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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of this 27th day of March, 1997,
(this "Agreement"), among TPG Partners II, L.P., a Delaware limited partnership
("Parent"), BB Merger Corp., an Ohio corporation and a wholly owned subsidiary
of Parent ("Sub"), and Belden & Blake Corporation, an Ohio corporation (the
"Company").
WITNESSETH:
WHEREAS, the General Partner of Parent and the respective boards of
directors of Sub and the Company have each determined that it is in the best
interests of their respective partners and stockholders, as applicable, for
Parent to acquire the Company upon the terms and subject to the conditions set
forth herein;
WHEREAS, to complete such acquisition, the boards of directors or general
partner, as applicable, of Parent, Sub and the Company have each approved the
merger (the "Merger") of Sub with and into the Company in accordance with the
Ohio General Corporation Law ("Ohio Law"), upon the terms and subject to the
conditions set forth herein, whereby each issued and outstanding share of Common
Stock, without par value, of the Company ("Company Common Stock") (shares of
Company Common Stock being hereinafter collectively referred to as "Shares") not
owned directly or indirectly by Parent or the Company, except holders of
Dissenting Shares (as hereinafter defined), will be converted into the right to
receive $27 per Share (such amount, or any greater amount per Share paid
pursuant to the Merger, being hereinafter referred to as the "Per Share
Amount");
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Parent's and Sub's willingness to enter into
this Agreement, certain holders of shares of Company Common Stock are entering
into a Voting Agreement in substantially the form attached hereto as Exhibit A
(the "Voting Agreement") pursuant to which such holders have agreed, among other
things, to vote all shares of Company Common Stock owned by such shareholders in
favor of the Merger and any other matter that requires a shareholder vote in
connection with the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions
set forth in Article VI, and in accordance with Ohio Law, at the Effective Time
(as defined below) Sub shall be merged with and into the Company. As a result of
the Merger, the separate corporate existence of Sub shall cease and the Company
shall continue as the surviving corporation of the Merger (the "Surviving
Corporation").
SECTION 1.02. Effective Time; Closing. As promptly as practicable after
the satisfaction or, if permissible hereunder, waiver of the conditions set
forth in Article VI, the parties hereto shall cause the Merger to be consummated
by filing this Agreement or a certificate of merger (in either case, the
"Certificate of Merger") with the Secretary of State of the State of Ohio, in
such form as is required by, and executed in accordance with the relevant
provisions of, Ohio Law (the date and time of such filing being the "Effective
Time"). Prior to such filing, a closing shall be held at the offices of Black,
McCuskey, Souers & Arbaugh, 1000 United Bank Plaza, Canton, Ohio 44702-2116, or
such other place as the parties shall agree, for the purpose of confirming the
satisfaction or waiver, as the case may be, of the conditions set forth in
Article VI.
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Ohio Law.
Without limiting the generality of the foregoing, and
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subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of the Company and Sub shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving Corporation.
SECTION 1.04. Articles of Incorporation; Regulations. (a) At the
Effective Time the articles of incorporation of Sub, as in effect immediately
prior to the Effective Time, shall be the articles of incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
articles of incorporation except that the name of the corporation specified in
such articles of incorporation shall be changed to Belden & Blake Corporation.
Such articles of incorporation shall be in the form attached hereto as Exhibit
B.
(b) The regulations of Sub, as in effect immediately prior to the
Effective Time, shall be the regulations of the Surviving Corporation until
thereafter amended as provided by law, the articles of incorporation of the
Surviving Corporation and such regulations. Such regulations shall be in
the form attached as Exhibit C.
SECTION 1.05. Directors and Officers. The directors of Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
from and after the Effective Time, each to hold office in accordance with the
articles of incorporation and regulations of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation from and after the Effective Time, in each
case until their respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the articles of incorporation and regulations of the Surviving Corporation.
SECTION 1.06. Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Sub, the Company or the
holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to Section
1.06(b) and any Dissenting Shares (as defined below)) shall be cancelled
and converted automatically into the right to receive an amount equal to
the Per Share Amount in cash (the "Merger Consideration") payable to the
holder of such Share, upon surrender, in the manner provided in Section
1.08, of the certificate that formerly evidenced such Share;
(b) Each Share held in the treasury of the Company and each Share
owned by Sub, Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company immediately prior to the Effective Time shall be
cancelled without any conversion thereof and no payment or distribution
shall be made with respect thereto; and
(c) Each share of common stock, par value $.01 per share, of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
SECTION 1.07. Dissenting Shares. Any contrary provision of this Agreement
notwithstanding, Shares that are outstanding immediately prior to the Effective
Time and which are held by stockholders who shall have not voted in favor of the
Merger or consented thereto in writing shall be deemed not cancelled and
converted into the right to receive the Merger Consideration as provided in
Section 1.06(a) if the holder of such Shares properly demands in writing the
fair cash value for such Shares in accordance with Section 1701.85 of Ohio Law
(collectively, the "Dissenting Shares"). Such stockholders shall be entitled to
receive payment of the fair cash value of such Shares held by them in accordance
with the provisions of such Section 1701.85, except that all Dissenting Shares
held by stockholders who shall have failed to perfect or who effectively shall
have withdrawn or lost their rights to the fair cash value of such Shares under
such Section 1701.85 shall thereupon be deemed to have been converted into and
to have become exchangeable for, as of the Effective Time, the right to receive
the Merger Consideration, without any interest thereon, upon surrender, in the
manner provided in Section 1.08, of the certificate or certificates that
formerly evidenced such Shares.
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SECTION 1.08. Surrender of Shares; Stock Transfer Books. (a) Prior to the
Effective Time, Parent and Sub shall designate a bank or trust company to act as
agent, which agent shall be reasonably acceptable to the Company (the "Paying
Agent"), for the holders of Shares in connection with the Merger to receive the
funds to which holders of Shares shall become entitled pursuant to Section
1.06(a), and Sub or Parent shall deposit such funds with the Paying Agent at or
prior to the Effective Time. Such funds shall be invested by the Paying Agent as
directed by the Surviving Corporation, provided that such investments shall be
in obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of America,
in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors
Service, Inc. or Standard & Poor's Corporation, respectively, or in deposit
accounts, certificates of deposit or banker's acceptances of, repurchase or
reverse repurchase agreements with, or Eurodollar time deposits purchased from,
commercial banks with capital, surplus and undivided profits aggregating in
excess of $1 billion (based on the most recent financial statements of such bank
which are then publicly available at the SEC or otherwise). Any net profit
resulting from, or interest or income produced by, such investments shall be
payable to the Surviving Corporation or Parent, as Parent directs.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder
of record of Shares entitled to receive the Merger Consideration pursuant
to Section 1.06(a) a form of letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
certificates evidencing such Shares (the "Certificates") shall pass, only
upon proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the Certificates
pursuant to such letter of transmittal. Upon surrender to the Paying Agent
of a Certificate, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, and such
other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange
therefor the Merger Consideration for each Share formerly evidenced by such
Certificate, and such Certificate shall then be cancelled. No interest
shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such
Certificate. If payment of the Merger Consideration is to be made to a
person other than the person in whose name the surrendered Certificate is
registered on the stock transfer books of the Company, it shall be a
condition of payment that the Certificate so surrendered shall be endorsed
properly or otherwise be in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Merger Consideration to a person
other than the registered holder of the Certificate surrendered or shall
have established to the satisfaction of the Surviving Corporation that such
taxes either have been paid or are not applicable.
(c) At any time following the eighteenth month after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying
Agent to deliver to it any funds which had been made available to the
Paying Agent and not disbursed to holders of Shares (including, without
limitation, all interest and other income received by the Paying Agent in
respect of all funds made available to it), and thereafter such holders
shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat and other similar laws) only as general
creditors thereof with respect to any Merger Consideration that may be
payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation nor the
Paying Agent shall be liable to any holder of a Share for any Merger
Consideration delivered in respect of such Share to a public official
pursuant to any abandoned property, escheat or other similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company with respect to the Shares shall be
closed and thereafter there shall be no further registration of transfers
of Shares on the records of the Company. From and after the Effective Time,
the holders of Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares except as
otherwise provided herein or by applicable law.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Sub that:
SECTION 2.01. Organization and Qualification; Subsidiaries. Each of the
Company and each subsidiary of the Company (a "Subsidiary" and collectively, the
"Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Section 2.01 of the
disclosure schedule (the "Company Disclosure Schedule") sets forth a list of the
Company's Subsidiaries. The Company and each Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except as would not have a Material Adverse Effect. When
used in this Agreement, the term "Material Adverse Effect" means any change or
effect that is or is reasonably likely to be materially adverse to the assets,
business, financial condition or results of operations of the Company and the
Subsidiaries taken as a whole. The Company has made available to Parent a
complete and correct copy of the articles of incorporation and regulations of
the Company and each Subsidiary.
SECTION 2.02. Capitalization. The authorized capital stock of the Company
consists of (i) 50,000,000 Shares, of which 11,268,879 Shares are issued and
outstanding as of the date hereof, and (ii) 8,000,000 shares of Preferred Stock,
no par value ("Company Preferred Stock"), of which 24,000 shares are issued and
outstanding as of the date hereof. All of the outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and nonassessable and free of preemptive rights. As of the date hereof,
802,563 Shares are reserved for future issuance upon the exercise of presently
outstanding stock options granted pursuant to the Stock Option Plans. Each
outstanding share of capital stock of each Subsidiary is duly authorized,
validly issued, fully paid and nonassessable and each such share is owned by the
Company or another Subsidiary free and clear of all liens, claims, options,
charges and other encumbrances of any nature. Except as set forth in this
Section 2.02, and except for $5.55 million of convertible subordinated
debentures (the "Debentures"), which at present may be converted into 275,434
Shares, and except for the Voting Agreements, as of the date hereof there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character to which Company or any Subsidiary is a party, obligating the
Company or any Subsidiary to issue, sell, repurchase, redeem or otherwise
acquire any shares of capital stock of or any securities or rights convertible
into, exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock of the Company or any Subsidiary. There are no voting trusts or
other agreements or understandings to which the Company or any Subsidiary of the
Company is a party with respect to the voting of the capital stock of the
Company, except for the Belden & Blake Corporation Employees 401(k) Profit
Sharing Plan.
SECTION 2.03. Authority Relative to this Agreement; Approval. The Company
has all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the Merger and the other
transactions contemplated hereby (the Merger and such other transactions being
herein referred to collectively as the "Transactions"). The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the Transactions have been duly and validly authorized and approved by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, adoption of this Agreement
by the stockholders of the Company in accordance with Section 1701.78 of Ohio
Law and the articles of incorporation of the Company and the filing and
recordation of appropriate merger documents as required by Ohio Law). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and Sub,
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except to the extent such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting generally the
enforcement of creditors' rights and (ii) the availability of equitable remedies
(whether in a proceeding in equity or at law).
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SECTION 2.04. No Conflict; Required Filings and Consents. (a) Except as
set forth in Section 2.04(a) of the Company Disclosure Schedule, the execution
and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company will not, (i) conflict with or violate the
articles of incorporation or regulations or equivalent organizational documents
of the Company or any Subsidiary, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Company or any
Subsidiary or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Company or any Subsidiary pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation, except as would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or
foreign, except for applicable requirements, if any, of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws, the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder (the "HSR
Act"), and filing and recordation of appropriate merger documents as
required by Ohio Law and filings required for foreign qualification
purposes.
SECTION 2.05. SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since December 31, 1992 (the "SEC Reports"), all of which (i) were prepared in
all material respects in accordance with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the Exchange Act, as the case
may be, and the rules and regulations thereunder and (ii) did not at the time
they were filed contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SEC Reports was prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated (except as may be
indicated therein or in the notes thereto) and each fairly presented the
consolidated financial position, results of operations and changes in
financial position of the Company and the consolidated Subsidiaries as at
the respective dates thereof and for the respective periods indicated
therein except as otherwise noted therein (subject, in the case of
unaudited statements, to normal year-end adjustments).
SECTION 2.06. Absence of Certain Changes or Events. Since September 30,
1996, except as contemplated by this Agreement or disclosed in Section 2.06 of
the Company Disclosure Schedule or in any SEC Report filed since September 30,
1996, and prior to the date of this Agreement, the Company and the Subsidiaries
have conducted their businesses only in the ordinary course, and neither the
Company nor any Subsidiary has suffered a Material Adverse Effect and none of
the following has occurred:
(a) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company
except regular quarterly dividends on the Preferred Stock, or any
repurchase, redemption or other acquisition by the Company or any
Subsidiary or other acquisition by the Company or any Subsidiary of any
outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any Subsidiary;
(b) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any material indebtedness for borrowed money (other than
borrowings under the Company's existing bank credit facilities) or any
creation or assumption by the Company or any Subsidiary of any lien on any
material asset other than in the ordinary course of business consistent
with past practices;
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(c) any making of any loan, advance or capital contributions to or
investment in any person other than loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries made in the
ordinary course of business consistent with past practices;
(d) any change in any method of accounting or accounting practice by
the Company or any Subsidiary, except for any such change required by
reason of a concurrent change in generally accepted accounting principles;
or
(e) any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any Subsidiary, (ii) entering into of
any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or
employee of the Company or any Subsidiary, (iii) any increase in benefits
payable under any existing severance or termination pay policies or
employment agreements, or (iv) any increase in excess of $50,000 in the
aggregate in compensation, bonus or other benefits payable to directors,
officers or employees of the Company or any Subsidiary, other than in the
ordinary course of business consistent with past practice.
SECTION 2.07. Litigation. Except as disclosed in the SEC Reports filed
prior to the date of this Agreement or in Section 2.07 of the Company Disclosure
Schedule, there is no claim, action, proceeding or investigation pending or, to
the knowledge of the Company, threatened against the Company or any Subsidiary
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign ("Governmental Entity"), which,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against the Company or any
Subsidiary having, or reasonably likely to have, a Material Adverse Effect.
SECTION 2.08. Employee Benefit Plans. (a) Section 2.08(a) of the Company
Disclosure Schedule lists (i) all employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements (including, without limitation, oral and informal arrangements)
whether legally enforceable or not, to which the Company or any of its
Subsidiaries is a party, with respect to which the Company or any of its
Subsidiaries has any material obligation or which are maintained, contributed to
or sponsored by the Company or any of its Subsidiaries for the benefit of any
current or former employee, officer or director of the Company or any of its
Subsidiaries, (ii) any plan in respect of which the Company or any of its
Subsidiaries could incur material liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated, (iii) any plan in respect of
which the Company or any of its Subsidiaries could incur liability under Section
4212(c) of ERISA and (iv) any contracts, arrangements or understandings
(including, without limitation, oral and informal arrangements) between the
Company or any of its Subsidiaries or any of their respective affiliates and any
employee of the Company or any of its Subsidiaries (collectively, the "Plans").
Each Plan is in writing and the Company and each of its Subsidiaries has
furnished Parent with a true and complete copy of each Plan and a true and
complete copy of each material document prepared in connection with each such
Plan including, without limitation, (i) a copy of each trust or other funding
arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed Internal Revenue Service ("IRS")
Form 5500, (iv) the most recently received IRS determination letter for each
such Plan, and (v) the most recently prepared actuarial report and financial
statement in connection with each such Plan. Except as disclosed in Section
2.08(a) of the Company Disclosure Schedule, there are no other employee benefit
plans, programs, arrangements or agreements, whether formal or informal, whether
in writing or not, to which the Company or any of its Subsidiaries is a party,
with respect to which the Company or any of its Subsidiaries has any material
obligation or which are maintained, contributed to or sponsored by the Company
or any of the Subsidiaries for the benefit of any current or former employee,
officer or director of the Company or any of its Subsidiaries. None of the
Company or any of its Subsidiaries has any express or implied commitment,
whether legally enforceable or not, (i) to create, incur liability with respect
to or cause
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to exist any other employee benefit plan, program or arrangement, (ii) to enter
into any contract or agreement to provide compensation or benefits to any
individual or (iii) to modify, change or terminate any Plan, other than with
respect to a modification, change or termination required by ERISA or the Code.
(b) None of the Plans is a multiemployer plan (within the meaning of
Sections 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a single
employer pension plan (within the meaning of Section 4001(a)(15) or ERISA)
for which the Company or any of its Subsidiaries could incur liability
under Section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). Except as
set forth in Section 2.08(b) of the Company Disclosure Schedule, none of
the Plans provides for the payment of separation, severance, termination or
similar-type benefits to any Person or obligates the Company or any of its
Subsidiaries to pay separation, severance, termination or similar-type
benefits solely as a result of any transaction contemplated by this
Agreement or as a result of a "change in control", within the meaning of
such term under Section 280G of the Code. Except as set forth in Section
2.08(b) of the Company Disclosure Schedule, none of the Plans provides for
or promises retiree medical, disability or life insurance benefits to any
current or former employee, officer or director of the Company or any of
its Subsidiaries. Each of the Plans is subject only to the laws of the
United States or a political subdivision thereof.
(c) Each Plan has been operated in all material respects in accordance
with the requirements of all applicable laws, including without limitation,
ERISA and the Code, and all persons who participate in the operation of
such Plans and all Plan "fiduciaries" (within the meaning of Section 3(21)
of ERISA) have acted in accordance with the provisions of all applicable
laws, including, without limitation, ERISA and the Code except where the
failure to do so would not have a Material Adverse Effect. Each of the
Company and its Subsidiaries has performed the obligations to be performed
by it under, is not in any respect in default under or in violation of, and
has no knowledge of any default or violation by any party to, any Plan. No
action is pending or threatened with respect to any Plan (other than claims
for benefits in the ordinary course) and no fact or event exists that could
give rise to any such action.
(d) Each Plan which is intended to be qualified under Section 401(a)
of the Code or Section 401(k) of the Code has received a favorable
determination letter from the IRS that it is so qualified and each trust
established in connection with any Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or
event has occurred since the date of such determination letter from the IRS
to adversely affect the qualified status of any such Plan or the exempt
status of any such trust. Each trust maintained or contributed to by the
Company or any of its Subsidiaries which is intended to be qualified as a
voluntary employees' beneficiary association and which is intended to be
exempt from federal income taxation under Section 501(c)(9) of the Code has
received a favorable determination letter from the IRS that it is so
qualified and so exempt, and no fact or event has occurred since the date
of such determination by the IRS to adversely affect such qualified or
exempt status.
(e) Except as disclosed in Section 2.08(e) of the Company Disclosure
Schedule, there has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan.
Except as disclosed in Section 2.08(e) of the Company Disclosure Schedule,
none of the Company or any of its Subsidiaries has incurred any liability
for any excise tax arising under Section 4971, 4972, 4980 or 4980B of the
Code and no fact or event exists which could give rise to any such
liability. None of the Company or any of its Subsidiaries has incurred any
liability under, arising out of or by operation of Title IV of ERISA (other
than liability for premiums to the Pension Benefit Guaranty Corporation
arising in the ordinary course), including, without limitation, any
liability in connection with (i) the termination or reorganization of any
employee benefit plan subject to Title IV of ERISA or (ii) the withdrawal
from any Multiemployer Plan or Multiple Employer Plan, and no fact or event
exists which could give rise to any such liability. No complete or partial
termination has occurred within the five years preceding the date hereof
with respect to any Plan. No reportable event (within the meaning of
Section 4043 of ERISA) has occurred or is expected to occur with respect to
any Plan subject to Title IV of ERISA. No Plan had an accumulated funding
deficiency (within the meaning of Section 302 of ERISA or Section 412 of
the Code), whether or not waived, as of the most recently ended
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plan year of such Plan. None of the properties or assets of the Company or
any of its Subsidiaries is the subject of any lien arising under Section
302(f) of ERISA or Section 412(n) of the Code; none of the Company or any
of its Subsidiaries has been required to post any security under Section
307 of ERISA or Section 401(a)(29) of the Code; and no fact or event exists
which could give rise to any such lien or requirement to post any such
security.
(f) All contributions, premiums or payments required to be made with
respect to any Plan have been made on or before their due dates. Except as
disclosed in Section 2.08(f) of the Company Disclosure Schedule, all such
contributions have been or will be fully deducted for income tax purposes
and no such deduction has been challenged or disallowed by any governmental
authority and no fact or event exists which could give rise to any such
challenge or disallowance. As of the Closing Date, no Plan which is subject
to Title IV of ERISA will have an "unfunded benefit liability" (within the
meaning of Section 4001(a)(18) of ERISA).
SECTION 2.09. Labor Matters. The Company has made available to Parent all
collective bargaining or other labor union contracts to which the Company or any
Subsidiary is a party and which are applicable to persons employed by the
Company or any Subsidiary as of the date hereof. Except as set forth in Section
2.09 of the Company Disclosure Schedule, there are no strikes, slowdowns, work
stoppages or lockouts, or, to the knowledge of the Company, threats thereof, by
or with respect to any employees of the Company or any Subsidiary.
SECTION 2.10. Proxy Statement. The Proxy Statement to be sent to the
stockholders of the Company in connection with the Stockholders' Meeting (as
defined below) (such proxy statement, as amended or supplemented, being referred
to herein as the "Proxy Statement") and, if required to be filed, a Rule 13E-3
Transaction Statement on Schedule 13E-3 relating thereto (the "Schedule 13E-3"),
will not, on the date the Proxy Statement (or any amendment or supplement
thereto) is first mailed to stockholders of the Company, at the time of the
Stockholders' Meeting and at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it is made, is false or
misleading with respect to any material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Stockholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by Parent or Sub or any of their
respective representatives which is contained in any of the foregoing documents.
The Proxy Statement and the Schedule 13E-3 will comply in all material respects
as to form with the requirements of the Exchange Act and the rules and
regulations thereunder.
SECTION 2.11. Brokers. No broker, finder or investment banker (other than
Goldman Sachs & Co., which shall be paid a fee in accordance with that certain
letter agreement with the Company dated September 26, 1996, is entitled to any
brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of the Company.
SECTION 2.12. Taxes. The Company and each of its Subsidiaries have filed
all United States federal income tax returns and all other tax returns required
to be filed by them or any of them (except where the failure to file would not
have a Material Adverse Effect), and have paid and discharged all taxes shown
therein to be due and there are no other taxes that would be due if asserted by
a taxing authority, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are required)
or with respect to which the Company is maintaining reserves in accordance with
generally accepted accounting principles. Neither the IRS nor any other taxing
authority or agency is now asserting or, to the Company's knowledge, threatening
to assert against the Company or any of its Subsidiaries any deficiency or claim
for additional taxes other than additional taxes with respect to which the
Company is maintaining reserves in accordance with generally accepted accounting
principles.
SECTION 2.13. Title to Property. Except as disclosed in Section 2.13 of
the Company Disclosure Schedule, the Company and each of its Subsidiaries have
good and defensible title to all of their properties
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and assets, free and clear of all liens, charges and encumbrances except liens
for taxes not yet due and payable and such liens or other imperfections of
title, if any, as do not materially detract from the value of or interfere with
the present use of the property affected thereby or which, individually or in
the aggregate, would not have a Material Adverse Effect; and, to the knowledge
of the Company, all leases pursuant to which the Company or any of its
Subsidiaries lease from others real or personal property, are in good standing,
valid and effective in accordance with their respective terms, and there is not,
to the knowledge of the Company, under any of such leases, any existing material
default or event of default (or event which with notice or lapse of time, or
both, would constitute a material default and in respect of which the Company or
such Subsidiary has not taken adequate steps to prevent such a default from
occurring).
SECTION 2.14. Environmental Matters. Except as disclosed in the SEC
Reports filed prior to the date of this Agreement or Section 2.14 of the Company
Disclosure Schedule:
(a) (i) the Company and each of its Subsidiaries is in substantial
compliance with all applicable Federal, state, local and foreign laws and
regulations relating to protection of public health, welfare and the
environment ("Environmental Laws"), (ii) the Company and each of its
Subsidiaries holds all the material permits, licenses and approvals of
governmental authorities and agencies necessary for the current use,
occupancy or operation of the Company's business under Environmental Laws
("Environmental Permits"), and (iii) the Company and each of its
Subsidiaries is in substantial compliance with all its environmental
Permits.
(b) The Company and each of its Subsidiaries has not been notified
that it is a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or any similar federal, state, local or foreign law with
respect to any owned or leased real property or any other location.
(c) The Company and each of its Subsidiaries has not entered into or
agreed to any consent decree or order and is not subject to any judgment,
decree or judicial order relating to compliance with or the cleanup of
substances regulated under any applicable Environmental Law.
(d) None of the Company's or any of its Subsidiaries' owned or leased
real property is listed or, to the knowledge of the Company, proposed for
listing on the "National Priorities List" under CERCLA, or on the
Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the United States Environmental Protection
Agency, as updated through January 31, 1997, or any similar state list of
sites requiring investigation or cleanup.
(e) To the knowledge of the Company, there are no circumstances that
could give rise to material liabilities under Superfund RCRA or similar
statutes including liabilities relating to remediation or natural resources
damages arising from on-site or off-site conditions.
SECTION 2.15. No Undisclosed Material Liabilities. Except as previously
disclosed to Sub in writing, there are no liabilities of the Company or any
Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a liability, other than:
(i) liabilities disclosed or provided for in the SEC Reports filed
prior to the date of this Agreement; and
(ii) liabilities incurred in the ordinary course of business since
the end of the period covered by the most recent SEC Report filed prior
to the date of this Agreement, which individually or in the aggregate
would not have a Material Adverse Effect.
SECTION 2.16. Board Approval; Fairness. (a) The Board of Directors of the
Company, at a meeting duly called and held on March 27, 1997, has (i) approved
and adopted this Agreement and the Transactions including the Merger and (ii)
recommended that the stockholders of the Company approve the Merger and adopt
this Agreement and Transactions; provided, however, that such recommendation of
the Board may be withdrawn, modified or amended by the Board at any time if, in
the good faith opinion of the Board after
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consultation with counsel, such recommendation would be inconsistent with its
fiduciary duties under applicable law (collectively, "Fiduciary Duty").
(b) The Company further represents that Goldman Sachs & Co. has
delivered to the Board its oral opinion, to be promptly followed up in
writing, to the effect that, as of the date of the opinion, the cash
consideration to be received by the holders of Shares in the Transactions
contemplated by this Agreement is fair to such holders from a financial
point of view, and a true and complete copy of such opinion has been
delivered to Parent and Sub, it being understood and acknowledged that such
opinion has been rendered for purposes of advising the Board of Directors
of the Company and may not be relied upon by Parent, Sub, their affiliates
or respective stockholders.
(c) The Board of Directors of the Company has approved, for the
purposes of Chapter 1704 of Ohio Law, (a) the grant of the option
contemplated by the Voting Agreement and any acquisition of Shares by Sub
pursuant to the Voting Agreement and (b) any acquisition of Shares by Sub
in connection with the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub hereby, jointly and severally, represent and warrant to the
Company that:
SECTION 3.01. Organization. Parent is a limited partnership organized and
existing under the laws of the State of Delaware. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Each of Parent and Sub has the requisite power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted.
SECTION 3.02. Authority Relative to this Agreement. Each of the Parent
and Sub has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and Sub and
the consummation by Parent and Sub of the Transactions have been duly and
validly authorized by all necessary action and no other proceedings on the part
of Parent or Sub are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the filing and recordation
of appropriate merger documents as required by Ohio Law). This Agreement has
been duly and validly executed and delivered by Parent and Sub and, assuming the
due authorization, execution and delivery by the Company, constitutes a legal,
valid and binding obligation of each of Parent and Sub enforceable against each
of Parent and Sub in accordance with its terms, except to the extent such
enforceability may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting generally the
enforcement of creditors' rights and (ii) the availability of equitable remedies
(whether in a proceeding in equity or at law).
SECTION 3.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Sub do not, and the
performance of this Agreement by Parent and Sub will not, (i) conflict with or
violate the partnership agreement or articles of incorporation or regulations of
either Parent or Sub, as applicable, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Parent or Sub or by
which any property or asset of either of them is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of Parent
or Sub pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or Sub is a party or by which Parent or Sub or any property or asset of
either of them is bound or affected.
(b) The execution and delivery of this Agreement by Parent and Sub do
not, and the performance of this Agreement by Parent and Sub will not,
require any consent, approval, authorization or permit of, of filing with
or notification to, any governmental or regulatory authority, domestic or
foreign, except
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(i) for applicable requirements, if any, of the Exchange Act, Blue Sky Laws
and state takeover laws, the HSR Act and filing and recordation of
appropriate merger documents as required by Ohio Law and (ii) where failure
to obtain such consents, approvals, authorizations or permits, or to make
such filings or notifications (other than as is set forth in clause (i))
would not prevent or delay consummation of the Merger, or otherwise prevent
Parent or Sub from performing their respective obligations under this
Agreement.
SECTION 3.04. Financing. Parent and Sub have delivered to the Company
copies of a commitment letter obtained by Parent and Sub respecting a senior
credit facility to be incurred at the Closing and a bridge facility that may be
utilized by Parent and Sub to consummate the transactions contemplated hereby.
SECTION 3.05. Proxy Statement. The information supplied by Parent for
inclusion in the Proxy Statement or the Schedule 13E-3 will not, on the date the
Proxy Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, at the time of the Stockholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact, or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, Parent and Sub make
no representation or warranty with respect to any information supplied by the
Company or any of its representatives which is contained in any of the foregoing
documents.
SECTION 3.06. Sub. Sub was formed solely for the purpose of engaging in
the Transactions and has not engaged in any business activities or conducted any
operations other than in connection with the Transactions.
SECTION 3.07. Brokers. No broker, finder or investment banker (other than
Johnson Rice & Company whose fee will be paid by Parent and Sub) is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of Parent or Sub.
SECTION 3.08. Post Merger Business. It is the present intention of Parent
and Sub that subsequent to the Merger they will maintain the Company's corporate
headquarters and principal executive offices in the greater Canton, Ohio area
and will preserve substantially intact the Company's business organization and
employee work force.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, the businesses
of the Company and its Subsidiaries shall be conducted only in, and the Company
and the Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use all reasonable efforts to preserve substantially intact the business
organization of the Company and its Subsidiaries, to keep available the services
of the current officers, employees and consultants of the Company and the
Subsidiaries and to preserve the current officers, employees and consultants of
the Company and the Subsidiaries and to preserve the current relationships of
the Company and the Subsidiaries with customers, suppliers and other persons
with which the Company or any Subsidiary has significant business relations. By
way of amplification and not limitation of the foregoing, except as contemplated
by this Agreement, neither the Company nor any Subsidiary shall, between the
date of this Agreement and the Effective Time, directly or indirectly do, or
propose to do, any of the following without the prior written consent of Parent:
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(a) amend or otherwise change its articles of incorporation or
regulations or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares
of capital stock of any class of the Company or any Subsidiary, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares or such capital stock, or any other ownership interest,
of the Company or any Subsidiary (except for the issuance of a maximum of
1,077,997 Shares issuable pursuant to stock options outstanding on the date
hereof and conversion of the Debentures) or (ii) any material assets of the
Company or any Subsidiary, except for sales in the ordinary course of
business;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock; provided, however, that the Company may make
scheduled dividend payments on the Company Preferred Stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
provided, however, that the Company may redeem any or all outstanding
Company Preferred Stock pursuant to the terms thereof;
(e) increase the compensation payable or to become payable to its
officers or employees, except for increases in accordance with past
practices in salaries or wages of employees of the Company or any
Subsidiary, or grant any severance or termination pay to, or enter into any
employment or severance agreement with any director, officer or other
employee of the Company or any Subsidiary, or establish, adopt, enter into
or amend 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 director, officer
or employee except amendments required by law; or
(f) create, incur, assume, guarantee or otherwise become liable for
any amount of indebtedness for borrowed money (other than borrowings under
the Company's existing bank credit facilities), individually or in the
aggregate, material to the condition (financial or otherwise), business,
results of operations or prospects of the Company and the Subsidiaries
taken as a whole.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Stockholders' Meeting. In order to consummate the Merger,
the Company, acting through the Board, shall, in accordance with applicable law
and the Company's restated articles of incorporation and regulations, (i) duly
call, give notice of, convene and hold an annual or special meeting of its
stockholders as soon as practicable following the execution and delivery of this
Agreement for the purpose of considering and taking action on this Agreement,
the Merger and the other Transactions (the "Stockholders' Meeting"), and (ii)
subject to its Fiduciary Duty, include in the Proxy Statement the
recommendations of the Board that the stockholders of the Company approve and
adopt this Agreement and the Transactions. At the Stockholders' Meeting, Parent
and Sub shall cause all Shares then owned by them and their subsidiaries to be
voted in favor of the approval and adoption of this Agreement and the
Transactions.
SECTION 5.02. Proxy Statement. As soon as practicable following the
execution and delivery hereof, the Company shall file the Proxy Statement in
preliminary form and the Schedule 13E-3 with the SEC under the Exchange Act, and
shall use all reasonable efforts to have the Proxy Statement cleared by the SEC.
Parent, Sub and the Company shall cooperate with each other in the preparation
of the Proxy Statement and the Schedule 13E-3, and the Company shall notify
Parent of the receipt of any comments of the SEC with respect to the Proxy
Statement and the Schedule 13E-3, and of any requests by the SEC for any
amendment or supplement thereto or for additional information and shall promptly
provide to Parent copies of all correspondence between the Company or any
representative of the Company and the SEC. The Company shall give Parent and its
counsel the opportunity to review the Proxy Statement and the Schedule 13E-3
prior
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to their being filed with the SEC and shall give Parent and its counsel the
opportunity to review all amendments and supplements to the Proxy Statement and
the Schedule 13E-3 and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the SEC. Each
of the Company, Parent and Sub agrees to use its reasonable best efforts, after
consultation with the other parties hereto, to respond promptly to all such
comments of and requests by the SEC and to cause the Proxy Statement and all
required amendments and supplements thereto to be mailed to the holders of
Shares entitled to vote at the Stockholders' Meeting at the earliest practicable
time.
SECTION 5.03. Access to Information; Confidentiality. (a) From the date
hereof to the Effective Time, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and the Subsidiaries to, afford the officers, employees and agents of
Parent and Sub access at all reasonable times to the officers, employees,
agents, properties, offices, plants and other facilities, books and records of
the Company and each Subsidiary, and shall make available to Parent and Sub all
financial, operating and other data and information as Parent or Sub, through
its officers, employees or agents, may reasonably request provided that no
investigation pursuant to this Section shall affect any representation or
warranty given by the Company to Parent and Sub hereunder.
(b) All information obtained by Parent or Sub pursuant to this Section
5.03 shall be kept confidential in accordance with the confidentiality
agreement, dated October 24, 1996 (the "Confidentiality Agreement"),
between TPG Partners, L.P. and the Company.
SECTION 5.04. Acquisition Proposals. Each of the Company and its
Subsidiaries will not, directly or indirectly, and will instruct and otherwise
use its commercially reasonable efforts to cause their respective officers,
directors, employees, agents or advisors or other representatives or consultants
not to, (i) directly or indirectly, solicit or initiate any proposals or offers
from any person relating to any acquisition or purchase of all or a material
amount of the assets of, or any securities of, or any merger, consolidation or
business combination with, the Company or any of its Subsidiaries or (ii) except
to the extent required by the Fiduciary Duty of the Company's Board of
Directors, participate in any negotiations regarding, or furnish to any other
person any information with respect to, or otherwise cooperate in any way with,
or assist or participate in, facilitate or encourage, any effort or attempt by
any other person to do or seek any of the foregoing. The Company will promptly
notify Parent in the event of any proposal or offer of the type referred to in
clause (i) of the first sentence of this Section 5.04, indicating in reasonable
detail the identity of the persons involved and the terms and conditions of any
proposal or offer. The Company will promptly notify Parent in the event of the
occurrence of any matter referred to in clause (ii) of the first sentence of
this Section 5.04 and indicate in reasonable detail the identity of the persons
involved.
SECTION 5.05. Directors' and Officers' Indemnification and Insurance. (a)
For a period of six years from and after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless the present and former
directors and officers of the Company and its Subsidiaries against all losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative (i) in respect of acts or omissions occurring at
or prior to the Effective Time to the fullest extent that the Company would have
been permitted to indemnify such person under Ohio law and the articles of
incorporation and regulations of the Company in effect on the date hereof, or
(ii) arising out of or pertaining to the Merger and the transactions
contemplated by this Agreement.
(b) The Surviving Corporation shall use its reasonable best efforts to
maintain in effect for six (6) years from the Effective Time directors' and
officers' liability insurance providing coverage no less favorable to the
directors and officers of the Company at the Effective Time than the
current directors' and officers' liability insurance policies maintained by
the Company with respect to matters occurring prior to the Effective Time;
provided that in satisfying the obligations under this provision, the
Surviving Corporation shall not be obligated to pay annual premiums in
excess of 200% of the amount per annum the Company paid in its last full
fiscal year.
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(c) This Section 5.05 shall survive the Effective Time and is intended
to be for the benefit of, and shall be enforceable by, the Indemnified
Parties and shall be binding on the Surviving Corporation and their
respective successors and assigns.
SECTION 5.06. Further Action. Upon the terms and subject to the
conditions hereof, each of the parties hereto shall (i) make promptly its
respective filings, and thereafter make any other required submissions, under
the HSR Act with respect to the Transactions and (ii) use all reasonable efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Transactions, including,
without limitation, using all reasonable efforts to obtain all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company and the
Subsidiaries as are necessary for the consummation of the Transactions and to
fulfill the conditions to the Merger. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party to this
Agreement shall use their reasonable best efforts to take all such action.
SECTION 5.07. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or any Transaction and shall not issue
any such press release or make any such public statement, except with the
written approval of the other or as may be required by law or any listing
agreement with a national securities exchange to which Parent or the Company is
a party.
SECTION 5.08. Notices of Certain Events. The Company shall promptly
notify Parent and Sub of:
(i) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or
involving or otherwise affecting the Company or any Subsidiary which, if
pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 2.07 or which relate to the
consummation of the transactions contemplated by this Agreement.
SECTION 5.09. Takeover Statute. (a) If any "fair price", "moratorium",
"control share acquisition" or other form of anti-takeover statute or
regulations is or shall become applicable to the transactions contemplated
hereby, the Company and, subject to its Fiduciary Duty, the members of the Board
of Directors of the Company shall grant such approvals and take such actions as
are necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
(b) Without limiting the foregoing, the Company agrees to take any and
all actions as are necessary such that the Merger may be authorized by the
Company's stockholders in accordance with Section 1701.78 of Ohio Law
including, without limitation, the calling of a special meeting of
stockholders pursuant to Section 5.01 and delivery of the notice required
by Section 5.01 and a Proxy Statement as set forth in Section 5.02.
SECTION 5.10. Certain Employee Benefit Plans. Following the Effective
Time, the Surviving Corporation shall be bound by the severance pay plans,
severance agreements and deferred compensation plans and agreements disclosed in
Section 2.08 of the Company Disclosure Schedule. The provisions of this Section
5.10 are intended for the benefit of, and shall be enforceable by, the
directors, officers and employees who are parties to such severance or deferred
compensation agreements or participate in such severance pay or deferred
compensation plans.
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SECTION 5.11. Stock Options. The Company will exert commercially
reasonable best efforts to obtain prior to the Effective Time from each holder
of an outstanding option (an "Option") to purchase Shares granted under the
Company's Stock Option Plan and the Company's Non-Employee Director Stock Option
Plan (collectively, the "Stock Option Plans"), which is exercisable prior to the
Effective Time or would become exercisable in accordance with the Stock Option
Plans and/or separate agreements between the Company and certain Option holders
effective on the consummation of the Transactions, the surrender or agreement to
surrender of such Option in consideration of the payment in cash equal to the
product of (i) the number of Shares previously subject to such Option and (ii)
the excess, if any, of the Merger Consideration over the exercise price per
share of such Option; provided, however, that this Section 5.11 shall not apply
to those options listed in Section 5.11 of the Company Disclosure Schedule.
SECTION 5.12. Equity Capital Contribution. At the closing referred to in
Section 1.02, Parent agrees to contribute to Sub not less than $110 million of
equity capital less the product of (i) the number of Shares covered by Options
that are not surrendered pursuant to Section 5.11 and (ii) the excess, if any,
of the Merger Consideration over the exercise price per share of such Options.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement and the Transactions shall
have been approved and adopted by the affirmative vote of the stockholders
of the Company to the extent required by Ohio Law and the articles of
incorporation of the Company; provided that Parent and Sub shall cause all
Shares then owned by them and their subsidiaries to be voted in favor of
the Merger.
(b) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the consummation of the Merger shall have expired or
been terminated.
(c) No Order. No federal or state governmental authority or other
agency or commission or federal or state court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any law, rule,
regulation, executive order, decree, ruling or injunction or other order
(whether temporary, preliminary or permanent) which is then in effect and
has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger; provided, however, that this condition shall
not be applicable to the obligations of any party until such party shall
have used all reasonable efforts to have such decree, ruling, injunction or
order vacated or lifted.
SECTION 6.02. Conditions of Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are subject to the
satisfaction of the following additional conditions at or prior to the Effective
Time, unless waived in writing by Parent and Sub:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct or, in the case of representations and warranties not containing
any materiality qualifier, including, without limitation, "Material Adverse
Effect," shall be true and correct in all material respects (i) as of the
date hereof and (ii) as of the Closing Date, as though made on and as of
the Closing Date (provided, however, that in the cases of clauses (i) and
(ii), any such representation and warranty made as of a specific date shall
be true and correct as of such specific date), and Parent and Sub shall
have received certificates to such effect signed by the Chief Executive
Officer or the Chief Financial Officer of the Company.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all its obligations and covenants
required to be performed by the Company under this
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Agreement prior to or as of the Closing Date, and Parent and Sub shall have
received certificates to such effect signed by the Chief Executive Officer
or the Chief Financial Officer of the Company.
(c) Consents. Parent and Sub shall have received duly executed copies
of all third-party consents and approvals contemplated by this Agreement to
be obtained by the Company in form and substance reasonably satisfactory to
Parent and Sub, except those consents the failure to so receive would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company.
(d) Board Approval. The Board of Directors of the Company shall not
have withdrawn or modified in a manner materially adverse to Parent or Sub
the approval or recommendation of the Merger, the Merger Agreement or the
Other Transactions, or approved or recommended any takeover proposal or any
other acquisition of Shares other than the Transactions.
(e) No Market Events. None of the following shall have occurred (i)
any general suspension of trading in, or limitation on prices for,
securities on the New York Stock Exchange, (ii) the declaration of a
banking moratorium or any suspension of payments in respect to banks in the
United States, (iii) the commencement of a war, armed hostilities or other
national or international calamity directly or indirectly involving the
United States that has a Material Adverse Effect, (iv) any material
limitation (whether or not mandatory) by any governmental authority on, or
any other event which might materially affect, the extension of credit by
lending institutions that has a Material Adverse Effect, or (v) in the case
of any of the foregoing existing at the date hereof, a material
acceleration or worsening thereof.
(f) No Material Adverse Change. Neither the Company nor any
Subsidiary shall have suffered a Material Adverse Effect or any development
that, insofar as can reasonably be foreseen, is likely to result in a
Material Adverse Effect other than as a result of conditions affecting the
oil and gas industry generally.
(g) Redemption of Preferred Stock. The Company shall have effected
the redemption of all issued and outstanding shares of the Company's Class
II Serial Preferred Stock in accordance with the terms of such preferred
stock prior to the record date to be established by the Board for the
special meeting of stockholders to approve the Merger.
(h) Change of Control Payments. There shall be no material litigation
or material outstanding claims with respect to change of control, severance
or other similar payments payable to officers or employees of the Company.
SECTION 6.03. Conditions of Obligations of the Company. The obligation of
the Company to effect the Merger is subject to the satisfaction of the following
conditions at or prior to the Effective Time, unless waived in writing by the
Company;
(a) Representations and Warranties. The representations and
warranties of Parent and Sub and set forth in this Agreement shall be true
and correct or, in the case of representations and warranties not
containing any materiality qualifier, including, without limitation,
"Material Adverse Effect," shall be true and correct in all material
respects (i) as of the date hereof and (ii) as of the Closing Date, as
though made on and as of the Closing Date (provided, however, that in the
cases of clauses (i) and (ii), any such representation and warranty made as
of a specific date shall be true and correct as of such specific date), and
the Company shall have received certificates to such effect signed by a
senior executive officer of Parent and a senior executive officer of Sub to
such effect with respect to Parent matters and Sub matters, respectively.
(b) Performance of Obligations of Parent and Sub. Each of Parent and
Sub shall have performed in all material respects all of their respective
obligations and covenants required to be performed by such party under this
Agreement prior to or as of the Closing Date, and the Company shall have
received certificates to such effect signed by the Chief Financial Officer
of Parent and the President of Sub with respect to Parent and Sub matters,
respectively.
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(c) Consents. The Company shall have received duly executed copies of
all third party consents and approvals contemplated by this Agreement to be
obtained by Parent in form and substance reasonably satisfactory to the
Company, except those consents the failure to so receive, would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
(d) Fairness Opinion. The fairness opinion referred to in Section
2.16(b) shall not have been withdrawn or modified and the Company shall
have received a fairness opinion, substantially in the form of the fairness
opinion referred to in Section 2.16(b), to be included in the Company's
Proxy Statement, and such fairness opinion shall not have been withdrawn or
modified.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions by the stockholders of the Company:
(a) By mutual written consent duly authorized by the boards of
directors or general partner, as applicable, of Parent, Sub and the
Company; or
(b) By either Parent, Sub or the Company if (i) the Effective Time
shall not have occurred on or before the date that is 120 days following
the date of this Agreement; provided, however, that the right to terminate
this Agreement under this Section 7.01(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on
or before such date or (ii) any court of competent jurisdiction in the
United States or other United States governmental authority shall have
issued an order, decree, ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and nonappealable; or
(c) By Parent (i) in the case of an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Section
6.01 or Section 6.02, unless such occurrence or circumstance shall have
been caused by or resulted from the failure of Parent or Sub to perform in
any material respect any material covenant or agreement of either of them
contained in this Agreement or the material breach by Parent or Sub of any
material representation or warranty of either of them contained in this
Agreement or (ii) if the Board or any committee thereof shall have
withdrawn or modified in a manner materially adverse to Sub or Parent its
approval or recommendation of this Agreement or the Merger or shall have
recommended another merger, consolidation, business combination with, or
acquisition of, the Company or its assets or another tender offer for
Shares; or
(d) By the Company (i) in the case of an occurrence or circumstance
that would result in a failure to satisfy any of the conditions set forth
in Section 6.01 or Section 6.03, unless such occurrence or circumstance
shall have been caused by or resulted from the failure of the Company to
perform in any material respect any material covenant or agreement of it
contained in this Agreement or the material breach by the Company of any
material representation or warranty of it contained in this Agreement or
(ii) if the Board shall have withdrawn or modified in a manner adverse to
Sub or Parent its approval or recommendation of the Offer, this Agreement
or the Merger; or
(e) By Parent, Sub or the Company if the Stockholders of the Company
do not approve the Merger and the other Transactions at the Stockholders'
Meeting.
SECTION 7.02. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.01, this Agreement shall forthwith become
void, and there shall be no liability on the part of any party hereto or its
affiliates, directors, officers, advisors or shareholders, except (i) as set
forth in Section 7.02 and in Sections 7.03 and 8.01 and (ii), except as set
forth in Section 7.03(c), nothing shall relieve any party from liability for any
intentional breach hereof.
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SECTION 7.03. Fees. (a) If:
(i) Parent, Sub or the Company terminates this Agreement pursuant
to Sections 7.01(c) or 7.01(d), and within 12 months thereafter, the
Company enters into an agreement with respect to a Third Party
Acquisition (as defined below) or a Third Party Acquisition occurs,
involving any party (or any affiliate thereof) (x) with whom the Company
had any discussions with respect to a Third Party Acquisition, (y) to
whom the Company furnished information with respect to or with a view to
a Third Party Acquisition or (z) who had submitted a proposal or
expressed any interest publicly or to the Company in a Third Party
Acquisition, in the case of each of clauses (x), (y) and (z), prior to
such termination; or
(ii) Parent, Sub or the Company terminates this Agreement pursuant
to Sections 7.01(c) or 7.01(d) and within 12 months thereafter a Third
Party Acquisition shall occur involving a direct or indirect
consideration (or implicit valuation) for Shares in excess of the Merger
Consideration;
then the Company shall pay to Parent and Sub a fee of $12,400,000; provided,
however, that: (i) the Company in no event shall be obligated to pay more than
one such fee with respect to all such agreements and occurrences and such
termination; (ii) the fee required to be paid under this Section 7.03(a) shall
be reduced dollar-for-dollar by any fee paid by the Company to Parent under
Section 7.03(b); and (iii) the Company shall not be obligated to pay the fee
required to be paid pursuant to this Section 7.03(a) if this Agreement is
terminated due solely to a failure to be satisfied of any of the following
conditions: Sections 6.01(b), 6.01(c), 6.02(e), 6.03(a) and 6.03(b), provided
that at such time each and all of the conditions set forth in Sections 6.01 and
6.02 (other than Section 6.02(e)) shall have been satisfied.
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of all of the stock or assets of the Company by
merger or otherwise by any person other than Parent, Sub or any affiliate
thereof (a "Third Party"); or (ii) the acquisition by a Third Party of 50% or
more of the total assets of the Company and its Subsidiaries, taken as a whole;
or (iii) the acquisition by a Third Party of 50% or more of the outstanding
Shares.
(b) In recognition of the significant expenditure of executive time
and resources incurred by Parent and Sub in connection with the negotiation
of this Agreement and investigation of the transactions contemplated
hereby, and in light of the difficulty in calculating the value of such
executive time and resources, upon the termination of this Agreement (i) by
Parent or Sub pursuant to Section 7.01(c)(i), or (ii) under circumstances
in which the Company shall be obligated to pay a fee pursuant to Section
7.03(a), the Company shall pay to Parent $5,000,000 provided, however, the
Company shall not be obligated to pay the fee required to be paid pursuant
to this Section 7.03(b) if this Agreement is terminated due solely to a
failure to be satisfied of any of the following conditions: Sections
6.01(b), 6.01(c), 6.02(e), 6.03(a) and 6.03(b), provided that at such time
each and all of the conditions set forth in Sections 6.01 and 6.02 (other
than Section 6.02(e)) shall have been satisfied. Notwithstanding the
foregoing, the Company shall not be obligated to pay the fee required to be
paid pursuant to this Section 7.03(b) if: (i) this Agreement is terminated
due solely to a failure to be satisfied of the condition set forth in
Section 6.01(a); and (ii) prior to the stockholders' meeting contemplated
therein the Company has not received a bona fide proposal for a Third Party
Acquisition and no third party has publicly announced an intention to make
such a proposal, provided that at such time each and all of the conditions
set forth in Sections 6.01 and 6.02 shall have been satisfied; provided,
however, in such circumstance, the Company shall promptly reimburse Parent
and Sub for their reasonable out-of-pocket expenses incurred in connection
with the proposed Transactions, but not in excess of $500,000 in the
aggregate.
(c) If this Agreement is terminated by the Company pursuant to Section
7.01(d) due solely to a failure to be satisfied of the conditions set forth
in Section 6.03(a) and (b), Parent shall pay to the Company $5,000,000;
provided, however (i) Parent shall not be obligated to pay such sum to the
Company if at the time the Company so terminates this Agreement, any of the
conditions set forth in Sections 6.01 and 6.02 shall not have been
satisfied and (ii) payment of such sum shall be the Company's sole and
exclusive remedy, at law or in equity, arising from such termination.
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(d) Except as set forth in this Section 7.03, all costs and expenses
incurred in connection with the Agreement and the Transactions shall be
determined and paid by the party incurring such expenses, whether or not
any Transaction is consummated.
SECTION 7.04. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective boards of directors
at any time prior to the Effective Time; provided, however, that, after the
approval and adoption of this Agreement and the Transactions by the stockholders
of the Company, no amendment may be made which would reduce the amount or change
the type of consideration into which each Share shall be converted upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 7.05. Waiver. At any time prior to the Effective Time, any party
hereto may (i) extend the time for the performance of any obligation or other
act of any other party hereto, (ii) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any agreement or condition (other than, with respect
to Parent and Sub, the Minimum Condition) contained herein. Any such extension
or waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.01, as the case may be, except that the agreements set
forth in Article I and Section 5.06 shall survive the Effective Time
indefinitely, the agreements set forth in Section 5.05 shall survive the
Effective Time for the respective periods set forth therein and the agreements
set forth in Section 5.03(b) shall survive termination indefinitely.
SECTION 8.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 8.02):
if to Parent or Sub:
c/o TPG Partners II, L.P.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
Attn: James J. O'Brien
with a copy to:
Kevin G. Levy
Kelly, Hart & Hallman, P.C.
201 Main Street, Suite 2500
Fort Worth, Texas 76102
if to the Company:
Belden & Blake Corporation
5200 Stoneham Road
North Canton, Ohio 47720
Attn: Joseph M. Vitale
Senior Vice President and General Counsel
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with copies to:
Anthony E. Efremoff
Black, McCuskey, Souers & Arbaugh
1000 United Bank Plaza
Canton, Ohio 44702-2116
and
David Porter
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
SECTION 8.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any Shares;
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise; and
(e) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person"
as defined in Section 13(d)(3) of the Exchange Act), trust, association or
entity or government, political subdivision, agency or instrumentality of a
government.
SECTION 8.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party.
SECTION 8.05. Entire Agreement; Assignment. Except for the
Confidentiality Agreement, this Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of law or otherwise without the consent of the other
parties provided, however, that Sub may transfer or assign, in whole or from
time to time in part, to one or more of its affiliates, including Parent, its
rights hereunder, but any such transfer or assignment will not relieve Sub of
its obligations hereunder or prejudice the rights of stockholders to receive
payment for their Shares pursuant to the Merger.
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SECTION 8.06. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Sections 5.05, 5.06 and 5.10 (which are intended
to be for the benefit of the persons covered thereby and may be enforced by such
persons).
SECTION 8.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio applicable to
contracts executed in and to be performed in that State.
SECTION 8.08. Headings. The descriptive headings contained in this
Agreement are included for convenience or reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 8.09. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
TPG PARTNERS II, L.P.
By TPG GenPar II, L.P., its General
Partner
By TPG Advisors II, Inc., its General
Partner
By: /s/ Richard A. Ekleberry
------------------------------------
Name: Richard A. Ekleberry
Title: Vice President
PARENT
BB MERGER CORP
By: /s/ Richard A. Ekleberry
------------------------------------
Name: Richard A. Ekleberry
Title: Vice President
MERGER SUB
BELDEN & BLAKE CORPORATION
By: /s/ Henry S. Belden IV
------------------------------------
Name: Henry S. Belden IV
Title: Chief Executive Officer
COMPANY
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