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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
dated as of
November 2, 1999
among
GIBSON GREETINGS, INC.
AMERICAN GREETINGS CORPORATION
and
GRANITE ACQUISITION CORP.
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1
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DEFINITIONS
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SECTION 1.01. Definitions..............................................2
ARTICLE 2
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THE OFFER
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SECTION 2.01. The Offer................................................6
SECTION 2.02. Company Action...........................................8
SECTION 2.03. Directors................................................9
ARTICLE 3
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THE MERGER
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SECTION 3.01. The Merger..............................................11
SECTION 3.02. Conversion of Shares....................................11
SECTION 3.03. Surrender and Payment...................................12
SECTION 3.04. Dissenting Shares.......................................13
SECTION 3.05. Stock Options...........................................13
SECTION 3.06. Adjustments.............................................14
SECTION 3.07. Withholding Rights......................................14
SECTION 3.08. Lost Certificates.......................................15
SECTION 3.09. Adjustments to Price....................................15
ARTICLE 4
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THE SURVIVING CORPORATION
-------------------------
SECTION 4.01. Certificate of Incorporation............................16
SECTION 4.02. Bylaws..................................................16
SECTION 4.03. Directors and Officers..................................16
ARTICLE 5
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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SECTION 5.01. Corporate Existence and Power...........................16
SECTION 5.02. Corporate Authorization.................................17
SECTION 5.03. Governmental Authorization..............................17
SECTION 5.04. Non-contravention.......................................17
SECTION 5.05. Capitalization..........................................18
SECTION 5.06. Subsidiaries............................................18
SECTION 5.07. SEC Filings.............................................19
SECTION 5.08. Financial Statements....................................20
SECTION 5.09. Absence of Certain Changes..............................20
SECTION 5.10. No Undisclosed Material Liabilities.....................21
SECTION 5.11. Compliance with Laws and Court Orders...................22
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PAGE
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SECTION 5.12. Litigation...................................................22
SECTION 5.13. Finders' Fees................................................22
SECTION 5.14. Taxes........................................................22
SECTION 5.15. Employee Benefit Plans.......................................23
SECTION 5.16. Environmental Matters........................................24
SECTION 5.17. Antitakeover Statutes, Rights Agreement and Standstill
Agreement....................................................25
SECTION 5.18. Intellectual Property........................................25
SECTION 5.19. Year 2000 Compliance.........................................26
ARTICLE 6
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REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
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SUBSIDIARY
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SECTION 6.01. Corporate Existence and Power................................27
SECTION 6.02. Corporate Authorization......................................27
SECTION 6.03. Governmental Authorization...................................27
SECTION 6.04. Non-contravention............................................28
SECTION 6.05. Finders' Fees................................................28
SECTION 6.06. Financing....................................................28
ARTICLE 7
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COVENANTS OF THE COMPANY
------------------------
SECTION 7.01. Conduct of the Company.......................................29
SECTION 7.02. Stockholder Meeting; Proxy Material..........................31
SECTION 7.03. Access to Information........................................32
SECTION 7.04. No Solicitation; Other Offers................................32
SECTION 7.05. Notices of Certain Events....................................34
SECTION 7.06. Disclosure Documents.........................................34
SECTION 7.07. Standstill Agreements: Confidentiality Agreements............35
SECTION 7.08. Rights Agreement; Anti-takeover Provisions...................35
ARTICLE 8
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COVENANTS OF PARENT
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SECTION 8.01. Confidentiality..............................................36
SECTION 8.02. Obligations of Merger Subsidiary.............................37
SECTION 8.03. Voting of Shares.............................................37
SECTION 8.04. Director and Officer Liability...............................37
SECTION 8.05. Employee Benefits............................................38
SECTION 8.06. Disclosure Documents.........................................39
ARTICLE 9
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COVENANTS OF PARENT AND THE COMPANY
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SECTION 9.01. Best Efforts.................................................39
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SECTION 9.02. Certain Filings..............................................42
SECTION 9.03. Public Announcements.........................................42
SECTION 9.04. Further Assurances...........................................42
ARTICLE 10
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CONDITIONS TO THE MERGER
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SECTION 10.01. Conditions to Obligations of Each Party.....................43
SECTION 10.02. Conditions to Obligations of Parent and Merger
Subsidiary to Effect the Merger.............................43
ARTICLE 11
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TERMINATION
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SECTION 11.01. Termination.................................................43
SECTION 11.02. Effect of Termination.......................................45
ARTICLE 12
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MISCELLANEOUS
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SECTION 12.01. Notices.....................................................46
SECTION 12.02. Survival of Representations and Warranties..................47
SECTION 12.03. Amendments; No Waivers......................................47
SECTION 12.04. Expenses....................................................47
SECTION 12.05. Successors and Assigns......................................49
SECTION 12.06. Governing Law...............................................49
SECTION 12.07. Dispute Resolution; Jurisdiction............................49
SECTION 12.08. WAIVER OF JURY TRIAL........................................50
SECTION 12.09. Counterparts; Effectiveness; Benefit........................50
SECTION 12.10. Entire Agreement............................................50
SECTION 12.11. Captions....................................................50
SECTION 12.12. Severability................................................50
SECTION 12.13. Specific Performance........................................50
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 2, 1999 among Gibson
Greetings, Inc., a Delaware corporation (the "COMPANY"), American Greetings
Corporation, an Ohio corporation ("PARENT"), and Granite Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("MERGER
SUBSIDIARY").
The parties hereto agree as follows:
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ARTICLE 1
Definitions
SECTION 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"ACQUISITION PROPOSAL" means any offer or proposal for, or any
indication of interest in, a merger, consolidation, tender offer, share
exchange, business combination, reorganization, recapitalization or other
similar transaction involving the Company or any of its Subsidiaries or any
proposal or offer to acquire, directly or indirectly, any equity interest in,
any voting securities of, or a substantial portion of the assets of, the Company
or any of its Subsidiaries, other than (A) the transactions contemplated by this
Agreement and (B) any transaction involving EGN.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY BALANCE SHEET" means the condensed consolidated balance sheet
of the Company as of June 30, 1999 as read in conjunction with the footnotes
thereto set forth in the Company 10-K.
"COMPANY BALANCE SHEET DATE" means June 30, 1999.
"COMPANY 10-K" means the Company's annual report on Form 10-K for the
fiscal year ended December 31, 1998.
"COMPANY'S KNOWLEDGE" or any other similar knowledge qualification in
this Agreement means the actual knowledge of: Frank J. O'Connell, Chairman,
Chief Executive Officer and President of the Company, James T. Wilson, Executive
Vice President--Finance and Operations and Chief Financial Officer of the
Company or James E. Thaxton, Vice President--Business Affairs and Counsel of the
Company.
"DELAWARE LAW" means the General Corporation Law of the State of
Delaware.
"EGN" means E-Greetings Network, a California corporation.
"ENVIRONMENTAL CLAIM" means any written claim, demand, suit, action,
proceeding, investigation or notice to the Company or any of its Subsidiaries by
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any Person or entity alleging any potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, or penalties) arising out
of, based on, or resulting from the presence, or Release into the environment,
of any Hazardous Substance at any location, whether owned, leased, operated or
used by the Company or its Subsidiaries.
"ENVIRONMENTAL LAWS" means all Laws as currently in effect, which
regulate the threatened Releases of Hazardous Substances, or otherwise relating
to the manufacture, generation, processing, distribution, use, storage,
disposal, transport or handling of Hazardous Substances, including the
Comprehensive Environmental Response, Compensation and Liability Act and the
Resource Conservation and Recovery Act.
"EMPLOYEE PLAN" means any material, written "employee benefit plan," as
defined in Section 3(3) of ERISA, or employment, severance or similar contract
or other plan providing for severance benefits, bonuses, profit-sharing, stock
option or other stock related rights or other forms of incentive or deferred
compensation, health, medical or disability benefits which is maintained,
administered or contributed to by the Company or any ERISA Affiliate and covers
any employee or former employee of the Company or any Subsidiary, or with
respect to which the Company or any Subsidiary has any liability.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA AFFILIATE" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"HAZARDOUS SUBSTANCE" means (1) pollutants, contaminants, hazardous
wastes, toxic substances, and oil and petroleum products, (2) any substance that
is or contains friable asbestos, urea formaldehyde foam insulation,
polychorinated biphenyls, petroleum or petroleum-derived substances or wastes,
radon gas or related materials, (3) any substance that requires removal or
remediation under any Environmental Law, or is defined, listed or identified as
a "hazardous waste" or "hazardous substance" thereunder, or (4) any substance
that is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous; in each case in clauses (1)-(4)
above which is regulated under any Environmental Law.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
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"LIEN" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"MATERIAL ADVERSE EFFECT" means, with respect to the Company, a
material adverse effect (i) on the business, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole or (ii) on the
ability of the Company to perform its obligations under or to consummate the
transactions contemplated by this Agreement.
"MINIMUM CONDITION" means that number of Shares that are validly
tendered in accordance with the terms of the Offer, prior to the expiration date
of the Offer and not withdrawn, that, together with the Shares then owned by
Parent, represents at least a majority of the Shares then outstanding on a
fully-diluted basis (assuming the exercise of all outstanding options which are
exercisable and in-the-money at the Offer Price).
"1933 ACT" means the Securities Act of 1933.
"1934 ACT" means the Securities Exchange Act of 1934.
"OPERATING SUBSIDIARY" shall mean a subsidiary of the Company that is
not a material Subsidiary.
"PARENT MATERIAL ADVERSE EFFECT" means a material adverse effect on the
ability of Parent or Merger Subsidiary to perform its obligations under or to
consummate the transactions contemplated by this Agreement.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"RABBI TRUST" means the trust established by the Company to fund the
compensation and benefits to be provided to employees of the Company and its
Subsidiaries under incentive arrangements designed and adopted by the Company.
"RELEASE" means any releasing, disposing, discharging, injecting,
spilling, leaking, pumping, dumping, emitting, escaping, emptying, migration,
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transporting, placing and the like, including into or upon, any land, soil,
surface water, ground water or air, or otherwise entering into the environment.
"SEC" means the Securities and Exchange Commission.
"SHARES" means the shares of common stock, $0.01 par value, of the
Company.
"SUBSIDIARY" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.
"TITLE IV PLAN" means an Employee Plan subject to Title IV of ERISA
other than any "multiemployer plan", as defined in Section 3(37) of ERISA.
Any reference in this Agreement to a statute shall be to such statute,
as amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
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Antitrust Law................................. 9.01(b)(iii)
Certificates.................................. 3.03(a)
Closing....................................... 3.01(b)
Closing Date.................................. 3.01(b)
Company Disclosure Documents.................. 7.06(a)
Company Proxy Statement....................... 7.06(a)
Company SEC Documents......................... 5.07(a)(iv)
Company Securities............................ 5.05(b)(iii)
Company Stockholder Meeting................... 7.02(a)
Company Subsidiary Securities................. 5.06(b)(ii)
Confidentiality Agreement..................... 7.03
Continuing Directors.......................... 2.03(a)(ii)
DOJ........................................... 9.01(b)(ii)
Disclosure Schedule........................... 5
Effective Time................................ 3.01(c)
Escrow Agent.................................. 12.04(d)
Exchange Agent................................ 3.03(a)
FTC........................................... 9.01(b)(ii)
GAAP.......................................... 5.08
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TERM SECTION
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Indemnified Person.......................... 8.04(a)(i)
Liquidation Event........................... 3.09
Merger...................................... 3.01(a)
Merger Consideration........................ 3.02(a)
Offer ................................... 2.01(a)
Offer Documents............................. 2.01(b)(i)(A)
Offer Price................................. 2.01(a)
Option Holder............................... 3.05(a)
Option Spread............................... 3.05(a)(ii)
Rights Agreement............................ 5.17(b)(i)
Schedule 14D-1.............................. 2.01(b)(i)(A)
Schedule 14D-9.............................. 2.02(b)
Standstill Agreement........................ 5.17(b)(ii)
Successor Plan.............................. 8.05(b)
Superior Proposal........................... 7.04(b)(iii)
Surviving Corporation....................... 3.01(a)
Tax Return.................................. 5.14(f)
Taxes....................................... 5.14(f)
Taxing Authority............................ 5.14(f)
Transferred Employee........................ 8.05(a)
ARTICLE 2
The Offer
SECTION 2.01. The Offer. (a) Provided this Agreement shall not have
been terminated, as promptly as practicable after the date hereof, but in no
event later than five business days following the public announcement of the
terms of this Agreement, Parent shall cause Merger Subsidiary to commence, and
Merger Subsidiary shall commence, an offer (as amended or supplemented in
accordance with this Agreement, the "OFFER") to purchase for cash any and all of
the outstanding Shares at a price of $10.25 per Share (the "OFFER PRICE"),
subject to adjustment as set forth in Section 3.06 and Section 3.09, net to the
seller in cash. The Offer shall be subject only to the conditions set forth in
Annex I hereto. Merger Subsidiary expressly reserves the right to waive the
condition to the Offer relating to the representations and warranties and
covenants of the Company, provided that no other change in the conditions to the
Offer may be made without the prior written consent of the Company.
Notwithstanding the foregoing, without the consent of the Company, Merger
Subsidiary shall have the right to extend the Offer (i) from time to time if, at
the scheduled or extended expiration date of the Offer, any of the conditions to
the Offer shall not have been satisfied
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or waived, until such conditions are satisfied or waived or (ii) for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer or any period required by applicable law,
provided that, each such extension shall be for such period (not to exceed 20
business days without the consent of Parent) as may be specified by the Company.
If all of the conditions to the Offer are satisfied or waived on any scheduled
expiration date of the Offer, the Company shall have the right to require Merger
Subsidiary to extend the Offer on one or more occasions for an aggregate period
of not more than 20 business days beyond the latest expiration date that would
otherwise be permitted under clause (i) or (ii) of the previous sentence, if, on
such expiration date, the number of Shares tendered (and not withdrawn) pursuant
to the Offer, together with the Shares then owned by Parent, represents less
than 90% of the then outstanding Shares on a fully-diluted basis (assuming the
exercise of all outstanding options which are exercisable and in-the-money at
the Offer Price), and Merger Subsidiary shall have the right to extend the Offer
on one occasion for a period of not more than 5 business days pursuant to the
provisions of this sentence, provided that, the Company may prevent such
extension by Merger Subsidiary if the Company, in its reasonable judgment,
determines that such an extension could threaten in any way the consummation of
the Offer. If all of the conditions to the Offer are not satisfied or waived on
any scheduled expiration date of the Offer, Merger Subsidiary shall extend the
Offer from time to time until such conditions are satisfied or waived, provided
that, each such extension shall be for such period (not to exceed 20 business
days without the consent of Parent) as may be specified by the Company and,
provided further that, Merger Subsidiary shall not be required to extend the
Offer if this Agreement is terminable pursuant to Sections 11.01(b)(i) or
11.01(b)(ii) hereof (except that the time periods referenced in Sections
11.01(b)(i) or 11.01(b)(ii) shall be extended for the time period equal to the
time period beyond ten business days during which either the Company or Parent
shall fail to make an HSR Filing pursuant to Section 9.01(a)). Merger Subsidiary
shall, and Parent shall cause it to, accept for payment and pay for, as promptly
as practicable after the expiration of the Offer, all Shares properly tendered
and not withdrawn pursuant to the Offer that Merger Subsidiary is obligated to
purchase.
(b) As soon as practicable on the date of commencement of the Offer,
Parent and Merger Subsidiary shall file with (A) the SEC a Tender Offer
Statement on Schedule 14D-1 (the "SCHEDULE 14D-1") with respect to the Offer,
which will contain the offer to purchase and form of the related letter of
transmittal and summary advertisement (such Schedule 14D-1 and such documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "OFFER DOCUMENTS") and (B) the Ohio
Division of Securities and the Company such documents as may be required in
accordance with Section 1707.041 of the General Corporation Law of
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Ohio (the "OHIO LAW"). Parent and the Company each agrees promptly to correct
any information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect. Parent and Merger Subsidiary agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. The Company and its counsel shall be given an opportunity to review and
approve the Offer Documents prior to their being filed with the SEC or
disseminated to the holders of Shares. Parent and Merger Subsidiary shall
provide the Company and its counsel with any comments or other communications,
whether written or oral, that Parent, Merger Subsidiary or their counsel may
receive from time to time from the SEC or its staff with respect to the Offer
Documents promptly after receipt of such comments or other communications.
SECTION 2.02. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held has (i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to and in the
best interests of the Company's stockholders, (ii) unanimously approved and
adopted this Agreement and the transactions contemplated hereby, including the
Offer and the Merger (such approval being sufficient to render Section 203 of
Delaware Law, Articles V and VI of the Company's Certificate of Incorporation
and the Rights Agreement inapplicable to this Agreement and the transactions
contemplated hereby, including the Offer and the Merger), (iii) unanimously
resolved to recommend acceptance of the Offer and approval and adoption of this
Agreement and the Merger by its stockholders, provided that, subject to and in
accordance with the provisions of Section 7.04(c), the Board of Directors of the
Company may withdraw, modify or amend such recommendation and (iv) amended the
Rights Agreement as described in Section 5.17 hereof. The Company further
represents that J.P. Morgan Securities Inc. has delivered to the Company's Board
of Directors its opinion that the consideration to be received in the Offer and
the Merger is fair to the holders of Shares from a financial point of view. The
Company will promptly furnish Parent with a list of its stockholders,
mailing labels and any available listing or computer file containing the names
and addresses of all record holders of Shares and lists of securities positions
of Shares held in stock depositories, in each case true and correct as of the
most recent practicable date, and will provide to Parent such additional
information (including, without limitation, updated lists of stockholders,
mailing labels and lists of securities positions) and such other assistance as
Parent may reasonably request in connection with the Offer. 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
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and Merger Subsidiary and each of their Affiliates, associates, employees,
agents and advisors shall hold in confidence the information contained in any
such lists, labels, listings or files, shall use such information only in
connection with the Offer and the Merger and, if this Agreement shall be
terminated and if the Company so requests, shall deliver, and shall use their
reasonable efforts to cause their Affiliates, associates, employees, agents and
advisors to deliver, to the Company all copies and any extracts or summaries
from such information then in their possession or control.
(b) Simultaneously with the filing by Merger Subsidiary of the
Schedule 14D-1 or as promptly thereafter as practicable, the Company shall file
with the SEC and disseminate to holders of Shares, in each case as and to the
extent required by applicable federal securities laws, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "SCHEDULE 14D-9") that, subject to the
provisions of Section 7.04(c), shall reflect the recommendations of the
Company's Board of Directors referred to above. The Company and Parent each
agree promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in any
material respect. The Company agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Parent and its counsel shall be given an opportunity to
review and comment on the Schedule 14D-9 prior to its being filed with the SEC.
The Company shall provide Parent and its counsel with any comments or other
communications, whether written or oral, that the Company or its counsel may
receive from time to time from the SEC or its staff with respect to the Schedule
14D-9 promptly after receipt of such comments or other communications.
SECTION 2.03. Directors. (a) Effective upon the acceptance for payment
pursuant to the Offer of a number of Shares that satisfies the Minimum
Condition, Parent shall be entitled to designate the number of directors,
rounded up to the next whole number, on the Company's Board of Directors that
equals the product of (i) the total number of directors on the Company's Board
of Directors (giving effect to the election of any additional directors pursuant
to this Section) and (ii) the percentage that the number of Shares beneficially
owned by Parent (including Shares accepted for payment) bears to the total
number of Shares outstanding, and the Company shall take all action necessary to
cause Parent's designees to be elected or appointed to the Company's Board of
Directors, including, without limitation, increasing the number of directors,
and seeking and accepting resignations of incumbent directors. At such time, the
Company will also use its best efforts to cause individuals designated by Parent
to constitute the number of members, rounded up to the next whole number, on (i)
each committee of the
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Board other than the Executive Committee or any committee of the Board
established to take action under this Agreement and (ii) each board of directors
of each Subsidiary of the Company (and each committee thereof) that represents
the same percentage as such individuals represent on the Board of Directors of
the Company. Notwithstanding the foregoing, the Company shall use its reasonable
best efforts to ensure that at least three members of the Board of Directors and
such committees and boards as of the date hereof who are not employees of the
Company (the "CONTINUING DIRECTORS") shall remain members of the Board of
Directors and such committees and boards until the Effective Time, provided
that, if the number of Continuing Directors is reduced below three prior to the
Effective Time, the remaining such Directors shall be entitled to designate to
fill the vacancy a person who is not an officer, director or designee of Parent
or any of its Affiliates and who shall be deemed to be a Continuing Director for
all purposes of this Agreement.
(b) The Company's obligations to appoint Parent's designees to the
Board of Directors shall be subject to Section 14(f) of the 1934 Act and Rule
14f- 1 promulgated thereunder. The Company shall promptly take all actions, and
shall include in the Schedule 14D-9 such information with respect to the Company
and its officers and directors, as Section 14(f) and Rule 14f-1 require in order
to fulfill its obligations under this Section. Parent shall supply to the
Company in writing and be solely responsible for any information with respect to
itself and its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees
pursuant to Section 2.03(a) and until the Effective Time, the approval of a
majority of the Continuing Directors of the Company then in office who were not
designated by Parent shall be required to authorize (and such authorization
shall constitute the authorization of the Board of Directors and no other action
on the part of the Company, including any action by any other director of the
Company, shall be required to authorize) any termination of this Agreement by
the Company, any amendment of this Agreement requiring action by the Board of
Directors, any extension of time for performance of any obligation or action
hereunder by Parent or Merger Subsidiary and any waiver of compliance with any
of the agreements or conditions contained herein for the benefit of the Company.
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ARTICLE 3
The Merger
SECTION 3.01. The Merger. (a) At the Effective Time, Merger Subsidiary
shall be merged (the "MERGER") with and into the Company in accordance with
Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease,
and the Company shall be the surviving corporation (the "SURVIVING
CORPORATION").
(b) Upon the terms and subject to the conditions of this Agreement,
the closing of the Merger (the "CLOSING") shall take place at 10:00 a.m. on a
date to be specified by the parties (the "CLOSING DATE") that shall be no later
than the second business day after satisfaction of the conditions set forth
herein, other than those conditions that are to be satisfied at the Closing, but
subject to the satisfaction of such conditions, at the offices of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York 10017, unless the parties
hereto agree in writing to another time, date or place.
(c) Upon the Closing, the Company and Merger Subsidiary shall file a
certificate of merger with the Delaware Secretary of State and make all other
filings or recordings required by Delaware Law in connection with the Merger.
The Merger shall become effective at such time (the "EFFECTIVE TIME") as the
certificate of merger is duly filed with the Delaware Secretary of State or at
such later time as is specified in the certificate of merger.
(d) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Subsidiary, all as provided under Delaware Law.
SECTION 3.02. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Subsidiary or
the Company or the holders of any of the following securities:
(a) except as otherwise provided in Section 3.02(c), Section 3.04,
Section 3.06 or Section 3.09, each Share outstanding immediately prior to the
Effective Time shall be converted into the right to receive $10.25 in cash or
any higher price paid for each Share in the Offer, without interest (the "MERGER
CONSIDERATION");
(b) each Share held by the Company as treasury stock or owned by
Parent or any of its Subsidiaries immediately prior to the Effective Time shall
be canceled, and no payment shall be made with respect thereto; and
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(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
SECTION 3.03. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint Bank One Corporation as agent (the "EXCHANGE AGENT") for
the purpose of exchanging certificates representing Shares (the "CERTIFICATES")
for the Merger Consideration. Parent will make available to the Exchange Agent,
as needed, the Merger Consideration to be paid in respect of the Shares.
Promptly after the Effective Time, Parent will send, or will cause the Exchange
Agent to send, to each holder of Shares at the Effective Time a letter of
transmittal and instructions (which shall specify that the delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates to the Exchange Agent) for use in such exchange.
(b) Each holder of Shares that have been converted into the right to
receive the Merger Consideration will be entitled to receive, upon surrender to
the Exchange Agent of a Certificate, together with a properly completed letter
of transmittal, the Merger Consideration payable for each Share represented by
such Certificate. Until so surrendered, each such Certificate shall represent
after the Effective Time for all purposes only the right to receive such Merger
Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the Person in whose name the surrendered Certificate is
registered, it shall be a condition to such payment that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such payment to a
Person other than the registered holder of such Certificate or establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be canceled and exchanged for the Merger
Consideration provided for, and in accordance with the procedures set forth, in
this Article.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.03(a) (and any interest or other income
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earned thereon) that remains unclaimed by the holders of Shares six months after
the Effective Time shall be returned to Parent, and any such holder who has not
exchanged them for the Merger Consideration in accordance with this Section
prior to that time shall thereafter look only to Parent for payment of the
Merger Consideration in respect of such Shares without any interest thereon.
Notwithstanding the foregoing, Parent shall not be liable to any holder of
Shares for any amount paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. Any amounts remaining unclaimed by holders of
Shares six years after the Effective Time (or such earlier date immediately
prior to such time when the amounts would otherwise escheat to or become
property of any governmental authority) shall become, to the extent permitted by
applicable law, the property of Parent free and clear of any claims or interest
of any Person previously entitled thereto.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.03(a) to pay for Shares for which appraisal
rights have been perfected shall be returned to Parent, upon demand.
SECTION 3.04. Dissenting Shares. Notwithstanding Section 3.02, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Delaware Law shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect, withdraws or otherwise loses its right to appraisal. If, after
the Effective Time, such holder fails to perfect, withdraws or loses its right
to appraisal, such Shares shall be treated as if they had been converted as of
the Effective Time into a right to receive the Merger Consideration. The Company
shall give Parent prompt notice of any demands received by the Company for
appraisal of Shares, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. Except with the prior
written consent of Parent, the Company shall not make any payment with respect
to, or settle or offer to settle, any such demands.
SECTION 3.05. Stock Options. (a) The Company shall take all actions
necessary (which include, but are not limited to, satisfying the requirements of
Rule 16b-3(e) promulgated under Section 16 of the Exchange Act, without
incurring any liability in connection therewith, and seeking any consents
required of holders of Options) to provide that at or immediately prior to the
Effective Time, each stock option to purchase Shares (the "OPTIONS") outstanding
under any employee or director stock option or compensation plan or arrangement
of the Company (the "OPTION PLANS"), whether or not vested or exercisable, shall
be canceled, and the Company shall pay each holder of any such Option (an
"OPTION HOLDER") at or promptly after the Effective Time for each such Option
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surrendered an amount in cash determined by multiplying (i) the excess, if any,
of the Merger Consideration over the applicable exercise price of such Option by
(ii) the number of Shares such holder could have purchased (assuming full
vesting of all options) had such holder exercised such Option in full
immediately prior to the Effective Time (the "OPTION SPREAD").
(b) Prior to the Effective Time, the Company shall make any amendments
to the terms of such stock option or compensation plans or arrangements deemed
necessary by the Company or Parent to give effect to the transactions
contemplated by Section 3.05(a).
(c) Except as provided herein or as otherwise agreed to by the
parties, (i) the Company shall cause the Option Plans to terminate as of the
Effective Time and (ii) the Company shall ensure that following the Effective
Time, no holder of Options or any participant in the Option Plans will have any
right to acquire any equity securities of the Company, the Surviving Corporation
or any Subsidiary thereof.
SECTION 3.06. Adjustments. If, during the period between the date of
this Agreement and the Effective Time, any change in the outstanding Shares
shall occur, including by reason of any reclassification, recapitalization,
stock split or combination, exchange or readjustment of Shares, or stock
dividend thereon with a record date during such period, the cash payable
pursuant to the Offer, the Merger Consideration and any other amounts payable
pursuant to this Agreement shall be appropriately adjusted.
SECTION 3.07. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the Surviving Corporation or Parent, as
the case may be, made such deduction and withholding.
SECTION 3.08. Lost Certificates. If 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 and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will pay, in exchange for such lost, stolen or destroyed
Certificate, the Merger
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Consideration to be paid in respect of the Shares represented by such
Certificate, as contemplated by this Article 3.
SECTION 3.09. Adjustments to Price. A "LIQUIDATION EVENT" shall mean
any sale or disposition for cash (including, without limitation, a sale or
disposition by EGN of all or substantially all of its assets followed by a
distribution of the cash proceeds thereof to shareholders of EGN, a merger or
consolidation involving EGN, a purchase of all or substantially all of the stock
of EGN by a third party or the repurchase by EGN of any of its capital stock
from the Company or its Subsidiaries) by the Company or its Subsidiaries of all
or any part of its investment in EGN prior to the expiration date of the Offer.
In the event of a Liquidation Event (or if more than one such Liquidation Event
occurs, with respect to each Liquidation Event), each of the Merger
Consideration, the Offer Price and the Option Spread shall be increased by an
amount equal to 30% of any after-tax gain (after giving full effect to any
capital loss carry-forward available to the Company, the availability of which
is confirmed by the Company's independent accountants) on such Liquidation
Event, calculated in accordance with GAAP, divided by the total number of Shares
then outstanding on a fully diluted basis, assuming for this purpose the
exercise only of outstanding Options, whether or not such Options are then
vested, which are (or, giving effect to the adjustment in the Merger
Consideration contemplated hereby, would be) in-the-money. Parent and Merger
Subsidiary shall make such changes in the Offer Documents necessary to reflect
any increase in the price per Share of the Offer pursuant to this provision,
including extending the expiration date of the Offer as required by applicable
Federal securities laws. The price used to compute any after-tax gain on a
Liquidation Event shall be the cash received by the Company in such sale or
disposition (net of any underwriting discounts and other amounts paid by the
Company in connection with such sale), but only if such cash is for an aggregate
amount in excess of the Company's then net book value of its interest in EGN.
ARTICLE 4
The Surviving Corporation
SECTION 4.01. Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, provided that, at the Effective Time, Article I
of such certificate of incorporation shall be amended to read as follows: "The
name of the corporation is Gibson Greetings, Inc."
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SECTION 4.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 4.03. Directors and Officers. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, (i) the directors of Merger Subsidiary at the Effective
Time shall be the directors of the Surviving Corporation and (ii) the officers
of [Merger Subsidiary] at the Effective Time shall be the officers of the
Surviving Corporation.
ARTICLE 5
Representations and Warranties of the Company
The Company represents and warrants to Parent that, except (A) as would
not have, individually or in the aggregate, a Material Adverse Effect on the
Company, (B) as disclosed in the Company SEC Documents filed prior to the date
of this Agreement or (C) as set forth (including an identification by section
reference to the representations and warranties to which such exceptions relate)
on the Disclosure Schedule to this Agreement (the "DISCLOSURE SCHEDULE"):
SECTION 5.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each material
jurisdiction where such qualification is necessary. The Company has heretofore
delivered to Parent true and complete copies of the certificate of incorporation
and bylaws of the Company as currently in effect.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby are within the Company's corporate powers and,
except for the affirmative vote of the holders of a majority of the outstanding
Shares in connection with the consummation of the Merger (if required by law),
have been duly authorized by all necessary corporate action on the part of the
Company. The affirmative vote of the holders of a majority of the outstanding
Shares (if required by law) is the only vote of the holders of any of the
Company's capital stock necessary in connection with the consummation of the
Merger. This Agreement constitutes a valid and binding agreement of the Company.
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SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no material action by or in
respect of, or material filing with, any governmental body, agency, official or
authority, domestic or foreign, other than (i) the filing of a certificate of
merger with respect to the Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (ii) compliance with any applicable
requirements of the HSR Act and other Antitrust Laws, (iii) compliance with any
applicable requirements of the 1933 Act, the 1934 Act and any other applicable
securities or takeover laws, whether federal, state or foreign, and (iv)
compliance with Section 1707.041 of the Ohio Law.
SECTION 5.04. Non-contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (i) contravene, conflict
with, or result in any violation or breach of any material provision of the
certificate of incorporation or bylaws of the Company, (ii) assuming compliance
with the matters referred to in Section 5.03, contravene, conflict with, or
result in a violation or breach of any material provision of any applicable law,
statute, ordinance, rule, regulation, judgment, injunction, order or decree,
(iii) to the Company's Knowledge, require any consent by any Person under, or
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 or cancellation of, any provision of any contract, license,
lease or loan binding upon the Company or any of its Subsidiaries that (A)
provides for annual rentals or payments by or to the Company of $100,000 or more
and (B) is not terminable by the Company or the other party to such agreement on
less than 90 days notice or (iv) result in the creation or imposition of any
Lien on any material asset of the Company or any of its Subsidiaries.
SECTION 5.05. Capitalization. (a) The authorized capital stock of the
Company consists of 50,000,000 Shares and 5,300,000 shares of preferred stock,
par value $1.00. As of October 29, 1999, there were outstanding (i) 15,846,663
Shares and (ii) no shares of preferred stock. As of October 29, 1999, there were
reserved for issuance, (i) 931,773 Shares under the Company's employee stock
option plans listed on Section 5.15 of the Disclosure Schedule in the amounts
and for the exercise prices stated in such schedule and (ii) no shares of Series
B Preferred Stock, par value $1.00 per share, pursuant to the Rights Agreement.
As of October 29, 1999, 1,291,601 Shares were held in the treasury of the
Company. As of October 29, 1999, there were outstanding compensatory employee
and director stock options to purchase an aggregate of 2,303,085 Shares. All
outstanding shares of capital stock of the Company have been, and all shares
that
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may be issued pursuant to the compensatory employee and director stock option
plans of the Company will be, when issued in accordance with the respective
terms thereof, duly authorized and validly issued and are fully paid and
nonassessable.
(b) Except for changes since October 29, 1999 resulting from the
exercise of employee stock options outstanding on such date, there are no
outstanding (i) shares of capital stock or voting securities of the Company,
(ii) securities of the Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company or (iii) options or other
rights to acquire from the Company or other obligation of the Company to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the items in
clauses (i), (ii) and (iii) being referred to collectively as the "COMPANY
SECURITIES"). There are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any of the Company
Securities.
SECTION 5.06. Subsidiaries. (a) Each material Subsidiary of the Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, has all corporate powers and all
material governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted. Each such Subsidiary is duly
qualified to do business as a foreign corporation and is in good standing in
each material jurisdiction where such qualification is necessary. All material
Subsidiaries of the Company and their respective jurisdictions of incorporation
are identified in the Company 10-K.
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each material Subsidiary and, to the
Company's Knowledge, each Operating Subsidiary of the Company, is owned by the
Company, directly or indirectly, free and clear of any material Lien and free of
any other material limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other voting
securities or ownership interests). There are no outstanding (i) securities of
the Company or any of its Subsidiaries convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests in any
material Subsidiary or, to the Company's Knowledge, any Operating Subsidiary of
the Company or (ii) options or other rights to acquire from the Company or any
of its Subsidiaries, or other obligation of the Company or any of its
Subsidiaries to issue, any capital stock or other voting securities or ownership
interests in, or any securities convertible into or exchangeable for any capital
stock or other voting securities or ownership interests in, any material
Subsidiary of the Company (the items in clauses (i) and (ii) being referred to
collectively as the "COMPANY SUBSIDIARY
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SECURITIES"). There are no outstanding obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any of the Company
Subsidiary Securities.
SECTION 5.07. SEC Filings. (a) The Company has delivered to Parent (i)
the Company's annual reports on Form 10-K for its fiscal years ended December
31, 1996, 1997 and 1998, (ii) its quarterly reports on Form 10-Q for its fiscal
quarters ended March 31, 1999 and June 30, 1999, (iii) its proxy or information
statements relating to meetings of, or actions taken without a meeting by, the
stockholders of the Company held since December 31, 1998, and (iv) all of its
other reports, statements, schedules and registration statements filed with the
SEC since December 31, 1998 (the documents referred to in this Section 5.07(a),
collectively, the "COMPANY SEC DOCUMENTS".) The Company has filed all forms,
reports and documents required to be filed with the SEC since January 1, 1996
(the "FILED SEC DOCUMENTS").
(b) As of the filing date, each Filed SEC Document complied as to form
in all material respects with the applicable requirements of the 1933 Act and
the 1934 Act, as the case may be.
(c) As of its filing date (or, if amended or superceded by a filing
prior to the date hereof, on the date of such filing), each Filed SEC Document
filed pursuant to the 1934 Act did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(d) Each Filed SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading.
SECTION 5.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Filed SEC Documents fairly present in all material
respects, in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements), except
that the notes and disclosures
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therein in the Company's quarterly reports on Form 10-Q have not been prepared
in accordance with GAAP.
SECTION 5.09. Absence of Certain Changes. Since the Company Balance
Sheet Date, the business of the Company and its material Subsidiaries and, to
the Company's Knowledge, its Operating Subsidiaries has been conducted in the
ordinary course consistent with past practices and, except as disclosed to
Parent prior to the date of this Agreement, there has not been:
(a) any event, occurrence, development or state of circumstances or
facts that has had individually or in the aggregate, a Material Adverse Effect
on the Company, except any such event, occurrence, development or state of
circumstances or facts resulting from or arising in connection with (A) changes,
circumstances or conditions affecting the greeting cards industry in general or
(B) changes in general economic, regulatory or political conditions;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its material
Subsidiaries;
(c) any amendment of any material term of any outstanding security of
the Company or any of its material Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company, or any of
its Subsidiaries of any indebtedness for borrowed money, including capitalized
leases, other than in the ordinary course of business and in amounts and on
terms consistent with past practices;
(e) any making of any loan, advance or capital contributions to or
investment in any Person, exceeding, individually or in the aggregate, $1
million, other than loans, advances or capital contributions to or investments
in its Subsidiaries made in the ordinary course of business consistent with past
practices or loans or advances to employees of the Company or any of its
Subsidiaries made in the ordinary course of business consistent with past
practice;
(f) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its material Subsidiaries and to the
Company's Knowledge, its Operating Subsidiaries relating to its assets or
business (including the acquisition or disposition of any material assets) or
any relinquishment by the Company or any of its material Subsidiaries and to the
Company's Knowledge, its Operating Subsidiaries of any contract or other right,
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in either case, material to the Company and its Subsidiaries, taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practices and those contemplated by this Agreement;
(g) any material change in any method of accounting, method of tax
accounting or accounting principles or practice by the Company or any of its
Subsidiaries, except for any such change required by reason of a concurrent
change in GAAP or Regulation S-X under the 1934 Act;
(h) any (i) increase in benefits payable under any existing severance
or termination pay policies or employment agreements exceeding $100,000, (ii)
any entering into any employment, severance 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 of its Subsidiaries , with
payments thereunder exceeding $100,000, (iii) establishment, adoption or
amendment (except as required by applicable law) of any profit-sharing, thrift,
pension, retirement, deferred compensation, stock option, restricted stock or
other benefit plan or arrangement covering any director, officer or employee of
the Company or any of its Subsidiaries, or (iv) increase in compensation, bonus
or other benefits payable to any director, officer or employee of the Company or
any of its subsidiaries exceeding $100,000, other than in the ordinary course of
business consistent with past practice.
SECTION 5.10. No Undisclosed Material Liabilities. There are no
liabilities or obligations of the Company or any of its Subsidiaries other than:
(a) liabilities or obligations disclosed or provided for in the
Company Balance Sheet or in the notes thereto or in the Company SEC Documents
filed prior to the date of this Agreement;
(b) liabilities or obligations incurred in the ordinary course
consistent with past practice; and
(c) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated hereby.
SECTION 5.11. Compliance with Laws and Court Orders. The Company and,
to the Company's Knowledge, each of its Subsidiaries is in compliance with, and
is not under investigation with respect to any violation of, any applicable
material law, statute, ordinance, rule, regulation, judgment, injunction, order
or decree.
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SECTION 5.12. Litigation. There is no material action, suit,
investigation or proceeding pending against or affecting, the Company, any of
its Subsidiaries, or any of their respective properties before any court or
arbitrator or before or by any governmental body, agency or official, domestic
or foreign.
SECTION 5.13. Finders' Fees. Except for J.P. Morgan Securities Inc., a
copy of whose engagement agreement has been provided to Parent, there is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of the Company or any of its Subsidiaries
who might be entitled to any material fee or commission from the Company or any
of its Subsidiaries in connection with the transactions contemplated by this
Agreement.
SECTION 5.14. Taxes. (a) The Company and each of its Subsidiaries have
timely filed or will file or cause to be timely filed all material Tax Returns
required by applicable law to be filed by them prior to or as of the Effective
Time, and all such material Tax Returns are, or will be at the time of filing,
true and complete in all material respects.
(b) The Company and each of its Subsidiaries have paid, or withheld
and remitted to the appropriate taxing authority all taxes shown as due and
payable on the Tax Returns that have been filed.
(c) No federal, state, local or foreign audits, administrative
proceedings or court proceeding are pending with regard to any Taxes or Tax
Returns of the Company and there are no outstanding deficiencies or assessments
asserted or proposed.
(d) There are no outstanding agreements, consents or waivers extending
the statutory period of limitations applicable to the assessment of any Taxes or
deficiencies against the Company, and the Company is not a party to any
agreement providing for the allocation or sharing of Taxes.
(e) Since January 1, 1990, the Company has not been a member of an
affiliated group filing consolidated or combined Tax Returns other than a
federal income tax group the common parent of which is the Company.
(f) "TAXES" shall mean any and all taxes, charges, fees, levies or
other assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, service use, license, value added, capital,
net worth, payroll, profits, withholding, franchise, transfer and recording
taxes, fees and charges, and any other taxes, assessment or similar charges
imposed by the Internal Revenue
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Service or any taxing authority (whether domestic or foreign including any
state, county, local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)) (a "TAXING AUTHORITY"), whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest whether paid or received, fines, penalties
or additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments. "TAX RETURN" shall mean
any report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction (foreign or
domestic) with respect to Taxes, including information returns, any documents
with respect to or accompanying payments of estimated Taxes, or with respect to
or accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
SECTION 5.15. Employee Benefit Plans. (a) Section 5.15 of the
Disclosure Schedule contains a true and complete list of the Employee Plans. The
Company has made available to Parent copies of each Employee Plan and all
amendments thereto and, where applicable, the most recent annual reports (Form
5500, including Schedule B thereto), the most recent actuarial valuation report
and the most recent determination letter of the Internal Revenue Service
relating to each Employee Plan.
(b) No "accumulated funding deficiency," as defined in Section 412 of
the Code, has been incurred with respect to any Title IV Plan. No "reportable
event," within the meaning of Section 4043 of ERISA, other than a "reportable
event" that will not have a Material Adverse Effect on the Company, and no event
described in Section 4062 or 4063 of ERISA, has occurred in connection with any
Employee Plan. Neither the Company nor any ERISA Affiliate of the Company has
(i) engaged in, or is a successor or parent corporation to an entity that has
engaged in, a transaction described in Sections 4069 or 4212(c) of ERISA or (ii)
incurred any liability under Title IV of ERISA arising in connection with the
termination of, or a complete or partial withdrawal from, any plan covered or
previously covered by Title IV of ERISA that could become a liability of the
Company, any Subsidiary of the Company, Parent or any of their ERISA Affiliates
after the Effective Time.
(c) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code is the subject of a favorable qualification determination
letter issued by the Internal Revenue Service and to the Company's Knowledge
nothing has occurred that would adversely affect that determination.
(d) Each Employee Plan has been maintained in substantial compliance
with its terms and with the requirements prescribed by any and all applicable
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statutes, orders, rules and regulations, including but not limited to ERISA and
the Code.
(e) (i) No Employee Plan provides any benefits or compensation which
would be triggered by the transactions contemplated herein and (ii) no
compensation or benefits payable in connection with the transactions
contemplated herein will constitute an "excess parachute payment" within the
meaning of Section 280G(b)(1) of the Code.
(f) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement. To the Company's Knowledge there is no
organizing effort or representation dispute with respect to any employee of the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries is involved in or, to the Company's Knowledge, threatened with any
labor dispute (other than individual grievances arising in the ordinary course),
work stoppage, labor strike or slowdown.
SECTION 5.16. Environmental Matters. (a) (i) No written notice, order,
complaint or penalty has been received by the Company or any Subsidiary arising
out of any Environmental Laws and there are no Environmental Claims pending or,
to the Company's Knowledge, threatened.
(ii) The Company and each Subsidiary have all environmental
permits necessary for their operations to comply with all applicable
Environmental Laws and are in compliance with the terms of such
permits.
(iii) The operations of the Company and each Subsidiary are in
compliance with the terms of applicable Environmental Laws.
(b) Except as set forth in this Section 5.16, no representations or
warranties are being made with respect to matters arising under or relating to
environmental matters.
SECTION 5.17. Antitakeover Statutes, Rights Agreement and Standstill
Agreement. (a) The Company has taken all action necessary to exempt the Offer,
the Merger, this Agreement, and the transactions contemplated hereby from the
provisions of Section 203 of Delaware Law and Articles V and VI of the Company's
Certificate of Incorporation, and, accordingly, neither such provisions nor
other antitakeover or similar statute or regulation applies or purports to apply
to any such transactions.
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(b) The Company will take all action necessary to (i) render the
Rights Agreement dated as of September 8, 1999 between the Company and The Bank
of New York (the "RIGHTS AGREEMENT") inapplicable to the Offer, the Merger and
the other transactions contemplated hereby, (ii) ensure that (y) neither Parent
nor any of its Subsidiaries nor any of its permitted assignees or transferees is
an Acquiring Person (as defined in the Rights Agreement) pursuant to the Rights
Agreement and (z) a Stock Acquisition Date, Triggering Event or Distribution
Date (in each case as defined in the Rights Agreement) does not occur by reason
of the execution of this Agreement, the commencement or completion of the Offer,
the consummation of the Merger or the other transactions contemplated hereby and
(iii) render the provisions of the Standstill Agreement dated as of October 26,
1998, between Parent and the Company (the "STANDSTILL AGREEMENT") inapplicable
to the Offer, the Merger, this Agreement and the transactions contemplated
hereby. If this Agreement is terminated for any reason, then the provisions of
the Rights Agreement and the Standstill Agreement will apply to Parent in full
force and effect as if the provisions of this Section 5.17(b) had never been
agreed to, with the provisions of the Standstill Agreement remaining in full
force and effect for a period of two years after such termination.
SECTION 5.18. Intellectual Property.
(a) The Company or its Subsidiaries own or have the valid right to use
all material intellectual property used by it in connection with its business,
including: (i) trademarks and service marks (registered or unregistered) and
trade names, and all goodwill associated therewith; (ii) patents, patentable
inventions, discoveries, improvements, ideas, know-how, processes and computer
programs, software and databases (including source code); (iii) trade secrets
and the right to limit the use or disclosure thereof; and (iv) copyrights in all
works, including software programs and mask works (collectively "INTELLECTUAL
PROPERTY").
(b) To the Company's Knowledge, the conduct of the businesses of the
Company as currently conducted does not conflict with or infringe in any
material respect any proprietary right of any third party. There is no claim,
suit, action or proceeding pending or, to the Company's Knowledge, threatened
against the Company (i) alleging any such conflict or infringement with any
third party's proprietary rights, or (ii) challenging the ownership or use of
the Intellectual Property.
SECTION 5.19. Year 2000 Compliance. (a) To the Company's
Knowledge, the material Subsidiaries of the Company are Year 2000 Compliant.
Section 5.19 of the Disclosure Schedule contains, to the Company's Knowledge,
the current status of the Company's Year 2000 readiness.
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(b) The term "YEAR 2000 COMPLIANCE" means, with respect to the
material Subsidiaries of the Company,
(i) the functions, calculations and other computer processes
of all equipment, computer hardware, software and systems of the
material Subsidiaries of the Company, including, but not limited to,
internal and outsourced systems and embedded computer features within
other systems and equipment of the material Subsidiaries of the Company
(collectively, "PROCESSES"), perform properly in an accurate and
consistent manner regardless of the date in time on which the Processes
are actually performed and regardless of the date of input, whether
before, on or after January 1, 2000 and whether or not the dates are
affected by leap years;
(ii) the equipment, computer hardware, software and systems
accept, calculate, compare, sort, extract, sequence and otherwise
process data inputs and date values, and return and display date
values, in an accurate and consistent manner regardless of the dates
used, whether before, on or after January 1, 2000;
(iii) the equipment, computer hardware, software and systems
will function properly without interruptions or manual interventions
caused by the date in time on which the Processes are actually
performed or by the date of input to the software, whether before, on
or after January 1, 2000;
(iv) the equipment, computer hardware, software and systems
accept and respond to two-digit year data input in the Processes in a
manner that resolves any ambiguities as to the century in a defined,
predetermined and appropriate manner; and
(v) the equipment, computer hardware, software and systems
store and display data information in the Processes in ways that are
accurate and unambiguous as to the determination of the century.
Notwithstanding any other provision of this Agreement to the contrary,
to the extent the Company is able to show that Parent knows of facts as of the
date hereof that constitute an inaccuracy or breach of the representations and
warranties made by the Company not to be true as of the date given, Parent shall
have no right or remedy with respect to such inaccuracy and such facts shall be
deemed to be exceptions to such representations and warranties.
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ARTICLE 6
Representations and Warranties of Parent and Merger Subsidiary
Parent and Merger Subsidiary represent and warrant to the Company that:
SECTION 6.01. Corporate Existence and Power. Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all material governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, permits, consents and
approvals the absence of which would not have, individually or in the aggregate,
a Parent Material Adverse Effect. Since the date of its incorporation, Merger
Subsidiary has not engaged in any activities other than in connection with or as
contemplated by this Agreement or in connection with arranging any financing
required to consummate the transactions contemplated hereby.
SECTION 6.02. Corporate Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Parent and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of each of Parent and Merger
Subsidiary.
SECTION 6.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby require no material action by or in respect of, or material filing with,
any governmental body, agency, official or authority, domestic or foreign, other
than (i) the filing of a certificate of merger with respect to the Merger with
the Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business, (ii)
compliance with any applicable requirements of the HSR Act, (iii) compliance
with any applicable foreign antitrust, requirements of the 1933 Act, the 1934
Act and any other applicable securities or takeover laws, whether federal, state
or foreign, or (iv) compliance with Section 1707.041 of the Ohio Law.
SECTION 6.04. Non-contravention. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby do not and will not (i) contravene, conflict with, or result in any
violation or breach of any material provision of the certificate of
incorporation or bylaws of
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Parent or Merger Subsidiary, (ii) assuming compliance with the matters referred
to in Section 6.03, contravene, conflict with, or result in any violation or
breach of any provision of any law, rule, regulation, judgment, injunction,
order or decree or (iii) require any consent by any Person under any provision
of any agreement binding upon Parent or Merger Subsidiary, except in the case of
clauses (ii) and (iii) for conflicts, violations, breaches or defaults, or the
failure to obtain such consents, that individually or in the aggregate would not
be reasonably expected to have a Parent Material Adverse Effect.
SECTION 6.05. Finders' Fees. Except for Wasserstein & Perella, whose
fees will be paid by Parent, there is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Parent who might be entitled to any material fee or commission from the
Company or any of its Subsidiaries upon consummation of the transactions
contemplated by this Agreement.
SECTION 6.06. Financing. Parent has and will make available to Merger
Subsidiary, sufficient cash, available lines of credit or other sources of
immediately available funds necessary to purchase all of the Shares outstanding
on a fully-diluted basis and to pay all related fees and expenses pursuant to
the Offer.
ARTICLE 7
Covenants of the Company
The Company agrees that:
SECTION 7.01. Conduct of the Company. From the date hereof until the
Effective Time, the Company and its Subsidiaries shall conduct their business
and affairs in the ordinary course consistent with past practice and shall use
their reasonable best efforts to preserve intact their business organizations
and relationships with third parties. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time, except as set forth in
Schedule 7.01 (including an identification by section reference to the covenants
to which such exceptions relate):
(a) The Company will not amend its certificate of incorporation or
bylaws;
(b) The Company will not declare, set aside or pay any dividend or
other distribution payable in cash, stock or property with respect to its
capital stock; and
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neither the Company nor any of its Subsidiaries will (i) issue, sell, transfer,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
the Company or any of its Subsidiaries, other than issuances of Shares pursuant
to securities, options, warrants, calls, commitments or rights that have been
granted at the date hereof and are or become exercisable prior to the Effective
Time and previously disclosed to Parent in writing or as set forth in the
Company SEC Documents or (ii) redeem, purchase or otherwise acquire directly or
indirectly any of its capital stock; provided that, this subsection (b) shall
not prohibit the Company from (A) issuing shares, options or warrants to acquire
up to 100,000 shares of capital stock of any class of the Company pursuant to
its 1999 Incentive Stock Option Plan for a period of 10 business days following
the date of this Agreement, provided that, no such issuances shall be made to
the Chief Executive Officer or Chief Financial Officer of the Company or (B)
taking any action pursuant to the Company's obligations to The Ink Group NZ
Limited or The Ink Group Publishers PTY Limited regarding any put rights held by
such entities;
(c) The Company will not (i) incur any long-term indebtedness (whether
evidenced by a note or other instrument, pursuant to a financing lease,
sale-leaseback transaction, or otherwise) or incur short-term indebtedness other
than under lines of credit existing on the date hereof other than, in each case,
to operate the Company's business in the ordinary course or (ii) except in the
ordinary course of business consistent with past practice, enter into, amend,
terminate, renew or fail to use reasonable efforts to renew in any material
respect any material contract;
(d) Except pursuant to employment contracts in effect on the date
hereof, neither the Company nor any of its Subsidiaries will (i) grant any
increase in the compensation or benefits payable or to become payable by the
Company or any of its Subsidiaries to any employee; (ii) adopt, enter into,
amend or otherwise increase, or accelerate the payment or vesting of the
amounts, benefits or rights payable or accrued or to become payable or accrued
under any bonus, incentive compensation, deferred compensation, severance,
termination, change in control, retention, hospitalization or other medical,
life, disability, insurance or other welfare, profit sharing, stock option,
stock appreciation right, restricted stock or other equity based, pension,
retirement or other employee compensation or benefit plan, program agreement or
arrangement; or (iii) enter into or amend in any material respect any employment
or collective bargaining agreement or, except in accordance with the existing
written policies of the Company or existing contracts or agreements, grant any
severance or termination pay to any officer, director or employee of the Company
or any of its Subsidiaries, provided that clauses (i), (ii)
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and (iii) shall not prohibit the Company from taking any action hereunder
pursuant to its program established by the Rabbi Trust and the related plan;
(e) Neither the Company nor its Subsidiaries will change the
accounting principles used by it unless required by GAAP (or, if applicable with
respect to Subsidiaries, foreign generally accepted accounting principles);
(f) Neither the Company nor any of its Subsidiaries will acquire by
merging or consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof,
otherwise acquire any assets of any other Person (other than the purchase of
assets from suppliers or vendors in the ordinary course of business consistent
with past practice) for an amount in excess of $10 million, individually or in
the aggregate, other than (A) any investment by the Company in EGN necessary to
maintain the Company's pro rata investment in EGN or (B) any exercise by the
Company of its warrants in EGN;
(g) Neither the Company nor any of its Subsidiaries will sell, lease,
exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange,
transfer or otherwise dispose of, any of its assets except (i) pursuant to
existing contracts or commitments and (ii) in the ordinary course of business
consistent with past practice, except that the Company may dispose of in any
manner and at any time all or a portion of its interest in EGN, provided that,
if the Company disposes of EGN and such disposition is (A) for an aggregate
amount less than $30 million or (B) to an Affiliate of the Company, then such
disposition shall be for an amount at least equal to fair market value of the
Company's interest in EGN that is disposed;
(h) The Company and its Subsidiaries will not mortgage, pledge,
hypothecate, grant any security interest in, or otherwise subject to any other
lien on any of its properties or assets, except in connection with the
incurrence of indebtedness permitted under Section 7.01(c);
(i) Neither the Company nor its Subsidiaries will compromise, settle,
grant any waiver or release relating to or otherwise adjust any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), including any Litigation, except for any such
compromise, settlement, waiver, release or adjustment in the ordinary course of
business consistent with past practice and involving a payment by the Company or
any of its Subsidiaries not in excess of $250,000 in the aggregate following
prior notice to and consultation with Parent; and
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(j) Neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing.
SECTION 7.02. Stockholder Meeting; Proxy Material. (a) The Company
shall cause a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to
be duly called and held as soon as reasonably practicable after consummation of
the Offer for the purpose of voting on the approval and adoption of this
Agreement and the Merger, unless Delaware Law does not require a vote of
stockholders of the Company for consummation of the Merger. Subject to Section
7.04(c), the Board of Directors of the Company shall recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders. In
connection with such meeting, the Company will (i) promptly prepare and file
with the SEC, will use its best efforts to have cleared by the SEC and will
thereafter mail to its stockholders as promptly as practicable the Company Proxy
Statement, which shall contain the recommendation of the Board of Directors, and
all other proxy materials for such meeting, (ii) use its best efforts to obtain
the necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby and (iii) otherwise comply with all legal
requirements applicable to such meeting.
(b) If Parent, Merger Subsidiary or any other Subsidiary of Parent
shall acquire at least 90% of the outstanding Shares pursuant to the Offer or
otherwise, the parties hereto agree, at the request of Parent, to take all
necessary and appropriate action to cause the Merger to be effective as soon as
practicable after the acceptance for payment and purchase of Shares pursuant to
the Offer without a meeting of stockholders of the Company in accordance with
Delaware Law.
SECTION 7.03. Access to Information. From the date hereof until the
Effective Time and subject to applicable law and the Confidentiality Agreement
dated as of October 28, 1998 between the Company and Parent (the
"CONFIDENTIALITY AGREEMENT"), the Company shall (i) furnish on a periodic basis
to Parent, its counsel, financial advisors, auditors and other authorized
representatives financial and operating data, (ii) give Parent reasonable access
to Frank J. O'Connell, Chairman, Chief Executive Officer and President of the
Company, James T. Wilson, Executive Vice President--Finance and Operations and
Chief Financial Officer of the Company and James E. Thaxton, Vice
President--Business Affairs and Counsel of the Company, (iii) furnish Parent
with all documents and analyses relating to the requirements of and approvals
needed under the HSR Act to effect a closing of the transaction and (iv) update
Parent on any material changes that develop with respect to information or
documents previously provided to Parent, provided that, except as otherwise
provided in this Agreement, including without limitation Section 9.01(b) hereof,
in no event shall the Company be required to provide information or documents
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that (A) it deems to be of a competitively sensitive nature and (B) are subject
to any attorney-client, work product or other privilege that the Company or any
Subsidiary may have. Any action taken pursuant to this Section shall be
conducted in such manner as not to interfere unreasonably with the conduct of
the business of the Company and its Subsidiaries.
SECTION 7.04. No Solicitation; Other Offers. (a) From the date hereof
until the acceptance for payment by Merger Subsidiary of the Shares tendered
into the Offer or the earlier termination hereof, the Company will not, and will
cause its Subsidiaries and the officers, directors, investment bankers,
attorneys, accountants, consultants or other agents or advisors of the Company
and its Subsidiaries not to (i) take any action (y) to solicit or (z) for the
primary purpose of initiating or encouraging the submission of any Acquisition
Proposal, (ii) engage in substantive discussions or negotiations with, or
disclose any material nonpublic information relating to the Company or any of
its Subsidiaries or afford access to the properties, books or records of the
Company or any of its Subsidiaries to, any Person who the Company should
reasonably be expected to know is considering making, or has made, an
Acquisition Proposal or (iii) otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage any effort or attempt by any other
Person, in each case, for the primary purpose of making any Acquisition Proposal
or enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Offer, the Merger or any other
transaction contemplated by this Agreement. The Company will notify Parent
promptly after receipt by the Company (or any of its advisors) of any
Acquisition Proposal, or any request for nonpublic information relating to the
Company or any of its Subsidiaries or for access to the properties, books or
records of the Company or any of its Subsidiaries by any Person who the Company
should reasonably be expected to know is considering making, or has made, an
Acquisition Proposal. The Company shall, and shall cause its Subsidiaries and
the directors, officers and other agents of the Company and its Subsidiaries to,
cease immediately and cause to be terminated all discussions and negotiations
with any Persons conducted prior to the date hereof with respect to any
Acquisition Proposal. Nothing contained in this Agreement shall prevent the
Board of Directors of the Company from complying with Rule 14e-2 under the 1934
Act with respect to any Acquisition Proposal.
(b) Notwithstanding the foregoing, prior to the acceptance for payment
by Merger Subsidiary of the Shares tendered in the Offer the Company may, if it
gives Parent notice of its intention to do so, negotiate or otherwise engage in
substantive discussions with, and furnish nonpublic information to, any Person
who delivers an unsolicited Superior Proposal if (i) the Company has complied
with the terms of this Section 7.04, including, without limitation, the
requirement
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in Section 7.04(a) that it notify Parent promptly after its receipt of any
Acquisition Proposal, (ii) the Board of Directors of the Company determines in
its good faith, reasonable judgment, after consultation with and the receipt of
advice from its financial advisor and outside counsel, that failure to take such
action could create a reasonable possibility of a breach of the fiduciary duties
of the Board of Directors under applicable law, and (iii) such Person executes a
confidentiality agreement with the Company not more favorable to the recipient
of such information than the Confidentiality Agreement. For purposes of this
Agreement, "SUPERIOR PROPOSAL" means any bona fide, unsolicited written
Acquisition Proposal for at least a majority of the outstanding Shares on terms
that the Board of Directors of the Company determines in good faith by a
majority vote, on the basis of the advice of a financial advisor of nationally
recognized reputation and taking into account all the terms and conditions of
the Acquisition Proposal, including any break-up fees, expense reimbursement
provisions and conditions to consummation, (A) is more favorable to all the
Company's stockholders than as provided hereunder, (B) is reasonably capable of
obtaining any required financing and (C) is reasonably capable of being
completed.
(c) The Board of Directors of the Company shall be permitted to
withdraw, or modify in a manner adverse to Parent, its recommendation to its
stockholders referred to in Sections 2.02 and 7.02 hereof if the Board of
Directors determines in its good faith, reasonable judgment, after consultation
with and the receipt of advice from its financial advisor and outside counsel,
that an Acquisition Proposal is a Superior Proposal and that failure to take
such action could create a reasonable possibility of a breach of the fiduciary
duties of the Board of Directors under applicable law.
SECTION 7.05. Notices of Certain Events. (a) The Company shall
promptly notify Parent 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; and
(ii) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement.
(b) The Company shall give prompt notice to Parent at any time the
Company has Knowledge that any representation or warranty contained in this
Agreement was inaccurate in any material respect as of the date made.
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SECTION 7.06. Disclosure Documents. (a) Each document required to be
filed by the Company with the SEC or required to be distributed or otherwise
disseminated to the Company's stockholders in connection with the transactions
contemplated by this Agreement (the "COMPANY DISCLOSURE DOCUMENTS"), including,
without limitation, the Schedule 14D-9, the proxy or information statement of
the Company (the "COMPANY PROXY STATEMENT"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto, when
filed, distributed or disseminated, as applicable, will comply as to form in all
material respects with the applicable requirements of the 1934 Act.
(b) (i) The Company Proxy Statement, as supplemented or amended, if
applicable, at the time such Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, and (ii) any Company
Disclosure Document (other than the Company Proxy Statement), at the time of the
filing of such Company Disclosure Document or any supplement or amendment
thereto and at the time of any distribution or dissemination thereof, 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 therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this Section 7.06(b) will not apply to statements or
omissions included in the Company Disclosure Documents based upon information
furnished to the Company by Parent.
(c) The information with respect to the Company or any of its
Subsidiaries that the Company furnishes to Parent for use in the Offer
Documents, at the time of the filing thereof, at the time of any distribution or
dissemination thereof and at the time of the consummation of the Offer, 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 therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 7.07. Standstill Agreements: Confidentiality Agreements. During
the period from the date of this Agreement through the Effective Time, the
Company will not terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement for the benefit of the Company or any of
its Subsidiaries, other than the Confidentiality Agreement pursuant to its terms
or by written Agreement of the parties thereto, provided that, the Company may
take such action if the Board of Directors determines in its good faith,
reasonable judgment, after consultation with and the receipt of advice from its
financial advisor and outside counsel, that failure to do so would create a
reasonable possibility of a breach of the fiduciary duties of the Board of
Directors under applicable law, and provided further that this Section 7.07
shall not apply to any
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confidentiality agreement that is not related to, or does not arise from, an
Acquisition Proposal.
SECTION 7.08. Rights Agreement; Anti-takeover Provisions. The Company's
Board of Directors will take all further action (in addition to that referred to
in Section 5.17 hereof) reasonably requested in writing by Parent (including
redeeming the Rights immediately prior to the Effective Time or further amending
the Rights Agreement) in order to render the Rights Agreement inapplicable to
the Offer and the Merger and the other transactions contemplated hereby to the
extent provided herein and in the Rights Agreement. Except as provided above
with respect to the Offer, the Merger and the other transactions contemplated
hereby or approved in writing by Parent, the Board of Directors of the Company
will not (i) amend the Rights Agreement, (ii) redeem the Rights or (iii) take
any action with respect to, or make any determination under, the Rights
Agreement to facilitate an Acquisition Proposal, provided that, the Company may
take such action if the Board of Directors determines in its good faith,
reasonable judgment, after consultation with and the receipt of advice from its
financial advisor and outside counsel, that failure to do so would create a
reasonable possibility of a breach of its fiduciary duties under applicable law.
In addition, except as otherwise provided in this Agreement, the Company will
not approve an Acquisition Proposal, other than the Offer, the Merger and the
other transactions contemplated by this Agreement, for purposes of Section 203
of Delaware Law or Article VI of the Company's Certificate of Incorporation,
provided that, the Company may take such action if the Board of Directors
determines in its good faith, reasonable judgment, after consultation with and
the receipt of advice from its financial advisor and outside counsel, that
failure to do so would create a reasonable possibility of a breach of its
fiduciary duties under applicable law.
ARTICLE 8
Covenants of Parent
Parent agrees that:
SECTION 8.01. Confidentiality. Prior to the Effective Time and after
any termination of this Agreement and for two years thereafter, Parent will
hold, and will use its best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents (including, without
limitation, any economists employed by Parent to assist in its antitrust review
of the Offer, the Merger and the transactions contemplated thereby) to hold, in
confidence, unless compelled to disclose by judicial or administrative process
or by other requirements of law, all confidential documents and information
concerning the
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Company or any of its Subsidiaries furnished to Parent or its Affiliates in
connection with the transactions contemplated by this Agreement, including,
without limitation, the stockholder lists furnished by the Company pursuant to
Section 2.02, except to the extent that such information can be shown to have
been (i) previously known on a nonconfidential basis by Parent, (ii) in the
public domain through no fault of Parent or (iii) later lawfully acquired by
Parent from sources other than the Company, provided that Parent may disclose
such information to its officers, directors, employees, accountants, counsel,
consultants, advisors and agents in connection with the transactions
contemplated by this Agreement so long as Parent informs such Persons of the
confidential nature of such information and directs them to treat it
confidentially. Parent and its Affiliates shall satisfy their obligation to hold
any such information in confidence if they exercise the same care with respect
to such information as a reasonable Person would take to preserve the
confidentiality of their own similar information under similar circumstances. If
this Agreement is terminated, Parent and its Affiliates will, and will use their
best efforts to cause their officers, directors, employees, accountants,
counsel, consultants, advisors and agents to, destroy or deliver to the Company,
upon request, all documents and other materials, and all copies thereof, that
Parent or its Affiliates obtained, or that were obtained on their behalf, from
the Company or any of its Subsidiaries in connection with this Agreement and
that are subject to such confidence. Notwithstanding anything herein to the
contrary, the terms of the Confidentiality Agreement executed by Parent shall
remain in full force and effect.
SECTION 8.02. Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 8.03. Voting of Shares. Parent agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Stockholder Meeting.
SECTION 8.04. Director and Officer Liability. (a) Parent shall cause
the Surviving Corporation, and the Surviving Corporation hereby agrees, to do
the following:
(i) For six years after the Effective Time, the Surviving
Corporation shall indemnify and hold harmless the present and former
officers and directors of the Company (each an "INDEMNIFIED PERSON") in
respect of acts or omissions occurring at or prior to the Effective
Time to the fullest extent permitted by Delaware Law or any other
applicable laws or provided under the Company's certificate of
incorporation and bylaws
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in effect on the date hereof, provided that such indemnification shall
be subject to any limitation imposed from time to time under applicable
law.
(ii) For six years after the Effective Time, the Surviving
Corporation shall provide officers' and directors' liability insurance
in respect of acts or omissions occurring prior to the Effective Time
covering each such Indemnified Person currently covered by the
Company's officers' and directors' liability insurance policy on terms
with respect to coverage and amount no less favorable than those of
such policy in effect on the date hereof.
(iii) If Parent, the Surviving Corporation or any of its
successors or assigns (A) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger, or (B) transfers or conveys all
or substantially all of its properties and assets to any Person, then,
and in each such case, to the extent necessary, proper provision shall
be made so that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, shall assume the obligations set forth
in this Section 8.04.
(iv) The rights of each Indemnified Person under this Section
8.04 shall be in addition to any rights such Person may have under the
certificate of incorporation or bylaws of the Company or any of its
Subsidiaries, or under Delaware Law or any other applicable laws. These
rights shall survive consummation of the Merger and are intended to
benefit, and shall be enforceable by, each Indemnified Person.
(b) Parent shall, prior to the Effective Time, provide the Company
with pre-paid, irrevocable officers' and directors' liability insurance with a
nationally recognized insurance provider with an A.M. Best rating of at least
"A", in amounts and for such periods of time as specified in Section
8.04(a)(ii).
SECTION 8.05. Employee Benefits. (a) For a period of one year after the
Effective Time, Parent will maintain or cause to be maintained employee
compensation and benefit plans and arrangements for the benefit of each
individual who is an employee of the Company or its Subsidiaries as of the
Effective Time (each a "TRANSFERRED EMPLOYEE") that are no less favorable to
such Transferred Employee than the compensation and benefits provided to the
Transferred Employee by the Company and its Subsidiaries immediately prior to
the Effective Time. Without limiting the generality of the foregoing, (i) for a
period of one year after the Effective Time, Parent will maintain or cause to be
maintained severance and employment termination benefits no less favorable to
each Transferred Employee than the severance and employment termination
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benefits provided under the plans, policies and practices of the Company and its
Subsidiaries, immediately prior to the Effective Time, and (ii) for a period of
one year after the Effective Time Parent will maintain or cause to be maintained
for the benefit of each eligible current and former employee of the Company and
its Subsidiaries (and his or her eligible domestic partner) the post-retirement
medical and life insurance benefits maintained by the Company and its
Subsidiaries immediately prior to the Effective Time and shall make such
benefits available to each such individual on a basis no less favorable to such
individual than the basis on which such benefits were provided to similarly
situated individuals immediately prior to the Effective Date.
(b) If Transferred Employees or former employees of the Company or its
Subsidiaries are included in any benefit plan, policy, or arrangement of Parent
or its Affiliates such individuals shall receive credit for service prior to the
Effective Time with the Company and its Subsidiaries and their respective
predecessors for all purposes to the same extent such service was recognized
under any similar Employee Plan of the Company or its Subsidiaries, except that
such service shall not be counted for purposes of benefit accruals under any
defined benefit pension plan to the extent that it would result in a duplication
of vested benefits accrued by any such individual under any Employee Plan of the
Company or its Subsidiaries. If Transferred Employees or former employees of the
Company or its Subsidiaries (or their domestic partners or dependents) are
included in any medical, dental or health plan other than the plans they
participated in at the Effective Time (a "SUCCESSOR PLAN"), any such Successor
Plan shall waive pre-existing conditions, to the extent such conditions were not
applicable under the Employee Plans of the Company and its Subsidiaries, and
shall provide that any expenses incurred prior to such change shall be taken
into account under the deductible and out-of-pocket maximums under such
Successor Plan.
SECTION 8.06. Disclosure Documents. (a) The information with respect to
Parent and any of its Subsidiaries that Parent furnishes to the Company in
writing specifically for use in any Company Disclosure Document 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 therein, in the light of the
circumstances under which they were made, not misleading (i) in the case of the
Company Proxy Statement, as supplemented or amended, if applicable, at the time
such Company Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of the Company and at the time such stockholders vote on
adoption of this Agreement, and (ii) in the case of any Company Disclosure
Document other than the Company Proxy Statement, at the time of the filing of
such Company Disclosure Document or any supplement or amendment thereto and at
the time of any distribution or dissemination thereof.
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(b) The Offer Documents, when filed, distributed or disseminated, as
applicable, will comply as to form in all material respects with the applicable
requirements of the 1934 Act and, at the time of the filing thereof, at the time
of any distribution or dissemination thereof and at the time of consummation of
the Offer, will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, provided
that this representation and warranty will not apply to statements or omissions
included in the Offer Documents based upon information furnished to Parent or
Merger Subsidiary by the Company.
ARTICLE 9
Covenants of Parent and the Company
The parties hereto agree that:
SECTION 9.01. Best Efforts. (a) Subject to the terms and conditions of
this Agreement, Company and Parent will use their best efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement including, without limitation, using
their best efforts to cause the conditions to the Offer to be satisfied as soon
as reasonably possible and, subject to the terms and conditions of this
Agreement, consummating the Offer as soon as possible after such conditions are
satisfied or waived. In furtherance and not in limitation of the foregoing, each
of Parent and Company agrees to make an appropriate filing of a Notification and
Report Form pursuant to the HSR Act (an "HSR FILING") with respect to the
transactions contemplated hereby as promptly as practicable and in any event
within ten business days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and to take all other actions necessary to
cause the expiration or termination of the applicable waiting periods under the
HSR Act as soon as practicable.
(b) In connection with the efforts referenced in Section 9.01(a) to
obtain all requisite approvals and authorizations for the transactions
contemplated by this Agreement under the HSR Act or any other Antitrust Law,
each of Parent and Company shall use its reasonable best efforts to (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (ii) keep the other party informed
in all material respects of any material
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communication received by such party from, or given by such party to, the
Federal Trade Commission (the "FTC"), the Antitrust Division of the Department
of Justice (the "DOJ") or any other governmental authority and of any material
communication received or given in connection with any proceeding by a private
party, in each case regarding any of the transactions contemplated hereby and
(iii) permit the other party to review any material communication given by it
to, and consult with each other in advance of any meeting or conference with,
the FTC, the DOJ or any such other governmental authority or, in connection with
any proceeding by a private party. Subject to the Confidentiality Agreement,
Section 8.01 of this Agreement, and any attorney-client, work product or other
privilege, each of the parties hereto will coordinate and cooperate fully with
the other parties hereto in exchanging such information and providing such
assistance as such other parties may reasonably request in connection with the
foregoing and in seeking early termination of any applicable waiting periods
under the HSR Act. Any competitively sensitive information that is disclosed
pursuant to this Section 9.01 will be limited to each of Parent's and the
Company's respective counsel and economists pursuant to a separate customary
confidentiality agreement. For purposes of this Agreement, "ANTITRUST LAW" means
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other federal, state and
foreign, if any, statutes, rules, regulations, orders, decrees, administrative
and judicial doctrines and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade or lessening of competition through merger or acquisition.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Section 9.01(a) and 9.01(b), each of Parent and the Company
shall use its best efforts to resolve such objections if any, as may be asserted
with respect to the transactions contemplated hereby under any Antitrust Law. In
connection with the foregoing, if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Antitrust Law, each of Parent and the Company
shall cooperate in all respects with each other and use its respective best
efforts to contest and resist any such action or proceeding and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order,
whether temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the transactions contemplated
by this Agreement, including, without limitation, vigorously defending in
litigation on the merits any claim asserted in any court by any party through a
final and nonappealable judgment.
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(d) If any objections are asserted with respect to the transactions
contemplated hereby under any Antitrust Law or if any suit is instituted by any
government authority or any private party challenging any of the transactions
contemplated hereby as violative of any Antitrust Law, each of Parent and the
Company shall use its best efforts to resolve such objections or challenge as
such governmental authority or private party may have to such transactions under
such Antitrust Law so as to permit consummation of the transactions contemplated
by this Agreement. In furtherance and not in limitation of the foregoing, each
of Parent and the Company (and, to the extent required by any governmental
authority, its respective Subsidiaries and Affiliates over which it exercises
control) shall be required to pursue a resolution with any governmental
authority and, if acceptable to any governmental authority, enter into a
settlement, undertaking, consent decree, stipulation or other agreement with
such governmental authority regarding antitrust matters in connection with the
transactions contemplated by this Agreement (each, a "SETTLEMENT").
Notwithstanding anything else contained in this Agreement, neither Parent nor
the Company shall be required to enter into any Settlement that requires Parent
and/or the Company to sell or otherwise dispose of assets of Parent and its
Subsidiaries and/or the Company and its Subsidiaries (any such action, a
"DIVESTITURE") if such Divestiture would have a material adverse effect on the
pro forma combined business of Parent and the Company.
(e) The Company hereby acknowledges that Parent will lead the process
to obtain all necessary waivers, consents and approvals, and to effect all
necessary filings under the Antitrust Law, and that Parent's reasonable
determination after consultation with the Company as to the appropriate course
of action to obtain such waivers, consents and approvals will be final, provided
that, the foregoing shall not limit in any respect any of the parties'
obligations under this Agreement.
SECTION 9.02. Certain Filings. The Company and Parent shall cooperate
with one another (i) in connection with the preparation of the Company
Disclosure Documents and the Offer Documents, (ii) in determining whether any
action by or in respect of, or filing with, any governmental body, agency,
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement and (iii) in taking such actions or making any such filings,
furnishing information required in connection therewith or with the Company
Disclosure Documents or the Offer Documents and seeking timely to obtain any
such actions, consents, approvals or waivers.
SECTION 9.03. Public Announcements. Parent and the Company will consult
with each other before issuing any press release or making any public
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statement with respect to this Agreement or the transactions contemplated hereby
and, except as may be required by applicable law or any listing agreement with
any national securities exchange, will not issue any such press release or make
any such public statement prior to such consultation.
SECTION 9.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
ARTICLE 10
Conditions to the Merger
SECTION 10.01. Conditions to Obligations of Each Party. The obligations
of the Company, Parent and Merger Subsidiary to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) if required by Delaware Law, this Agreement shall have been
approved and adopted by the stockholders of the Company in accordance with such
law;
(b) no injunction shall have been issued and remain in effect which
restrains consummation of the Offer; and
(c) the number of Shares tendered pursuant to the Offer and not
withdrawn, together with the Shares then owned by Parent, satisfies the Minimum
Condition and the Merger Subsidiary has accepted for payment and paid for such
Shares.
SECTION 10.02. Conditions to Obligations of Parent and Merger
Subsidiary to Effect the Merger. The obligations of Parent and Merger Subsidiary
to effect the Merger are further subject to the satisfaction or waiver of the
following condition prior to the Effective Time:
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(a) The Company shall have performed in all material respects its
obligations under Section 2.03(a) with respect to the election or appointment of
Parent's designees to the Company's Board of Directors.
ARTICLE 11
Termination
SECTION 11.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Offer has not been consummated on or before 18 months
after the date hereof, provided that (A) the right to terminate this
Agreement pursuant to this Section 11.01(b)(i) shall not be available
to any party whose breach of any provision of this Agreement results in
the failure of the Offer to be consummated by such time and (B) such 18
month period shall be extended for the time period equal to the time
period beyond ten business days during which either the Company or
Parent shall fail to make an HSR Filing pursuant to Section 9.01(a);
(ii) within 10 days following satisfaction of all other
conditions to the Offer, the Minimum Condition shall not have been
satisfied, provided that, such 10 day period shall be extended for a
period to allow for the extension of the expiration date of the Offer
pursuant clause (ii) of the fourth sentence of Section 2.01(a) or
pursuant to Section 3.09 to allow for an increase in the Offer Price;
(iii) a permanent injunction which is final and nonappealable
shall have been issued restraining or otherwise prohibiting
consummation of the Merger or any of the other transactions
contemplated by this Agreement, provided that the party seeking to
terminate this Agreement pursuant to this Section 11.01(b)(iii) shall
have used all efforts to prevent the entry of such permanent
injunction; or
(iv) the other party shall have breached or failed to perform
in all material respects any of its obligations pursuant to Section
9.01 hereof on
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or prior to such time, provided that, such party shall have failed to
substantially cure such failure to perform within a reasonable time
after being notified of such failure to perform;
(c) by Parent, if, after the date hereof and prior to the acceptance
for payment of the Shares under the Offer:
(i) the Board of Directors of the Company shall have
withdrawn, or modified in a manner materially adverse to Parent, its
approval or recommendation of this Agreement, the Offer or the Merger,
or shall have recommended an Acquisition Proposal other than by Parent
or its Affiliates;
(ii) the Board of Directors of the Company shall have (i)
amended the Rights Agreement to facilitate an Acquisition Proposal or
(ii) terminated or redeemed the Rights, except in each case (A) as
shall be necessary to render the Rights Agreement inapplicable to the
Offer and the Merger and the other transactions contemplated hereby (or
any other Acquisition Proposal by Parent or its Affiliates) or (B) as
directed by Parent pursuant to Section 7.08;
(iii) the Board of Directors of the Company shall take action
under Section 203 of Delaware Law or Article VI of the Company's
Certificate of Incorporation to approve any transaction other than the
Offer and the Merger and the other transactions contemplated hereby (or
any other Acquisition Proposal by Parent or its Affiliates); or
(iv) the Company shall have breached or failed to perform any
of its obligations under this Agreement required to be performed on or
prior to such time or any of the representations and warranties of the
Company under this Agreement shall fail to be accurate as of the date
made, provided that, in each such case, (A) the Company shall have
failed to substantially cure such breach, failure to perform or
inaccuracy within a reasonable time after being notified by Parent of
such breach, failure to perform or inaccuracy and (B) such breach,
failure to perform or inaccuracy would have, individually or in the
aggregate, a Material Adverse Effect on the Company;
(d) by the Company, if, prior to the acceptance for payment of the
Shares under the Offer the Board of Directors of the Company shall have
recommended, or entered into an agreement with respect to a Superior Proposal
pursuant to Section 7.04.
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The party desiring to terminate this Agreement pursuant to this Section 11.01
(other than pursuant to Section 11.01(a)) shall give notice of such termination
to the other party. Termination by the Company pursuant to Section 11.01(d)
shall not be effective unless and until the Company shall have paid to Parent
the fee described in Section 12.04(c) hereof. Termination by Parent pursuant to
Sections 11.01(a), 11.01(b)(i), 11.01(b)(iii), 11.01(b)(iv) or 11.01(c)(iv)
shall not be effective unless and until Parent shall have paid, or caused the
Escrow Agent to pay, to Company the fee described in Section 12.04(d).
SECTION 11.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 11.01, this Agreement shall become void and of no effect
with no liability on the part of any party (or any stockholder, director,
officer, employee, agent, consultant or representative of such party) to the
other party hereto, provided that, if such termination shall result from the (i)
failure of either party to fulfill a condition to the performance of the
obligations of the other party or (ii) failure of either party to perform a
covenant hereof, such party shall be fully liable for any and all liabilities
and damages incurred or suffered by the other party as a result of such failure
or breach. The provisions of Sections 8.01, 12.04, 12.06, 12.07 and 12.08 shall
survive any termination hereof pursuant to Section 11.01.
ARTICLE 12
Miscellaneous
SECTION 12.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Parent or Merger Subsidiary, to:
American Greetings Corporation
One American Road
Cleveland, Ohio 44144
Fax: (216) 252-6777
Attn: General Counsel
with a copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
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Cleveland, OH 44144
Fax: (216) 579-0212
Attn: Lyle G. Ganske
if to the Company, to:
Gibson Greetings, Inc.
2100 Section Road
Cincinnati, Ohio 45237
Fax: (513) 841-6921
Attn: Chief Executive Officer
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
Attn: Phillip R. Mills
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a business day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 12.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement, except for the agreements
set forth in Article 3, Sections 8.01, 8.04 (which shall only survive the
Effective Time),11.02, 12.04, 12.06, 12.07 and 12.08.
SECTION 12.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or, in the case of a waiver, by each
party against whom the waiver is to be effective, provided that, after the
adoption of this Agreement by the stockholders of the Company and without their
further approval, no such amendment or waiver shall reduce the amount or change
the kind of consideration to be received in exchange for the Shares.
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(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 12.04. Expenses. (a) Except as otherwise provided in this
Section, all costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.
(b) Whether or not the transactions contemplated by this Agreement are
consummated, subject to the last sentence of this Section 12.04(b), Parent
agrees to pay all costs and expenses incurred by the Company or its Subsidiaries
in connection with this Agreement arising from the Hart-Scott-Rodino review and
the Company's obligations contained in Section 9.01 hereof, including, without
limitation, all costs and expenses related to prior antitrust analyses
undertaken by the Company and its advisors in connection with the transactions
contemplated hereby since October 1, 1998, preparing and filing the Notification
and Report Form pursuant to the HSR Act, responding to a Second Request issued
under the HSR Act, preventing the entry of any injunction, appealing any such
injunction, obtaining all necessary consents, approvals or waivers from any
government authorities, opposing vigorously any litigation or administrative
proceeding relating primarily to antitrust aspects of this Agreement or the
transactions contemplated hereby or otherwise complying with any Antitrust Law.
Parent shall promptly pay such costs and expenses as they are incurred by the
Company, provided that, Parent's obligation to pay such costs and expenses shall
not exceed in the aggregate $2.5 million.
(c) The Company agrees to pay Parent a fee in immediately available
funds equal to $7 million concurrently with the termination of this Agreement by
Parent pursuant to the provisions of Section 11.01(c)(i), 11.01(c)(ii) or
11.01(c)(iii) or by the Company pursuant to the provisions of Section 11.01(d),
provided that Parent or Merger Subsidiary is not in breach of its
representations and warranties under this Agreement and shall not have failed to
perform in all material respects each of its obligations under this Agreement.
(d) Parent agrees to pay, or cause to be paid to, the Company a fee in
immediately available funds equal to $20 million simultaneously with the
termination of this Agreement as a result of the occurrence of any of the events
set forth in Sections11.01(a), 11.01(b)(i), 11.01(b)(iii), 11.01(b)(iv) or
11.01(c)(iv), provided that, at the time of such termination, the applicable
waiting period under the HSR Act shall not have expired or been terminated and
the FTC, DOJ or any other Person shall not be challenging by litigation or
otherwise any of the
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transactions contemplated hereby. Concurrently with the signing of this
Agreement, Parent shall deliver such $20 million termination fee to The Bank of
New York (the "ESCROW AGENT") to be held, invested and disbursed by the Escrow
Agent as provided in the Escrow Agreement dated as of November 2, 1999 between
the Company and the Escrow Agent.
(e) Concurrently with the signing of this Agreement, Parent agrees to
contribute cash in the amount of $10 million to the Rabbi Trust.
SECTION 12.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Parent or Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of its Affiliates, the right to purchase all or a portion of the Shares
pursuant to the Offer, but no such transfer or assignment will relieve Parent or
Merger Subsidiary of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
SECTION 12.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard to
the conflicts of law rules of such state.
SECTION 12.07. Dispute Resolution; Jurisdiction. (a) If a dispute
relating to this Agreement arises between the parties, the following procedure
shall be implemented before either party pursues other available remedies
(except that such procedure shall not apply to any equitable remedy). The
parties shall hold a meeting promptly, attended by the persons with
decision-making authority regarding the dispute, to attempt in good faith to
negotiate a resolution of the dispute. If not resolved at such meeting, the
parties shall continue to attempt in good faith to negotiate a resolution of the
dispute for 30 days after such meeting. The parties agree to participate in good
faith in such negotiations related thereto. If within 30 days after such meeting
the parties have not succeeded in negotiating a resolution of the dispute, then
the parties may seek to resolve the dispute by litigation in an appropriate
court of jurisdiction.
(b) Any suit, action or proceeding seeking to enforce any provision
of, or based on any matter arising out of or in connection with, this Agreement
or the transactions contemplated hereby may be brought in any federal court
located in the State of Delaware or any Delaware state court, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts
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therefrom) in any such suit, action or proceeding and irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have
to the laying of the venue of any such suit, action or proceeding in any such
court or that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient form. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party as provided in Section 12.01
shall be deemed effective service of process on such party.
SECTION 12.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 12.09. Counterparts; Effectiveness; Benefit. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Except as provided in Section 8.04, no provision of this Agreement is intended
to confer any rights, benefits, remedies, obligations, or liabilities hereunder
upon any Person other than the parties hereto and their respective successors
and assigns.
SECTION 12.10. Entire Agreement. This Agreement, the Confidentiality
Agreement, the Escrow Agreement, the Rabbi Trust and the Standstill Agreement
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement.
SECTION 12.11. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 12.12. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
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determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
SECTION 12.13. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
GIBSON GREETINGS, INC.
By: /s/ Frank O'Connell
-------------------------------------------
Name: Frank O'Connell
Title: Chairman, President and Chief
Executive Officer
AMERICAN GREETINGS CORPORATION
By: /s/ Morry Weiss
-------------------------------------------
Name: Morry Weiss
Title: Chairman and Chief Executive Officer
GRANITE ACQUISITION CORP.
By: /s/ Morry Weiss
-------------------------------------------
Name: Morry Weiss
Title: President
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ANNEX I
Notwithstanding any other provision of the Offer or this Agreement,
Parent and Merger Subsidiary shall not be required to accept for payment any
Shares if prior to the expiration date of the Offer, any of the following
conditions exist:
(a) an injunction shall have been issued and remain in effect which
restrains consummation of the Offer;
(b) the Company shall have breached or failed to perform in all
material respects any of its obligations under this Agreement required to be
performed on or prior to such time or any of the representations and warranties
of the Company under this Agreement shall fail to be accurate as of the date
made, provided that, such breach, failure to perform or inaccuracy would have,
individually or in the aggregate, a Material Adverse Effect on the Company;
(c) the applicable waiting period under the HSR Act relating to the
Merger shall not have expired or been terminated;
(d) the number of Shares tendered pursuant to the Offer and not
withdrawn, together with the Shares then owned by Parent, represents less than a
majority of the Shares outstanding on a fully-diluted basis (assuming the
exercise of all outstanding options which are exercisable and in-the-money at
the Offer Price); or
(e) this Agreement shall have been terminated in accordance with its
terms.
56
CROSS-REFERENCE TARGET LIST
---------------------------
NOTE: DUE TO THE NUMBER OF TARGETS SOME TARGET NAMES MAY NOT
APPEAR IN THE TARGET PULL-DOWN LIST.
(This list is for the use of the wordprocessor only, is not a part of this
document and may be discarded.)
ARTICLE/SECTION TARGET NAME
- --------------- -----------
2...........................offer.art
2.01............................offer
2.01(a)................offer.commence
2.01(b)...............file.sec.tender
2.02......................comp.action
2.02(a).................co.board.unan
2.02(b).....................file.14d9
2.03........................directors
2.03(a)..................buy.desig.no
2.03(b)..............co.oblig.appoint
3..........................merger.art
3.01...........................merger
3.01(a).....................surv.corp
3.01(b)................themerger.upon
3.01(c)..............file.cert.merger
3.01(d)...............possess.all.rts
3.02......................conv.shares
3.02(a)................out.share.conv
3.02(b)...............co.share.cancel
3.02(c)................sub.share.conv
3.03.........................surr.pay
3.03(a).....................exc.agent
3.03(b)...............holder.entitled
3.03(c).................cert.endorsed
3.03(d)..............no.furth.reg.shr
3.03(e).................unclaimed.ret
3.03(f)................shares.ret.buy
3.04................dissenting.shares
3.05....................stock.options
3.05(a)...................emp.stk.can
3.05(b)............prior.eff.co.shall
3.06.......................adjustmnts
3.09........................adj.price
4.......................surv.corp.art
4.01.........................cert.inc
4.02...........................bylaws
4.03..........................dir.off
5..........................rep.war.co
5.01.........................co.exist
5.02.........................co.autho
5.03.....................co.gov.autho
5.04.......................co.non.con
5.05...........................co.cap
5.05(b)(i).............no.out.shr.cap
5.05(b)(ii)...........no.sec.conv.shr
5.05(b)(iii)...............no.options
5.06...........................co.sub
5.06(a)......................sub.corp
5.06(b)................co.own.sub.stk
5.06(b)(i)...............nno.vtng.sec
5.06(b)(ii).................no.rights
5.07...................co.sec.filings
5.07(a)................co.del.buy.sec
5.07(c)...................report.true
5.07(d).................co.not.untrue
5.08......................co.fin.stmt
5.09..................co.abs.cert.chg
5.09(a).................co.no.mat.adv
5.09(b).................co.no.div.cap
5.09(c)...............co.no.amend.sec
5.09(d)..................co.no.indebt
5.09(e)....................co.no.loan
5.09(f)...................co.no.trans
5.09(g)................co.no.chg.acct
5.09(h)...................co.no.sever
5.10.................co.no.undis.liab
5.10(a).......................co.liab
5.10(b)...................co.ord.liab
5.10(c)...................co.liab.agt
5.11..................comply with law
5.12..........................co.liti
5.13....................co.finder.fee
5.14.........................co.taxes
5.15................co.emp.bene.plans
5.15(a).................list.emp.plan
5.15(c).................emp.plan.qual
5.15(e)...............list.emp.plan.e
5.16.......................co.env.mat
5.16(a).................co.except.10k
5.16(b)..............co.no.env.invest
5.17............antkovr.sts.rghts.agt
5.17(b)................antitakeover.b
6.........................rep.war.buy
6.01........................buy.exist
6.02........................buy.autho
6.03....................buy.gov.autho
6.04......................buy.non.con
6.05...................buy.finder.fee
6.06....................buy.financing
7..............................cov.co
7.01........................co.conduc
7.01(b)...........................006
7.01(c)......................cov.co.c
7.02.................co.stk.mtg.proxy
7.03...................co.access.info
7.04..................co.other.offers
7.04(a).............no.solicitation.a
7.04(a)(i)........................001
7.04(c).............board.dir.company
7.05.................co.notice.events
7.06.....................co.disc.docs
7.06(a)................co.docs.comply
7.06(b).................co.proxy.true
7.06(c)..............co.sub.info.true
7.07..................standstill.agts
7.08.......................rights.agt
8.............................cov.buy
8.01.......................buy.confid
8.02.................oblig.merger.sub
8.03....................voting.shares
8.04.................buy.dir.off.liab
?...........................d.and.o.b
8.05..........................emp.ben
8.06....................buy.disc.docs
8.06(a).............buy.sub.info.true
8.06(b)..............buy.offer.comply
9..........................cov.buy.co
9.01.....................best.efforts
9.01(a)................best.efforts.a
9.01(b)................best.efforts.b
9.02..................certain.filings
9.03..................public.announce
9.04....................further.assur
10....................cond.merger.art
10.01.................cond.oblig.each
10.01(a)................adopt.del.law
?........................hsr.wait.exp
10.01(b)..............no.law.prohibit
10.01(c).............buy.purch.shares
11...........................term.art
11.01............................term
11.01(a)...............mutual.consent
11.01(b).............offer.not.consum
11.01(b)(i).......................003
11.01(b)(ii)......................005
11.01(b)(iii).....................002
11.01(b)(iv)................the.other
11.01(c)...............merger.illegal
11.01(c)(ii)................bod.amend
11.01(c)(iii)..............bod.action
11.01(c)(iv).................the.comp
11.01(d).............merger.illegal.d
11.01(c)(i).......................004
11.02.....................effect.term
12...........................misc.art
12.01.........................notices
12.02....................surv.rep.war
12.03...................amend.waivers
12.03(a).......................signed
12.03(b)..............delay.not.waive
12.04........................expenses
12.04(c)..........................007
11.01(b)(ii)......................005
12.04(d)...................escrw.agnt
12.05....................succ.assigns
12.06...................governing.law
12.09..................counter.effect