AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CHAMPION ENTERPRISES, INC.,
RHI ACQUISITION CORP.
and
REDMAN INDUSTRIES, INC.
August 19, 1996
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time . . . . . . . . . . . . . . . . . 2
1.3 Effects of the Merger . . . . . . . . . . . . . . 2
1.4 Certificate of Incorporation and By-laws . . . . 2
1.5 Directors and Officers . . . . . . . . . . . . . 2
1.6 Additional Actions . . . . . . . . . . . . . . . 2
ARTICLE II CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock . . . . . . . . . . . 3
2.2 Exchange Ratio; Fractional Shares . . . . . . . . 3
2.3 Exchange of Certificates . . . . . . . . . . . . 4
(a) Exchange Agent . . . . . . . . . . . . . 4
(b) Exchange Procedures . . . . . . . . . . . 4
(c) Distributions with Respect to Unexchanged
Shares . . . . . . . . . . . . . . . . . 5
(d) No Further Ownership Rights in Company
Common Stock . . . . . . . . . . . . . . 5
(e) Termination of Exchange Fund . . . . . . 5
(f) No Liability . . . . . . . . . . . . . . 5
(g) Investment of Exchange Fund . . . . . . . 6
2.4 Treatment of Stock Options . . . . . . . . . . . 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
3.1 Organization and Standing . . . . . . . . . . . . 7
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . 7
3.3 Corporate Power and Authority . . . . . . . . . . 8
3.4 Capitalization of Parent . . . . . . . . . . . . 8
3.5 Conflicts, Consents and Approval . . . . . . . . 9
3.6 Absence of Certain Changes . . . . . . . . . . . 10
3.7 Parent SEC Documents . . . . . . . . . . . . . . 10
3.8 Taxes . . . . . . . . . . . . . . . . . . . . . . 11
3.9 Compliance with Law . . . . . . . . . . . . . . . 12
3.10 Registration Statement . . . . . . . . . . . . . 12
3.11 Litigation . . . . . . . . . . . . . . . . . . . 12
3.12 Brokerage and Finder's Fees . . . . . . . . . . . 12
3.13 Opinion of Financial Advisor. . . . . . . . . . . 13
3.14 Accounting Matters . . . . . . . . . . . . . . . 13
3.15 Tax-Free Reorganization . . . . . . . . . . . . . 13
3.16 Employee Benefit Plans . . . . . . . . . . . . . 13
3.17 Contracts . . . . . . . . . . . . . . . . . . . . 15
3.18 Labor Relations . . . . . . . . . . . . . . . . . 16
3.19 Permits . . . . . . . . . . . . . . . . . . . . . 16
3.20 Environmental Matters . . . . . . . . . . . . . . 16
3.21 Company Stock Ownership . . . . . . . . . . . . . 17
ARTICLE IVREPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Organization and Standing . . . . . . . . . . . . 17
4.2 Subsidiaries . . . . . . . . . . . . . . . . . . 18
4.3 Corporate Power and Authority . . . . . . . . . . 18
4.4 Capitalization of the Company . . . . . . . . . . 19
4.5 Conflicts; Consents and Approvals . . . . . . . . 19
4.6 Absence of Certain Changes . . . . . . . . . . . 20
4.7 Company SEC Documents . . . . . . . . . . . . . . 20
4.8 Taxes . . . . . . . . . . . . . . . . . . . . . . 21
4.9 Compliance with Law . . . . . . . . . . . . . . . 22
4.10 Registration Statement . . . . . . . . . . . . . 22
4.11 Litigation . . . . . . . . . . . . . . . . . . . 22
4.12 Brokerage and Finder's Fees . . . . . . . . . . . 22
4.13 Opinion of Financial Advisor . . . . . . . . . . 23
4.14 Accounting Matters . . . . . . . . . . . . . . . 23
4.15 Tax-Free Reorganization . . . . . . . . . . . . . 23
4.16 Employee Benefit Plans . . . . . . . . . . . . . 23
4.17 Contracts . . . . . . . . . . . . . . . . . . . . 25
4.18 Labor Relations . . . . . . . . . . . . . . . . . 25
4.19 Permits . . . . . . . . . . . . . . . . . . . . . 25
4.20 Environmental Matters . . . . . . . . . . . . . . 25
4.21 Parent Stock Ownership . . . . . . . . . . . . . 26
4.22 DGCL Section 203 and State Takeover Laws . . . . 26
4.23 Company Rights Agreement. . . . . . . . . . . . . 26
ARTICLE V COVENANTS OF THE PARTIES
5.1 Mutual Covenants . . . . . . . . . . . . . . . . 27
(a) General . . . . . . . . . . . . . . . . . 27
(b) HSR Act . . . . . . . . . . . . . . . . . 27
(c) Other Governmental Matters . . . . . . . 27
(d) Pooling-of-Interests . . . . . . . . . . 27
(e) Tax-Free Treatment . . . . . . . . . . . 27
(f) Public Announcements . . . . . . . . . . 27
(g) Access . . . . . . . . . . . . . . . . . 28
(h) Stockholders Meeting . . . . . . . . . . 28
(i) Preparation of Proxy Statement and
Registration Statement . . . . . . . . 28
(j) Notification of Certain Matters . . . . . 29
(k) Affiliates . . . . . . . . . . . . . . . 29
5.2 Covenants of Parent . . . . . . . . . . . . . . . 29
(a) Conduct of Parent's Operations . . . . . 29
(b) Indemnification; Insurance . . . . . . . 30
(c) Consulting Agreement . . . . . . . . . . 31
(d) Listing Application . . . . . . . . . . . 31
(e) Directors of Parent . . . . . . . . . . . 31
(f) Employee Benefits . . . . . . . . . . . . 31
5.3 Covenants of the Company . . . . . . . . . . . . 32
(a) Conduct of the Company's Operations . . . 32
(b) No Solicitation . . . . . . . . . . . . . 34
ARTICLE VI CONDITIONS
6.1 Mutual Conditions . . . . . . . . . . . . . . . . 35
6.2 Conditions to Obligations of the Company . . . . 36
6.3 Conditions to Obligations of Parent and Sub . . . 37
ARTICLE VII TERMINATION AND AMENDMENT
7.1 Termination . . . . . . . . . . . . . . . . . . . 38
7.2 Effect of Termination . . . . . . . . . . . . . . 39
7.3 Amendment . . . . . . . . . . . . . . . . . . . . 42
7.4 Extension; Waiver . . . . . . . . . . . . . . . . 42
ARTICLE VIII MISCELLANEOUS
8.1 Survival of Representations and Warranties . . . 42
8.2 Notices . . . . . . . . . . . . . . . . . . . . . 43
8.3 Interpretation . . . . . . . . . . . . . . . . . 44
8.4 Counterparts . . . . . . . . . . . . . . . . . . 44
8.5 Entire Agreement . . . . . . . . . . . . . . . . 44
8.6 Third Party Beneficiaries . . . . . . . . . . . . 44
8.7 Governing Law . . . . . . . . . . . . . . . . . . 44
8.8 Specific Performance . . . . . . . . . . . . . . 44
8.9 Assignment . . . . . . . . . . . . . . . . . . . 44
8.10 Expenses . . . . . . . . . . . . . . . . . . . . 45
8.11 Incorporation of Disclosure Schedules . . . . . . 45
8.12 Severability . . . . . . . . . . . . . . . . . . 45
8.13 Subsidiaries . . . . . . . . . . . . . . . . . . 45
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is
made and entered into as of the 19th day of August, 1996, by and
among Champion Enterprises, Inc., a Michigan corporation
("Parent"), RHI Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and Redman Industries,
Inc., a Delaware corporation (the "Company").
PRELIMINARY STATEMENTS
A. Parent desires to combine with the business and
operations of the Company through the merger (the "Merger") of
Sub with and into the Company, with the Company as the surviving
corporation, pursuant to which each share of Company Common Stock
(as defined in Section 4.4) outstanding at the Effective Time (as
defined in Section 1.2) will be converted into the right to
receive shares of Parent Common Stock (as defined in Section 3.4)
as more fully provided herein.
B. The Company desires to combine its business and
operations with the businesses of Parent and to become a wholly
owned subsidiary of Parent and for the holders of shares of
Company Common Stock ("Company Stockholders") to have a
continuing equity interest in the combined businesses of Parent
and the Company.
C. The parties intend that the Merger constitute a
tax-free "reorganization" within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
D. The parties intend that the Merger be accounted for
as a pooling-of-interests for financial reporting purposes.
E. The respective Boards of Directors of Parent, Sub
and the Company have determined that the Merger in the manner
contemplated herein is fair to and in the best interests of their
respective stockholders and, by duly adopted resolutions, have
approved and adopted this Agreement.
AGREEMENT
Now, therefore, in consideration of these premises and
the mutual and dependent promises hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to
the conditions hereof, and in accordance with the provisions of
the Delaware General Corporation Law (the "DGCL"), Sub shall be
merged with and into the Company as soon as practicable following
the satisfaction or waiver of the conditions set forth in Article
VI, but in no event later than two business days thereafter (the
date of such merger being referred to herein as the "Closing
Date"). Following the Merger, the separate corporate existence
of Sub shall cease and the Company shall continue its existence
under the laws of the State of Delaware. The Company, in its
capacity as the corporation surviving the Merger, is hereinafter
sometimes referred to as the "Surviving Corporation."
1.2 Effective Time. The Merger shall be
consummated by filing with the Secretary of State of the State of
Delaware (the "Delaware Secretary of State") a certificate of
merger (the "Certificate of Merger") in such form as is required
by and executed in accordance with the DGCL. The Merger shall
become effective (the "Effective Time") when the Certificate of
Merger has been filed with the Delaware Secretary of State or at
such later time as may be agreed by Parent and the Company and
specified in the Certificate of Merger. Prior to the filing
referred to in this Section 1.2, a closing (the "Closing") shall
be held at the offices of Skadden, Arps, Slate, Meagher & Flom at
919 Third Avenue, New York, New York, or such other place as the
parties may agree.
1.3 Effects of the Merger. The Merger shall have
the effects set forth in the DGCL.
1.4 Certificate of Incorporation and By-laws.
The Restated Certificate of Incorporation of the Company, as in
effect immediately prior to the Effective Time, shall be the
initial Certificate of Incorporation of the Surviving
Corporation. The Amended and Restated By-laws of the Company, as
in effect immediately prior to the Effective Time, shall be the
initial By-laws of the Surviving Corporation.
1.5 Directors and Officers. From and after the
Effective Time, the officers of the Company shall be the officers
of the Surviving Corporation and the directors of Sub shall be
the directors of the Surviving Corporation, in each case until
their respective successors are duly elected and qualified.
1.6 Additional Actions. If, at any time after
the Effective Time, the Surviving Corporation shall consider or
be advised that any further deeds, assignments or assurances in
law or any other acts are necessary or desirable to carry out the
provisions of this Agreement, the proper officers and directors
of Parent and the Company shall take all such necessary action.
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. At the
Effective Time, by virtue of the Merger and without any action on
the part of Parent, Sub or the Company:
(a) Each share of common stock of Sub issued and
outstanding immediately prior to the Effective Time shall be
converted into one share of common stock of the Surviving
Corporation. Such shares shall thereafter constitute all of
the issued and outstanding capital stock of the Surviving
Corporation.
(b) Each share of Company Common Stock (other
than shares to be cancelled in accordance with Section
2.1(c)) issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive
1.24 shares of Parent Common Stock (the "Exchange Ratio").
(c) Each share of capital stock of the Company
held in the treasury of the Company or held by Parent or any
of its subsidiaries shall be cancelled and retired and no
payment shall be made in respect thereof.
2.2 Exchange Ratio; Fractional Shares. No
certificates for fractional shares of Parent Common Stock shall
be issued as a result of the conversion provided for in Section
2.1(b). To the extent that an outstanding share of Company
Common Stock would otherwise have become a fractional share of
Parent Common Stock, the holder thereof, upon presentation of
such fractional interest represented by an appropriate
certificate for Company Common Stock to the Exchange Agent
pursuant to Section 2.3, shall be entitled to receive a cash
payment therefor in an amount equal to the value (determined with
reference to the closing price of Parent Common Stock on the New
York Stock Exchange Composite Tape ("NYSE") on the last full
trading day immediately prior to the Effective Time) of such
fractional interest. Such payment with respect to fractional
shares is merely intended to provide a mechanical rounding off
of, and is not a separately bargained for, consideration. If
more than one certificate representing shares of Company Common
Stock shall be surrendered for the account of the same holder,
the number of shares of Parent Common Stock for which
certificates have been surrendered shall be computed on the basis
of the aggregate number of shares represented by the certificates
so surrendered. In the event that prior to the Effective Time
Parent or the Company shall declare a stock dividend or other
distribution payable in shares of its common stock or securities
convertible into shares of its common stock, or effect a stock
split, reclassification, combination or other change with respect
to its common stock, the Exchange Ratio shall be adjusted to
reflect such dividend, distribution, stock split,
reclassification, combination or other change.
2.3 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time,
Parent shall make available to an exchange agent designated by
Parent and reasonably acceptable to the Company (the "Exchange
Agent"), for the benefit of Company Stockholders, for exchange in
accordance with this Section 2.3, certificates representing
shares of Parent Common Stock issuable pursuant to Section 2.1 in
exchange for outstanding shares of Company Common Stock and shall
from time-to-time deposit cash in an amount reasonably expected
to be paid pursuant to Section 2.2 (such shares of Parent Common
Stock and cash, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange
Fund").
(b) Exchange Procedures. Promptly after the
Effective Time, Parent shall cause the Exchange Agent to mail to
each holder of record of a certificate or certificates (the
"Certificates") which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive shares of Parent
Common Stock pursuant to Section 2.1(b) hereof (i) a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for effecting the
surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with
a duly executed letter of transmittal, the holder of such
Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of shares of Parent Common
Stock which such holder has the right to receive pursuant to
Section 2.1 and (y) a check representing the amount of cash in
lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, which such holder has the right to receive
pursuant to the provisions of this Article II, after giving
effect to any required withholding tax, and the shares
represented by the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the cash in
lieu of fractional shares, if any, and unpaid dividends and
distributions, if any, payable to holders of shares of Company
Common Stock. In the event of a transfer of ownership of shares
of Company Common Stock which is not registered on the transfer
records of the Company, a certificate representing the proper
number of shares of Parent Common Stock, together with a check
for the cash to be paid in lieu of fractional shares, if any, and
unpaid dividends and distributions, if any, may be issued to such
transferee if the Certificate representing such shares of Company
Common Stock held by such transferee is presented to the Exchange
Agent, accompanied by all documents required to evidence and
effect such transfer and to evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated
by this Section 2.3, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive
upon surrender a certificate representing shares of Parent Common
Stock and cash in lieu of fractional shares, if any, and unpaid
dividends and distributions, if any, as provided in this Article
II.
(c) Distributions with Respect to Unexchanged
Shares. Notwithstanding any other provisions of this Agreement,
no dividends or other distributions declared or made after the
Effective Time with respect to shares of Parent Common Stock
having a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate, and no cash payment
in lieu of fractional shares shall be paid to any such holder,
until the holder shall surrender such Certificate as provided in
this Section 2.3. Subject to the effect of Applicable Law (as
defined in Section 3.9), following surrender of any such
Certificate, there shall be paid to the holder of the
certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions
with a record date after the Effective Time theretofore payable
with respect to such whole shares of Parent Common Stock and not
paid, less the amount of any withholding taxes which may be
required thereon, and (ii) at the appropriate payment date
subsequent to surrender, the amount of dividends or other
distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of Parent Common Stock,
less the amount of any withholding taxes which may be required
thereon.
(d) No Further Ownership Rights in Company Common
Stock. All shares of Parent Common Stock issued upon surrender
of Certificates in accordance with the terms hereof (including
any cash paid pursuant to this Article II) shall be deemed to
have been issued in full satisfaction of all rights pertaining to
such shares of Company Common Stock represented thereby, and from
and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the
Company of shares of Company Common Stock. If, after the
Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged
as provided in this Section 2.3.
(e) Termination of Exchange Fund. Any portion of
the Exchange Fund which remains undistributed to Company
Stockholders for six months after the Effective Time shall be
delivered to Parent or the Surviving Corporation, upon demand
thereby, and holders of shares of Company Common Stock who have
not theretofore complied with this Section 2.3 shall thereafter
look only to Parent for payment of any claim to shares of Parent
Common Stock, cash in lieu of fractional shares thereof, or
dividends or distributions, if any, in respect thereof.
(f) No Liability. None of Parent, the Surviving
Corporation or the Exchange Agent shall be liable to any person
in respect of any shares of Company Common Stock (or dividends or
distributions with respect thereto) or cash from the Exchange
Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates
shall not have been surrendered prior to seven years after the
Effective Time of the Merger (or immediately prior to such
earlier date on which any cash, any cash in lieu of fractional
shares or any dividends or distributions with respect to whole
shares of Company Common Stock in respect of such Certificate
would otherwise escheat to or become the property of any
Governmental Authority (as defined in Section 3.5)), any such
cash, dividends or distributions in respect of such Certificate
shall, to the extent permitted by Applicable Law, become the
property of Parent, free and clear of all claims or interest of
any person previously entitled thereto.
(g) Investment of Exchange Fund. The Exchange
Agent shall invest any cash included in the Exchange Fund, as
directed by Parent, on a daily basis. Any interest and other
income resulting from such investments shall be paid to Parent.
In the event the Exchange Fund shall realize a loss on any such
investment, Parent shall promptly thereafter deposit, or cause to
be deposited, in such Exchange Fund on behalf of the Surviving
Corporation cash in an amount equal to such loss.
2.4 Treatment of Stock Options
(a) Prior to the Effective Time, Parent and the
Company shall take all such actions as may be necessary to cause
each unexpired and unexercised option or right to purchase shares
of Company Common Stock granted (or subject to being granted on a
contingent basis) under the Company's various stock option plans
in effect on the date hereof to current or former directors,
officers, employees, consultants or independent contractors of
the Company or its subsidiaries (each, a "Company Option") to
cease to represent the right to purchase Company Common Stock and
to be adjusted at the Effective Time to represent the right (an
"Adjusted Option") to purchase that number of shares of Parent
Common Stock equal to the number of shares of Company Common
Stock issuable immediately prior to the Effective Time upon
exercise of the Company Option (without regard to actual
restrictions on exercisability) multiplied by the Exchange Ratio,
with an exercise price equal to the exercise price which existed
under the corresponding Company Option divided by the Exchange
Ratio, and with other terms and conditions that are the same as
the terms and conditions of such Company Option immediately
before the Effective Time. In connection with the issuance of
Adjusted Options, Parent shall (i) reserve for issuance the
number of shares of Parent Common Stock that will become subject
to Adjusted Options pursuant to this Section 2.4 and (ii) from
and after the Effective Time, upon exercise of Adjusted Options,
make available for issuance all shares of Parent Common Stock
covered thereby, subject to the terms and conditions applicable
thereto.
(b) Parent agrees to file with the Securities and
Exchange Commission (the "Commission") as soon as reasonably
practicable after the Closing Date a registration statement on
Form S-8 or other appropriate form under the Securities Act of
1933 (together with the rules and regulations thereunder, the
"Securities Act") to register shares of Parent Common Stock
issuable upon exercise of the Adjusted Options and use its
reasonable efforts to cause such registration statement to remain
effective until the exercise or expiration of such options.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
In order to induce the Company to enter into this
Agreement, Parent and Sub hereby represent and warrant to the
Company that the statements contained in this Article III are
true, correct and complete.
3.1 Organization and Standing. Each of Parent
and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation with full power and authority to own, lease, use
and operate its properties and to conduct its business as and
where now owned, leased, used, operated and conducted. Each
of Parent and its subsidiaries is duly qualified to do
business and in good standing in each jurisdiction in which
the nature of the business conducted by it or the property it
owns, leases or operates makes such qualification necessary,
except where the failure to be so qualified or in good
standing in such jurisdiction would not have a material
adverse effect on Parent. The copies of the Certificate of
Incorporation and By-laws (or similar organizational
documents) of Parent and each of its subsidiaries, which have
previously been made available to the Company, are true,
complete and correct copies of such documents as in effect as
of the date of this Agreement.
3.2 Subsidiaries. As of the date hereof,
other than immaterial interests, Parent does not own, directly
or indirectly, any equity or other ownership interest in any
corporation, partnership, joint venture or other entity or
enterprise, except as set forth in Section 3.2 to the
disclosure schedule (the "Parent Disclosure Schedule")
delivered by Parent to the Company and dated the date hereof.
Section 3.2 to the Parent Disclosure Schedule sets forth as to
each subsidiary of Parent: (i) its name and jurisdiction of
incorporation or organization, (ii) its authorized capital
stock or share capital, and (iii) the number of issued and
outstanding shares of its capital stock or share capital.
Except as set forth in Section 3.2 to the Parent Disclosure
Schedule, each of the outstanding shares of capital stock of
each of Parent's subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, and is owned, directly
or indirectly, by Parent free and clear of all liens, pledges,
security interests, claims or other encumbrances, other than
liens imposed by law which could not reasonably be expected to
have, in the aggregate, a material adverse effect on Parent.
All of the outstanding shares of the capital stock of Sub are
directly owned by Parent. Other than as set forth in Section
3.2 to the Parent Disclosure Schedule, there are no
outstanding shares of capital stock or subscriptions, options,
warrants, puts, calls, agreements, understandings, claims or
other commitments or rights of any type relating to the
issuance, sale or transfer of any securities of any subsidiary
of Parent, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of capital
stock of any subsidiary of Parent; and no subsidiary of Parent
has any obligation of any kind to issue any additional
securities or to pay for securities of any subsidiary of
Parent or any predecessor thereof. As used in this Section
3.2, "capital stock" shall include capital stock or other
ownership interests having by their terms ordinary voting
power to elect directors or others performing similar
functions with respect to such entity.
3.3 Corporate Power and Authority.
(a) Parent has full corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject to the approval of
the Share Issuance (as defined below) by the requisite votes
of the stockholders of Parent (the "Parent Stockholders") in
accordance with the rules of the NYSE and this Agreement. The
execution and delivery of this Agreement by Parent and the
consummation by Parent of the transactions contemplated hereby
have been duly and validly approved by the Board of Directors
of Parent. The Board of Directors of Parent has directed that
the issuance of Parent Common Stock pursuant hereto (the
"Share Issuance") be submitted to the Parent Stockholders for
approval at a stockholders meeting and, except for the
approval of the Share Issuance by the Parent Stockholders in
accordance with the rules of the NYSE, no other corporate
proceedings on the part of Parent are necessary to approve
this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by Parent and constitutes a valid and binding
obligation of Parent, enforceable against Parent in accordance
with its terms.
(b) Sub has full corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery
of this Agreement by Sub and the consummation by Sub of the
transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Sub and by Parent as the
sole stockholder of Sub, and no other corporate proceedings on
the part of Sub are necessary to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by Sub and constitutes a valid and
binding obligation of Sub, enforceable against Sub in
accordance with its terms.
3.4 Capitalization of Parent. Parent's
authorized capital stock consists solely of (a) 75,000,000
shares of common stock, $1.00 par value per share ("Parent
Common Stock"), and (b) 5,000,000 shares of preferred stock,
no par value ("Parent Preferred Stock"), of which 300,000
shares are designated as "Series A Preferred Stock." As of
August 16, 1996, (i) 30,921,235 shares of Parent Common Stock
were issued and outstanding, (ii) 3,828,540 shares of Parent
Common Stock were issuable upon the exercise or conversion of
options, warrants or convertible securities granted or
issuable by Parent, other than the rights ("Parent Rights")
issued under the rights agreement, dated January 9, 1996,
between Parent and Harris Trust and Savings Bank (the "Parent
Rights Agreement"), (iii) no shares of Parent Preferred Stock
were issued and outstanding, and (iv) 309,212 shares of Series
A Preferred Stock were issuable upon exercise of the Parent
Rights in accordance with the terms of the Parent Rights
Agreement. Since August 16, 1996, Parent has not issued any
shares of its capital stock except upon the exercise of such
options, warrants or convertible securities. Each outstanding
share of Parent capital stock is, and all shares of Parent
Common Stock to be issued in connection with the Merger will
be, duly authorized and validly issued, fully paid and
nonassessable and free of any preemptive rights. As of the
date hereof, other than as set forth above, in the Parent SEC
Documents (as defined in Section 3.7) or in Section 3.4 to the
Parent Disclosure Schedule, there are no outstanding shares of
capital stock or subscriptions, options, warrants, puts,
calls, agreements, understandings, claims or other commitments
or rights of any type relating to the issuance, sale or
transfer by Parent of any securities of Parent, nor are there
outstanding any securities which are convertible into or
exchangeable for any shares of capital stock of Parent; and
Parent has no obligation of any kind to issue any additional
securities or to pay for securities of Parent or any
predecessor. Parent has no outstanding bonds, debentures,
notes or other similar obligations the holders of which have
the right to vote generally with holders of Parent Common
Stock.
3.5 Conflicts, Consents and Approvals.
Neither the execution and delivery of this Agreement by Parent
or Sub nor the consummation of the transactions contemplated
hereby will:
(a) conflict with, or violate any provision of
the Certificate of Incorporation or By-laws (or any
similar organizational document) of Parent or any
subsidiary of Parent;
(b) violate, or conflict with, or result in a
breach of any provision of, or constitute a default (or
an event which, with the giving of notice, the passage of
time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the passage
of time or otherwise) to terminate, accelerate, modify or
call a default under, or result in the termination,
acceleration or cancellation of, or result in the
creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of
Parent or any of its subsidiaries under, any of the
terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, contract,
undertaking, agreement, lease or other instrument or
obligation to which Parent or any of its subsidiaries is
a party or by which any of their respective properties or
assets may be bound;
(c) violate any order, writ, injunction,
decree, statute, rule or regulation, applicable to Parent
or any of its subsidiaries or their respective properties
or assets; or
(d) require any action or consent or approval
of, or review by, or registration or filing by Parent or
any of its affiliates with any third party or any court,
arbitral tribunal, administrative agency or commission or
other governmental or regulatory body, agency,
instrumentality or authority (a "Governmental
Authority"), other than (i) approval of the Share
Issuance by Parent Stockholders, (ii) approval of the
listing of the shares of Parent Common Stock to be issued
in the Merger on the NYSE, subject to official notice of
issuance, (iii) actions required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder (the "HSR
Act"), and (iv) registrations or other actions required
under federal and state securities laws as are
contemplated by this Agreement;
except for any of the foregoing that are set forth in
subsections (b), (c) or (d) of Section 3.5 to the Parent
Disclosure Schedule and, in the case of (b), (c) and (d), for
any of the foregoing that would not, in the aggregate, have a
material adverse effect on Parent or that would not prevent or
delay the consummation of the transactions contemplated
hereby.
3.6 Absence of Certain Changes. Except as set
forth in the Parent SEC Documents filed with the Commission as
of the date hereof, since December 31, 1995, (i) each of
Parent and its subsidiaries has conducted its business in the
ordinary course, consistent with past practice, (ii) no event
has occurred which has or which would reasonably be expected
to have, in the aggregate, a material adverse effect on Parent
(but, excluding for such purposes, events that are generally
applicable in Parent's and the Company's industry and the
United States economy), and (iii) neither Parent nor any of
its subsidiaries has taken any action which would be
prohibited by Section 5.2(a).
3.7 Parent SEC Documents. Each of Parent and
its subsidiaries has timely filed with the Commission all
forms, reports, schedules, statements, exhibits and other
documents required to be filed by it since December 31, 1992
under the Securities Exchange Act of 1934 (together with the
rules and regulations thereunder, the "Exchange Act") or the
Securities Act (such documents, as supplemented and amended
since the time of filing, collectively, the "Parent SEC
Documents"). The Parent SEC Documents, including, without
limitation, any financial statements or schedules included
therein, at the time filed (and, in the case of registration
statements and proxy statements, on the dates of effectiveness
and the dates of mailing, respectively) (a) did not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and
(b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as
the case may be. The financial statements (including the
related notes) of Parent included in the Parent SEC Documents
were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto),
and fairly present (subject in the case of unaudited
statements to normal, recurring and year-end audit
adjustments) in all material respects the consolidated
financial position of Parent as of the dates thereof and the
consolidated results of its operations and cash flows for the
periods then ended.
3.8 Taxes. Except as set forth in the Parent
SEC Documents, (i) each of Parent and its subsidiaries has
duly filed all federal and state income tax returns and all
other material tax returns (including, but not limited to,
those filed on a consolidated, combined or unitary basis)
required to have been filed by Parent or any of its
subsidiaries prior to the date hereof and will file, on or
before the Effective Time, all such returns which are required
to be filed after the date hereof and on or before the
Effective Time, (ii) all of the foregoing returns and reports
are true and correct in all material respects, and each of
Parent and its subsidiaries has paid or, prior to the
Effective Time, will pay all taxes required to be paid in
respect of the periods covered by such returns or reports to
any federal, state, foreign, local or other taxing authority,
(iii) each of Parent and its subsidiaries has paid or made
adequate provision (in accordance with generally accepted
accounting principles) in the financial statements of Parent
included in the Parent SEC Documents for all taxes payable in
respect of all periods ending on or prior to December 31,
1995, (iv) neither Parent nor any of its subsidiaries will
have any material liability for any taxes in excess of the
amounts so paid or reserves so established and neither Parent
nor any of its subsidiaries is delinquent in the payment of
any material tax, assessment or governmental charge and none
of them has requested any extension of time within which to
file any returns in respect of any fiscal year which have not
since been filed, (v) no deficiencies for any tax, assessment
or governmental charge have been proposed, asserted or
assessed in writing (tentatively or definitely), in each case,
by any taxing authority, against Parent or any of its
subsidiaries for which there are not adequate reserves in its
financial statements (in accordance with generally accepted
accounting principles), (vi) as of the date of this Agreement,
there are no extensions or waivers or pending requests for
extensions or waivers of the time to assess or collect any
such tax, (vii) the federal income tax returns of Parent have
never been audited by the Internal Revenue Service, and the
federal income tax returns of its subsidiaries have not been
audited by the Internal Revenue Service, since February 25,
1977, (viii) neither Parent nor any of its subsidiaries is or
has been a party to any tax sharing agreement with any
corporation which is not currently a member of the affiliated
group of which Parent is currently a member, (ix) there are no
liens for taxes on any assets of Parent or any of its
subsidiaries (other than statutory liens for taxes not yet due
or liens for which adequate reserves have been established in
its financial statements in accordance with generally accepted
accounting principles), (x) Parent and its subsidiaries have
withheld and paid (and until the Effective Time will withhold
and pay) all income, social security, unemployment, and all
other material payroll taxes required to be withheld
(including, without limitation, pursuant to Sections 1441 and
1442 of the Code or similar provisions under foreign law) and
paid in connection with amounts paid to any employee,
independent contractor, stockholder, creditor or other third
party, and (xi) Parent has not filed an election under Section
341(f) of the Code to be treated as a consenting corporation.
For purposes of this Agreement, the term "tax" shall include
all federal, state, local and foreign taxes including interest
and penalties thereon and additions to tax. In addition, the
term "tax return" shall mean any return, declaration,
statement, report, schedule, certificate, form information
return, or any other document (including any related or
supporting information) required to be supplied to, or filed
with, a taxing authority (foreign or domestic) in connection
with taxes.
3.9 Compliance with Law. Each of Parent and
its subsidiaries is in compliance with, and at all times since
December 31, 1992 has been in compliance with, all applicable
laws, statutes, orders, rules, regulations, policies or
guidelines promulgated, or judgments, decisions or orders
entered by any Governmental Authority (collectively,
"Applicable Law") relating to it or its business or
properties, except for any such failures to be in compliance
therewith which, in the aggregate, would not have a material
adverse effect on Parent.
3.10 Registration Statement. None of the
information provided by Parent or any of its subsidiaries for
inclusion in the registration statement on Form S-4 to be
filed with the Commission by Parent under the Securities Act,
including the prospectus (as amended, supplemented or
modified, the "Prospectus") relating to shares of Parent
Common Stock to be issued in the Merger and the joint proxy
statement and form of proxies relating to the vote of Company
Stockholders with respect to the Merger and the Parent
Stockholders with respect to the Share Issuance (collectively
and as amended, supplemented or modified, the "Proxy
Statement") contained therein (such registration statement as
amended, supplemented or modified, the "Registration
Statement"), at the time the Registration Statement becomes
effective or, in the case of the Proxy Statement, at the date
of mailing, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading. Each of the Registration Statement and Proxy
Statement, except for such portions thereof that relate only
to the Company and its subsidiaries, will comply in all
material respects with the provisions of the Securities Act
and the Exchange Act.
3.11 Litigation. Except as set forth in the
Parent SEC Documents, there is no suit, claim, action,
proceeding or investigation (an "Action") pending or, to the
knowledge of Parent, threatened against Parent or any of its
subsidiaries which, in the aggregate, could reasonably be
expected to have a material adverse effect on Parent. Neither
Parent nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree which, in the
aggregate, could reasonably be expected to have a material
adverse effect on Parent.
3.12 Brokerage and Finder's Fees. Except for
Parent's obligation to Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") (a copy of the agreement relating to such
obligation having previously been provided to the Company),
Parent has not incurred and will not incur, directly or
indirectly, any brokerage, finder's or similar fee in
connection with the transactions contemplated by this
Agreement. Other than the foregoing obligation to DLJ, Parent
is not aware of any claim for payment of any finder's fees,
brokerage or agent's commissions or other like payments in
connection with the negotiation of this Agreement or in
connection with the transactions contemplated hereby.
3.13 Opinion of Financial Advisor. Parent has
received the opinion of DLJ to the effect that, as of the date
hereof, the Exchange Ratio is fair to Parent from a financial
point of view.
3.14 Accounting Matters. To the best knowledge
of Parent, neither Parent nor any of its affiliates has taken
or agreed to take any action that (without giving effect to
any actions taken or agreed to be taken by the Company or any
of its affiliates) would prevent Parent from accounting for
the business combination to be effected by the Merger as a
pooling-of-interests for financial reporting purposes in
accordance with Accounting Principles Board Opinion No. 16,
the interpretative releases issued pursuant thereto, and the
pronouncements of the Commission thereon.
3.15 Tax-Free Reorganization. To the best
knowledge of Parent, neither Parent nor any of its
subsidiaries has taken any action or failed to take any action
which action or failure would jeopardize the qualification of
the Merger as a reorganization within the meaning of Section
368(a) of the Code.
3.16 Employee Benefit Plans.
(a) For purposes of this Agreement, the
following terms have the definitions given below:
"Controlled Group Liability" means any and all
liabilities under (i) Title IV of ERISA, (ii)
section 302 of ERISA, (iii) sections 412 and 4971 of
the Code, (iv) the continuation coverage
requirements of section 601 et seq. of ERISA and
section 4980B of the Code, and (v) corresponding or
similar provisions of foreign laws or regulations,
in each case other than pursuant to the Parent Plans
with respect to Parent, or Company Plans (as defined
below) with respect to the Company.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended, and the
regulations thereunder.
"ERISA Affiliate" means, with respect to any
entity, trade or business, any other entity, trade
or business that is a member of a group described in
Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b)(1) of ERISA that includes the first
entity, trade or business, or that is a member of
the same "controlled group" as the first entity,
trade or business pursuant to Section 4001(a)(14) of
ERISA.
"Parent Plans" means all employee benefit plans,
programs, policies, practices, and other
arrangements providing benefits to any employee or
former employee or beneficiary or dependent thereof,
whether or not written, and whether covering one
person or more than one person, sponsored or
maintained by Parent or any of its subsidiaries or
to which Parent or any of its subsidiaries
contributes or is obligated to contribute. Without
limiting the generality of the foregoing, the term
"Parent Plans" includes all employee welfare benefit
plans within the meaning of Section 3(1) of ERISA
and all employee pension benefit plans within the
meaning of Section 3(2) of ERISA.
(b) Section 3.16 to the Parent Disclosure
Schedule lists all Parent Plans. With respect to each Parent
Plan, Parent has made available to the Company a true, correct
and complete copy of: (i) each writing constituting a part of
such Parent Plan, including without limitation all plan
documents, benefit schedules, trust agreements, and insurance
contracts and other funding vehicles; (ii) the most recent
Annual Report (Form 5500 Series) and accompanying schedule, if
any; (iii) the current summary plan description, if any; (iv)
the most recent annual financial report, if any; and (v) the
most recent determination letter from the IRS, if any.
(c) The Internal Revenue Service has issued a
favorable determination letter with respect to each Parent
Plan that is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code (a "Qualified Parent
Plan") and there are no existing circumstances nor any events
that have occurred that could adversely affect the qualified
status of any Qualified Parent Plan or the related trust.
(d) All contributions required to be made to
any Parent Plan by Applicable Law or by any plan document or
other contractual undertaking, and all premiums due or payable
with respect to insurance policies funding any Parent Plan,
for any period through the date hereof have been timely made
or paid in full and through the Closing Date will be timely
made or paid in full or, to the extent not required to be made
or paid on or before the date hereof or the Closing Date, as
applicable, have been or will be fully reflected in Parent's
financial statements contained in the Parent SEC Documents.
(e) Parent and its subsidiaries have complied,
and are now in compliance, in all material respects, with all
provisions of ERISA, the Code and all laws and regulations
applicable to the Parent Plans. There is not now, and there
are no existing, circumstances that standing alone could give
rise to, any requirement for the posting of security with
respect to a Parent Plan or the imposition of any lien on the
assets of Parent or any of its subsidiaries under ERISA or the
Code.
(f) Except as set forth in Section 3.16(f) to
the Parent Disclosure Schedule, no Parent Plan is subject to
Title IV or Section 302 of ERISA or Section 412 or 4971 of the
Code. No Parent Plan is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA (a "Multiemployer
Plan") or a plan that has two or more contributing sponsors at
least two of whom are not under common control, within the
meaning of Section 4063 of ERISA (a "Multiple Employer Plan"),
nor has Parent or any of its subsidiaries or any of their
respective ERISA Affiliates, at any time within five years
before the date hereof, contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer
Plan.
(g) There does not now exist, and there are no
existing, circumstances that could result in, any Controlled
Group Liability that would be a liability of Parent or any of
its subsidiaries following the Closing, other than normal
funding responsibilities. Without limiting the generality of
the foregoing, neither Parent nor any of its subsidiaries nor
any of their respective ERISA Affiliates has engaged in any
transaction described in Section 4069 or Section 4204 of
ERISA.
(h) Except as set forth in Section 3.16(h) to
the Parent Disclosure Schedule and except for health
continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA, neither Parent nor any of its
subsidiaries has any liability for life, health, medical or
other welfare benefits to former employees or beneficiaries or
dependents thereof.
(i) Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated hereby will result in, cause the accelerated
vesting or delivery of, or increase the amount or value of,
any payment or benefit to any employee or director or former
employee or former director of Parent or any of its
subsidiaries, pursuant to a "change in control" or "change of
control" or otherwise. Without limiting the generality of the
foregoing and except as set forth in Section 3.16(i) to the
Parent Disclosure Schedule, no amount paid or payable by
Parent or any of its subsidiaries in connection with the
transactions contemplated hereby either solely as a result
thereof or as a result of such transactions in conjunction
with any other events will be an "excess parachute payment"
within the meaning of Section 280G of the Code.
(j) There are no pending or threatened claims
(other than claims for benefits in the ordinary course),
lawsuits or arbitrations which have been asserted or
instituted against the Parent Plans, any fiduciaries thereof
with respect to their duties to the Parent Plans or the assets
of any of the trusts under any of the Parent Plans which could
reasonably be expected to result in any material liability of
Parent or any of its subsidiaries to the Pension Benefit
Guaranty Corporation, the Department of Treasury, the
Department of Labor or any Multiemployer Plan.
3.17 Contracts. None of Parent, any of its
subsidiaries, or, to the knowledge of Parent, any other party
thereto is in violation of or in default in respect of, nor
has there occurred an event or condition which with the
passage of time or giving of notice (or both) would constitute
a default by Parent under, any contract, agreement, guarantee,
lease or executory commitment (each a "Contract") to which it
is a party, except such violations or defaults under such
Contracts which, in the aggregate, would not have a material
adverse effect on Parent.
3.18 Labor Relations. There is no unfair labor
practice complaint against Parent or any of its subsidiaries
pending before the NLRB and there is no labor strike, dispute,
slowdown or stoppage, or any union organizing campaign,
actually pending or, to the knowledge of Parent, threatened
against or involving Parent or any of its subsidiaries, except
for any such proceedings which would not have a material
adverse effect on Parent. Except as disclosed in the Parent
SEC Documents, neither Parent nor any of its subsidiaries is a
party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor
union or labor organization. To the knowledge of Parent,
there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made
or threatened involving employees of Parent or any of its
subsidiaries.
3.19 Permits. Each of Parent and its
subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders
(collectively, "Permits") necessary to own, lease and operate
its properties and to carry on its business as it is now being
conducted, except for any such Permits the failure of which to
possess, in the aggregate, would not reasonably be expected to
have a material adverse effect on Parent.
3.20 Environmental Matters.
(a) As used herein, the term "Environmental
Laws" means all applicable federal, state, local or foreign
laws relating to pollution or protection of human health or
the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to
emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, "Hazardous Materials")
into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous
Materials, as well as all applicable authorizations, codes,
decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved
thereunder to the extent applicable to the specific operations
of Parent or the Company, as applicable.
(b) Except as set forth in the Parent SEC
Documents filed with the Commission as of the date hereof,
there are, with respect to Parent, its subsidiaries or any
predecessor of the foregoing, no past or present violations of
Environmental Laws, releases of any materials into the
environment, actions, activities, circumstances, conditions,
events, incidents, or contractual obligations which may give
rise to any common law environmental liability or any
liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 or similar federal,
state, local or foreign laws, other than those which, in the
aggregate, would not reasonably be expected to have a material
adverse effect on Parent and none of Parent and its
subsidiaries has received any notice with respect to any of
the foregoing, nor is any Action pending or threatened in
connection with any of the foregoing that, if adversely
determined, could reasonably be expected to have a material
adverse effect on Parent.
(c) Except as set forth in the Parent SEC
Documents filed with the Commission as of the date hereof, no
Hazardous Materials are contained on or about any real
property currently owned, leased or used by Parent or any of
its subsidiaries and no Hazardous Materials were released on
or about any real property previously owned, leased or used by
Parent or any of its subsidiaries during the period the
property was so owned, leased or used, except in the normal
course of Parent's business, other than those which, in the
aggregate, would not reasonably be expected to have a material
adverse effect on Parent.
3.21 Company Stock Ownership. Except as set
forth in Section 3.21 to the Parent Disclosure Schedule,
neither Parent nor any of its "affiliates" or "associates"
"owns" (as each of such terms is defined in Section 203 of the
DGCL) any shares of Company Common Stock or other securities
convertible into Company Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce Parent and Sub to enter into this
Agreement, the Company hereby represents and warrants to
Parent and Sub that the statements contained in this Article
IV are true, correct and complete.
4.1 Organization and Standing. Each of the
Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its
state of incorporation with full power and authority to own,
lease, use and operate its properties and to conduct its
business as and where now owned, leased, used, operated and
conducted. Each of the Company and its subsidiaries is duly
qualified to do business and in good standing in each
jurisdiction in which the nature of the business conducted by
it or the property it owns, leases or operates makes such
qualification necessary, except where the failure to be so
qualified or in good standing in such jurisdiction would not
have a material adverse effect on the Company. The copies of
the Certificate of Incorporation and By-laws (or similar
organizational documents) of the Company and each of its
subsidiaries, which have previously been made available to
Parent, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement.
4.2 Subsidiaries. As of the date hereof,
other than immaterial interests, the Company does not own,
directly or indirectly, any equity or other ownership interest
in any corporation, partnership, joint venture or other entity
or enterprise, except as set forth in Section 4.2 to the
disclosure schedule (the "Company Disclosure Schedule")
delivered by the Company to Parent and dated the date hereof.
Section 4.2 to the Company Disclosure Schedule sets forth as
to each subsidiary of the Company: (i) its name and
jurisdiction of incorporation or organization, (ii) its
authorized capital stock or share capital and (iii) the number
of issued and outstanding shares of its capital stock or share
capital. Except as set forth in Section 4.2 of the Company
Disclosure Schedule, each of the outstanding shares of capital
stock of each of the Company's subsidiaries is duly
authorized, validly issued, fully paid and nonassessable, and
is owned, directly or indirectly, by the Company free and
clear of all liens, pledges, security interests, claims or
other encumbrances, other than liens imposed by law which
could not reasonably be expected to have, in the aggregate, a
material adverse effect on the Company. Other than as set
forth in Section 4.2 to the Company Disclosure Schedule, there
are no outstanding shares of capital stock or subscriptions,
options, warrants, puts, calls, agreements, understandings,
claims or other commitments or rights of any type relating to
the issuance, sale or transfer of any securities of any
subsidiary of the Company, nor are there outstanding any
securities which are convertible into or exchangeable for any
shares of capital stock of any subsidiary of the Company; and
no subsidiary of the Company has any obligation of any kind to
issue any additional securities or to pay for securities of
any subsidiary of the Company or any predecessor thereof. As
used in this Section 4.2, "capital stock" shall include
capital stock or other ownership interests having by their
terms ordinary voting power to elect directors or others
performing similar functions with respect to such entity.
4.3 Corporate Power and Authority. The
Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby, subject to the approval of the Merger and
the adoption and authorization of this Agreement by the
stockholders of the Company in accordance with the DGCL and
this Agreement. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly
approved by the Board of Directors of the Company. The Board
of Directors of the Company has directed that this Agreement
and the transactions contemplated hereby be submitted to the
Company Stockholders for adoption at a stockholders meeting
and, except for the adoption of this Agreement by the
affirmative vote of the holders of a majority of shares of
Company Common Stock in accordance with the Applicable Law, no
other corporate proceedings on the part of the Company are
necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
4.4 Capitalization of the Company. The
Company's authorized capital stock consists solely of (a)
20,000,000 shares of common stock, $0.01 par value per share
("Company Common Stock") and (b) 10,000,000 shares of
preferred stock, $.01 par value per share ("Company Preferred
Stock"), of which 1,000,000 are designated as "Series A Junior
Preferred Stock". As of August 16, 1996, (i) 13,307,251
shares of Company Common Stock were issued and outstanding,
(ii) 654,026 shares of Company Common Stock were issuable upon
the exercise or conversion of outstanding options, warrants or
convertible securities granted or issuable (on a contingent
basis or otherwise) by the Company, other than the rights (the
"Company Rights") issued under the Company Rights Agreement
(as defined below), (iii) no shares of Company Preferred Stock
were issued and outstanding, and (iv) 13,308 shares of "Series
A Junior Preferred Stock" were issuable upon exercise of the
Company Rights in accordance with the terms of the Company
Rights Agreement. Since August 16, 1996, the Company has not
issued any shares of its capital stock except upon the
exercise of such options, warrants or convertible securities.
Each outstanding share of Company capital stock is duly
authorized and validly issued, fully paid and nonassessable
and free of any preemptive rights. As of the date hereof,
other than as set forth above, in the Company SEC Documents
(as defined in Section 4.7) or in Section 4.4 to the Company
Disclosure Schedule, there are no outstanding shares of
capital stock or subscriptions, options, warrants, puts,
calls, agreements, understandings, claims or other commitments
or rights of any type relating to the issuance, sale or
transfer by the Company of any securities of the Company, nor
are there outstanding any securities which are convertible
into or exchangeable for any shares of capital stock of the
Company; and the Company has no obligation of any kind to
issue any additional securities or to pay for securities of
the Company or any predecessor. The Company has no
outstanding bonds, debentures, notes or other similar
obligations the holders of which have the right to vote
generally with holders of Company Common Stock.
4.5 Conflicts; Consents and Approvals.
Neither the execution and delivery of this Agreement by the
Company, nor the consummation of the transactions contemplated
hereby will:
(a) conflict with, or violate any provision of
the Certificate of Incorporation or By-laws (or any
similar organizational document) of the Company or any
subsidiary of the Company;
(b) violate, or conflict with, or result in a
breach of any provision of, or constitute a default (or
an event which, with the giving of notice, the passage of
time or otherwise, would constitute a default) under, or
entitle any party (with the giving of notice, the
passage of time or otherwise) to terminate, accelerate,
modify or call a default under, or result in the
termination, acceleration or cancellation of, or result
in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the
Company or any of its subsidiaries under, any of the
terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, contract,
undertaking, agreement, lease or other instrument or
obligation to which the Company or any of its
subsidiaries is a party or by which any of their
respective properties or assets may be bound;
(c) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the
Company or any of its subsidiaries or any of their
respective properties or assets; or
(d) require any action or consent or approval
of, or review by, or registration or filing by the
Company or any of its affiliates with any third party or
any Governmental Authority, other than (i) authorization
of the Merger and the transactions contemplated hereby by
Company Stockholders, (ii) actions required by the HSR
Act and (iii) registrations or other actions required
under federal and state securities laws as are
contemplated by this Agreement;
except for any of the foregoing that are set forth in
subsections (b), (c) or (d) of Section 4.5 of the Company
Disclosure Schedule and, in the case of (b), (c) and (d), for
any of the foregoing that would not, in the aggregate, have a
material adverse effect on the Company or that would not
prevent or delay the consummation of the transactions
contemplated hereby.
4.6 Absence of Certain Changes. Except as set
forth in the Company SEC Documents filed with the Commission
as of the date hereof, since March 29, 1996, (i) each of the
Company and its subsidiaries has conducted its business in the
ordinary course, consistent with past practice, (ii) no event
has occurred which has or which would reasonably be expected
to have, in the aggregate, a material adverse effect on the
Company (but, excluding for such purposes, events that are
generally applicable in Parent's and the Company's industry
and the United States economy), and (iii) neither the Company
nor any of its subsidiaries has taken any action which would
be prohibited by Section 5.3(a).
4.7 Company SEC Documents. Each of the
Company and its subsidiaries has timely filed with the
Commission all forms, reports, schedules, statements, exhibits
and other documents required to be filed by it since September
23, 1993 under the Exchange Act or the Securities Act (such
documents, as supplemented and amended since the time of
filing, collectively, the "Company SEC Documents"). The
Company SEC Documents, including, without limitation, any
financial statements or schedules included therein, at the
time filed (and, in the case of registration statements and
proxy statements, on the dates of effectiveness and the dates
of mailing, respectively) (a) did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading, and (b) complied in all
material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be. The
financial statements (including the related notes) of the
Company included in the Company SEC Documents were prepared in
accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto), and fairly
present (subject in the case of unaudited statements to
normal, recurring and year-end audit adjustments) in all
material respects the consolidated financial position of the
Company as of the dates thereof and the consolidated results
of its operations and cash flows for the periods then ended.
4.8 Taxes. Except as set forth in the Company
SEC Documents or in Section 4.8 to the Company Disclosure
Schedule, (i) each of the Company and its subsidiaries has
duly filed all federal and state income tax returns and all
other material tax returns (including, but not limited to,
those filed on a consolidated, combined or unitary basis)
required to have been filed by the Company or any of its
subsidiaries prior to the date hereof and will file, on or
before the Effective Time, all such returns which are required
to be filed after the date hereof and on or before the
Effective Time, (ii) all of the foregoing returns and reports
are true and correct in all material respects, and each of the
Company and its subsidiaries has paid or, prior to the
Effective Time, will pay all taxes required to be paid in
respect of the periods covered by such returns or reports to
any federal, state, foreign, local or other taxing authority,
(iii) each of the Company and its subsidiaries has paid or
made adequate provision (in accordance with generally accepted
accounting principles) in the financial statements of the
Company included in the Company SEC Documents for all taxes
payable in respect of all periods ending on or prior to
December 31, 1995, (iv) neither the Company nor any of its
subsidiaries will have any material liability for any taxes in
excess of the amounts so paid or reserves so established and
neither the Company nor any of its subsidiaries is delinquent
in the payment of any material tax, assessment or governmental
charge and none of them has requested any extension of time
within which to file any returns in respect of any fiscal year
which have not since been filed, (v) no deficiencies for any
tax, assessment or governmental charge have been proposed,
asserted or assessed in writing (tentatively or definitely),
in each case, by any taxing authority, against the Company or
any of its subsidiaries for which there are not adequate
reserves in its financial statements (in accordance with
generally accepted accounting principles), (vi) as of the date
of this Agreement, there are no extensions or waivers or
pending requests for extensions or waivers of the time to
assess or collect any such tax, (vii) the federal income tax
returns of the Company and its subsidiaries have been audited
by the Internal Revenue Service through the fiscal year ending
March 31, 1989, (viii) neither the Company nor any of its
subsidiaries is or has been a party to any tax sharing
agreement with any corporation which is not currently a member
of the affiliated group of which the Company is currently a
member (other than RBPI Holding Corporation and its
subsidiaries), (ix) there are no liens for taxes on any assets
of the Company or any of its subsidiaries (other than
statutory liens for taxes not yet due or liens for which
adequate reserves have been established in its financial
statements in accordance with generally accepted accounting
principles), (x) the Company and its subsidiaries have
withheld and paid (and until the Effective Time will withhold
and pay) all income, social security, unemployment, and all
other material payroll taxes required to be withheld
(including, without limitation, pursuant to Sections 1441 and
1442 of the Code or similar provisions under foreign law) and
paid in connection with amounts paid to any employee,
independent contractor, stockholder, creditor or other third
party, and (xi) the Company has not filed an election under
Section 341(f) of the Code to be treated as a consenting
corporation.
4.9 Compliance with Law. Each of the Company
and its subsidiaries is in compliance with, and at all times
since December 31, 1992 has been in compliance with, all
Applicable Law relating to it or its business or properties,
except for any such failures to be in compliance therewith
which, in the aggregate, would not have a material adverse
effect on the Company.
4.10 Registration Statement. None of the
information provided by the Company or any of its subsidiaries
for inclusion in the Registration Statement at the time it
becomes effective or, in the case of the Proxy Statement, at
the date of mailing, will contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading. Each of the Registration Statement and
Proxy Statement, except for such portions thereof that relate
only to Parent and its subsidiaries, will comply in all
material respects with the provisions of the Securities Act
and the Exchange Act.
4.11 Litigation. Except as set forth in the
Company SEC Documents, there is no Action pending or, to the
knowledge of the Company, threatened against the Company or
any of its subsidiaries which, in the aggregate, could
reasonably be expected to have a material adverse effect on
the Company. Neither the Company nor any of its subsidiaries
is subject to any outstanding order, writ, injunction or
decree which, in the aggregate, could reasonably be expected
to have a material adverse effect on the Company.
4.12 Brokerage and Finder's Fees. Except for
the Company's obligation to Dillon, Read & Co. Inc. ("Dillon
Read") (a copy of the written agreement relating to such
obligation having previously been provided to Parent), the
Company has not incurred and will not incur, directly or
indirectly, any brokerage, finder's or similar fee in
connection with the transactions contemplated by this
Agreement. Other than the foregoing obligation to Dillon
Read, the Company is not aware of any claim for payment of any
finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiation of this Agreement
or in connection with the transactions contemplated hereby.
4.13 Opinion of Financial Advisor. The Company
has received the opinion of Dillon Read to the effect that, as
of the date hereof, the Exchange Ratio is fair to the Company
Stockholders from a financial point of view.
4.14 Accounting Matters. To the best knowledge
of the Company, neither the Company nor any of its affiliates
has taken or agreed to take any action that (without giving
effect to any actions taken or agreed to be taken by Parent or
any of its affiliates) would prevent Parent from accounting
for the business combination to be effected by the Merger as a
pooling-of-interests for financial reporting purposes in
accordance with Accounting Principles Board Opinion No. 16,
the interpretative releases issued pursuant thereto, and the
pronouncements of the Commission thereon.
4.15 Tax-Free Reorganization. To the best
knowledge of the Company, neither the Company nor any of its
subsidiaries has taken any action or failed to take any action
which action or failure would jeopardize the qualification of
the Merger as a reorganization within the meaning of Section
368(a) of the Code.
4.16 Employee Benefit Plans.
(a) For purposes of this Agreement, "Company
Plans" means all employee benefit plans, programs, policies,
practices, and other arrangements providing benefits to any
employee or former employee or beneficiary or dependent
thereof, whether or not written, and whether covering one
person or more than one person, sponsored or maintained by the
Company or any of its subsidiaries or to which the Company or
any of its subsidiaries contributes or is obligated to
contribute. Without limiting the generality of the foregoing,
the term "Company Plans" includes all employee welfare benefit
plans within the meaning of Section 3(1) of ERISA and all
employee pension benefit plans within the meaning of Section
3(2) of ERISA.
(b) Section 4.16 to the Company Disclosure
Schedule lists all Company Plans. With respect to each
Company Plan, the Company has made available to Parent a true,
correct and complete copy of: (i) each writing constituting a
part of such Company Plan, including without limitation all
plan documents, benefit schedules, trust agreements, and
insurance contracts and other funding vehicles; (ii) the most
recent Annual Report (Form 5500 Series) and accompanying
schedule, if any; (iii) the current summary plan description,
if any; (iv) the most recent annual financial report, if any;
and (v) the most recent determination letter from the IRS, if
any.
(c) The Internal Revenue Service has issued a
favorable determination letter with respect to each Company
Plan that is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code (a "Qualified Company
Plan") and there are no existing circumstances nor any events
that have occurred that could adversely affect the qualified
status of any Qualified Company Plan or the related trust.
(d) All contributions required to be made to
any Company Plan by Applicable Law or by any plan document or
other contractual undertaking, and all premiums due or payable
with respect to insurance policies funding any Company Plan,
for any period through the date hereof have been timely made
or paid in full and through the Closing Date will be timely
made or paid in full or, to the extent not required to be made
or paid on or before the date hereof or the Closing Date, as
applicable, have been or will be fully reflected in the
Company's financial statements contained in the Company SEC
Documents.
(e) The Company and its subsidiaries have
complied, and are now in compliance, in all material respects,
with all provisions of ERISA, the Code and all laws and
regulations applicable to the Company Plans. There is not
now, and there are no existing, circumstances that standing
alone could give rise to, any requirement for the posting of
security with respect to a Company Plan or the imposition of
any lien on the assets of the Company or any of its
subsidiaries under ERISA or the Code.
(f) Except as set forth in Section 4.16(f) to
the Company Disclosure Schedule, no Company Plan is subject to
Title IV or Section 302 of ERISA or Section 412 or 4971 of the
Code. No Company Plan is a Multiemployer Plan (as defined in
Section 3.16) or a Multiple Employer Plan (as defined in
Section 3.16), nor has the Company or any of its subsidiaries
or any of their respective ERISA Affiliates, at any time
within five years before the date hereof, contributed to or
been obligated to contribute to any Multiemployer Plan or
Multiple Employer Plan.
(g) There does not now exist, and there are no
existing, circumstances that could result in, any Controlled
Group Liability that would be a liability of the Company or
any of its subsidiaries following the Closing, other than
normal funding responsibilities. Without limiting the
generality of the foregoing, neither the Company nor any of
its subsidiaries nor any of their respective ERISA Affiliates
has engaged in any transaction described in Section 4069 or
Section 4204 of ERISA.
(h) Except as set forth in Section 4.16(h) to
the Company Disclosure Schedule and except for health
continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA, neither the Company nor any of
its subsidiaries has any liability for life, health, medical
or other welfare benefits to former employees or beneficiaries
or dependents thereof.
(i) Except as set forth in Section 4.16(i) to
the Company Disclosure Schedule, neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in, cause the
accelerated vesting or delivery of, or increase the amount or
value of, any payment or benefit to any employee or director
or former employee or former director of the Company or any of
its subsidiaries, pursuant to a "change in control" or "change
of control" or otherwise. Without limiting the generality of
the foregoing and except as set forth in Section 4.16(i) to
the Company Disclosure Schedule, no amount paid or payable by
the Company or any of its subsidiaries in connection with the
transactions contemplated hereby either solely as a result
thereof or as a result of such transactions in conjunction
with any other events will be an "excess parachute payment"
within the meaning of Section 280G of the Code.
(j) There are no pending or threatened claims
(other than claims for benefits in the ordinary course),
lawsuits or arbitrations which have been asserted or
instituted against the Company Plans, any fiduciaries thereof
with respect to their duties to the Company Plans or the
assets of any of the trusts under any of the Company Plans
which could reasonably be expected to result in any material
liability of the Company or any of its subsidiaries to the
Pension Benefit Guaranty Corporation, the Department of
Treasury, the Department of Labor or any Multiemployer Plan.
4.17 Contracts. Except as set forth in Section
4.17 of the Company Disclosure Schedule, none of the Company,
any of its subsidiaries, or, to the knowledge of the Company,
any other party thereto is in violation of or in default in
respect of, nor has there occurred an event or condition which
with the passage of time or giving of notice (or both) would
constitute a default by the Company under, any Contract to
which it is a party, except such violations or defaults under
such Contracts which, in the aggregate, would not have a
material adverse effect on the Company.
4.18 Labor Relations. There is no unfair labor
practice complaint against the Company or any of its
subsidiaries pending before the NLRB and there is no labor
strike, dispute, slowdown or stoppage, or any union organizing
campaign, actually pending or, to the knowledge of the
Company, threatened against or involving the Company or any of
its subsidiaries, except for any such proceedings which would
not have a material adverse effect on the Company. Except as
disclosed in the Company SEC Documents, neither the Company
nor any of its subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization. To
the knowledge of the Company, there are no organizational
efforts with respect to the formation of a collective
bargaining unit presently being made or threatened involving
employees of the Company or any of its subsidiaries.
4.19 Permits. Each of the Company and its
subsidiaries is in possession of all Permits necessary to own,
lease and operate its properties and to carry on its business
as it is now being conducted, except for any such Permits the
failure of which to possess, in the aggregate, would not
reasonably be expected to have a material adverse effect on
the Company.
4.20 Environmental Matters.
(a) Except as set forth in the Company SEC
Documents filed with the Commission as of the date hereof,
there are, with respect to the Company, its subsidiaries or
any predecessor of the foregoing, no past or present
violations of Environmental Laws, releases of any materials
into the environment, actions, activities, circumstances,
conditions, events, incidents, or contractual obligations
which may give rise to any common law environmental liability
or any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar
federal, state, local or foreign laws, other than those which,
in the aggregate, would not reasonably be expected to have a
material adverse effect on the Company and its subsidiaries,
taken as a whole , and none of the Company and its
subsidiaries has received any notice with respect to any of
the foregoing, nor is any Action pending or threatened in
connection with any of the foregoing that, if adversely
determined, could reasonably be expected to have a material
adverse effect on the Company.
(b) Except as set forth in Section 4.20 to the
Company Disclosure Schedule or set forth in the Company SEC
Documents filed with the Commission as of the date hereof, no
Hazardous Materials are contained on or about any real
property currently owned, leased or used by the Company or any
of its subsidiaries and no Hazardous Materials were released
on or about any real property previously owned, leased or used
by the Company or any of its subsidiaries during the period
the property was so owned, leased or used, except in the
normal course of the Company's business, other than those
which, in the aggregate, would not reasonably be expected to
have a material adverse effect on the Company.
4.21 Parent Stock Ownership. Except as set
forth in Section 4.21 to the Company Disclosure Schedule,
neither the Company nor any of its "affiliates" or
"associates" "owns" (as each of such terms is defined in
Section 203 of the DGCL) any shares of Parent Common Stock or
other securities convertible into Parent Common Stock.
4.22 DGCL Section 203 and State Takeover Laws.
Assuming the accuracy of the representations and warranties
set forth in Section 3.21, prior to the date hereof, the Board
of Directors of the Company has taken all action necessary to
exempt under or make not subject to Section 203 of the DGCL:
(i) the execution of this Agreement, (ii) the Merger and (iii)
the transactions contemplated hereby.
4.23 Company Rights Agreement. The Company has
taken all action necessary, if any, in respect of the Rights
Agreement dated as of July 26, 1994, between the Company and
Chemical Mellon Shareholder Services, LLC (the "Company Rights
Agreement"), so as to provide that none of Parent and its
affiliates will become an "Acquiring Person" and that no
"Stock Acquisition Date" or "Distribution Date" (as such terms
are defined in the Company Rights Agreement) will occur as a
result of the execution of this Agreement or the consummation
of the Merger pursuant to this Agreement.
ARTICLE V
COVENANTS OF THE PARTIES
The parties hereto agree as follows with respect to
the period from and after the execution of this Agreement.
5.1 Mutual Covenants.
(a) General. Each of the parties shall use
its reasonable efforts to take all action and to do all things
necessary, proper or advisable to consummate the Merger and
the transactions contemplated by this Agreement as promptly as
possible (including, without limitation, using its reasonable
efforts to cause the conditions set forth in Article VI for
which they are responsible to be satisfied as soon as
reasonably practicable and to prepare, execute and deliver
such further instruments and take or cause to be taken such
other and further action as any other party hereto shall
reasonably request).
(b) HSR Act. As soon as practicable, and in
any event no later than ten business days after the date
hereof, each of the parties hereto will file any Notification
and Report Forms and related material required to be filed by
it with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the
HSR Act with respect to the Merger, will use its reasonable
efforts to obtain an early termination of the applicable
waiting period, and shall promptly make any further filings
pursuant thereto that may be necessary, proper or advisable.
(c) Other Governmental Matters. Each of the
parties shall use its reasonable efforts to take any
additional action that may be necessary, proper or advisable
in connection with any other notices to, filings with, and
authorizations, consents and approvals of any Governmental
Authority that it may be required to give, make or obtain.
(d) Pooling-of-Interests. Each of the parties
shall use its reasonable efforts to cause the Merger to
qualify for pooling-of-interests accounting treatment for
financial reporting purposes.
(e) Tax-Free Treatment. Each of the parties
shall use its reasonable efforts to cause the Merger to
constitute a tax-free "reorganization" under Section 368(a) of
the Code and to permit Weil, Gotshal & Manges LLP to issue its
opinion provided for in Section 6.2(c).
(f) Public Announcements. Unless otherwise
required by Applicable Law or requirements of the NYSE or The
Nasdaq Stock Market, at all times prior to the earlier of the
Effective Time or termination of this Agreement pursuant to
Section 7.1, Parent and the Company shall consult with each
other before issuing any press release with respect to the
Merger and shall not issue any such press release prior to
such consultation.
(g) Access. Subject to Applicable Law, from
and after the date of this Agreement until the Effective Time
(or the termination of this Agreement), Parent and the Company
shall permit representatives of the other to have reasonable
access to the other's officers, employees, premises,
properties, books, records, contracts, tax records and
documents. Information obtained by Parent and the Company
pursuant to this Section 5.1(g) shall be subject to the
provisions of the confidentiality agreement between them dated
August 1, 1996 (the "Confidentiality Agreement"), which
agreement remains in full force and effect.
(h) Stockholders Meetings. Each of Parent and
the Company shall duly call, give notice of, convene and hold
a meeting of its stockholders, to be held as promptly as
practicable following the date hereof for the purpose of
obtaining the requisite stockholder approvals and adoptions in
connection with this Agreement, the Share Issuance and the
Merger, and each shall use reasonable efforts to cause such
meetings to occur on the same date. Subject to its fiduciary
duties under Applicable Law as advised by counsel, the Board
of Directors of each of Parent and the Company will (i)
recommend that its stockholders approve such matters and (ii)
use reasonable efforts to obtain any necessary approvals by
its stockholders.
(i) Preparation of Proxy Statement and
Registration Statement. Each of Parent and the Company shall
cooperate to, and shall, as soon as is reasonably practicable,
prepare and file the Proxy Statement with the Commission on a
confidential basis. Each of Parent and the Company shall
cooperate to prepare and file, and Parent shall prepare and
file, the Registration Statement with the Commission as soon
as is reasonably practicable following clearance of the Proxy
Statement by the Commission and each of Parent and the Company
shall cooperate to, and shall, use all reasonable efforts to
have the Registration Statement declared effective by the
Commission as promptly as practicable and to maintain the
effectiveness of the Registration Statement through the
Effective Time. Parent shall advise the Company promptly
after it receives notice of (i) the Registration Statement
being declared effective or any supplement or amendment
thereto being filed with the Commission, (ii) the issuance of
any stop order in respect of the Registration Statement, and
(iii) the receipt of any correspondence, comments or requests
from the Commission in respect of the Registration Statement.
If at any time prior to the Effective Time, any information
pertaining to the Company contained in or omitted from the
Registration Statement makes statements contained in the
Registration Statement false or misleading, the Company shall
promptly so inform Parent and provide Parent with the
information necessary to make such statements contained
therein not false and misleading. Each of Parent and Company
shall also cooperate to, and shall, take such other reasonable
actions (other than qualifying to do business in any
jurisdiction in which it is not so qualified) required to be
taken under any applicable state securities laws in connection
with the Share Issuance.
(j) Notification of Certain Matters. Each of
Parent and the Company shall give prompt notice to the other
party of (i) the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any
representation or warranty contained in this Agreement made by
such party to be untrue or inaccurate at or prior to the
Effective Time and (ii) any material failure of such party to
comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this
Section 5.1(j) shall not limit or otherwise affect the
remedies available hereunder to any party.
(k) Affiliates. Each of Parent and the
Company shall use its reasonable efforts to cause each such
person who may be at the Effective Time or was on the date
hereof an "affiliate" of such party within the meaning of Rule
145 under the Securities Act, to execute and deliver to Parent
no less than 35 days prior to the date of the meeting of such
party's stockholders written undertakings in the form attached
hereto as Exhibit 5.1(k).
5.2 Covenants of Parent.
(a) Conduct of Parent's Operations. During
the period from the date of this Agreement to the Effective
Time, Parent shall, and shall cause its subsidiaries to,
conduct its operations in the ordinary course except as
expressly contemplated by this Agreement and the transactions
contemplated hereby and shall use its reasonable efforts to
maintain and preserve its business organization and its
material rights and franchises and to retain the services of
its officers and key employees and maintain relationships with
customers, suppliers and other third parties to the end that
their goodwill and ongoing business shall not be impaired in
any material respect. Without limiting the generality of the
foregoing, during the period from the date of this Agreement
to the Effective Time or the earlier termination of this
Agreement pursuant to Section 7.1, Parent shall not, and with
respect to clauses (i) and (ii) below, Sub shall not, and with
respect to clauses (iii) and (iv) below, Parent shall cause
each of its subsidiaries to not, except as otherwise expressly
contemplated by this Agreement and the transactions
contemplated hereby, without the prior written consent of the
Company:
(i) do or effect any of the following actions with
respect to its securities: (A) adjust, split, combine or
reclassify its capital stock, or (B) make, declare or pay
any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any of
its securities (except in connection with the use of
shares of capital stock of Parent to pay the exercise
price or tax withholding in connection with stock-based
employee benefit plans of Parent);
(ii) make or propose any change in its Certificate
of Incorporation, as amended, or By-laws, as amended, or
other organizational documents;
(iii) subject to the limitations of clause (iv)
below, merge or consolidate with any other person or
acquire a material amount of assets or capital stock of
any other person, that would involve, in any case, the
payment of more than $100,000,000 or the issuance of more
than 10% of the outstanding Parent Common Stock on the
date hereof or, in the aggregate, the payment of more
than $200,000,000 or the issuance of more than 20% of the
outstanding Parent Common Stock on the date hereof, other
than in connection with this Agreement and the
transactions contemplated hereby;
(iv) conduct its business in a manner or take, or
cause to be taken, any other action that would or might
reasonably be expected to prevent or materially delay
Parent or Sub from consummating the transactions
contemplated by this Agreement (regardless of whether
such action would otherwise be permitted or not
prohibited hereunder), including without limitation, any
action that may materially limit or delay the ability of
Parent or Sub to consummate the transactions contemplated
by this Agreement as a result of antitrust or securities
laws or other regulatory concerns; or
(v) agree to take any action prohibited by the
foregoing.
(b) Indemnification; Insurance. (i) From and after
the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, indemnify and hold harmless to the
fullest extent permitted under Applicable Law each person who
is now, or has been at any time prior to the date hereof, an
officer, director, employee, trustee or agent of the Company
(or any subsidiary or division thereof), including, without
limitation, each person controlling any of the foregoing
persons (individually, an "Indemnified Party" and
collectively, the "Indemnified Parties"), against all losses,
claims, damages, liabilities, costs or expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid
in settlement in connection with any claim, action, suit,
proceeding or investigation (and shall pay expenses for legal
fees in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the fullest extent
permitted under Delaware law, provided that the Indemnified
Party agrees that, in the event that it is ultimately
determined that such Indemnified Party is not entitled to the
payment of such expenses, for any reason, such Indemnified
Party shall reimburse Parent or the Surviving Corporation for
such expenses paid in advance) arising out of or pertaining to
acts or omissions, or alleged acts or omissions, by them in
their capacities as such, whether commenced, asserted or
claimed before the Effective Time and including, without
limitation, liabilities arising under the Securities Act, the
Exchange Act and state corporation laws in connection with the
Merger; provided that the Surviving Corporation shall pay for
only one law firm (in addition to local counsel) for all
Indemnified Parties, unless the use of one law firm for all
Indemnified Parties would present such law firm with a
conflict of interest. Parent shall cause the Surviving
Corporation to keep in effect the Company's current provisions
in its Certificate of Incorporation and By-laws providing for
exculpation of director and officer liability and
indemnification of the Indemnified Parties to the fullest
extent permitted under the DGCL. In the event of any actual
or threatened claim, action, suit, proceeding or investigation
in respect of such acts or omissions, Parent shall cause the
Surviving Corporation to cooperate in the defense of any such
matter; provided, however, that the Surviving Corporation
shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably
withheld). Parent shall, and shall cause the Surviving
Corporation to, maintain the Company's existing
indemnification provisions.
(ii) From and after the Effective Time,
Parent shall, or shall cause the Surviving Corporation to,
maintain in effect for not less than 6 years, the current
policies of directors' and officers' liability insurance
maintained by the Company; provided that Parent may substitute
therefor policies of at least the same coverage and amounts
containing terms and conditions that are no less advantageous
in any material respect to the Indemnified Parties.
(c) Consulting Agreement. Simultaneous herewith,
Parent is entering into a consulting agreement with Thomas W.
Sturgess in the form of Exhibit 5.2(c).
(d) Listing Application. Parent shall, as soon as
practicable following the date hereof, prepare and submit to
the NYSE a subsequent listing application covering the shares
of Parent Common Stock issuable in the Merger, and shall use
its reasonable efforts to obtain, prior to the Effective Time,
approval for the listing of such shares of Parent Common
Stock, subject to official notice of issuance.
(e) Directors of Parent. Immediately after the
Effective Time, Parent will take such action as may be
necessary to create two additional seats on the Board of
Directors of Parent and to cause Thomas W. Sturgess and one of
the individuals set forth in Section 5.2(e) to the Company
Disclosure Schedule, as selected by Parent (Mr. Sturgess and
such individual initially selected by Parent being referred to
herein as the "New Members") to be elected to the Board of
Directors of Parent. For a period of two years following the
Effective Time, Parent shall take, or cause to be taken, all
action necessary to nominate the New Members for election to
the Board of Directors of Parent and, in accordance with its
normal solicitation efforts, solicit proxies for their
election to such Board of Directors.
(f) Employee Benefits. (i) Parent intends that,
until at least December 1, 1997, it will or will cause the
Surviving Corporation to, honor and maintain in effect the
Company Plans (other than those under which the participants'
interests are based in whole or in part upon Company Common
Stock or the respective market price thereof) substantially in
the form as of the date hereof, with such revisions or
amendments as may be required by Applicable Law. Parent shall
take, and shall cause the Surviving Corporation to take, any
and all actions necessary to amend the Company Plans as of the
Effective Time to remove or modify all provisions therefrom
which provide benefits which are based in whole or in part
upon Company Common Stock or the respective market price
thereof.
(ii) The parties hereto each acknowledge and
agree that the transactions contemplated by this Agreement
shall constitute a "Change of Control," a "Change in Control"
or any other term with a similar intended effect, and a
"Retirement" with respect to "Outside Director Participants"
(as those two terms are defined in the Company's 1993 Stock
Option Plan), for purposes of the plans, agreements and
arrangements listed in Section 5.2(f)(ii) of the Company
Disclosure Schedule, and Parent shall, and shall cause the
Surviving Corporation to, honor the terms of such plans,
agreements and arrangements.
(iii) In the event that Phil Surles, Mike
Garvin, Merle Miller or any of up to 40 corporate headquarters
employees of the Company or any of its subsidiaries listed on
a schedule to be delivered within two days from the date
hereof, which schedule shall be added to and become part of
Section 5.2(f)(iii) of the Company Disclosure Schedule, is
terminated by the Surviving Corporation for any reason other
than "cause" within six months following the Effective Time,
Parent shall, or shall cause the Surviving Corporation to,
provide such individual with the severance benefits set forth
in Section 5.2(f)(iii) of the Company Disclosure Schedule.
For purposes of this Section 5.2(f)(iii), "cause" shall mean
(A) the engaging in willful or grossly negligent misconduct
injurious to the Company, (B) the embezzlement or
misappropriation of funds or property of the Company or the
conviction of a felony or the entrance of a plea of guilty or
nolo contendere to a felony, (C) the use of illegal drugs, or
(D) the failure or refusal to substantially perform his or her
employment related duties.
5.3 Covenants of the Company.
(a) Conduct of the Company's Operations. During
the period from the date of this Agreement to the Effective
Time, the Company shall, and shall cause its subsidiaries to,
conduct its operations in the ordinary course except as
expressly contemplated by this Agreement and the transactions
contemplated hereby and shall use its reasonable efforts to
maintain and preserve its business organization and its
material rights and franchises and to retain the services of
its officers and key employees and maintain relationships with
customers, suppliers and other third parties to the end that
their goodwill and ongoing business shall not be impaired in
any material respect. Without limiting the generality of the
foregoing, during the period from the date of this Agreement
to the Effective Time or the earlier termination of this
Agreement pursuant to Section 7.1, the Company shall not, and
shall cause its subsidiaries to not, except as otherwise
expressly contemplated by this Agreement and the transactions
contemplated hereby, without the prior written consent of
Parent:
(i) do or effect any of the following actions with
respect to its securities: (A) adjust, split, combine or
reclassify its capital stock, (B) make, declare or pay
any dividend or distribution on, or directly or
indirectly redeem, purchase or otherwise acquire any of
its securities (except in connection with the use of
shares of capital stock of the Company to pay the
exercise price or tax withholding in connection with
stock-based employee benefit plans of the Company or any
of its subsidiaries), (C) grant any person any right or
option to acquire any of its securities, (D) issue,
deliver or sell or agree to issue, deliver or sell any
additional securities (except pursuant to the exercise of
outstanding options to purchase Company Common Stock) or
amend the terms of any of its securities, or (E) enter
into any agreement, understanding or arrangement with
respect to the sale or voting of its capital stock;
(ii) sell, transfer, lease, pledge, mortgage,
encumber or otherwise dispose of any of its property or
assets which are material, in the aggregate, other than
in the ordinary course of business consistent with past
practice;
(iii) make or propose any changes in its
Certificate of Incorporation, as amended, or By-laws, as
amended, or other organizational documents;
(iv) merge or consolidate with any other person or
acquire a material amount of assets or capital stock of
any other person or enter into any confidentiality
agreement with any person, other than in connection with
this Agreement and the transactions contemplated hereby;
(v) incur, create, assume or otherwise become
liable for indebtedness for borrowed money, other than in
the ordinary course of business consistent with past
practice, or assume, guarantee, endorse or otherwise as
an accommodation become responsible or liable for
obligations of any other individual, corporation or other
entity, other than in the ordinary course of business
consistent with past practice;
(vi) enter into or modify any employment, severance,
termination or similar agreements or arrangements with,
or grant any bonuses, salary increases, severance or
termination pay to, any officer, director, consultant or
employee other than salary increases and bonuses granted
in the ordinary course of business consistent with past
practice, or otherwise increase the compensation or
benefits provided to any officer, director, consultant or
employee except as may be required by Applicable Law,
this Agreement, any applicable collective bargaining
agreement or a binding written contract in effect on the
date of this Agreement, or adopt any new employee benefit
plan, including the proposed 1996 Long Term Incentive
Plan (or grant any options or awards thereunder);
(vii) change its method of doing business or
change any method or principle of accounting in a manner
that is inconsistent with past practice;
(viii) settle any Actions, whether now pending or
hereafter made or brought involving, in any Action or
related series of Actions, an amount in excess of
$200,000;
(ix) modify, amend or terminate, or waive, release
or assign any material rights or claims with respect to,
any material Contract to which the Company is a party or
any confidentiality agreement to which the Company is a
party;
(x) incur or commit to any capital expenditures,
obligations or liabilities in respect thereof, other than
in the ordinary course of business consistent with past
practice;
(xi) conduct its business in a manner or take, or
cause to be taken, any other action that would or might
reasonably be expected to prevent or materially delay the
Company from consummating the transactions contemplated
by this Agreement (regardless of whether such action
would otherwise be permitted or not prohibited
hereunder), including without limitation, any action that
may materially limit or delay the ability of the Company
to consummate the transactions contemplated by this
Agreement as a result of antitrust or securities laws or
other regulatory concerns;
(xii) take any action to exempt under or make
not subject to Section 203 of the DGCL, any person or
entity (other than Parent or its subsidiaries) or any
action taken thereby, which person, entity or action
would have otherwise been subject to the restrictive
provisions thereof and not exempt therefrom; or
(xiii) agree to take any action prohibited by the
foregoing.
(b) No Solicitation. The Company agrees that,
during the term of this Agreement, it shall not, and shall not
authorize or permit any of its subsidiaries or any of its or
its subsidiaries' directors, officers, employees, agents or
representatives, directly or indirectly, to (i) solicit,
initiate, encourage or facilitate, or furnish or disclose non-
public information in furtherance of, any inquiries or the
making of any proposal with respect to any recapitalization,
merger, consolidation or other business combination involving
the Company, or acquisition of any capital stock (except in
connection with the exercise of options, as permitted in
Section 5.3(a)) or any material portion of the assets of the
Company (except for acquisition of assets in the ordinary
course of business consistent with past practice), or any
combination of the foregoing (a "Company Competing
Transaction"), (ii) negotiate, explore or otherwise engage in
discussions with any person (other than Parent, Sub or their
respective directors, officers, employees, agents and
representatives) with respect to any Company Competing
Transaction or (iii) enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to
consummate the Merger or any other transactions contemplated
by this Agreement; provided that the Company may (x) furnish
information (subject to a confidentiality agreement in
reasonably customary form) to, and negotiate or otherwise
engage in discussions with, any party who delivers a written
proposal for a Company Competing Transaction if and so long as
the Board of Directors of the Company determines in good
faith, based upon advice of its outside legal counsel, that
failing to take such action would reasonably be expected to
constitute a breach of the fiduciary duties of the Board and
(y) take a position with respect to the Merger or a Company
Competing Transaction, or amend or withdraw such position, in
compliance with Rule 14d-9 or Rule 14e-2 promulgated under the
Exchange Act with regard to a Company Competing Transaction.
The Company will immediately cease all existing activities,
discussions and negotiations with any parties conducted
heretofore with respect to any Company Competing Transaction.
From and after the execution of this Agreement, the Company
shall immediately advise Parent orally, to be followed by a
confirmation in writing, of the receipt, directly or
indirectly, of any inquiries, discussions, negotiations, or
proposals relating to a Company Competing Transaction
(including the status and a summary of the general terms
thereof) and promptly furnish to Parent a copy of any such
proposal or inquiry in addition to any information provided to
or by any third party relating thereto.
ARTICLE VI
CONDITIONS
6.1 Mutual Conditions. The obligations of the
parties hereto to consummate the Merger shall be subject to
fulfillment of the following conditions:
(a) No temporary restraining order,
preliminary or permanent injunction or other order or
decree which prevents the consummation of the Merger
shall have been issued and remain in effect, and no
statute, rule or regulation shall have been enacted by
any Governmental Authority which prevents the
consummation of the Merger.
(b) All waiting periods applicable to the
consummation of the Merger under the HSR Act shall have
expired or been terminated and all other material
consents, approvals, permits or authorizations required
to be obtained prior to the Effective Time from any
Governmental Authority in connection with the execution
and delivery of this Agreement and the consummation of
the transactions contemplated hereby shall have been
obtained.
(c) This Agreement and the transactions
contemplated hereby shall have been approved and adopted
by the affirmative vote of a majority of the outstanding
shares of Company Common Stock entitled to vote thereon,
in accordance with Applicable Law, at the Company's
stockholder meeting, and the Share Issuance shall have
been approved by the Parent Stockholders in accordance
with the rules of NYSE.
(d) The Registration Statement shall have
become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for
that purpose shall have been initiated or, to the
knowledge of Parent or the Company, threatened by the SEC
or any other Governmental Entity.
(e) No Action shall be instituted by any
Governmental Authority which seeks to prevent
consummation of the Merger or which seeks material
damages in connection with the transactions contemplated
hereby which continues to be outstanding.
(f) The shares of Parent Common Stock to be
issued in the Merger shall have been authorized for
listing on the NYSE, subject to official notice of
issuance.
(g) All consents, waivers and approvals of
third parties required in connection with the
transactions contemplated hereby shall have been
obtained, except where the failure to obtain such
consents, waivers or approvals, in the aggregate, would
not reasonably be expected to result in a material
adverse effect on Parent or the Company, as the case may
be, provided that a party which has not used all
reasonable efforts to obtain a consent, approval or
waiver may not assert this condition with respect to such
consent, approval or waiver.
6.2 Conditions to Obligations of the Company.
The obligations of the Company to consummate the Merger and
the transactions contemplated hereby shall be subject to the
fulfillment of the following conditions unless waived by the
Company:
(a) The representations and warranties of each
of Parent and Sub shall be true and correct on the date
hereof and on and as of the Closing Date as though made
on and as of the Closing Date (except for representations
and warranties made as of a specified date, which need be
true and correct only as of the specified date), other
than such breaches of representations and warranties
which would not have or which would not be reasonably
expected to have, in aggregate, a material adverse effect
on Parent.
(b) Each of Parent and Sub shall have
performed in all material respects each obligation and
agreement and shall have complied in all material
respects with each covenant to be performed and complied
with by it hereunder at or prior to the Effective Time.
(c) The Company shall have received an opinion
dated as of the Closing Date of Weil, Gotshal & Manges
LLP, substantially in the form of Exhibit 6.2(c), to the
effect that (1) the Merger will constitute a
reorganization within the meaning of Section 368(a) of
the Code and (2) no gain or loss will be recognized by
Company Stockholders with respect to shares of Parent
Common Stock received in the Merger in exchange for
shares of Company Common Stock, except with respect to
cash received in lieu of fractional shares of Parent
Common Stock. In rendering such opinion, Weil, Gotshal &
Manges LLP may require and rely on representations
contained in certificates of Parent, the Company, Sub and
others, as they deem reasonably appropriate.
(d) The Company shall have received a letter,
in form and substance reasonably satisfactory to the
Company, from Ernst & Young LLP, dated the date of the
Proxy Statement and confirmed in writing at the Effective
Time, stating that the Merger will qualify as a pooling
of interests transaction under Opinion 16 of the
Accounting Principles Board.
6.3 Conditions to Obligations of Parent and
Sub. The obligations of Parent and Sub to consummate the
Merger and the other transactions contemplated hereby shall be
subject to the fulfillment of the following conditions unless
waived by each of Parent and Sub:
(a) The representations and warranties of the
Company shall be true and correct on the date hereof and
on and as of the Closing Date as though made on and as of
the Closing Date (except for representations and
warranties made as of a specified date, which need be
true and correct only as of the specified date), other
than such breaches of representations and warranties
which would not have or which would not be reasonably
expect to have, in the aggregate, a material adverse
effect on the Company.
(b) The Company shall have performed in all
material respects each obligation and agreement and shall
have complied in all material respects with each covenant
to be performed and complied with by it hereunder at or
prior to the Effective Time.
(c) Each person who may be at the Effective
Time or was on the date of this Agreement an "affiliate"
of the Company within the meaning of Rule 145 under the
Securities Act, shall have executed and delivered to
Parent a written undertaking in the form attached hereto
as Exhibit 5.1(k).
(d) Parent shall have received a letter, in
form and substance reasonably satisfactory to Parent,
from Price Waterhouse LLP, dated the date of the Proxy
Statement and confirmed in writing at the Effective Time,
stating that the Merger will qualify as a pooling of
interests transaction under Opinion 16 of the Accounting
Principles Board.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether
before or after approval and adoption of this Agreement by
Company Stockholders:
(a) by mutual consent of Parent and the
Company;
(b) by either Parent or the Company if any
permanent injunction or other order or decree of a court
or other competent Governmental Authority preventing the
consummation of the Merger shall have become final and
nonappealable;
(c) by either Parent or the Company if the
Merger shall not have been consummated before March 31,
1997, unless extended by the Boards of Directors of both
Parent and the Company (provided that the right to
terminate this Agreement under this Section 7.1(c) shall
not be available to any party whose failure to perform
any material covenant or obligation under this Agreement
has been the cause of or resulted in the failure of the
Merger to occur on or before such date);
(d) by Parent or the Company if at the meeting
of Company Stockholders held for such purpose (including
any adjournment or postponement thereof) the requisite
vote of the Company Stockholders to approve the Merger
and the transactions contemplated hereby shall not have
been obtained;
(e) by Parent or the Company if at the meeting
of Parent Stockholders held for such purpose (including
any adjournment or postponement thereof) the requisite
vote of the Parent Stockholders to approve the Share
Issuance shall not have been obtained;
(f) by Parent or the Company (provided that
the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement
contained herein) if there shall have been a material
breach of any of the covenants or agreements or any of
the representations or warranties set forth in this
Agreement on the part of the other party, which breach is
not cured within 30 days following written notice given
by the terminating party to the party committing such
breach, or which breach, by its nature, cannot be cured
prior to the Closing, but only if such breach would
constitute a failure of a condition contained in Section
6.2 or Section 6.3, as applicable;
(g) by the Company if the Board of Directors
of the Company shall determine to engage in a Company
Competing Transaction and the Company shall have
delivered to Parent a written notice of the determination
by the Company Board of Directors to terminate this
Agreement pursuant to this Section 7.1(g); provided,
however, that the Company may not terminate this
Agreement pursuant to this clause (g) unless (w) five
business days shall have elapsed after delivery to Parent
of the notice referred to above, (x) at the end of such
five business-day period the Company Board of Directors
shall continue to believe that the failure to engage in
such Company Competing Transaction would reasonably be
expected to be a breach of the fiduciary duties of the
Board of Directors of the Company (after giving effect to
any adjustment to the terms and conditions of such
transactions proposed by Parent in response to such
Company Competing Transaction), (y) at the time of such
termination, the Company shall have paid to Parent the
Termination Fee (as hereinafter defined) and (z) promptly
thereafter the Company shall enter into a definitive
acquisition, merger or similar agreement to effect, or
shall effect, such Company Competing Transaction; or
(h) by Parent if the Board of Directors of the
Company shall not have recommended the Merger to the
Company Stockholders, or shall have resolved not to make
such recommendation, or shall have materially modified or
rescinded its recommendation of the Merger to the Company
Stockholders, or shall have modified or rescinded its
approval of this Agreement, or shall have resolved to do
any of the foregoing.
7.2 Effect of Termination.
(a) In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement, except for
the provisions of the last sentence of Section 5.1(g) and the
provisions of Sections 7.2 and 8.10, shall become void and
have no effect, without any liability on the part of any party
or its directors, officers, employees or stockholders.
Notwithstanding the foregoing, nothing in this Section 7.2
shall relieve any party to this Agreement of liability for a
material breach of any provision of this Agreement.
(b) If this Agreement is terminated
(i) by Parent or the Company pursuant to
Section 7.1(d), then the Company will pay to Parent in
cash by wire transfer in immediately available funds to
an account designated by Parent the reasonable documented
out-of-pocket expenses, up to $2 million, incurred by
Parent in connection with the transactions contemplated
hereby, including the negotiation and execution of this
Agreement; or
(ii) by Parent or the Company pursuant to
Section 7.1(e), then Parent will pay to the Company in
cash by wire transfer in immediately available funds to
an account designated by the Company the reasonable
documented out-of-pocket expenses, up to $2 million,
incurred by the Company in connection with the
transactions contemplated hereby, including the
negotiation and execution of this Agreement.
(c) If this Agreement is terminated
(i) by Parent pursuant to Section 7.1(c) or
7.1(f), if (A) the Company's breach of a covenant or
agreement or failure to perform a covenant or obligation
under this Agreement has been the cause of or resulted in
such termination and (B) a Prior Event (as defined below)
shall have occurred prior to such termination and (C)
either (x) the Company shall enter into a definitive
agreement with respect to a Company Competing Transaction
within twelve months following such termination and such
Company Competing Transaction is thereafter (as it may be
amended) consummated, or (y) a Company Competing
Transaction is consummated within twelve months following
such termination;
(ii) by Parent or the Company pursuant to
Section 7.1(d) or by Parent pursuant to Section 7.1(h),
if (A) a Prior Event shall have occurred prior to such
termination and (B) either (x) the Company shall enter
into a definitive agreement with respect to a Company
Competing Transaction within twelve months following such
termination and such Company Competing Transaction is
thereafter consummated, or (y) a Company Competing
Transaction is consummated within twelve months following
such termination; or
(iii) by the Company pursuant to Section
7.1(g);
then in any such case the Company will pay to Parent in cash
by wire transfer in immediately available funds to an account
designated by Parent a termination fee in an amount equal to
$9.1 million, plus reasonable documented out-of-pocket
expenses incurred by Parent in connection with the
transactions contemplated hereby, including the negotiation
and execution of this Agreement, less any amounts paid or
payable pursuant to Section 7.2(b) hereof (the "Termination
Fee"). Such payment shall be made (a) in the case of clauses
(i) or (ii), above, within one business day following the
consummation of such Company Competing Transaction, (b) in the
case of clause (iii), no later than immediately prior to such
termination.
(d) If this Agreement is terminated by Parent
or the Company pursuant to Section 7.1(e), if (A) a Parent
Prior Event (as defined below) shall have occurred prior to
such termination, and (B) either (x) Parent shall enter into a
definitive agreement with respect to a Parent Competing
Transaction (as defined below) within twelve months following
such termination and such Parent Competing Transaction (as it
may be amended) is thereafter consummated, or (y) a Parent
Competing Transaction is consummated within twelve months
following such termination, then Parent will pay to the
Company in cash by wire transfer in immediately available
funds to an account designated by the Company a termination
fee in an amount equal to $9.1 million, plus reasonable
documented out-of-pocket expenses incurred by the Company in
connection with the transactions contemplated hereby,
including the negotiation and execution of this Agreement,
less any amounts paid or payable pursuant to Section 7.2(b)
hereof. Such payment shall be made within one business day
following the consummation of the Parent Competing
Transaction.
(e) As used herein, a "Prior Event" shall mean
any of the following events:
(i) any person (other than Parent or any of
its subsidiaries) shall have commenced (as such term is
defined in Rule 14d-2 under the Exchange Act), or shall
have filed a registration statement under the Securities
Act, with respect to, a tender offer or exchange offer to
purchase any shares of Company Common Stock such that,
upon consummation of such offer, such person would
Beneficially Own (as defined below) or control 15% or
more of the then outstanding Company Common Stock;
(ii) the Company or any of its subsidiaries
shall have entered into, authorized, recommended,
proposed or publicly announced an intention to enter
into, authorize, recommend, or propose, an agreement,
arrangement or understanding with any person (other than
Parent or any of its subsidiaries) to, or any person
(other than Parent or any of its subsidiaries) shall
have announced a bona fide intention to, or the Company
shall have announced that any person (other than Parent
or any of it subsidiaries) has proposed or communicated
its intention to, or the Company shall have received a
bona fide proposal or communication regarding an
intention to, (A) effect any Competing Transaction, (B)
purchase, lease or otherwise acquire 15% or more of the
assets of the Company or any of its subsidiaries or (C)
purchase or otherwise acquire (including by way of
merger, consolidation, tender or exchange offer or
similar transaction) Beneficial Ownership of securities
representing 15% or more of the voting power of the
Company or any of its subsidiaries; or
(iii) any person (other than Parent or any
subsidiary of Parent) shall have acquired Beneficial
Ownership of a number of shares of Company Common Stock
in addition to the number of shares of Company Common
Stock Beneficially Owned by such person on the date
hereof equal to 15% or more of the voting power of the
Company.
(f) As used herein, the term "Parent Prior
Event" shall have the same meaning with respect to Parent as
the term "Prior Event" has with respect to the Company, with
such changes in the definition thereof as are appropriate to
contemplate Parent in lieu of the Company.
(g) As used herein, the term "Parent Competing
Transaction" shall have the same meaning with respect to
Parent as the term "Company Competing Transaction" has with
respect to the Company, with such changes in the definition
thereof as are appropriate to contemplate Parent in lieu of
the Company.
(h) As used herein, the terms "Beneficial
Ownership" and "Beneficially Own" shall have the meanings
ascribed to them in Rule 13d-3 under the Exchange Act. As
used herein, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
7.3 Amendment. This Agreement may be amended
by the parties hereto, at any time before or after adoption of
this Agreement by Company Stockholders or authorization of
issuance of shares of Parent Common Stock in the Merger by
Parent Stockholders, but after such approval or authorization,
no amendment shall be made which by law requires further
approval or authorization by the Company Stockholders or
Parent Stockholders, as the case may be, without such further
approval or authorization. Notwithstanding the foregoing,
this Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
7.4 Extension; Waiver. At any time prior to
the Effective Time, Parent (with respect to the Company) and
the Company (with respect to Parent and Sub) may, to the
extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of such
party, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument
signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations and
Warranties. The representations and warranties made herein by
the parties hereto shall not survive the Effective Time. This
Section 8.1 shall not limit any covenant or agreement of the
parties hereto, which by its terms contemplates performance
after the Effective Time or the termination of this Agreement.
8.2 Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed given upon receipt if delivered personally, telecopied
(which is confirmed) or dispatched by a nationally recognized
overnight courier service to the parties at the following
addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Sub:
Champion Enterprises, Inc.
2701 University Drive
Suite 320
Auburn Hills, Michigan 48326
Attention: Walter R. Young, Jr.
Telecopy No.: (810) 340-9345
with a copy to
Jeffrey W. Tindell, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Telecopy No.: (212) 735-2000
(b) if to the Company:
Redman Industries, Inc.
2550 Walnut Hill Lane
Dallas, Texas 75229
Attention: Thomas W. Sturgess
Robert M. Linton
Telecopy No.: (214) 351-2983
with a copy to
Mary R. Korby, Esq.
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Telecopy No.: (214) 746-7777
8.3 Interpretation. When a reference is made
in this Agreement to an Article or Section, such reference
shall be to an Article or Section of this Agreement unless
otherwise indicated. The headings and the table of contents
contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation
of this Agreement. When a reference is made in this Agreement
to common stock of the Company or Parent, as the case may be,
or shares thereof, such reference shall be deemed to include
the preferred share purchase rights issued pursuant to the
Parent Rights Agreement or Company Rights Agreement, as the
case may be, that trade together with such common stock. For
the purposes of this Agreement, a "material adverse effect"
shall mean, as to any party, a material adverse effect on the
assets, liabilities, results of operations, business or
financial condition of such party and its subsidiaries, taken
as a whole, or on such party's ability to consummate the
transactions contemplated hereby.
8.4 Counterparts. This Agreement may be
executed in counterparts, which together shall constitute one
and the same Agreement. The parties may execute more than one
copy of the Agreement, each of which shall constitute an
original.
8.5 Entire Agreement. This Agreement
(including the documents and the instruments referred to
herein) and the Confidentiality Agreement constitute the
entire agreement among the parties and supersede all prior
agreements and understandings, agreements or representations
by or among the parties, written and oral, with respect to the
subject matter hereof and thereof.
8.6 Third Party Beneficiaries. Nothing in
this Agreement, express or implied, is intended or shall be
construed to create any third party beneficiaries, except for
the provisions of Section 5.2(b) and Section 5.2(f)(ii) and
(iii) which may be enforced by the beneficiaries thereof.
8.7 Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
State of Delaware without regard to principles of conflicts of
law.
8.8 Specific Performance. The transactions
contemplated by this Agreement are unique and monetary damages
would not be an adequate remedy for a breach hereof.
Accordingly, each of the parties acknowledges and agrees that,
in addition to all other remedies to which it may be entitled,
each of the parties hereto is entitled to a decree of specific
performance, provided that such party is not in material
default hereunder.
8.9 Assignment. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the
other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors
and assigns.
8.10 Expenses. Subject to the provisions of
Section 7.2, Parent and the Company shall pay their own costs
and expenses associated with the transactions contemplated by
this Agreement, except that the Company and Parent shall share
equally (i) the filing fees in connection with the filing of
the Proxy Statement and Registration Statement with the
Commission and (ii) the expenses incurred in connection with
printing and mailing the Proxy Statement to the Company
Stockholders.
8.11 Incorporation of Disclosure Schedules.
The Company Disclosure Schedule and the Parent Disclosure
Schedule are hereby incorporated herein and made a part hereof
for all purposes as if fully set forth herein.
8.12 Severability. Any term or provision of
this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to
the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
8.13 Subsidiaries. As used in this Agreement,
the word "subsidiary" when used with respect to any party
means any corporation or other organization, whether
incorporated or unincorporated, of which such party directly
or indirectly owns or controls at least a majority of the
securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or
others performing similar functions with respect to such
corporation or other organization, or any organization of
which such party is a general partner.
IN WITNESS WHEREOF, Parent, Sub and the Company have
signed this Agreement as of the date first written above.
CHAMPION ENTERPRISES, INC.
By: /s/ Walter R. Young, Jr.
____________________________
Name: Walter R. Young, Jr.
Title: Chairman, President
and CEO
RHI ACQUISITION CORP.
By: /s/ Walter R. Young, Jr.
____________________________
Name: Walter R. Young, Jr.
Title: Chairman
REDMAN INDUSTRIES, INC.
By: /s/ Thomas W. Sturgess
____________________________
Name: Thomas W. Sturgess
Title: Chairman of the Board