rights, calls, subscriptions, claims of any character,
agreements, obligations, rights of redemption, convertible or
exchangeable securities, or other commitments, contingent or
otherwise, relating to the capital stock of any subsidiary, pursuant
to which such subsidiary is or may become obligated to issue any
shares of capital stock of such subsidiary or any securities
convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of such subsidiary. Other than as set forth
in Section 3.01(c)(ii) of the Company Disclosure Letter, there are no
restrictions of any kind which prevent the payment of dividends by any
of the Company's subsidiaries. Except for the subsidiaries listed in
Section 3.01(c)(ii) of the Company Disclosure Letter, the Company does
not own, directly or indirectly, any capital stock or other equity
interest in any Person or have any direct or indirect equity or
ownership interest in any Person and neither the Company nor any of
its subsidiaries is subject to any obligation or requirement to
provide funds for or to make any investment (in the form of a loan or
capital contribution) to or in any Person.
(d) Consents and Approvals; No Violations. Assuming (i) the filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), are made and the waiting period thereunder has
been terminated or has expired, (ii) the requirements of the Exchange Act
relating to the Proxy Statement and the Offer are met, (iii) the filing of
the Certificate of Merger and other appropriate merger documents, if any,
as required by DGCL are made and (iv) approval of the Merger by holders a
majority of the outstanding shares of Common Stock entitled to vote, if
required by the DGCL, is received, the execution, delivery and performance
of this Agreement by the Company and the consummation of the transactions
contemplated hereby will not: (1) violate any provision of the Certificate
of Incorporation or By-Laws of the Company or the comparable governing
documents of any of its subsidiaries, in each case, as amended; (2) violate
any statute, code, ordinance, rule, regulation, order or decree
(collectively "Laws") of any court, arbitrator or of any governmental or
regulatory body, agency or authority (each a "Governmental Entity")
applicable to the Company or any of its subsidiaries or their respective
properties or assets; (3) require any filing with, or permit, consent or
approval of, or the giving of any notice to, any Governmental Entity by the
Company; or (4) except as set forth in Section 3.01(d) of the Company
Disclosure Letter, result in a violation or breach of, conflict with,
constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation, payment,
acceleration or other material right or obligation or limitation) under, or
result in the creation of any Encumbrance upon any of the properties or
assets of the Company or any of its subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or other
instrument or obligation to which the Company or any of its subsidiaries is
a party, or by which it or any of their respective properties or assets are
bound or subject except for in the case of clauses (3) and (4) above for
any such filings, permits, consents, approvals, violations, breaches or
Encumbrances which, individually or in the aggregate would not have a
material adverse effect on the Condition of the Company and its
subsidiaries taken as a whole, or would not be reasonably likely to prevent
or materially delay consummation of the transactions contemplated by this
Agreement (including the transactions contemplated by the Stockholders
Agreement).
(e) Company Reports and Financial Statements. (i) Since January 1,
1996 the Company has filed all forms, reports and documents with the
Commission required to be filed by it pursuant to the federal securities
laws and the Commission rules and regulations thereunder, and all forms,
reports and documents filed with the Commission by the Company have
complied in all material respects with all applicable requirements of the
federal securities laws and the Commission rules and regulations
promulgated thereunder. The Company has made available to Parent true and
complete copies of all forms, reports, registration statements and other
filings filed by the Company with the Commission from January 1, 1996
through the date of this Agreement (such forms, reports, registration
statements and other filings, together with any exhibits, any amendments
thereto and information incorporated by reference therein, are sometimes
collectively referred to as the "COMMISSION FILINGS"). As of their
respective dates, the Commission Filings did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets, and the consolidated statements of operations,
consolidated statements of stockholders' equity and consolidated statements
of cash flows, included in the Commission Filings, were prepared in
accordance with generally accepted accounting principles ("GAAP") (as in
effect from time to time) applied on a consistent basis, (except as may be
indicated therein or in the notes or schedules thereto) and fairly present,
in all material respects, the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
results of their operations and changes in cash flows for the periods then
ended.
(ii) The Company shall deliver to Sub and Parent as soon as they
become available true and complete copies of any report or statement
mailed by it to its stockholders generally or filed by it with the
Commission subsequent to the date hereof and prior to the Effective
Time. As of their respective dates, such reports and statement will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are
made, not misleading and will comply in all material respects with all
applicable requirements of the federal securities laws and the
Commission rules and regulations thereunder. The consolidated
financial statements of the Company included in such reports and
statement will be prepared in accordance with GAAP applied on a
consistent basis (except as may be indicated therein or in the notes
or schedules thereto) and will fairly present in all material respects
the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the results of
their operations and their cash flows for the periods then ended
(subject in the case of any unaudited financial statements, to normal
year-end adjustments).
(f) Absence of Certain Changes. Except as previously disclosed in the
Commission Filings or as set forth in Section 3.01(f) of the Company
Disclosure Letter, since March 31, 1997 or as specifically contemplated by
this Agreement (i) there has not been any material adverse change in the
Condition of the Company and its subsidiaries taken as a whole; (ii) the
businesses of the Company and each of its subsidiaries have been conducted
only in the ordinary course consistent with past practice; (iii) neither
the Company nor any of its subsidiaries has incurred any material
liabilities (direct, contingent or otherwise) or engaged in any material
transaction or entered into any material agreement outside of the ordinary
course of business consistent with past practice; (iv) the Company and its
subsidiaries have not increased the compensation of any officer or granted
any general salary or benefits increase to their employees, in each case
other than in the ordinary course of business consistent with past
practice; (v) neither the Company nor any of its subsidiaries has taken any
action referred to in Section 4.03 hereof, except as permitted thereby;
(vi) there has been no declaration, setting aside or payment of any
dividend or other distribution with respect to the capital stock of the
Company; (vii) there has been no change by the Company in accounting
principles, practices or methods, except as may have been required by GAAP
or applicable Law and (viii) neither the Company nor any of its
subsidiaries has agreed (whether or not in writing) to do any of the
foregoing.
(g) Title to Properties; Encumbrances. The Company and each of its
subsidiaries has good, valid and marketable title to (i) all of its
material tangible properties and assets (real and personal), including,
without limitation, all the properties and assets reflected in the
consolidated balance sheet as of December 31, 1997 except as indicated in
the notes thereto and except for properties and assets reflected in the
consolidated balance sheet as of March 31, 1997 which have been sold or
otherwise disposed of in the ordinary course of business consistent with
past practice after such date, and (ii) all the material tangible
properties and assets purchased by the Company and any of its subsidiaries
since March 31, 1997 except for such properties and assets which have been
sold or otherwise disposed of in the ordinary course of business consistent
with past practice; in each case subject to no Encumbrance, except for (1)
Encumbrances set forth in the consolidated balance sheet as of March 31,
1997 (including the notes thereto) or as set forth in Section 3.01(g) of
the Company Disclosure Letter, (2) Encumbrances consisting of zoning or
planning restrictions, easements, permits and other restrictions or
limitations on the use of real property or irregularities in title thereto
which do not materially detract from the value of, or impair the use of,
such property by the Company or any of its subsidiaries in the operation of
its respective business, (3) statutory liens or liens of landlords,
carriers, warehousemen, mechanics, suppliers, materialmen or repairmen
arising in the ordinary course of business, (4) Encumbrances for current
taxes, assessments or governmental charges or levies on property not yet
due and delinquent and (5) such Encumbrances as, individually or in the
aggregate, would not be reasonably expected to have a material adverse
effect on the Condition of the Company and its subsidiaries taken as a
whole. All of the material properties and assets of the Company and its
subsidiaries are in good working order, normal wear and tear excepted and
are suitable for their current uses in their respective businesses.
(h) Compliance with Laws. Except as set forth in Section 3.01(h) of
the Company Disclosure Schedule, the Company and its subsidiaries are in
compliance with applicable Laws except where the failure to so comply would
not have a material adverse effect on the Condition of the Company and its
subsidiaries taken as a whole or would not prevent or materially delay
consummation of the transactions contemplated by this Agreement.
(i) Litigation. Except as disclosed in the Commission Filings or as
set forth in Section 3.01(i) of the Company Disclosure Letter, there is no
action, suit, proceeding at law or in equity, or any arbitration or any
administrative or other proceeding by or before (or to the knowledge of the
Company any investigation by) any Governmental Entity, pending, or to the
best knowledge of the Company, threatened, against or affecting the Company
or any of its subsidiaries, or any of their properties, assets or rights
which would be reasonably likely to have a material adverse effect on the
Condition of the Company and its subsidiaries taken as a whole or would
prevent or materially delay consummation of the transactions contemplated
by this Agreement. Except as disclosed in the Commission Filings, neither
the Company nor any of its subsidiaries is subject to any judgment, order
or decree entered in any lawsuit, arbitration or other proceeding which
would have a material adverse effect on the Condition of the Company and
its subsidiaries taken as a whole or on the ability of the Company or any
subsidiary to conduct its business as presently conducted or would prevent
or materially delay consummation of the transactions contemplated by this
Agreement.
(j) Employee Benefit Plans. (i) Each employee benefit plan within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), maintained by the Company and/or any of its
United States subsidiaries or to which the Company or any such subsidiary
contributes (or has any obligation to contribute) (collectively, the "US
EMPLOYEE BENEFIT PLANS") is listed in Section 3.01(j)(i) of the Company
Disclosure Letter. Also listed on the Disclosure Schedule are any bonus,
deferred compensation, profit sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, restricted stock, stock option,
employment, termination, severance, change of control or incentive
compensation plan or agreement maintained by the Company or any of its
subsidiaries. Except as set forth in Section 3.01(j)(i) of the Company
Disclosure Letter: (1) each US Employee Benefit Plan is in material
compliance with applicable law and has been administered and operated in
all respects in accordance with its terms; (2) each US Employee Benefit
Plan which is intended to be "QUALIFIED" within the meaning of Section
401(a) of the Internal Revenue Code of 1986, as amended (the "CODE"), has
received a favorable determination letter from the Internal Revenue Service
with respect to "TRA" (as defined in Section 1 of Rev. Proc. 93-39) and, to
the knowledge of the Company, no event has occurred and no condition exists
which would result in the revocation of any such determination; (3) no US
Employee Benefit Plan is covered by Title IV of ERISA or subject to Section
412 of the Code or Section 302 of ERISA; (4) no liability under Subtitle C
or D of Title IV of ERISA has been or is expected to be incurred by the
Company or any of its subsidiaries with respect to any ongoing, frozen or
terminated "SINGLE-EMPLOYER PLAN", within the meaning of Section
4001(a)(15) of ERISA, covered by Title IV of ERISA ("Single Employer Plan")
currently or formerly maintained by any of them, or the Single-Employer
Plan of any entity which is considered one employer with the Company under
Section 4001 of ERISA or Section 414(b) or (c) of the Code (an "ERISA
AFFILIATE"); (5) no notice of a "REPORTABLE EVENT", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not
been waived, has been required to be filed for any U.S. Employee Benefit
Plan covered by Title IV of ERISA ("Pension Plan") within the 12-month
period ending on the date hereof or will be required to be filed in
connection with the transactions contemplated by this Agreement; (6)
neither any Pension Plan nor any Single-Employer Plan of an ERISA Affiliate
has an "ACCUMULATED FUNDING DEFICIENCY" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver; (7) neither the Company nor
any of its subsidiaries has provided, or is required to provide, security
to any Pension Plan or to any Single-Employer Plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code; (8) under each Pension Plan
which is a Single-Employer Plan, as of the last day of the most recent plan
year ended prior to the date hereof, the actuarially determined present
value of all "BENEFIT LIABILITIES", within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions contained in the Plan's most recent actuarial valuation), did
not exceed the then current value of the assets of such Plan, and there has
been no material change in the financial condition of such Plan since the
last day of the most recent plan year; (9) the withdrawal liability of the
Company and its subsidiaries under each U.S. Employee Benefit Plan which is
a multiemployer plan to which the Company, any of its subsidiaries or an
ERISA affiliate has contributed during the preceding 12 months, determined
as if a "COMPLETE WITHDRAWAL", within the meaning of Section 4203 of ERISA,
had occurred as of the date hereof, does not exceed $100,000; (10) neither
the Company nor any of its subsidiaries, nor, to the Company's knowledge,
any other "DISQUALIFIED PERSON" or "PARTY IN INTEREST" (as defined in
Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively)
has engaged in any transactions in connection with any US Employee Benefit
Plan that would result in the imposition of a penalty pursuant to Section
502 of ERISA, damages pursuant to Section 409 of ERISA or a tax pursuant to
Section 4975 of the Code; (11) no US Employee Benefit Plan provides for
post-employment or retiree health or life insurance benefits, except to the
extent required by Part 6 of Subtitle B of Title I of ERISA or Section
4980B of the Code; (12) no litigation or administrative proceeding has been
commenced, or, to the Company's knowledge, threatened with respect to any
US Employee Benefit Plan (other than routine claims for benefits payable in
the ordinary course, and appeals of denied such claims); (13) all
contributions required to be made under the terms of any US Employee
Benefit Plan have been timely made or have been reflected in the Audited
Financial Statements or the Preliminary Financial Statements.
(ii) Each employee benefit plan other than any US Employee
Benefit Plan maintained or contributed to by any non-United States
subsidiary of the Company is listed in Section 3.01(j)(ii) of the
Company Disclosure Letter (collectively, the "FOREIGN EMPLOYEE BENEFIT
PLANS"). Except as set forth in Section 3.01(j)(ii) of the Company
Disclosure Letter: (1) each Foreign Employee Benefit Plan is in
compliance with applicable law and has been administered and operated
in all respects in accordance with its terms; and (2) no litigation or
administrative proceeding has been commenced, or, to the Company's
knowledge, threatened, with respect to any Foreign Employee Benefit
Plan (other than routine claims for benefits payable in the ordinary
course, and appeals of denied such claims); and (3) with respect to
each Foreign Employee Benefit Plan which is a pension plan, the
Company and its subsidiaries have no material unfunded liabilities
with respect to any such pension plan.
(k) Taxes. (i) The Company has filed or caused to be filed, or will
file or cause to be filed on or prior to the Closing Date, all material
federal, state, local and foreign tax returns and tax reports which are
required to be filed by, or with respect to, the Company on or prior to the
Closing Date (taking into account any extension of time to file granted to
or on behalf of the Company) (collectively, the "RETURNS"). Except as set
forth in Section 3.01(k) of the Company Disclosure Letter, all material
federal, state, local and foreign income, gross receipts, windfall profits,
severance, property, sales, use, license, excise, franchise, employment,
withholding or similar taxes imposed on the income, properties or
operations of the Company, together with any interest, additions to tax or
penalties with respect thereto and any interest in respect of such
additions to tax or penalties ("TAXES") due and payable by the Company have
been, or prior to the Closing Date will be, paid or fully provided for on
the books and records of the Company in accordance with GAAP, and all
material Taxes not yet due and payable with respect to periods (or portions
thereof) ending on or prior to the Closing Date have been or will be fully
provided for on the books and records of the Company in accordance with
generally accepted accounting principles. Except as set forth in Section
3.01(k) of the Company Disclosure Letter, (a) all Returns with respect to
periods ending on or before the Closing Date have been examined by the
Internal Revenue Service or the appropriate state, local or foreign taxing
authority or the period for assessment of the Taxes in respect of which
such Returns were required to be filed has expired, (b) no issues have been
raised by any relevant taxing authority in connection with an audit or
examination of any such Returns which are currently pending, and (c) no
waivers of statutes of limitation are in effect with respect to any Taxes
of the Company.
(ii) The Company is not, nor was it at any time during the
five-year period ending on the Closing Date, a "UNITED STATES REAL
PROPERTY HOLDING CORPORATION" within the meaning of Section 897(c) of
the Code.
(iii) Except as set forth in Section 3.01(k) of the Company
Disclosure Letter, none of the Company, Parent or Sub will be
obligated as a result of the transactions contemplated by this
Agreement to make a payment that would be a "PARACHUTE PAYMENT" to a
"DISQUALIFIED INDIVIDUAL" as those terms are defined in Section 280G
of the Code without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the
future.
(l) Liabilities. Except as set forth in Section 3.01(l) of the Company
Disclosure Letter, neither the Company nor any of its subsidiaries has any
material claims, liabilities or indebtedness outstanding except (i) as set
forth in the consolidated balance sheet of the Company as of March 31,
1997, (ii) for liabilities incurred subsequent to March 31, 1997, in the
ordinary course of business consistent with past practice, (iii) as set
forth in the Commission Filings.
(m) Intellectual Properties. Except as would not have a material
adverse effect on the Condition of the Company and its subsidiaries, taken
as a whole, the Company and its subsidiaries own or have valid, binding and
enforceable rights to use all patents, trademarks, trade names, service
marks, service names, copyrights, applications therefor and licenses or
other rights in respect thereof ("INTELLECTUAL PROPERTY") used or held for
use in connection with the business of the Company or its subsidiaries,
without any known conflict with the rights of others. Except as set forth
in Section 3.01(m) of the Company Disclosure Letter, neither the Company
nor any of its subsidiaries has received any notice from any other Person
pertaining to or challenging the right of the Company or any of its
subsidiaries to use any Intellectual Property or any trade secrets,
proprietary information, inventions, know-how, processes and procedures
owned or used by or licensed to the Company or its subsidiaries, except
with respect to rights the loss of which, individually or in the aggregate,
would not be reasonably likely to have a material adverse effect on the
Condition of the Company and its subsidiaries, taken as a whole.
(n) Material Contracts. Except as set forth in Section 3.01(n) of the
Company Disclosure Letter, neither the Company nor any of its subsidiaries
has or is bound by:
(i) any agreement, contract or commitment that involves the
performance of services by it of an amount or value (as measured by
the revenue derived therefrom during 1997) in excess of $500,000
annually, unless terminable by the Company or its relevant subsidiary
on not more than 90 days notice,
(ii) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock,
(iii) any agreement, contract or commitment to be performed
relating to capital expenditures in excess of $100,000 in any calendar
year, or in the aggregate require expenditures in excess of $1,000,000
other than those capital expenditures approved as part of the
Company's fiscal 1999 budget a true and correct copy of which has
heretofore been provided to Parent,
(iv) any agreement, indenture or instrument relating to
indebtedness for borrowed money or the deferred purchase price of
property (excluding trade payables in the ordinary course of business,
intercompany indebtedness and leases for telephones, copy machines,
facsimile machines and other office equipment),
(v) any loan or advance to (other than advances to employees in
the ordinary course of business in amounts of $25,000 or less to any
individual and $100,000 in the aggregate), or investment in (other
than investments in subsidiaries), any Person, or any agreement,
contract or commitment relating to the making of any such loan,
advance or investment or any agreement, contract or commitment
involving a sharing of profits (except for bonus arrangements with
employees entered into in the ordinary course of business consistent
with past practice),
(vi) any guarantee or other contingent liability in respect of
any indebtedness or obligation of any Person (other than in the
ordinary course of business, consistent with past practice or with
respect to any indebtedness or obligation of the Company or any
subsidiary),
(vii) any management service, consulting or any other similar
type of contract, involving payments of more than $250,000 annually,
unless terminable by the Company on not more than 90 days notice,
(viii) any agreement, contract or commitment limiting the ability
of the Company or any of its subsidiaries to engage in any line of
business or to compete with any Person,
(ix) any warranty, guaranty or other similar undertaking with
respect to a contractual performance extended by the Company or any of
its subsidiaries other than in the ordinary course of business, or
(x) any material amendment, modification or supplement in respect
of any of the foregoing.
Except as otherwise set forth in Section 3.01(n) of the Company
Disclosure Letter, each contract or agreement set forth in Section 3.01(n) of
the Company Disclosure Letter is in full force and effect and (A) there exists
no default or event of default or event, occurrence, condition or act (including
the consummation of Offer or the Merger) on the part of the Company or any
subsidiary which, with the giving of notice, the lapse of time or the happening
of any other event or condition, would become a default or event of default
thereunder and (B) no approval or consent of, or notice to, any person is needed
in order that each such contract or agreement shall continue in full force and
effect in accordance with its terms without penalty, acceleration or rights of
early termination by reason of the consummation of the transactions contemplated
by this Agreement.
(o) Proxy Statement and Schedule l4D-9. The definitive proxy statement
and related materials, if required, to be furnished to the holders of
Common Stock in connection with the Merger pursuant to Section 4.04 hereof
(the "PROXY STATEMENT") will comply in all material respects with the
Exchange Act and the rules and regulations thereunder and any other
applicable laws. If at any time prior to the Effective Time any event
occurs which should be described in an amendment or supplement to the Proxy
Statement, the Company will promptly file and disseminate, as required, an
amendment or supplement which complies in all material respects with the
Exchange Act and the rules and regulations thereunder and any other
applicable laws. Prior to its filing with the Commission, Parent and Sub
and their Counsel shall have a reasonable opportunity to review the
amendment or supplement. None of the information supplied by the Company
for inclusion in the Proxy Statement, will, at the date such information is
supplied and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made, in light of the circumstance under which they are
made, not misleading. None of the information in the Schedule 14D-9, at the
respective times the Schedule 14D-9 is filed with the Commission, will
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances
under which they are made, not misleading. Notwithstanding the foregoing,
no representation or warranty is made with respect to any information with
respect to Parent, Sub or their officers, directors or affiliates provided
to the Company by Parent or Sub in writing for inclusion in the Schedule
14D-9. The Schedule l4D-9 will comply in all material respects with the
Exchange Act and the rules and regulations thereunder and any other
applicable laws. If at any time prior to the expiration or termination of
the Offer any event occurs which should be described in an amendment or
supplement to the Schedule l4D-9 or any amendment or supplement thereto,
the Company will promptly file and disseminate, as required, an amendment
or supplement which complies in all material respects with the Exchange Act
and the rules and regulations thereunder and any other applicable laws.
Prior to its filing with the Commission, Parent and Sub and their Counsel
shall have a reasonable opportunity to review the amendment or supplement.
None of the information supplied by the Company to Parent or Sub for
inclusion or incorporation by reference in the Offer Documents contained,
at the respective times the Offer Documents were filed with the SEC, any
untrue statement of a material fact or omitted to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(p) Broker's or Finder's Fee. Except for Berenson Minella (whose fees
and expenses will be paid by the Company in accordance with the Company's
agreement with such firm) no agent, broker, Person or firm acting on behalf
of the Company is, or will be, entitled to any fee, commission or broker's
or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby.
(q) Environmental Laws and Regulations. Except as set forth in Section
3.01(q) of the Company Disclosure Letter, or as would not have a material
adverse effect on the Condition of the Company and its subsidiaries, taken
as a whole:
(i) Hazardous Materials have not been generated, used, treated or
stored on any Company Property, except for quantities used or stored
at such Property in compliance with Environmental Laws, required in
connection with the normal operations and maintenance of such Property
and as would not reasonably be expected to result in liability under
any Environmental Law.
(ii) Hazardous Materials have not been released or disposed of on
any Company Property, except for quantities released on such Property
in compliance with Environmental Laws and required in the normal
operation and maintenance of such Property.
(iii) The Company and its subsidiaries are in compliance with
Environmental Laws and the requirements of permits issued under such
Environmental Laws with respect to any Company Property.
(iv) There are no pending or threatened Environmental Claims
against the Company, any of its subsidiaries or, to the knowledge of
the Company, any Company Property.
(v) neither the Company nor any subsidiary is subject to any
order, decree, injunction or other arrangement with any Governmental
Entity or any indemnity or other agreement with any third party
relating to liability under any Environmental Law.
(vi) none of the properties of the Company or any subsidiary
contain any underground storage tanks, asbestos-containing material,
lead products, or polychlorinated biphenyls.
(vii) there are no other circumstances or conditions involving
the Company or any subsidiary that could reasonably be expected to
result in any claims, liability, investigations, costs or restrictions
on the ownership, use, or transfer of any property in connection with
any Environmental Law
As used in this Section 3.01(q), the following terms shall have the
meanings set forth below:
(i) "COMPANY PROPERTY" means any real property and improvements
currently or formerly owned, leased, used, operated or occupied by the
Company or any of its subsidiaries.
(ii) "HAZARDOUS MATERIALS" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable,
urea formaldehyde foam insulation, transformers or other equipment
that contain dielectric fluid containing levels of polychlorinated
biphenyls, and radon gas; and (b) any chemicals, materials or
substances defined as or included in the definition of "Hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," or words of similar import, under any applicable
Environmental Law or otherwise regulated under any Environmental Law.
(iii) "ENVIRONMENTAL LAW" means any applicable federal, state,
foreign or local statute, law, rule, regulation, ordinance, code,
policy or rule of common law in effect and in each case as amended as
of the Closing Date, and any judicial or administrative interpretation
thereof as of the Closing Date, including any judicial or
administrative order, consent decree or judgment, relating to the
environment, health, safety or Hazardous Materials, including the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, 42 U.S.C. ss. 9601 et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. ss. 6901 et seq.;
the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.
1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et
seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Occupational
Safety and Health Act, 28 U.S.C. ss. 2412; the Safe Drinking Water
Act, 42 U.S.C. ss. 300f et seq.; the Oil Pollution Act of 1990, 33
U.S.C. ss. 2701 et seq.; and their state and local counterparts and
equivalents.
(iv) "ENVIRONMENTAL CLAIMS" means administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigations or proceedings
relating in any way to any Environmental Law or any permit issued
under any such Law (hereafter "CLAIMS"), including (a) Claims by
governmental or regulatory authorities for enforcement,
investigations, monitoring, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law,
and (b) Claims by any third party relating to any Environmental Law
seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety
or the environment.
(v) "RELEASE" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing and the like, into or upon any land or water or air, or
otherwise entering into the environment.
(r) State Takeover Statutes; Charter Provisions. Section 203 of the
DGCL is inapplicable to the Offer, the Merger, this Agreement and the
Stockholders Agreement and the transactions contemplated hereby and
thereby. No other state takeover statute or similar statute or regulation
applies to the Offer, the Merger or the transactions contemplated hereby or
by the Stockholders Agreement.
(s) Opinion of Financial Advisor. The Company has received the opinion
of Berenson Minella, to the effect that, as of the date of this Agreement,
the consideration per share of Common Stock to be received in the Offer and
the Merger by the Company's stockholders is fair to the Company's
stockholders from a financial point of view, and a complete and correct
signed copy of such opinion has been, or will be, delivered to Sub and
Parent.
(t) Rights Agreement. The Company has not adopted or otherwise
implemented a stockholder rights plan or other similar agreement or
instrument.
(u) Voting Requirements. Unless the Merger is consummated in
accordance with the provisions of Section 253 of the DGCL, the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock
is the only vote of the holders of any class or series of the Company's
capital stock necessary to approve this Agreement and the transactions
contemplated hereby.
3.2 Representations and Warranties of Parent and Sub. Each of Parent
and Sub represents and warrants to the Company as follows:
(a) Due Organization; Good Standing and Corporate Power. Parent is a
corporation duly organized and validly existing and in good standing under
the laws of its jurisdiction of incorporation. Sub is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Each of Parent and Sub has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted except such instances where
the failure to have such power and authority, individually or in the
aggregate, would not prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(b) Authorization and Validity of Agreement. Each of Parent and Sub
has the corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance
of this Agreement by Parent and Sub, and the consummation by each of them
of the transactions contemplated hereby, have been duly authorized by the
Boards of Directors of each of Parent and Sub. No other corporate action on
the part of either of Parent or Sub is necessary to authorize the
execution, delivery and performance of this Agreement by each of Parent and
Sub and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of Parent and Sub
and is a valid and binding obligation of each of Parent and Sub,
enforceable against each of Parent and Sub in accordance with its terms,
except that such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and general equitable principles.
(c) Consents and Approvals; No Violations. Assuming (i) the filings
required under the HSR Act are made and the waiting period thereunder has
been terminated or has expired, (ii) the requirements of the Exchange Act
relating to the Proxy Statement and the Offer are met, and (iii) the filing
of the Certificate of Merger and other appropriate merger documents, if
any, as required by the laws of the State of Delaware, the execution and
delivery of this Agreement by Parent and Sub and the consummation by Parent
and Sub of the transactions contemplated hereby will not: (1) violate any
provision of the Certificate of Incorporation or By-Laws of either Parent
or Sub; (2) violate any statute, ordinance, rule, regulation, order or
decree of any court or of any governmental or regulatory body, agency or
authority applicable to Parent or Sub or by which either of their
respective properties or assets may be bound; (3) require any filing with,
or permit, consent or approval of, or the giving of any notice to any
governmental or regulatory body, agency or authority; or (4) result in a
violation or breach of, conflict with, constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation
of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Parent, Sub or any of their subsidiaries under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, franchise, permit, agreement, lease or other instrument
or obligation to which Parent or Sub or any of their subsidiaries is a
party, or by which they or their respective properties or assets may be
bound except for in the case of clauses (3) and (4) above for such filing,
permit, consent, approval or violation, which would not prevent or
materially delay consummation of the transactions contemplated by this
Agreement.
(d) Offer Documents, Schedule 14D-9 and Proxy Statement. The Offer
Documents will comply in all material respects with the Exchange Act and
the rules and regulations thereunder and any other applicable laws. The
Offer Documents will not, at the time such Offer Documents are filed with
the Commission or are first published, sent or given to the Company's
stockholders, as the case may be, contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the expiration or termination of the Offer any event occurs which
should be described in an amendment or supplement to the Schedule l4D-1 or
any amendment or supplement thereto, Sub will file and disseminate, as
required, an amendment or supplement which complies in all material
respects with the Exchange Act and the rules and regulations thereunder and
any other applicable laws. Prior to its filing with the Commission, the
amendment or supplement shall be delivered to the Company and its counsel
and the Company shall be given the opportunity to comment thereon. The
written information supplied or to be supplied by Parent and Sub for
inclusion in the Proxy Statement and the Schedule l4D-9 of the Company will
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made, in light of
the circumstances under which they are made, not misleading.
Notwithstanding the foregoing, no representation or warranty is made with
respect to any information with respect to the Company or its officers,
directors and affiliates provided to Parent or Sub by the Company in
writing for inclusion in the Offer Documents or amendments or supplements
thereto.
(e) Broker's or Finder's Fee. Except for Lazard Freres & Co. LLC
(whose fees and expenses as financial advisor to Parent and Sub will be
paid by Parent or Sub), no agent, broker, Person or firm acting on behalf
of Parent or Sub is, or will be, entitled to any fee, commission or
broker's or finder's fees from any of the parties hereto, or from any
Person controlling, controlled by, or under common control with any of the
parties hereto, in connection with this Agreement or any of the
transactions contemplated hereby.
(f) Financing. Parent has available to it sufficient funds to
consummate the transactions contemplated hereby. On or prior to the
purchase of shares of Common Stock pursuant to the Offer and Effective Time
Parent shall provide or cause to be provided to Sub the funds necessary to
consummate the transactions contemplated hereby.
ARTICLE IV
TRANSACTIONS PRIOR TO CLOSING DATE
4.1 Access to Information Concerning Properties and Records. During
the period commencing on the date hereof and ending at the Effective Time, the
Company shall, and shall cause each of its subsidiaries to, upon reasonable
notice, afford Parent and Sub, and their respective counsel, accountants,
consultants and other authorized representatives, reasonable access during
normal business hours to the employees, properties, books and records of the
Company and its subsidiaries in order that they may have the opportunity to make
such investigations as they shall desire of the affairs of the Company and its
subsidiaries and all other information concerning the Company's or its
subsidiaries' business, properties and personnel as Parent and Sub may
reasonably request. The Company shall furnish promptly to Parent and Sub (a) a
copy of each report, schedule, registration statement and other document filed
by it or its subsidiaries during such period pursuant to the requirements of
Federal or state securities laws and (b) all other information concerning its or
its subsidiaries' business, properties and personnel as Parent and Sub may
reasonably request. The Company agrees to cause its officers and employees to
furnish such additional financial and operating data and other information and
respond to such inquiries as Parent and Sub shall from time to time reasonably
request.
4.2 Confidentiality. Information obtained by Parent and Sub and their
respective counsel accountants, consultants and other authorized representatives
pursuant to Section 4.01 hereof shall be subject to the provisions of the
Confidentiality Agreement between the Company and Technicolor Video Cassettes,
Inc. dated December 10, 1997.
4.3 Conduct of the Business of the Company Pending the Closing Date.
The Company agrees that, except as specifically permitted, required or
specifically contemplated by or otherwise described in this Agreement or
otherwise consented to or approved by Sub and Parent (which consent or approval
shall not be unreasonably withheld, conditioned or delayed), during the period
commencing on the date hereof and, except with respect to Section 4.03(b)(xiv)
which shall survive any termination of this Agreement in accordance with Section
6.02 hereof, ending at the Effective Time.
(a) The Company and each of its subsidiaries will conduct their
respective businesses and operations only according to their ordinary
course of business consistent with past practice and will use their
reasonable best efforts to preserve intact their respective business
organization, keep available the services of their officers and employees
and maintain satisfactory relationships with licensors, suppliers,
distributors, clients, landlords, joint venture partners, employees, agents
and others having business relationships with them;
(b) Neither the Company nor any of its subsidiaries shall (i) make any
change in or amendment to its Certificate of Incorporation or By-Laws (or
comparable governing documents); (ii) distribute, issue or sell any shares
of its capital stock (other than in connection with the exercise of Options
outstanding on the date hereof) or any of its other securities, or issue
any securities convertible into, or options, warrants or rights to purchase
or subscribe to, or enter into any arrangement or contract with respect to
the issuance or sale of, any shares of its capital stock or any of its
other securities, or make any other changes in its capital structure; (iii)
sell or pledge or agree to sell or pledge any stock owned by it in any of
its subsidiaries; (iv) declare, pay, set aside or make any dividend or
other distribution or payment with respect to, or split or combine, redeem
or reclassify, or purchase or otherwise acquire any shares of its capital
stock or its other securities, other than dividends in the ordinary course,
consistent with past practice by a direct or indirect wholly owned
subsidiary to is parent, (v) (A) enter into any contract or commitment with
respect to capital expenditures in excess of $100,000, individually or
$1,000,000, in the aggregate, other than those capital expenditures
approved as part of the Company's fiscal 1999 budget; (B) acquire (by
merger, consolidation, or acquisition of stock or assets) any corporation,
partnership or other business or division thereof; or (C) enter into,
amend, modify, supplement or cancel any material contract, (vi) except in
the ordinary course of business, acquire a material amount of assets or
securities or release or relinquish any material contract rights; (vii)
except to the extent required under existing employee and director benefit
plans, agreements or arrangements as in effect on the date of this
Agreement, (a) increase the compensation or fringe benefits of any of its
directors, officers or employees, except for increases in salary or wages
of employees (other than officers) of the Company and its subsidiaries in
the ordinary course of business, consistent with past practice, (b) grant
any severance or termination pay not currently required to be paid under
existing severance plans, (c) enter into any employment, consulting or
severance agreement or arrangement with any present or former director,
officer or other employee of the Company or any of its subsidiaries, or (d)
establish, adopt, enter into or amend or terminate any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any present or former directors, officers or
employees; (viii) transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of, encumber or subject to any lien, any material
properties or assets or incur or modify any indebtedness or other material
liability (other than indebtedness incurred in the ordinary course under
the Amended and Restated Credit Agreement among the Company, certain of its
subsidiaries and NationsBank, N.A. (the "EXISTING CREDIT FACILITY") or
issue any debt securities or assume, guarantee or endorse or otherwise as
an accommodation become responsible for the obligations of another Person
or, otherwise than in the ordinary course of business, consistent with past
practice make any loan or extend credit; (ix) make any material tax
election or settle or compromise any material tax liability; (x) except as
required by applicable law or generally accepted accounting principles,
make any material change in its method of accounting; (xi) adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or
any of its subsidiaries not constituting an inactive subsidiary (other than
the Merger); (xii) agree to the settlement of any material claim or
litigation (including, but not limited to any claim or litigation in
respect of or related to any Environmental Law), (xiii) permit any material
insurance policy naming it as beneficiary or a loss payable payee to be
cancelled or otherwise terminate without notice to Parent unless such
insurance policy is immediately replaced, with no gaps or lapses in
coverage, with an insurance policy issued by a financially sound and
reputable insurance company in at least such amounts and against at least
such risks as the cancelled policy for a premium not greater than 110% of
the premium for the cancelled or otherwise terminated policy, (xiv) take
any action, including, without limitation, the adoption of any stockholder
rights plan or similar agreement, arrangement or instrument or amendments
to its Certificate of Incorporation (or other organizational or governing
documents), which would, directly or indirectly, restrict or impair the
ability of Parent or Sub to vote, or otherwise to exercise the rights and
receive the benefits of a stockholder with respect to, securities of the
Company that may be acquired or controlled by Parent or Sub or permit any
stockholder to acquire securities of the Company on a basis not available
to Parent or (xv) agree, in writing or otherwise, to take any of the
foregoing actions; and
(c) The Company shall not, and shall not permit any of its
subsidiaries to, (i) take any action (or knowingly omit to take any
action), engage in any transaction or enter into any agreement which
action, knowing omission, transaction or agreement would cause any of the
representations or warranties set forth in Section 3.01 hereof to be untrue
as of the Closing Date, or (ii) purchase or acquire, or offer to purchase
or acquire, any shares of capital stock of the Company; and
(d) The Company and each of its subsidiaries shall pay all material
Taxes and shall use reasonable best efforts to pay all other Taxes as the
same become due other than Taxes which are being contested in good faith.
4.4 Proxy Statement. If stockholder approval of the Merger is
required by law, as promptly as practicable, the Company will promptly prepare
and file a preliminary Proxy Statement with the Commission and will use its
reasonable efforts to respond to the comments of the Commission in connection
therewith and to furnish all information required to prepare the definitive
Proxy Statement (including, without limitation, financial statements and
supporting schedules and certificates and reports of independent public
accountants). Parent, Sub and Company will cooperate with each other in
connection with the preparation of the Proxy Statement. Without limiting the
generality of the foregoing, each of Parent and Sub will furnish to the Company
the information relating to it required by the Exchange Act to be set forth in
the Proxy Statement. Promptly after the expiration or termination of the Offer,
if required by the DGCL in order to consummate the Merger, the Company will
cause the definitive Proxy Statement to be mailed to the stockholders of the
Company and, if necessary, after the definitive Proxy Statement shall have been
so mailed, promptly circulate amended, supplemental or supplemented proxy
material and, if required in connection therewith, resolicit proxies. The
Company will not use any proxy material in connection with the meeting of its
stockholders without providing Parent and Sub with a reasonable opportunity to
review and comment on such proxy material.
4.5 Stockholder Approval. (a) Promptly after the expiration or
termination of the Offer, if required by DGCL in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law, duly call, convene and hold a meeting of the holders of Common
Stock for the purpose of voting upon this Agreement and the Merger and the
Company agrees that this Agreement and the Merger shall be submitted at such
special meeting. The Company shall use its reasonable best efforts to solicit
from its stockholders proxies, and, subject always to the fiduciary obligations
of the Company's directors under applicable law, shall take all other action
necessary and advisable to secure the vote of stockholders required by
applicable law to obtain the approval for this Agreement and the Merger. Subject
to Section 4.07 of this Agreement, the Company agrees that it will include in
the Proxy Statement the recommendation of its Board of Directors that holders of
Common Stock approve and adopt this Agreement and approve the Merger. Parent
will cause all shares of Common Stock owned by Parent and its subsidiaries to be
voted in favor of the Merger.
(b) Notwithstanding the foregoing, in the event that Sub shall acquire
at least 90% of the outstanding Company Common Stock, the Company agrees, at the
request of Parent and Sub, subject to Article V, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the DGCL.
4.6 Reasonable Efforts. Subject to the terms and conditions provided
herein, each of the Company, Parent and Sub shall, and the Company shall cause
each of its subsidiaries to, cooperate and use their respective reasonable
efforts to (a) take, or cause to be taken, all appropriate action, to do and
cause to be done all things reasonably necessary, proper and advisable and to
make, or cause to be made, all filings necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
their respective reasonable efforts to obtain, as promptly as practicable and
prior to the Closing Date, all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities,
regulatory organizations, and other instrumentalities and agencies and other
third parties to contracts with the Company and its subsidiaries as are
necessary in connection with the authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement and to fulfill the conditions to the Offer and the Merger and (b) as
promptly as practicable, make, or cause to be made, all filings and other
submissions necessary, proper or advisable with respect to this Agreement the
transactions contemplated hereby under (x) the HSR Act and any related
governmental request thereunder and (y) any other applicable laws or
regulations; provided, however, that no loan agreement or contract for borrowed
money shall be repaid except as currently required by its terms, in whole or in
part, and no contract shall be amended to increase the amount payable thereunder
or otherwise to be more burdensome to the Company or any of its subsidiaries in
order to obtain any such consent, approval or authorization without the written
consent of Sub. The Company, Parent and Sub shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filing and,
if requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith. The Company, Parent and Sub shall use their respective
reasonable best efforts to furnish to each other all information required for
any application or other filing to be made pursuant to the rules and regulations
of any applicable law in connection with the transactions contemplated by this
Agreement.
4.7 No Solicitation of Other Offers. (a) The Company and its
affiliates and each of their respective officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents ("AGENTS") shall immediately cease any existing discussions or
negotiations with any other parties that may be ongoing with respect to any
Acquisition Proposal (as defined below). Neither the Company nor any of its
subsidiaries shall, directly or indirectly, take (and the Company shall not
authorize or permit its or its subsidiaries' Agents to take) any action to (i)
encourage, solicit or initiate the making of any Acquisition Proposal, (ii)
enter into any agreement with respect to any Acquisition Proposal or (iii)
participate in any way in discussions or negotiations with or furnish or
disclose any information to, any Person (other than Parent or Sub) in connection
with, or take any other action to knowingly facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal, except that, the Company may participate in
discussions or negotiations with and, provided such Person enters into a
confidentiality agreement with the Company on terms no more favorable to such
Person than the confidentiality agreement between Technicolor Videocassette
Inc., a wholly owned subsidiary of Parent, and the Company, furnish or disclose
information to, any Person who has made, in the good faith judgement of the
Board of Directors of the Company after consultation with their financial
advisors, a bona fide offer or proposal (but not an inquiry) regarding a
transaction that would constitute an Acquisition Proposal and that, if agreed
with the Company, would constitute a Superior Proposal, provided such
Acquisition Proposal was not initially solicited, encouraged or knowingly
facilitated by the Company, its subsidiaries or their Agents in violation of
this Agreement after the date hereof, and, provided further, that nothing in
this Section 4.07 shall prevent the Company or Board of Directors from taking
and disclosing to the Company's stockholders a position contemplated by Rule
14d-9 and Rule 14e-2 promulgated under the Exchange Act with respect to any
tender offer or from making such disclosure to the Company's stockholders, upon
the advice of its independent outside legal counsel, as is required under
applicable Federal Securities law. Any actions permitted under, and taken in
compliance with, this Section 4.07 shall not be deemed a breach of any other
covenant or agreement of such party contained in this Agreement.
"ACQUISITION PROPOSAL" shall mean any inquiry, proposal or offer from
any Person or group relating to any direct or indirect acquisition or purchase
of a substantial amount of assets of the Company or any of its subsidiaries or
of all or any portion of any class of equity securities of the Company or any of
its subsidiaries, any tender offer or exchange offer that if consummated would
result in any person beneficially owning all or any portion of any class of
equity securities of the Company or any of its subsidiaries, any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or any transaction having similar
economic effect involving the Company or any of its subsidiaries, other than the
transactions contemplated by this Agreement. "SUPERIOR PROPOSAL" shall mean a
bona fide proposal made by a third party to acquire all or a portion of the
outstanding shares of the Company pursuant to a tender offer, a merger or a sale
of all of the assets of the Company (x) on terms which the Board of Directors of
the Company determines in their good faith reasonable judgment (after
consultation with its independent outside financial and legal advisors) to be
more favorable to the Company and its stockholders than the transactions
contemplated hereby.
(b) Except to the extent that, after consultation with independent
outside counsel to the Company, the Board of Directors determines in good faith
that such actions are required in order for the directors of the Company to
satisfy their fiduciary duties to the Company and its stockholders or to comply
with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act, the Board of
Directors shall not take any action to withdraw or modify in a manner adverse to
Parent or Sub, or take a public position inconsistent with, its approvals or
recommendation of the Offer, the Merger or this Agreement or to recommend
another Acquisition Proposal and shall not resolve to do any of the foregoing.
(c) In addition to the obligations of the Company set forth in
paragraph (a) above, on the date of receipt thereof, the Company shall advise
Parent of any request for information regarding or that may be reasonably likely
to result in, or any other inquiry or proposal relating to an Acquisition
Proposal, the material terms and conditions of such request, inquiry or proposal
and of any subsequent material amendments or changes thereto, and the identity
of the Person making any such request, inquiry or proposal.
(d) Immediately following the execution of this Agreement, the Company
will request each Person which has heretofore executed a confidentiality
agreement in connection with its consideration of making an Acquisition Proposal
with respect to the Company to return and/or destroy all confidential
information heretofore furnished to such Person by or on behalf of the Company.
4.8 Notification of Certain Matters. The Company shall give prompt
notice to Sub and Parent, and Parent and Sub shall give prompt notice to the
Company, of (a) the occurrence, or failure to occur, of any event, which
occurrence or failure to occur has caused or would be reasonably likely cause
(i) any representation or warranty contained in the Agreement to be untrue in
any material respect or (ii) any of the Tender Offer Conditions to be
unsatisfied, (b) any notice of, or other communication relating to, a default or
event that, with notice or lapse of time or both, would become a default,
received by the Company or any of its subsidiaries under any material contract
to which the Company or any of its subsidiaries is a party or under which any of
their respective assets or properties is bound, or (c) any event, change in
circumstances or other occurrence that has or would be reasonably likely to have
a material adverse effect on the Condition of the Company and its subsidiaries
taken as a whole. Each of the Company on the one hand and Sub and Parent on the
other shall give prompt notice to the other party of any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement.
4.9 HSR Act. The Company and Parent shall, as soon as practicable and
in any event within ten days from the date of this Agreement, file Notification
and Report Forms under the HSR Act with the Federal Trade Commission (the "FTC")
and the Antitrust Division of the Department of Justice (the "ANTITRUST
DIVISION") and shall use their reasonable efforts to respond as promptly as
practicable to all inquiries received from the FTC or the Antitrust Division for
additional information or documentation.
4.10 Employee Benefits. (a) From and after the Effective time until
the first anniversary of the Effective Time, the Surviving Corporation shall
(or, if necessary, Parent shall cause the Surviving Corporation to) ensure that
all employees and officers of the Company at the Effective Time receive benefits
in the aggregate substantially comparable to the benefits received by such
individuals under US Employee Benefit Plans and Foreign Employee Benefit Plans
immediately prior to the date hereof. Notwithstanding the foregoing, following
the Effective Time, the Surviving Corporation may terminate the employment of
any employee (subject to the payment of severance benefits payable to the
employee in connection with such termination).
(b) From and after the Effective time until the first anniversary of
the Effective Time, the Surviving Corporation shall (or, if necessary, Parent
shall cause the Surviving Corporation to) keep in effect all severance policies
that are applicable to employees and officers of the Company immediately prior
to the date hereof.
(c) Following the Effective Time, (i) the Surviving Corporation shall
(or, if necessary, Parent shall cause the Surviving Corporation to) ensure that
no medical, dental, health or disability plan adopted by the Surviving
Corporation shall have any preexisting condition limitations and (ii) the
Surviving Corporation shall (or, if necessary, Parent shall cause the Surviving
Corporation to) honor all deductibles and out-of-pocket expenses paid by the
employees and officers of the Company and its U.S. subsidiaries under any
medical, dental, health or disability plan of the Company and its subsidiaries
during the portion of the calendar year prior to the time such employees become
eligible to participate in any medical, dental, health or disability plan
adopted by the Surviving Corporation..
(d) Following the Effective Time, for purposes of eligibility and
vesting, the Surviving Corporation (and, if applicable, Parent) shall honor all
service credit accrued by the employees and officers of the Company under all US
Employee Benefit Plans and Foreign Employee Benefit Plans up to (and including)
the Effective Time.
4.11 Directors' and Officers' Insurance; Indemnification. (a) From
and after the Effective Time, the Surviving Corporation shall (or, if necessary,
Parent shall take all necessary action to) ensure that the Certificate of
Incorporation and the By-Laws of the Surviving Corporation shall contain the
provisions with respect to indemnification and exculpation from liability set
forth in the Company's Certificate of Incorporation and By-Laws on the date of
this Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by law.
(b) For six years from the Effective Time, the Surviving Corporation
shall either (x) maintain in effect the Company's current directors' and
officers' liability insurance covering those persons who are currently covered
on the date of this Agreement by the Company's directors' and officers'
liability insurance policy (a copy of which has been heretofore delivered to
Parent) (the "INDEMNIFIED PARTIES"); provided that the Surviving Corporation may
substitute for such Company policies, policies with at least the same coverage
containing terms and conditions which are no less advantageous and provided that
said substitution does not result in any gaps or lapses in coverage with respect
to matters occurring prior to the Effective Time or (y) cause the Parent's,
directors' and officers' liability insurance then in effect to cover those
persons who are covered on the date of this Agreement by the Company's
directors' and officers' liability insurance policy with respect to those
matters covered by the Company's directors' and officers' liability policy;
provided that the coverage provided by Parent's insurance shall be no less
favorable to the Indemnified Parties and shall provide no fewer rights than the
Company's directors' and officers' liability insurance policy currently in
place. Notwithstanding anything to the contrary in this Section 4.11, in no
event shall the Surviving Corporation be required to expend in any one year an
amount in excess of 200% of the annual premiums paid by the Company as of the
date of this Agreement for such insurance and if the annual premium for the
insurance coverage that would otherwise be required pursuant to this Section
4.11 would exceed such amount, the Surviving Corporation shall only be obligated
to obtain a policy with the greatest coverage available for a cost not exceeding
200% of the annual premiums currently paid by the Company.
4.12 Guaranty of Performance. If Sub fails to perform any of its
obligations under this Agreement, Parent shall, or shall cause another of its
affiliates to, perform such obligations.
4.13 Financing. Parent shall provide Sub with the funds necessary to
consummate the Offer, the Merger and the other transactions contemplated hereby.
ARTICLE V
CONDITIONS PRECEDENT TO MERGER
5.1 Conditions Precedent to Obligations of Parent, Sub and the
Company. The respective obligations of Parent and Sub, on the one hand, and the
Company, on the other hand, to effect the Merger are subject to the satisfaction
or waiver (subject to applicable law) at or prior to the Effective Time of each
of the following conditions:
(a) Approval of Company's Stockholders. To the extent required by
applicable law, this Agreement and the Merger shall have been approved and
adopted by holders of a majority of the outstanding shares of the Common
Stock of the Company entitled to vote in accordance with applicable law (if
required by applicable law) and the Company's Certificate of Incorporation
and By-Laws;
(b) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated;
(c) Injunction. No preliminary or permanent injunction or other order
shall have been issued by any court or by any governmental or regulatory
agency, body or authority which prohibits the consummation of the Offer or
the Merger and the transactions contemplated by this Agreement and which is
in effect at the Effective Time, provided, however, that, in the case of a
decree, injunction or other order, each of the parties shall have used
reasonable best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any decree, injunction or
other order that may be entered;
(d) Statutes. No statute, rule, regulation, executive order, decree or
order of any kind shall have been enacted, entered, promulgated or enforced
by any court or governmental authority which prohibits the consummation of
the Offer or the Merger or has the effect of making the purchase of the
Common Stock illegal; and
(e) Payment for Common Stock. Sub shall have accepted for payment and
paid for a number of shares of Common Stock tendered pursuant to the Offer
that satisfies the Minimum Condition; provided that the foregoing shall not
be a condition to Parent's and Sub's obligation to consummate the Merger if
Sub's failure to purchase any shares of Common Stock violates the terms of
the Offer.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after approval of the Merger by the Company's
stockholders:
(a) by mutual consent of the Company, on the one hand, and of Parent
and Sub, on the other hand;
(b) by either Parent and Sub, on the one hand, or the Company, on the
other hand, if any governmental or regulatory agency shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, shares of Common Stock pursuant to the Offer or the Merger and
such order, decree or ruling or other action shall have become final and
nonappealable;
(c) by Parent and Sub, on the one hand, or the Company, on the other
hand, if the Effective Time shall not have occurred on or prior to
September 30, 1998 (the "OUTSIDE DATE"), unless the Effective Time shall
not have occurred on or prior to the Outside Date because of a material
breach of any representation, warranty, obligation, covenant, agreement or
condition set forth in this Agreement on the part of the party seeking to
terminate this Agreement;
(d) by Parent and Sub, if the Offer is terminated or expires in
accordance with its terms without Sub having purchased any Common Stock
thereunder due to an event or occurrence which would result in a failure to
satisfy any of the conditions set forth on Exhibit A hereto, unless any
such failure shall have been caused by or resulted from the failure of
Parent or Sub to perform in a material respect any covenant or agreement of
either of them contained in this Agreement or the breach by Parent or Sub
in a material respect of any representation or warranty of either of them
contained in this Agreement;
(e) by Parent and Sub, in the event that (A) (i) any one or more
representations, warranties, covenants or agreements of the Company
contained in this Agreement that is qualified as to materiality shall be
untrue, incorrect or breached in any respect except for such failures as
would not be reasonably likely to have a material adverse effect on the
Condition of the Company and its subsidiaries taken as a whole or (ii) any
one or more of such representations, warranties, covenants or agreements
that is not so qualified shall be untrue incorrect or breached in any
material respect which, individually or in the aggregate, would be
reasonably likely to have a material adverse effect on the Condition of the
Company and its subsidiaries taken as a whole and, (B) in each case, cannot
or has not been cured prior to the earlier of (i) 15 days after the giving
of written notice of such breach to the Company and (ii) two business days
prior to the date on which the Offer expires;
(f) by the Company, if the Board of Directors of the Company
determines that an Acquisition Proposal constitutes a Superior Proposal and
the Board of Directors determines after consulting with independent outside
counsel that a failure to terminate this Agreement and enter into an
agreement to effect the Superior Proposal would constitute a breach of its
fiduciary duties; provided, however, that the Company shall not be
permitted to terminate this Agreement pursuant to this Section 6.01(f)
unless it has provided Parent and Sub with two business days prior written
notice of its intent to so terminate this Agreement together with a
reasonably detailed summary of the terms and conditions of such Superior
Proposal; provided, further, that Parent shall receive the fees set forth
in Section 7.01(b) immediately prior to any termination pursuant to this
Section 6.01(f) by wire transfer in same day funds;
(g) by Parent and Sub, if (i) the Company or any of its subsidiaries
or their Agents encourages, solicits or initiates the making of any
Acquisition Proposal from any Person other than Parent or Sub or the
Company or any of its subsidiaries or their Agents takes any other action
to knowingly facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal (other than as permitted by and taken in compliance with Section
4.07), (ii) the Company enters into any agreement with respect to or the
making of an Acquisition Proposal or (iii) if the Company's Board of
Directors shall have (A) failed to recommend to the Company's stockholders
that such stockholders tender their shares of Common Stock pursuant to the
Offer and vote to approve and adopt this Agreement or (B) amended,
withdrawn or modified such recommendation in a manner adverse to Parent and
Sub.
(h) by the Company, in the event that (A) (i) any one or more
representations, warranties, covenants or agreements of Parent or Sub
contained in this Agreement that is qualified as to materiality shall be
untrue, incorrect or breached in any respect except where such failures as
are not reasonably likely to materially and adversely affect Parent's or
Sub's ability to complete the Offer or Merger or (ii) any one or more of
such representations, warranties, covenants or agreements that is not so
qualified shall be untrue, incorrect or breached which, individually or in
the aggregate would be reasonably likely to materially and adversely effect
Parent's or Sub's ability to complete the Offer or the Merger and (B) in
each case cannot or has not been cured prior to the earlier of (i) 15 days
after the giving of written notice of such breach to the Parent and Sub and
(ii), to the extent applicable, two business days prior to the date on
which the Offer expires.
(i) by the Company, if Parent or Sub shall have (i) failed to commence
the Offer within 5 business days following the date of this Agreement, (ii)
terminated the Offer or (iii) failed to pay for shares of Common Stock
pursuant to the Offer on or prior to the earlier of (x) the fifth day after
any shares of Common Stock tendered in the Offer have been accepted for
payment and (y) the Outside Date, unless in the case (i) or (ii) such
failure shall have been caused by or resulted from the failure of the
Company to satisfy the Tender Offer Conditions set forth in Annex A or a
material breach by the Company of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
6.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 6.01 hereof by Parent or Sub, on the one hand, or
the Company, on the other hand, written notice thereof shall forthwith be given
to the other party or parties specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall become void and have no
effect, and there shall be no liability hereunder on the part of Parent, Sub or
the Company, except that Sections 4.02, 7.01 and this Section 6.02 hereof shall
survive any termination of this Agreement and Section 4.03(b)(xiv) of this
Agreement shall survive termination of this Agreement until the thirtieth day
following the expiration, termination or withdrawal of (without recommencement
or amendment or the execution of any agreement with the Company or any one or
more Selling Stockholders relating to) any Acquisition Proposal made by any
Person prior to the expiration or termination of the Offer. Nothing in this
Section 6.02 shall relieve any party to this Agreement of liability for breach
of this Agreement.
ARTICLE VII
MISCELLANEOUS
7.1 Fees and Expenses. (a) Except as provided in paragraph (b)
below, all costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
(b) If (w) (i) the Offer shall have remained open for a minimum of at
least 20 business days, (ii) after the date hereof and prior to December 31,
1998 any Person (other than Parent or Sub) shall have become the beneficial
owner of 50% or more of the outstanding shares of Common Stock and (iii) the
Minimum Condition (as defined in Annex A) shall not have been satisfied and the
Offer is terminated without the purchase of any Shares thereunder, or (x) Parent
and Sub shall have terminated this Agreement pursuant to Section 6.01(g), or (y)
the Company shall have terminated this Agreement pursuant to Section 6.01(f),
then the Company, if requested by Purchaser, shall promptly, but in no event
later than two days after the date of such request, pay Parent up to $2,000,000
to reimburse Purchaser for the documented fees and expenses of Parent, Purchaser
and Merger Sub related to this Agreement, the transactions contemplated hereby
and any related financing and an additional fee of $8,000,000, which amounts
shall be immediately payable by wire transfer in same day funds; provided,
however, that if the Company shall have terminated this Agreement pursuant to
Section 6.01(f), such amounts shall be paid in accordance with the provisions of
such section. The Company acknowledges that the agreements contained in this
Section 7.01(b) are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, Parent and Sub would not enter
into this Agreement; accordingly, if the Company fails to promptly pay the
amounts due pursuant to this Section 7.01(b) or Section 6.01(f), and, in order
to obtain such payments, Parent or Sub commences a suit which results in a
judgment against the Company for the fees set forth in this paragraph (b), the
Company shall pay to Parent and Sub its reasonably documented costs and expenses
(including reasonably documented attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee at a rate equal
to two percentage points over the prime rate of the Morgan Guaranty Trust
Company of New York on the date such payment was required to be made.
7.2 Representations and Warranties. The respective representations
and warranties of the Company, on the one hand, and Parent and Sub, on the other
hand, contained herein or in any certificates or other documents delivered prior
to or at the Closing shall not be deemed waived or otherwise affected by any
investigation made by any party. Each and every such representation and warranty
shall expire with, and be terminated and extinguished by, the Closing and
thereafter none of the Company, Parent or Sub shall be under any liability
whatsoever with respect to any such representation or warranty. This Section
7.02 shall have no effect upon any other obligation of the parties hereto,
whether to be performed before or after the Effective Time.
7.3 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company, Parent or Sub, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other applicable party or in any document, certificate or writing
delivered pursuant hereto by any other applicable party or (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
7.4 Public Announcements. The Company, on the one hand, and Parent
and Sub, on the other hand, agree to consult promptly with each other prior to
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated hereby, and, unless required by applicable law
or regulation or the rules and regulations of any stock exchange on which any of
their securities are traded, shall not issue any such press release or make any
such public statement prior to such consultation and review by the other party
of a copy of such release or statement.
7.5 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or telecopier, as follows:
(a) if to the Company, to it at:
Nimbus CD International Inc.
623 Welsh Run Road, Guildford Farm
Ruckersville, Virginia 22968
Attention: L. Steven Minkel
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr.
(b) if to Parent, to it at:
Carlton Communications Plc
25 Knightsbridge
London SW1X 7RZ England
Attention: David Abdoo
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: David M. Kies
(c) if to Sub, to it at:
Neptune Acquisition Corp.
3233 East Mission Oaks Blvd.
Camarillo, California 93012
Attention: Thomas Collins
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: David M. Kies
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed, in which case on the third business day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
7.6 Entire Agreement. This Agreement and the annex, schedules and
other documents referred to herein or delivered pursuant hereto, collectively
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and supersede all prior agreements and
understandings, oral and written, with respect thereto.
7.7 Binding Effect; Benefit; Assignment. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and, with respect to
the provisions of Section 4.11 hereof, shall inure to the benefit of the Persons
benefiting from the provisions thereof who are specifically intended to be third
party beneficiaries thereof, and, in each such case, their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties. Notwithstanding
anything in this Section 7.07 to the contrary, it is expressly understood that
Parent and Sub may assign their respective rights, interests and obligations
under this Agreement to any of their affiliates provided that such assignment
shall not relieve Parent or Sub, as the case may be, from their obligations
pursuant to this Agreement. Except as set forth above, nothing in this
Agreement, expressed or implied, is intended to confer on any Person other than
the parties hereto or their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
7.8 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in writing by the parties
hereto in any and all respects before the Effective Time (notwithstanding any
stockholder approval), by action taken by the respective Boards of Directors of
Parent, Sub and the Company or by the respective officers authorized by such
Boards of Directors; provided, however, that after any such stockholder
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval.
7.9 Further Actions. Each of the parties hereto agrees that, subject
to the terms of this Agreement and its obligations under applicable Law, it will
use its reasonable best efforts to fulfill all conditions precedent specified
herein, to the extent that such conditions are within its control, and to do all
things reasonably necessary to consummate the transactions contemplated hereby.
7.10 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only, do not constitute
a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.
7.11 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
7.12 Applicable Law; Jurisdiction. This Agreement and the legal
relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflict of laws rules thereof. Each party hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Southern
District of New York or any court of the State of New York located in the City
of New York in any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be brought
only in such court (and waives any objection based on forum non conveniens or
any other objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this Section 7.12 and
shall not be deemed to be a general submission to the jurisdiction of said
Courts or in the State of New York other than for such purposes. EACH PARTY
HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH
ACTION, SUIT OR PROCEEDING.
7.13 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
7.14 Certain Definitions. "PERSON" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, a group and a government or other department or
agency thereof.
(b) "SUBSIDIARY" with respect to the Company, shall mean and include
(x) any partnership of which the Company or any subsidiary is a general partner
or (y) any corporation or other organization whether incorporated or
unincorporated of which at least a majority of the securities or interests
having by the terms thereof ordinary voting power to elect at least a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its subsidiaries, or by such
party and one or more of its subsidiaries.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each of Parent, Sub and the Company has caused
this Agreement to be executed by its respective officers thereunto duly
authorized, all as of the date first above written.
CARLTON COMMUNICATIONS PLC
By___________________________
Name: B.A. Cragg
Title: Finance Director
NEPTUNE ACQUISITION CORP.
By___________________________
Name: O.F. Raimondo
Title: President
NIMBUS CD INTERNATIONAL, INC.
By___________________________
Name: L.J. Faulkner
Title: President and Chief
Executive Officer
ANNEX A
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex A is
appended and "Purchaser" shall be deemed to refer to Sub.
Notwithstanding any other provision of the Offer or the Merger
Agreement, Purchaser shall not be required to accept for payment or subject to
any applicable rules and regulations of the Commission, including Rule 14e-1c
under the Exchange Act, pay for any shares of Common Stock tendered pursuant to
the Offer and may terminate or amend the Offer and may postpone the acceptance
of, and payment for, shares of Common Stock, if (i) there shall not have been
validly tendered and not withdrawn prior to the expiration of the Offer a number
of shares of Common Stock which represent a majority of the total voting power
of all shares of capital stock of the Company outstanding on a fully diluted
basis (the "Minimum Condition"), (ii) any applicable waiting period under the
HSR Act shall not have expired or been terminated, or (iii) if, at any time on
or after the date of the Merger Agreement and at or before the time of payment
for any such shares of Common Stock (whether or not any shares of Common Stock
have theretofore been accepted for payment or paid for pursuant to the Offer)
any of the following shall occur:
(a) there shall be instituted or pending any action or proceeding by
any government or governmental authority or agency, domestic or foreign, or
by any other Person, domestic or foreign, before any court or governmental
authority or agency, domestic or foreign, (i) challenging or seeking to or
which would be reasonably likely to make illegal, impede, delay or
otherwise directly or indirectly restrain or prohibit the Offer or the
Merger or seeking to obtain material damages, (ii) seeking to compel Parent
or Purchaser to dispose of, or hold separate (through the establishment of
a trust or otherwise) material assets or properties or categories of assets
or properties or businesses of Parent, the Company or any of their
subsidiaries or to withdraw from one or more lines of business material to
the Condition of Parent, the Company or any of their subsidiaries or to
take any actions that, in the aggregate would be reasonably likely to
materially impair Parent's ability to control, direct or manage on a
day-to-day basis the business or affairs of the Company, (iii) seeking to
impose limitations on the ability of Parent or Purchaser effectively to
exercise full rights of ownership of the shares of Common Stock, including,
without limitation, the right to vote any shares of Common Stock acquired
or owned by Sub or Parent on all matters properly presented to the
Company's stockholders, (iv) seeking to require divestiture by Parent or
Purchaser of any shares of Common Stock or (v) materially adversely
affecting the Condition of the Company and its subsidiaries taken as a
whole;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
Parent, Purchaser, the Company or any subsidiary of the Company or (ii) the
Offer or the Merger, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, other than the routine application of the waiting period
provisions of the HSR Act to the Offer or to the Merger, which would
directly or indirectly, result in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(c) any change shall have occurred (or any condition, event or
development shall have occurred), that would have a material adverse effect
on the Condition of the Company and its subsidiaries taken as a whole;
(d) except as to any such representation or warranty which speaks as
of a specific date or for a specific period which must be true and correct
in the following respects only as of such specific date or period, as of
the date of the Merger Agreement and as of the scheduled expiration date
the Offer (i) any one or more representations, warranties, covenants or
agreements of the Company contained in the Merger Agreement that is
qualified as to materiality shall be untrue, incorrect or breached in any
respect except for such failures as would not be reasonably likely to have
a material adverse effect on the Condition of the Company and its
subsidiaries taken as a whole or (ii) any one or more of such
representations, warranties, covenants or agreements that is not so
qualified shall be untrue incorrect or breached in any material respect
which, individually or in the aggregate, would be reasonably likely to have
a material adverse effect on the Condition of the Company and its
subsidiaries taken as a whole;
(e) (i) the Company or any of its subsidiaries or their Agents
encourages, solicits or initiates the making of any Acquisition Proposal
from any Person other than Parent or Sub or the Company or any of its
subsidiaries or their Agents takes any other action to knowingly facilitate
any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal other than as
permitted by and in compliance with Section 4.07, (ii) the Company enters
into any agreement with respect to or the making of an Acquisition
Proposal, or (iii) if the Company's Board of Directors shall have (A)
failed to recommend to the Company's stockholders that such stockholders
tender their shares of Common Stock pursuant to the Offer and vote to
approve and adopt this Agreement or (B) amends, withdraws or modifies such
recommendation in a manner adverse to Parent and Sub or resolves to do so.
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it and its subsidiaries under the Merger Agreement; or
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the reasonable judgment of Purchaser, in any such case and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment
The foregoing conditions (including those set forth in clauses
(i)-(iii) above) are for the sole benefit of the Parent and the Purchaser and
may be asserted by the Parent or the Purchaser, or may be waived by the Parent
or the Purchaser, in whole or in part at any time and from time to time in its
sole discretion. The failure by the Parent or the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.