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AGREEMENT AND PLAN OF MERGER
dated as of February 16, 1999
among
CHART INDUSTRIES, INC.,
CHART ACQUISITION COMPANY
and
MVE HOLDINGS, INC.
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER........................................................... 2
SECTION 1.1. The Merger....................................... 2
SECTION 1.2. Closing.......................................... 2
SECTION 1.3. Effective Time................................... 2
SECTION 1.4. Effects of the Merger............................ 2
SECTION 1.5. Certificate of Incorporation; By-laws............ 2
SECTION 1.6. Directors........................................ 3
SECTION 1.7. Officers......................................... 3
ARTICLE II
EFFECT OF THE MERGER ON THE SECURITIES OF
THE CONSTITUENT CORPORATION.......................................... 3
SECTION 2.1. Effect on Capital Stock.......................... 3
SECTION 2.2. Treatment of Other Securities of the Company..... 5
SECTION 2.3. Exchange of Certificates......................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................ 10
SECTION 3.1. Organization and Qualification; Subsidiaries.... 10
SECTION 3.2. Capitalization.................................. 10
SECTION 3.3. Authority Relative to This Agreement;
Stockholder Approval......................... 12
SECTION 3.4. SEC Reports; Financial Statements............... 13
SECTION 3.5. No Undisclosed Liabilities...................... 13
SECTION 3.6. Absence of Changes.............................. 13
SECTION 3.7. Consents and Approvals; No Violations........... 14
SECTION 3.8. Property........................................ 14
SECTION 3.9. Litigation...................................... 15
SECTION 3.10. Compliance with Applicable Law.................. 15
SECTION 3.11. Employee Plans.................................. 15
SECTION 3.12. Labor Matters................................... 17
SECTION 3.13. Environmental Matters........................... 18
SECTION 3.14. Tax Matters..................................... 19
SECTION 3.15. Material Contracts.............................. 20
SECTION 3.16. Brokers......................................... 21
SECTION 3.17. Opinion of Financial Advisor.................... 21
SECTION 3.18. Anti-Takeover Provisions........................ 21
SECTION 3.19. Intellectual Property........................... 22
SECTION 3.20. Insurance Policies.............................. 22
SECTION 3.21. Certain Business Practices...................... 23
SECTION 3.22. Suppliers and Customers......................... 23
SECTION 3.23. Millennium Compliance........................... 23
SECTION 3.24. Related Party Transactions...................... 23
SECTION 3.25. MVE Restaurant Services, Inc.................... 24
SECTION 3.26. Full Disclosure................................. 24
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ARTICLE IV
REPRESENTATION AND WARRANTIES OF PARENT AND SUB...................... 24
SECTION 4.1. Organization..................................... 25
SECTION 4.2. Authority Relative to This Agreement............. 25
SECTION 4.3. Consents and Approvals; No Violations............ 25
SECTION 4.4. No Prior Activities.............................. 26
SECTION 4.5. Available Funds.................................. 26
SECTION 4.6. Brokers.......................................... 27
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS............................. 27
SECTION 5.1. Conduct of Business of the Company............... 27
SECTION 5.2. Access to Information............................ 31
SECTION 5.3 Notification of Certain Events................... 31
ARTICLE VI
ADDITIONAL AGREEMENTS................................................ 31
SECTION 6.1. Stockholder Consent............................. 31
SECTION 6.2. Reasonable Best Efforts......................... 32
SECTION 6.3. Public Announcements............................ 33
SECTION 6.4. Indemnification; Directors' and Officers'
Insurance..................................... 34
SECTION 6.5. Employee Matters................................ 35
SECTION 6.6. Obligations of Sub.............................. 36
SECTION 6.7. Distribution.................................... 37
SECTION 6.8. Cooperation in Financing........................ 37
SECTION 6.9. Indenture....................................... 37
SECTION 6.10. Subordinated Notes.............................. 38
SECTION 6.11. Repayment of Bank Debt.......................... 38
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER............................. 38
SECTION 7.1. Conditions to Each Party's Obligations to
Effect the Merger.............................. 38
SECTION 7.2. Additional Conditions to Parent's and Sub's
Obligations to Effect the Merger............... 38
SECTION 7.3. Additional Conditions to the Company's
Obligations to Effect the Merger............... 40
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER....................................... 41
SECTION 8.1. Termination...................................... 41
SECTION 8.2. Effect of Termination............................ 42
SECTION 8.3. Fees and Expenses................................ 42
SECTION 8.4. Liquidated Damages............................... 42
SECTION 8.5. Amendment........................................ 43
SECTION 8.6. Extension; Waiver................................ 43
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ARTICLE IX
SPECIAL INDEMNIFICATION.............................................. 44
SECTION 9.1. Special Indemnification.......................... 44
SECTION 9.2. Method of Asserting Claims....................... 44
SECTION 9.3. Limitations...................................... 44
SECTION 9.4. Escrow Agreement................................. 45
SECTION 9.5. Distribution of Holdback Amount.................. 45
ARTICLE X
MISCELLANEOUS........................................................ 45
SECTION 10.1. Nonsurvival of Representations and Warranties...45
SECTION 10.2. Entire Agreement; Assignment....................45
SECTION 10.3. Notices.........................................46
SECTION 10.4. Governing Law...................................47
SECTION 10.5. Descriptive Headings........................... 47
SECTION 10.6. Parties in Interest............................ 47
SECTION 10.7. Severability................................... 47
SECTION 10.8. Specific Performance........................... 48
SECTION 10.9. Counterparts................................... 48
SECTION 10.10. Interpretation................................. 48
SECTION 10.11. Definitions.................................... 49
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Glossary of Defined Terms
Defined Terms Defined in Section
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ACI Warrant.......................................................2.2(d)
Affiliate..........................................................10.11
Agreement.......................................................Recitals
Antitrust Law.....................................................6.2(b)
beneficial ownership...............................................10.11
Capital Stock........................................................2.1
Cash Amount.......................................................2.1(c)
Certificate of Merger................................................1.3
Class A Merger Consideration......................................2.1(d)
Class A Preferred Stock..............................................2.1
Class B Merger Consideration......................................2.1(d)
Class B Preferred Stock..............................................2.1
Closing..............................................................1.2
Closing Date.........................................................1.2
Commitment Letter....................................................4.5
Common Merger Consideration.......................................2.1(c)
Common Stock.........................................................2.1
Company.........................................................Recitals
Company Disclosure Schedule..................................Article III
Company Permits.....................................................3.10
Company Requisite Vote............................................3.3(b)
Company SEC Reports..................................................3.4
Company Stock Option..............................................2.2(a)
Confidentiality Agreement.........................................5.2(b)
Contract...........................................................10.11
Credit Agreement.....................................................4.5
Damages..............................................................9.1
Date Data...........................................................3.23
Delaware Secretary of State..........................................1.3
DGCL.................................................................1.1
Dissenting Shares.................................................2.1(e)
DOJ...............................................................6.2(b)
Effective Time.......................................................1.3
Employee Benefit Plan............................................3.11(a)
Environmental Law.............................................3.13(a)(i)
Escrow Agent.........................................................9.4
Escrow Agreement.....................................................9.4
Exeter Warrants...................................................2.2(c)
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Defined Terms Defined in Section
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Financials...........................................................3.4
FTC...............................................................6.2(b)
GAAP.................................................................3.4
Government Entity....................................................3.7
Hazardous Material...........................................3.13(a)(ii)
Holdback Amount...................................................2.1(c)
Holdback Termination Date............................................9.1
HSR Act............................................................. 3.7
Indemnification Agreement.........................................7.2(e)
Indemnified Party................................................... 6.4
Indemnitee.......................................................... 9.1
Indemnity Claims.................................................... 9.2
Indenture........................................................... 3.4
IRS............................................................. 3.11(b)
know or knowledge................................................. 10.11
Law............................................................... 10.11
Lien..............................................................3.2(b)
Material Adverse Affect............................................10.11
Material Contracts...............................................3.15(a)
Material Intellectual Property Rights...............................3.19
Members..............................................................9.1
Merger..........................................................Recitals
Merger Consideration..............................................2.1(d)
Millennium Compliant................................................3.23
Misallocation Claims.................................................9.1
MVE..................................................................3.4
MVE Investors.....................................................3.3(b)
Named Employees...................................................6.5(b)
Option Consideration..............................................2.2(a)
Parent..........................................................Recitals
Parent Disclosure Schedule....................................Article IV
Paying Agent......................................................2.3(b)
Payment Fund......................................................2.3(b)
Permitted Lien.....................................................10.11
person.............................................................10.11
Powell Claims........................................................9.1
Public Note Warrant...............................................2.2(b)
Public Note Warrant Agreement.....................................2.2(b)
Release.....................................................3.13(a)(iii)
Remedial Action..............................................3.13(a)(iv)
Restaurant Services.................................................3.25
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Defined Terms Defined in Section
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Restaurant Services Agreement.....................................6.7(c)
SEC..................................................................3.4
Securities Act....................................................3.2(c)
Sub.............................................................Recitals
Subordinated Note Agreement..........................................4.5
subsidiary.........................................................10.11
Surviving Corporation................................................1.1
Tax or Taxes.....................................................3.14(a)
Tax Returns......................................................3.14(a)
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AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of February
16, 1999 among CHART INDUSTRIES, INC., a Delaware corporation ("Parent"), CHART
ACQUISITION COMPANY, a Delaware corporation and wholly owned subsidiary of
Parent ("Sub") and MVE HOLDINGS, INC., a Delaware corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Board of Directors of each of Parent, Sub and the
Company has adopted resolutions approving this Agreement, pursuant to which Sub
shall be merged with and into the Company and the Company shall become a wholly
owned, direct subsidiary of Parent (the "Merger"), and has determined that the
Merger would be fair and in the best interests of the stockholders of Parent and
the Company;
WHEREAS, concurrently with the execution of this Agreement, certain
stockholders of the Company, including the holder of the Company's 12 1/2% Class
A Cumulative Convertible Participating Preferred Stock, have executed a written
consent approving this Agreement in accordance with Section 228 of the Delaware
General Corporation Law; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
SECTION I.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as hereinafter defined). Upon the Effective Time,
the separate existence of Sub shall cease, and the Company shall continue as the
surviving corporation (the "Surviving Corporation").
SECTION I.2. Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 8.1 and subject to the satisfaction or waiver of the
conditions set forth in Article VII, the closing of the Merger (the "Closing")
will take place at 10:00 a.m. on the second business day following the date (the
"Closing Date") on which the last to be fulfilled or waived of the conditions
set forth in Sections 7.1, 7.2 and 7.3 shall be fulfilled or waived in
accordance with this Agreement (other than those conditions which by their
nature are to be satisfied at the Closing, but subject to the satisfaction or
waiver of those conditions), at the offices of Weil, Gotshal & Manges LLP, 767
Fifth Avenue, New York, New York unless another date, time or place is agreed to
in writing by the parties hereto.
SECTION I.3. Effective Time. The parties hereto will file with the
Secretary of State of the State of Delaware (the "Delaware Secretary of State")
on the date of the Closing (or on such other date as Parent and the Company may
agree) a certificate of merger (the "Certificate of Merger") or other
appropriate documents, executed in accordance with the relevant provisions of
the DGCL, and make all other filings or recordings required under the DGCL in
connection with the Merger. The Merger shall become effective upon the filing of
the Certificate of Merger with the Delaware Secretary of State, or at such later
time as is specified in the Certificate of Merger (the "Effective Time").
SECTION I.4. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION I.5. Certificate of Incorporation; By-laws. (a) At the
Effective
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Time, the Company's Certificate of Incorporation shall be the Certificate of
Incorporation of the Surviving Corporation, except that the Certificate of
Incorporation of the Surviving Corporation shall be amended, in a manner not
inconsistent with Section 6.4 of this Agreement, at the discretion of Parent and
Sub.
(b) The By-Laws of Sub as in effect at the Effective Time shall,
from and after the Effective Time, be the By-Laws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
SECTION I.6. Directors. The directors of Sub at the Effective Time
shall, from and after the Effective Time, become the directors of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION I.7. Officers. At the Effective Time, the officers of Sub
shall become the officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be. The officers of the Surviving
Corporation shall include John Kucharik, David E. Hoffman and Lewis Shender in
their current positions, except that John Kucharik will be President and Chief
Operating Officer of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE SECURITIES OF THE CONSTITUENT
CORPORATIONS
SECTION II.1. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of (i) any
shares of (a) common stock, par value $.01 per share, of the Company (the
"Common Stock") (b) 12 1/2% Class A Cumulative Convertible Participating
Preferred Stock, par value $100.00 per share, of the Company (the "Class A
Preferred Stock") and (c) 10% Class B Cumulative Preferred Stock, par value
$100.00 per share, of the Company (the "Class B Preferred Stock" and together
with the Common Stock and the Class A Preferred Stock, the "Capital Stock") or
any other shares of capital stock of the Company or (ii) any shares of capital
stock of Sub, the following shall occur:
(a) Common Stock of Sub. Each share of common stock of Sub issued
and outstanding immediately prior to the Effective Time shall be converted into
and become one validly issued, fully paid and nonassessable share of Common
Stock, par
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value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of Capital Stock
issued and outstanding immediately prior to the Effective Time that is owned,
directly or indirectly, by Parent, Sub, the Company or by any subsidiary of the
Company shall automatically be cancelled and retired and shall cease to exist,
and no cash or other consideration shall be delivered or deliverable in exchange
therefor.
(c) Conversion of Common Stock. Each share of Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 2.1(b) and other than Dissenting Shares (as
defined in Section 2.1(e)) shall be converted into the right to receive $25.00
per share net to the holder in cash, without interest (the "Cash Amount") plus
the right to receive a pro rata share of the Holdback Amount (as defined below)
subject to the terms of Article IX hereof (the Cash Amount plus a pro rata share
of the Holdback Amount are together called the "Common Merger Consideration").
As of the Effective Time, subject to Section 9.5 hereof Parent shall deposit (or
cause to be deposited) with the Escrow Agent (as defined in Section 9.4), cash
in the amount of $20 multiplied by the number of shares of Common Stock
outstanding as of the Effective Time (including the Common Stock issuable upon
exercise of the Public Note Warrants and the Exeter Warrants (to the extent not
put to the Company pursuant to the terms thereof) referred to in Sections 2.2(b)
and (c) but excluding any Dissenting Shares) (the "Holdback Amount"). The
Holdback Amount shall be held by the Escrow Agent and disbursed in accordance
with the terms of Article IX and the Escrow Agreement (as defined in Section
9.4).
(d) Preferred Stock. Each share of Class A Preferred Stock issued
and outstanding immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 2.1(b)) shall be converted into the right
to receive, per share, the Liquidation Preference (as defined in the Certificate
of Designation of the Company, dated August 26, 1996, with respect to the Class
A Preferred Stock) plus any accrued but unpaid dividends thereon as of the
Effective Date, net to the holder in cash, without interest (the "Class A Merger
Consideration"). Each share of Class B Preferred Stock issued and outstanding
immediately prior to the Effective time shall be converted into the right to
receive, per share, the Liquidation Value (as defined in the Certificate of
Designation of the Company, dated August 26, 1996, with respect to the Class B
Preferred Stock) plus all accrued and unpaid dividends thereon as of the
Effective Date, net to the holder in cash, without interest (the "Class B Merger
Consideration" and together with the Common Merger Consideration and the Class A
Merger Consideration, the "Merger Consideration").
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(e) Dissenting Shares. (i) Notwithstanding anything in this
Agreement to the contrary, shares of Capital Stock issued and outstanding
immediately prior to the Effective Time held by a holder (if any) who has the
right to demand, and who properly demands, an appraisal of such shares in
accordance with Section 262 of the DGCL (or any successor provision)
("Dissenting Shares") shall not be converted into a right to receive the Merger
Consideration unless such holder fails to perfect or otherwise loses such
holder's right to such appraisal, if any. If, after the Effective Time, such
holder fails to perfect or loses any such right to appraisal, each such share of
such holder shall be treated as a share that had been converted as of the
Effective Time into the right to receive the Merger Consideration in accordance
with this Section 2.1. At least 21 days prior to the Effective Time, the Company
shall provide notice to the holders of Common Stock of the Merger and the other
transactions contemplated hereby and inform such holders of their appraisal
rights.
(f) Cancellation and Retirement of Capital Stock. As of the
Effective Time, all certificates representing shares of Capital Stock issued and
outstanding immediately prior to the Effective Time, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Capital
Stock shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration, as applicable, upon surrender of such
certificate in accordance with Section 2.3 and rights with respect to Dissenting
Shares, if any, under Section 262 of the DGCL.
(g) Restricted Stock Grants. Immediately prior to the Effective
Time, each restricted share of Common Stock issued under the Company's 1998
Restricted Stock Plan shall fully vest and all such shares of restricted Common
Stock shall be converted into the right to receive the Common Merger
Consideration, subject to the Holdback Amount.
(h) Certain Adjustments. If, between the date of this Agreement and
the Effective Time, the outstanding shares of any class or series of Capital
Stock shall be changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, combination, exchange of shares,
or any dividend payable in stock or other securities (other than the dividend
described in Section 6.7 below) shall be declared thereon with a record date
within such period, the Merger Consideration payable to the holders thereof
shall be adjusted accordingly to provide to such holders the same economic
effect as contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or dividend.
SECTION II.2. Treatment of Other Securities of the Company.
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(a) Stock Option Plan. Each outstanding option issued pursuant to
the Company 1997 Stock Option Plan to purchase shares of Common Stock (a
"Company Stock Option") shall be cancelled immediately prior to the Effective
Time in exchange for an amount in cash equal to the product of (i) the number of
shares of Common Stock subject to such Company Stock Option and (ii) $1.00 (the
"Option Consideration"). The surrender of a Company Stock Option to the Company
in exchange for the Option Consideration shall be deemed a release of any and
all rights the holder or the Company had or may have had in such Company Stock
Option. Prior to the Effective Time, the Company shall use its reasonable
efforts to obtain all necessary consents or releases from holders of Company
Stock Options and take any such other reasonable action (including any amendment
or modification of the Company 1997 Stock Option Plan) as may be necessary to
give effect to the transactions contemplated by this Section 2.2.
(b) Public Note Warrants. As soon as practicable following the date
of this Agreement, the Company shall take all necessary action to cause each
Warrant issued by the Company in connection with the offering of 12-1/2% Senior
Secured Notes Due 2002 of MVE, Inc. (each, a "Public Note Warrant"), pursuant to
the Warrant Agreement between the Company and American Bank National
Association, as warrant agent, dated as of February 16, 1995 (the "Public Note
Warrant Agreement"), to be converted automatically and without any further
action by the Company or the holders thereof, into the right to receive,
pursuant to Section 2.1(c), an amount equal to the (x) Common Merger
Consideration (subject to the Holdback Amount) multiplied by such number of
shares of Common Stock issuable upon exercise of such Public Note Warrant
assuming it had been exercised immediately prior to the Effective Time, less (y)
the aggregate exercise price of such Public Note Warrant.
(c) Exeter Warrants. As soon as practicable following the date of
this Agreement, the Company shall take all necessary action such that, in the
event any holder of the Warrants to purchase an aggregate of 8,000 shares of
Common Stock originally issued to Exeter Equity Partners, L.P. and Exeter
Venture Lenders, L.P. on or about May 5, 1998 (collectively, the "Exeter
Warrants") elects not to require the Company to purchase its Exeter Warrants,
such Exeter Warrants shall be converted automatically and without any further
action by the Company or the holders thereof, into the right to receive,
pursuant to Section 2.1(c), an amount equal to the (x) Common Merger
Consideration (subject to the Holdback Amount) multiplied by such number of
shares of Common Stock issuable upon exercise of such Exeter Warrants assuming
they had been exercised immediately prior to the Effective Time less (y) the
aggregate exercise price of such Exeter Warrants.
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(d) ACI Warrant. At or immediately prior to the Effective Time, the
Company shall take all necessary action to cause the Warrant to purchase 25,000
shares of Common Stock originally issued to A.C. Israel Enterprises Inc. on
August 27, 1996 (the "ACI Warrant") to be cancelled without consideration.
(e) No Further Rights. The Company shall take all action reasonably
necessary to cause any other plans, programs or arrangements providing for the
issuance or grant of any interest in respect of the capital stock of the Company
or any of its subsidiaries to terminate as of the Effective Time.
SECTION II.3. Exchange of Certificates.
(a) Payment at Closing. At the Effective Time, Parent shall pay by
wire transfer of immediately available funds, to each holder of an outstanding
certificate or certificates which prior thereto represented shares of Common
Stock, Class A Preferred Stock or Class B Preferred Stock (other than any such
shares cancelled without consideration pursuant to Section 2.1(b)), who
surrenders to the Parent such certificate or certificates, the Cash Amount, the
Class A Merger Consideration and the Class B Merger Consideration, as
applicable.
(b) Paying Agent. As of the Effective Time, Parent shall deposit,
with or for the account of a bank or trust company designated by Parent, which
shall be reasonably satisfactory to the Company (the "Paying Agent"), for the
benefit of the holders of shares of Common Stock other than those holders who
have received the Cash Amount at Closing pursuant to Section 2.3(a) and other
than Dissenting Shares, cash in an aggregate amount sufficient to pay the
aggregate unpaid Cash Amount (such amount being hereinafter referred to as the
"Payment Fund").
(c) Exchange Procedures. As soon as practicable after the Effective
Time, each holder of an outstanding certificate or certificates which prior
thereto represented shares of Common Stock (other than any Dissenting Shares)
shall, upon surrender to the Paying Agent of such certificate or certificates
and acceptance thereof by the Paying Agent, be entitled to the per share Cash
Amount multiplied by the aggregate number of shares of Common Stock previously
represented by such certificate(s). The Paying Agent shall accept such
certificates upon compliance with such reasonable terms and conditions as the
Paying Agent may impose to effect an orderly exchange thereof in accordance with
normal exchange practices. If the consideration to be paid in the Merger (or any
portion thereof) is to be delivered to any person other than the person in whose
name the certificate representing shares of Common Stock surrendered in exchange
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therefor is registered, it shall be a condition to such exchange that the
certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person requesting such exchange shall pay to the
Paying Agent any transfer or other taxes required by reason of the payment of
such consideration to a person other than the registered holder of the
certificate surrendered, or shall establish to the satisfaction of the Paying
Agent that such tax has been paid or is not applicable. After the Effective
Time, there shall be no further transfer on the records of the Company or its
transfer agent of certificates representing shares of Common Stock and if such
certificates are presented to the Company for transfer, they shall be cancelled
against delivery of the Cash Amount as hereinabove provided. Until surrendered
as contemplated by this Section 2.3(c), each certificate representing shares of
Common Stock (other than certificates representing shares to be cancelled in
accordance with Section 2.1(b) or Dissenting Shares), shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Common Merger Consideration (subject to the Holdback Amount),
without any interest thereon, as contemplated by Section 2.1. No interest will
be paid or will accrue on any cash payable as Common Merger Consideration.
(d) Letter of Transmittal. Promptly after the Effective Time (but in
no event more than 5 days thereafter), the Surviving Corporation shall require
the Paying Agent to mail to each record holder of certificates that immediately
prior to the Effective Time represented shares of Common Stock which have been
converted into Common Merger Consideration, a form of letter of transmittal and
instructions for use in surrendering such certificates and receiving the
consideration to which such holder shall be entitled therefor pursuant to
Section 2.1.
(e) No Further Ownership Rights in Capital Stock. The Merger
Consideration paid upon the surrender for exchange of certificates representing
shares of Capital Stock in accordance with the terms of this Article II and
Section 9.5 below shall be deemed to have been issued and paid in full
satisfaction of all rights pertaining to such shares theretofore represented by
such certificates.
(f) Termination of Payment Fund. Any portion of the Payment Fund
which remains undistributed to the holders of the certificates representing
shares of Common Stock for 120 days after the Effective Time shall be delivered
to Parent, upon demand, and any holders of shares of Common Stock who have not
theretofore complied with this Article II shall thereafter look only to Parent
and only as general creditors thereof for payment of their claim for any Common
Merger Consideration.
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(g) No Liability. None of Parent, Sub, the Surviving Corporation or
the Paying Agent shall be liable to any person in respect of any cash, shares,
dividends or distributions payable from the Payment Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any certificates representing shares of Common Stock shall not have been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which any Merger Consideration in respect of such
certificate would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.7), any such cash, shares,
dividends or distributions payable in respect of such certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
(h) Investment of Payment Fund. The Paying Agent shall invest the
Payment Fund in any combination of the following, as directed by Parent: (i)
direct obligations of the United States of America, (ii) obligations for which
the full faith and credit of the United States of America is pledged to provide
for the payment of principal and interest, (iii) commercial paper rated the
highest quality by either Moody's Investors Services, Inc. or Standard & Poor's
Corporation, or (iv) certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $100 million,
and any net earnings with respect thereto shall be paid to Parent as and when
requested by Parent; provided that any such investment or any such payment of
earnings shall not delay the receipt by holders of shares of Common Stock of the
Common Merger Consideration or otherwise impair such holders' respective rights
hereunder. Any interest and other income resulting from the investment of the
Payment Fund shall be paid to the Surviving Corporation. In the event the
Payment Fund shall realize a loss on any such investment, Parent shall promptly
thereafter deposit in such Payment Fund on behalf of the Surviving Corporation
cash in an amount sufficient to enable such Payment Fund to satisfy all
remaining obligations originally contemplated to be paid out of such Payment
Fund.
9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule") (each section of which qualifies the correspondingly
numbered representation and warranty or covenant to the extent specified
therein), the Company hereby represents and warrants to each of Parent and Sub
as follows:
SECTION III.1. Organization and Qualification; Subsidiaries. (a) The
Company and each of its subsidiaries is a corporation or legal entity duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has all requisite corporate, partnership
or similar power and authority to own, lease and operate its properties and to
carry on its businesses as now conducted and proposed by the Company to be
conducted.
(b) Section 3.1 of the Company Disclosure Schedule sets forth a list
of all subsidiaries of the Company. Except as listed in Section 3.1 of the
Company Disclosure Schedule, the Company does not own, directly or indirectly,
beneficially or of record, any shares of capital stock or other security of any
other entity or any other investment in any other entity.
(c) Each of the Company and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing does not have a
Material Adverse Effect on the Company.
(d) The Company has heretofore delivered or made available to Parent
accurate and complete copies of the certificate of incorporation and bylaws, as
currently in effect, of each of the Company and each of its subsidiaries.
SECTION III.2. Capitalization (a) As of the date of this Agreement,
the Company has 10,000,000 shares of Common Stock authorized for issuance, of
which 132,810 shares are issued and outstanding (including uncertificated
restricted shares of Common Stock), 4,700 shares of Class A Preferred Stock
authorized for issuance, of which 4,700 are issued and outstanding, and 1,400
shares of Class B Preferred Stock
10
authorized for issuance, of which 797.08 shares are issued and outstanding. All
of the outstanding shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid and nonassessable and free from
preemptive rights. There are no outstanding options, warrants, convertible
securities, subscriptions or other rights or agreements providing for the
issuance or sale of any shares of capital stock or other securities of the
Company, except as set forth on Section 3.2(a) of the Company Disclosure
Schedule. Section 3.2(a) of the Company Disclosure Schedule sets forth with
respect to each option and warrant listed thereon, the identity of the record
holder thereof (or beneficial holder, if known), the number and type of shares
of capital stock of the Company issuable thereunder, the expiration date (if
any) thereof and the exercise price thereof. Except as set forth on Section
3.2(a) of the Company Disclosure Schedule, the Company is not required to
repurchase, redeem or otherwise acquire or make any payment in respect of any
shares of Capital Stock or other securities of the Company.
(b) Except as set forth on Section 3.2(b) of the Company Disclosure
Schedule, all of the outstanding capital stock of the Company's subsidiaries is
owned by the Company, directly or indirectly, free and clear of any Lien (as
hereinafter defined) or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided as
a matter of Law). There are no securities of the Company or its subsidiaries
convertible into or exchangeable for, no options or other rights to acquire from
the Company or its subsidiaries, and no other Contract (whether or not
contingent) providing for the issuance or sale, directly or indirectly, of any
capital stock or other ownership interests in, or any other securities of, any
subsidiary of the Company. There are no outstanding contractual obligations of
the Company or its subsidiaries to repurchase, redeem or otherwise acquire any
outstanding shares of capital stock or other ownership interests in any
subsidiary of the Company. For purposes of this Agreement, "Lien" means, with
respect to any asset (including, without limitation, any security) any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset.
(c) Except as set forth in Section 3.2(c) of the Company Disclosure
Schedule, there are no outstanding bonds, debentures, notes or other
indebtedness or other securities of the Company (other than Capital Stock)
having the right to vote, or convertible into or exchangeable for securities
having the right to vote, on any matters on which stockholders of the Company
may vote. Other than as set forth in Section 3.2(c) of the Company Disclosure
Schedule, no indebtedness for borrowed money of the Company or any of its
subsidiaries by its terms contains any restriction upon the incurrence of
indebtedness for borrowed money by the Company or any of its subsidiaries or
restricts the ability of the Company or any of its subsidiaries to grant any
Liens on their respective properties or assets. Except as set forth in Section
3.2(c) of the Company Disclosure
11
Schedule, there are no Contracts pursuant to which the Company is or could be
required to register any securities issued by the Company or any subsidiary
under the Securities Act of 1933, as amended (the "Securities Act"), or other
Contracts with or among any security holders of the Company or any of its
subsidiaries with respect to any securities of the Company or any of its
subsidiaries. Except as set forth in Section 3.2(c) of the Company Disclosure
Schedule, to the knowledge of the Company, there are no effective proxies with
respect to any shares of Capital Stock or other securities of the Company or any
of its subsidiaries.
SECTION III.3. Authority Relative to This Agreement; Stockholder
Approval. (a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. No other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than the Company Requisite Vote (as hereinafter
defined)). This Agreement has been duly and validly executed and delivered by
the Company and constitutes a valid, legal and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(b) The Board of Directors of the Company, by unanimous vote, has
duly and validly authorized the execution and delivery of this Agreement and
approved the consummation of the transactions contemplated hereby, and has taken
all corporate actions required to be taken by the Company Board for the
consummation of the transactions, including the Merger, contemplated hereby and
has resolved (i) to deem this Agreement and the transactions contemplated
hereby, including the Merger, advisable and fair to, and in the best interests
of, the Company and its stockholders; and (ii) to recommend that the
stockholders of the Company approve and adopt this Agreement. The approval of
the holders of shares of Common Stock and Class A Preferred Stock representing a
majority of the votes that may be cast by the holders of all outstanding shares
of such stock (voting as a single class) as of the record date for such vote
(the "Company Requisite Vote") is the only vote of the holders of any class or
series of capital stock of the Company necessary to adopt this Agreement and
approve the transactions contemplated hereby, including the Merger. MVE
Investors LLC ("MVE Investors") as record holder of all of the outstanding
shares of Class A Preferred Stock has executed a written consent in favor of
approval of the adoption of this Agreement, and no further stockholder action is
required under the DGCL in order to approve the Merger.
12
SECTION III.4. SEC Reports; Financial Statements. Pursuant to the
Indenture, dated as of February 16, 1995, of MVE, Inc. ("MVE"), a wholly owned
subsidiary of the Company, with respect to MVE's 12-1/2% Senior Secured Notes
due 2002 (the "Indenture"), and the Public Note Warrant Agreement, each of the
Company and MVE is required to file certain financial information with the
Securities and Exchange Commission (the "SEC"). Such information is not intended
to comply with, and does not comply with, the periodic reporting requirements
under Section 13 of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder. The Company has heretofore
delivered or made available to Parent, in the form filed with the SEC, all
information filed by the Company and MVE with the SEC since January 1, 1997 (the
"Company SEC Reports"). The information set forth in the Company SEC Reports is
true and correct in all material respects. The consolidated financial statements
of the Company included in the Company SEC Reports (the "Financials") fairly
present, in conformity with generally accepted accounting principles applied on
a consistent basis ("GAAP") (except as may be indicated in the notes thereto),
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments, none of which, individually or in the aggregate, is
material). The monthly financial statements of the Company as of December 31,
1998, delivered to Parent, are true and correct in all material respects, and
were prepared in a manner consistent with past practice for the preparation of
monthly financial statements.
SECTION III.5. No Undisclosed Liabilities. Except as set forth in
Section 3.5 of the Company Disclosure Schedule and except as and to the extent
disclosed in the Financials and except for liabilities incurred in the ordinary
course of business consistent with past practice since September 30, 1998, none
of the Company or its subsidiaries has (i) any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, and whether due or to
become due or asserted or unasserted, which would be required by GAAP to be
reflected in, reserved against or otherwise described in the consolidated
balance sheet of the Company (including the notes thereto) or (ii) any material
liability or obligation of any nature, whether or not accrued, contingent or
otherwise, and whether due or to become due or asserted or unasserted, which is
known to the Company but would not be required to be disclosed by GAAP.
SECTION III.6. Absence of Changes. Except as set forth in Section
3.6 of the Company Disclosure Schedule, since September 30, 1998, each of the
Company and its subsidiaries has conducted its business only in the ordinary
course consistent with
13
past practice, and there is not and has not been (i) any Material Adverse Effect
with respect to the Company, (ii) any condition, event or occurrence which would
be reasonably likely to have a Material Adverse Effect on the Company or (iii)
any condition, event or occurrence which could reasonably be expected to
prevent, hinder or materially delay the ability of the Company to consummate the
transactions contemplated hereby.
SECTION III.7. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the filing and recordation
of the Certificate of Merger as required by the DGCL and as otherwise set forth
in Section 3.7 to the Company Disclosure Schedule, no filing with or notice to,
and no permit, authorization, consent or approval of, any United States or
foreign court or tribunal or administrative, governmental or regulatory body,
agency or authority (a "Governmental Entity") or any person under any Contract
to which the Company or any of its subsidiaries is a party or to which any of
their respective properties or assets is subject, or under any permit issued to
the Company or any of its subsidiaries, is necessary for the execution and
delivery by the Company of this Agreement or the consummation by the Company of
the transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice would not be material to the Company. Neither the execution,
delivery and performance of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby will (i) conflict with or
result in any breach of any provision of the respective certificate or articles
of incorporation or bylaws (or similar governing documents) of the Company or
any of its subsidiaries, (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, amendment, cancellation or acceleration or Lien)
under, any of the terms, conditions or provisions of any Contract to which the
Company or any of its subsidiaries is a party or by which any of them or any of
their respective properties or assets may be bound, or (iii) violate any Law
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, except in the case of (ii) or (iii) for violations,
breaches or defaults which do not have a Material Adverse Effect on the Company.
SECTION III.8. Property. Except as set forth in Section 3.8 of the
Company Disclosure Schedule, the Company and each subsidiary of the Company has
good, marketable and valid title in and to all of its material assets, including
all real, personal and intangible property, and except as reflected on Section
3.8 of the Company Disclosure Schedule, the Company and each subsidiary of the
Company holds its assets free and clear of any Liens (other than Permitted
Liens).
14
SECTION III.9. Litigation. Except as disclosed on Section 3.9 of the
Company Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the Company's knowledge, threatened against the
Company or any of its subsidiaries or any of their respective properties or
assets which (a) seeks damages in excess of $100,000 or (b) as of the date
hereof, questions the validity of this Agreement, or any action to be taken by
the Company in connection with the consummation of the transactions contemplated
hereby or could otherwise prevent or delay the consummation of the transactions
contemplated by this Agreement. Except as disclosed in Section 3.9 of the
Company Disclosure Schedule, none of the Company or its subsidiaries is subject
to any outstanding material order, writ, injunction or decree.
SECTION III.10. Compliance with Applicable Law. The Company and its
subsidiaries hold all material permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "Company Permits"), except as set forth in
Section 3.13 of the Company Disclosure Schedule. Except as set forth in Section
3.13 of the Company Disclosure Schedule, the Company and its subsidiaries are in
compliance in all material respects with the terms of the Company Permits. Each
of the Company and its subsidiaries is in compliance in all material respects
with all material Laws. To the Company's knowledge, except as set forth in
Section 3.10 of the Company Disclosure Schedule, no material investigation or
review by any Governmental Entity with respect to the Company or its
subsidiaries is pending or threatened, nor, to the Company's knowledge, has any
Governmental Entity indicated an intention to conduct the same.
SECTION III.11. Employee Plans. (a) The Company has made available
to Parent all "employee benefit plans," as defined in Section 3(3) of ERISA, and
all material bonus or other incentive compensation, equity or equity-based
compensation, deferred compensation and severance pay, plans or policies that
the Company or any of its subsidiaries has any obligation to or liability for
(each an "Employee Benefit Plan" and collectively, the "Employee Benefit
Plans").
(b) True, correct and complete copies of the following documents,
with respect to each of the Employee Benefit Plans (other than a Multiemployer
Plan) have been made available or delivered to Parent by the Company (i) the
most recent plan document and related trust documents, and amendments thereto;
(ii) the most recent Forms 5500 and schedules thereto; (iii) the most recent
Internal Revenue Service ("IRS") determination letter; (iv) the most recent
financial statements and actuarial valuations, if applicable; and (v) the most
recent summary plan descriptions.
(c) As of the date hereof, except for such non-compliance which
would
15
not have a Material Adverse Effect on the Company, (i) all payments required to
be made by or under any Employee Benefit Plan, any related trusts, or any
collective bargaining agreement or pursuant to Law have been made by the due
date thereof (including any valid extension); (ii) the Employee Benefit Plans
(other than any multiemployer plans), have been administered in compliance with
their terms and the requirements of ERISA, the Code and other applicable Laws;
and (iii) to the Company's knowledge, there are no actions, suits, arbitrations
or claims (other than routine claims for benefit) pending or threatened with
respect to any Employee Benefit Plan.
(d) Except as set forth in Section 3.11(d) or the Company Disclosure
Schedule, there has been no "reportable event" as that term is defined in
Section 4043 of ERISA and the regulations thereunder with respect to any
Employee Benefit Plan subject to Title IV of ERISA which would require the
giving of notice or any event requiring disclosure under Section 4041(c)(3)(C)
or 4063(a) of ERISA which would reasonably be expected to result in a Material
Adverse Effect on the Company.
(e) Each of the Employee Benefit Plans which is intended to qualify
under Section 401(a) of the Code has been determined by the IRS to so qualify,
and the trusts maintained pursuant thereto are exempt from federal income
taxation under Section 501 of the Code, and the Company knows of no fact which
would adversely affect the qualified status of any such pension plan or the
exemption of such trust and which would reasonably be expected to result in a
Material Adverse Effect on the Company.
(f) Except as set forth in Section 3.11(f) of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, will except as expressly
contemplated by this Agreement, (i) result in any material payment becoming due,
or materially increase the amount of compensation due, to any current or former
employee of the Company or any of its subsidiaries; (ii) materially increase any
benefits otherwise payable under any Employee Benefit Plan; or (iii) result in
the acceleration of the time of payment or vesting of any such material
benefits.
(g) Other than as set forth in Section 3.11(g) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries has any
rights plan, preferred stock plan, deferred compensation plan or similar
Contract which applies to or provides for the grant or acceleration of any
benefits as a result of the transactions contemplated hereby.
(h) Except as set forth in Section 3.11(h) of the Company Disclosure
Schedule, there are no material unfunded benefit liabilities with respect to any
defined
16
benefit plan maintained by the Company or any of its subsidiaries, as determined
under reasonable actuarial assumptions. No pension plan maintained by the
Company or any of its subsidiaries has incurred an accumulated funding
deficiency, whether or not waived
SECTION III.12. Labor Matters. (a) Section 3.12 of the Company
Disclosure Schedule sets forth a list of all employment, labor or collective
bargaining agreements to which the Company or any subsidiary is party which
calls for the payment by the Company in any single year of an amount in excess
of $100,000 and except as set forth therein, there are no material employment,
labor or collective bargaining agreements which pertain to employees of the
Company or any of its subsidiaries. Except as set forth on Section 3.12 of the
Company Disclosure Schedule, the Company has heretofore made available to Parent
true and complete copies of the employment agreements and the labor or
collective bargaining agreements listed on Section 3.12 of the Company
Disclosure Schedule, together with all amendments, modifications, supplements
and side letters affecting the duties, rights and obligations of any party
thereunder.
(b) Except as set forth in Section 3.12 of the Company Disclosure
Schedule, no employees of the Company or any of its U.S. subsidiaries are
represented by any labor organization; no labor organization or group of
employees of the Company or any of its subsidiaries has made a pending demand
for recognition or certification; and, to the Company's knowledge, there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened in writing to be
brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority. To the Company's knowledge, except as set forth
in Section 3.12 of the Company Disclosure Schedule, there are no organizing
activities involving the Company or any of its subsidiaries pending with any
labor organization or group of employees of the Company or any of its
subsidiaries. Except as set forth in Section 3.12 to the Company Disclosure
Schedule, there is no strike, work stoppage or other major labor dispute
involving the Company or any of its subsidiaries pending or, to the knowledge of
the Company, threatened.
(c) Except as set forth on Section 3.12 to the Company Disclosure
Schedule, there are no material unfair labor practice charges, grievances or
complaints pending or to the best of the Company's knowledge, threatened in
writing by or on behalf of any employee or group of employees of the Company or
any of its subsidiaries.
(d) Except as set forth in Section 3.12 of the Company Disclosure
Schedule, there are no complaints, charges or claims against the Company or any
of its subsidiaries pending, or to the best of the Company's knowledge,
threatened in writing, arising out of, in connection with, or otherwise relating
to the employment or termination
17
of employment of any individual by the Company or any of its subsidiaries which
would be material to the Company, including, without limitation, any
discrimination claims or sexual harassment claims. Except as set forth in
Section 3.12 of the Company Disclosure Schedule, and except for payments in the
ordinary course of business, neither the Company nor any of its subsidiaries is
liable for any severance pay or other payments to any employee, former employee
or beneficiary of any employee or former employee arising out of any termination
of employment or other change in employment relationship.
SECTION III.13. Environmental Matters. (a) For purposes of this
Agreement:
(i) "Environmental Law" means any applicable federal, state,
local or foreign Law (including common Law) or other legal requirement relating
to the protection of natural resources, the environment and public and employee
health and safety or pollution or the release or exposure to Hazardous Materials
(as hereinafter defined) as such Laws have been and may be amended or
supplemented through the Closing Date;
(ii) "Hazardous Material" means any substance, material or
waste which is regulated, classified or otherwise characterized as hazardous,
toxic, pollutant, contaminant or words of similar meaning or regulatory effect
by any Governmental Entity or the United States, and includes, without
limitation, petroleum, petroleum by-products and wastes, asbestos and
polychlorinated biphenyls;
(iii) "Release" means any release, spill, effluent, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching,
or migration into the indoor or outdoor environment, or into or out of any
property owned, operated or leased by the applicable party or its subsidiaries;
and
(iv) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a Governmental Entity or
required under or taken pursuant to any Environmental Law, or voluntarily
undertaken to (A) clean up, remove, treat, or in any other way, ameliorate or
address any Hazardous Materials or other substance in the indoor or outdoor
environment; (B) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not endanger or threaten to
endanger the public health or welfare of the indoor or outdoor environment; (C)
perform pre-remedial studies and investigations or post-remedial monitoring and
care pertaining or relating to a Release; or (D) bring the applicable party into
compliance with any Environmental Law.
18
(b) Except as set forth in Section 3.13 of the Company Disclosure
Schedule:
(i) The Company and its subsidiaries are and have been in
compliance in all material respects with all applicable Environmental Laws;
(ii) The Company and its subsidiaries have all material
permits, authorizations, licenses or similar approvals required under applicable
Environmental Laws for the continued operations of their respective businesses,
and no material modification, revocation, reissuance or amendment will occur or
is required in connection with the transactions contemplated by this Agreement;
(iii) Neither the Company nor any of its subsidiaries is
subject to any outstanding written orders or decrees issued by any Governmental
Entity or is a party to any Contract with any person respecting (A)
Environmental Laws, (B) Remedial Action or (C) any Release or threatened Release
of a Hazardous Material;
(iv) Neither the Company nor any of its subsidiaries has
received any written communication alleging, with respect to any such party, the
violation of any Environmental Law, which violation would materially and
adversely affect the Company; and
(v) No judicial or administrative proceedings are pending or,
to the Company's knowledge, threatened against the Company or any of its
subsidiaries alleging the violation of or seeking to impose liability pursuant
to any Environmental Law and there are no investigations pending or, to the
Company's knowledge, threatened against the Company or any of its subsidiaries
under any Environmental Laws.
SECTION III.14. Tax Matters. (a) The Company and each of its
subsidiaries has timely filed all material Tax Returns (as hereinafter defined)
required to be filed by it. All such Tax Returns are materially complete and
correct. The Company and each of its subsidiaries has paid (or the Company has
paid on its subsidiaries' behalf) all Taxes shown due on such returns, or has
established reserves therefor. For purposes of this Agreement, "Tax" or "Taxes"
shall mean all taxes, charges, fees, imposts, or levies, including, without
limitation, all net income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, and property taxes, together with any interest and
any penalties, fines, additions to tax or additional amounts imposed by any
taxing authority (domestic or foreign). "Tax Returns" shall mean any report,
return, document, declaration or any
19
other information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including, without
limitation, information returns, any document with respect to or accompanying
payments or estimated Taxes.
(b) No material deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries that have
not been fully paid or adequately provided for in the appropriate financial
statements of the Company and its subsidiaries, no requests for waivers or
extensions of the time to assess any Taxes are pending, and no power of attorney
with respect to any Taxes has been executed or filed with any taxing authority.
All U.S. Federal income Tax Returns filed by or on behalf of the Company or any
of its subsidiaries for taxable periods prior to February, 1995 have been
reviewed by the relevant taxing authority.
(c) Except as set forth in Section 3.14(c) of the Company Disclosure
Schedule, none of the Company or any of its subsidiaries is a party to or is
bound by any Tax sharing agreement, Tax indemnity obligation or similar
agreement, arrangement or practice with respect to Taxes. Except as set forth in
Section 3.14(c) of the Company Disclosure Schedule, to the Company's knowledge,
no audit of any Tax Return of the Company or any of its subsidiaries is being
conducted by any taxing authority.
SECTION III.15. Material Contracts. (a) Section 3.15 of the Company
Disclosure Schedule sets forth a list of the following types of written
Contracts to which the Company or any of its subsidiaries is a party or to which
any of their respective assets are subject: (i) employment Contracts outside the
ordinary course of business, severance Contracts, personal services or
consulting Contracts providing for payments in excess of $250,000 per year,
non-competition Contracts imposing material competition restrictions on the
Company or its subsidiaries or indemnification Contracts outside the ordinary
course of business (including, without limitation, any Contract to which the
Company or any of its subsidiaries is a party involving employees of the
Company); (ii) licensing, distribution or dealership Contracts providing for
exclusivity in any region that constituted 5% or more of the Company's gross
revenues in the Company's latest fiscal year or for payments in excess of
$500,000 per year; (iii) partnership or joint venture Contracts; (iv) Contracts
for the acquisition, sale or lease of properties or assets of the Company or any
subsidiary in an amount greater than $500,000 (by merger, purchase or sale of
assets or stock or otherwise (other than the sale of products of the Company or
any subsidiaries in the ordinary course of business)) entered into since August
27, 1996; (v) loan or credit agreements, mortgages, indentures or other
Contracts or instruments evidencing indebtedness for borrowed money by the
Company or any of its subsidiaries or any Liens related to such Contracts or any
Contracts pursuant to which indebtedness for borrowed money may be incurred;
(vi) all Contracts outside the ordinary course of business relating
20
to Material Intellectual Property Rights (as defined herein) (vii) all Contracts
with any current or former shareholder, officer or director of the Company or
any of its subsidiaries, other than those disclosed on Section 3.24 of the
Company Disclosure Schedule; (viii) all other Contracts, other than purchase and
sales orders entered into in the ordinary course of business, which involve
amounts in excess of $1,000,000 and all other material Contracts which are not
terminable by either party thereto without penalty upon not more than 90 days
notice to the other party; and (ix) any Contracts to enter into any of the
foregoing (collectively, the "Material Contracts").
(b) Each of the Material Contracts constitutes the valid and legally
binding obligation of the Company or its subsidiaries, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar Laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and is in full force and effect. Except as
disclosed on Section 3.15(b) of the Company Disclosure Schedule, there is no
material default under any Material Contract either by the Company or, to the
Company's knowledge, by any other party thereto, and no event has occurred that
with the lapse of time or the giving of notice or both would constitute a
material default thereunder by the Company or, to the Company's knowledge, any
other party.
SECTION III.16. Brokers. Except for Donaldson, Lufkin & Jenrette
Securities Corporation, the fees and expenses of which will be paid by the
Company pursuant to an engagement letter, a copy of which has been provided to
Parent, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission or expense reimbursement in connection with
the transactions contemplated by this Agreement based upon arrangements made by
and on behalf of the Company or any of its Affiliates. The aggregate fees
payable to Donaldson, Lufkin & Jenrette Securities Corporation are not expected
to exceed $400,000 plus expenses.
SECTION III.17. Opinion of Financial Advisor. Donaldson, Lufkin &
Jenrette Securities Corporation has delivered to the Company its written
opinion, dated February 15, 1999, to the effect, that based upon and subject to
the assumptions and qualifications set forth therein, the aggregate Merger
Consideration to be received by the holders of Common Stock, the Class A
Preferred Stock and Class B Preferred Stock of the Company, taken together,
pursuant to the Agreement is fair to such stockholders from a financial point of
view.
SECTION III.18. Anti-Takeover Provisions. The Company has taken all
steps necessary to exempt the Merger and the other transactions contemplated
hereby from the requirements of any "business combination," "moratorium,"
"control bid," "control
21
share," or other anti-takeover Law of any state or foreign country which (i)
restricts the Company's ability to consummate the Merger or the other
transactions contemplated hereby, (ii) would have the effect of invalidating or
voiding this Agreement or any provision hereof, or (iii) would subject Parent or
Sub to any material impediment or condition in connection with the exercise of
their respective rights under this Agreement or their ownership and operation of
the business of the Surviving Corporation and its subsidiaries after the
Effective Time.
SECTION III.19. Intellectual Property. As used herein, the term
"Intellectual Property Rights" means any registered trade names, trademarks and
service marks and all applications therefor, all registered patents and all
applications therefor and all reissues, divisions, continuations and extensions
thereof. Section 3.19 of the Company Disclosure Schedule lists all Intellectual
Property Rights which are material to the operations of the Company and its
subsidiaries, taken as a whole ("Material Intellectual Property Rights"), and
which are owned by the Company or any of its subsidiaries or with respect to
which (as noted in Section 3.19 of the Company Disclosure Schedule) the Company
or any of its subsidiaries has any material right or license. To the Company's
knowledge, the Material Intellectual Property Rights are valid and in full force
and effect. Except as set forth in Section 3.19 of the Company Disclosure
Schedule, there have been no material interference actions or other judicial,
arbitration or other adversary proceedings concerning any of the Material
Intellectual Property Rights. Neither the Company nor any of its subsidiaries
has disposed of or permitted to lapse, or otherwise failed to preserve its right
to use, any of its Material Intellectual Property Rights. Except as disclosed in
Section 3.19 of the Company Disclosure Schedule, to the Company's knowledge,
neither the Company nor any of its subsidiaries has infringed any Intellectual
Property Right of any other person and, to the Company's knowledge, no such
infringement has been alleged in writing by any other person within the past
three years. Except as disclosed in Section 3.19 of the Company Disclosure
Schedule, to the knowledge of the Company, there has not been any infringement
by any other person of any of the Intellectual Property Rights of the Company or
any of its subsidiaries. Each of the Company and each of its subsidiaries has
the right to use all Intellectual Property Rights as are necessary to enable it
to conduct all material phases of its business in the manner presently conducted
by it.
SECTION III.20. Insurance Policies. Section 3.20 of the Company
Disclosure Schedule contains a list of all insurance policies of the Company and
its U.S. Subsidiaries and each such policy is in full force and effect. All
premiums with respect to such insurance policies which are due and payable prior
to the date of this Agreement have been paid, and no written notice of
cancellation or termination has been received by the Company with respect to any
such policy.
22
SECTION III.21. Certain Business Practices. Since August 27, 1996,
except as set forth in Section 3.21 of the Company Disclosure Schedule, neither
the Company nor any of its subsidiaries, nor to the Company's knowledge any
directors, officers, agents or employees of the Company or any of its
subsidiaries, (i) has used any funds for unlawful contributions, gifts,
entertainment or other expenses related to political activity, (ii) has made any
unlawful payment to any foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns or violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended or (iii) has violated
any Law relating to the sale or export of technology or products into foreign
countries.
SECTION III.22. Suppliers and Customers. Except as set forth in
Section 3.22 of the Company Disclosure Schedule, since November 30, 1998,
neither the Company nor any of its subsidiaries has received any written notice
from any supplier or customer of the Company or any of its subsidiaries of such
supplier's or customer's intention to cancel an existing agreement, with the
Company or such subsidiary prior to its expiration date, which agreement
involves the purchase or sale in any given year of amounts in excess of
$5,000,000.
SECTION III.23. Millennium Compliance. All information systems used
by the Company in connection with the operations of the Company and its
subsidiaries are Millennium Compliant in all material respects. For purposes of
this Agreement, the term "Millennium Compliant" means the ability, when used
individually or in conjunction with any other systems, software or equipment,
to: (i) accurately process Date Data before, after and across December 31, 1999
and throughout the year 2000 and beyond; (ii) provide correct results when
moving backwards and forwards between the 20th and 21st centuries; and (iii)
function without error or interruption related to or caused by Date Data. For
the purposes of this Agreement, the term "Date Data" means data which represents
or references dates in the same and/or different centuries. The Company has made
reasonable inquiries of its key vendors and suppliers with respect to whether
their information systems are Millennium Compliant and does not believe that any
failure on the part of any vendor or supplier to be Millennium Compliant will
have a Material Adverse Effect on the Company.
SECTION III.24. Related. Except as set forth in Section 3.24 of the
Company Disclosure Schedule, since August 27, 1996, no director, officer,
employee or Affiliate of the Company or any of its subsidiaries (i) has borrowed
any funds from or has outstanding any indebtedness or other obligations to the
Company or any of its subsidiaries, (ii) owns any direct or indirect interest of
any kind in, or is a
23
director, officer, employee, Affiliate or associate of, or consultant or lender
to, or borrower from, or has the right to participate in the management,
operations or profits of, any person which is (x) a competitor, supplier,
customer, distributor, lessor, tenant, creditor or debtor of the Company or any
of its subsidiaries, (y) engaged in a business related to the business of the
Company or any of its subsidiaries, or (z) participating in any transaction to
which the Company or any of its subsidiaries is a party, or (iii) is otherwise a
party to any Contract with the Company or any of its subsidiaries.
SECTION III.25. MVE Restaurant Services, Inc. Section 3.25 of the
Company Disclosure Schedule sets forth (i) a true and correct balance sheet of
MVE Restaurant Services, Inc., a Delaware corporation and wholly owned
subsidiary of the Company ("Restaurant Services"), as of December 31, 1998 and
(ii) a list of all full-time employees of Restaurant Services as of the date
hereof. No assets of Restaurant Services material to the conduct of the business
of the Company or the business of any other subsidiary of the Company are
shared.
SECTION 3.26. Full Disclosure. No representation or warranty by the
Company in this Agreement and no statement contained in the Company Disclosure
Schedule contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein, in light of
the circumstances in which they are made, not misleading. To the knowledge of
the Company, there is no event or circumstance which the Company has not
disclosed to Parent in writing which would have a Material Adverse Effect on the
Company.
ARTICLE IV
REPRESENTATION AND WARRANTIES
OF PARENT AND SUB
Except as set forth in the disclosure schedule delivered by Parent
to the Company prior to the execution of this Agreement (the "Parent Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), Parent
and Sub hereby represent and warrant to the Company as follows:
24
SECTION IV.1. Organizing. (a) Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its businesses as now
conducted or proposed by Parent to be conducted.
(b) Each of Parent and Sub is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect on Parent or Sub.
(c) Parent has heretofore delivered to the Company accurate and
complete copies of the certificate of incorporation and bylaws of each of Parent
and Sub as currently in effect.
SECTION IV.2. Authority Relative to This Agreement. (a) Each of
Parent and Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
No other corporate proceedings on the part of Parent or Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Parent and Sub and constitutes a valid, legal and binding agreement of each of
Parent and Sub, enforceable against each of Parent and Sub in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(b) The Boards of Directors of Parent and Sub, and Parent as the
sole stockholder of Sub, have in each case by unanimous vote duly and validly
authorized the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, and have taken all corporate actions
required to be taken by such Boards of Directors and Parent as the sole
stockholder of Sub for the consummation of the transactions contemplated hereby.
SECTION IV.3. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the HSR Act, the filing and
recordation of the Certificate
25
of Merger as required by the DGCL and as otherwise set forth in Section 4.3 to
the Parent Disclosure Schedule, no filing with or notice to, and no permit,
authorization, consent or approval of, any Governmental Entity, or any person
under any Contract to which Parent or Sub is a party or to which any of their
respective properties or assets is subject, is necessary for the execution and
delivery by Parent or Sub of this Agreement or the consummation by Parent or Sub
of the transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice would not be material to Parent or Sub. Neither the execution,
delivery and performance of this Agreement by Parent or Sub nor the consummation
by Parent or Sub of the Transactions contemplated hereby will (i) conflict with
or result in any breach of any provision of the respective certificates of
incorporation or bylaws (or similar governing documents) of Parent or Sub, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration or Lien) under, any of the terms,
conditions or provisions of any Contract to which Parent or Sub is a party or by
which either of them or any of their respective properties or assets may be
bound or (iii) violate any Law applicable to Parent or Sub or any of their
respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which would not have a Material Adverse Effect
on Parent of Subsidiary.
SECTION IV.4. No Prior Activities. Except for obligations incurred
in connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby, Sub has
neither incurred any obligation or liability nor engaged in any business or
activity of any type or kind whatsoever or entered into any agreement or
arrangement with any person.
SECTION IV.5. Available Funds. Parent has obtained a letter, dated
on or about the date hereof (the "Commitment Letter"), from The Chase Manhattan
Bank and Chase Securities Inc. (a copy of which has been provided to the
Company) which provides that, subject to the conditions set forth therein, upon
the funding of such Commitment Letter on the Closing Date, Parent will have
sufficient funds to consummate the Merger and to perform all of its obligations
under this Agreement and the transactions contemplated hereby, including,
without limitation, (i) the obligation, if any, to make the Change of Control
Payment (as defined in the Indenture) required to be made by the Company or MVE
pursuant to the Indenture, (ii) the payment in full of the Obligations (as
defined in the Credit Agreement) of the Company and MVE under the Credit
Agreement, dated as of October 17, 1997, by and among MVE and certain of its
Affiliates, the lenders party thereto and BankBoston, N.A., as agent to the
lenders (the "Credit Agreement"), (iii) the obligation to make any payments
required to be made by the Company pursuant to the Senior Subordinated Note
Purchase Agreement, dated as of May 5, 1998, among the
26
Company, Exeter Venture Lenders, L.P. and Exeter Equity Partners, L.P. (the
"Subordinated Note Agreement") in connection with the redemption of the notes
issued thereunder pursuant to Section 2.7(b) thereof, and (iv) any payments
required to be made to the holders of the Exeter Warrants to the extent such
holders exercise their put rights pursuant to such warrants.
SECTION IV.6. Brokers. Except for Schroder & Co., Inc., Chase
Securities Inc. and other investment banks retained by Parent in connection with
the financing of the transactions contemplated hereby, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of Parent or Sub or any of their
Affiliates.
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION V.1. Conduct of Business of the Company. Except as otherwise
specifically provided by this Agreement, during the period from the date hereof
to the Effective Time, the Company will, and will cause each of its subsidiaries
to, conduct its operations in the ordinary and usual course of business
consistent with past practice and use its reasonable best efforts to preserve
intact its current business organizations, preserve its goodwill, keep available
the service of its current officers and employees, maintain all material
properties and assets in customary condition and repair, maintain its books and
records in accordance with past practice, comply in all material respects with
all applicable Laws, and preserve its relationships with customers, suppliers
and others having business dealings with it. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement or
in the Company Disclosure Schedule, prior to the Effective Time, neither the
Company nor any of its subsidiaries will, without the prior written consent of
Parent, which consent shall not be unreasonably withheld or delayed:
(a) amend its certificate of incorporation or bylaws or similar
organizational documents;
(b) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities convertible into or exchangeable for any
stock or any equity equivalents
27
(including, without limitation, any stock options or stock appreciation rights),
except for the issuance of shares of Common Stock pursuant to the exercise of
outstanding Company Stock Options described in the Company Disclosure Schedule
or other currently outstanding convertible securities of the Company described
in the Company Disclosure Schedule;
(c) (i) split, combine or reclassify any shares of its capital
stock; (ii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock other than the dividend contemplated by Section 6.7 hereof
(iii) make any other actual, constructive or deemed distribution in respect of
any shares of its capital stock or otherwise make any payments to stockholders
in their capacity as such; or (iv) redeem, repurchase or otherwise acquire any
of its securities or any securities of any of its subsidiaries;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its subsidiaries (other than the Merger);
(e) alter through merger, liquidation, reorganization, restructuring
or in any other fashion its corporate structure or ownership of any subsidiary;
(f) (i) incur or assume any long-term or short-term debt or issue
any debt securities, except for borrowings under existing lines of credit in the
ordinary and usual course of business consistent with past practice, (ii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other person,
except in the ordinary and usual course of business consistent with past
practice, and except for obligations of the wholly owned subsidiaries of the
Company; (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to the wholly owned subsidiaries of
the Company, provided, however, that in the case of Restaurant Services, the
Company will not make any such loans, advances or capital contributions to the
extent that such loans, advances or capital contributions would exceed amounts
previously budgeted for such purposes (a copy of which budget is set forth as
Section 5.1 of the Company Disclosure Schedule) or customary loans or advances
to employees in the ordinary and usual course of business consistent with past
practice); (iv) pledge or otherwise encumber shares of capital stock of the
Company's subsidiaries; or (v) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material Lien
thereupon;
(g) except as may be required by Law or as specifically provided by
this Agreement, including the provisions of Section 6.5, enter into, adopt or
amend or
28
terminate any Employee Benefit Plan or any bonus, profit sharing, compensation,
severance, termination, stock option (except as provided in Section 5.1(b)
above), stock appreciation right, restricted stock, performance unit, stock
equivalent, stock purchase, retirement, deferred compensation, employment,
severance or other employee benefit agreement, or other arrangement for the
benefit of any director, officer or employee, or (except as set forth in Section
5.1(g) of the Company Disclosure Schedule and except for normal increases in the
ordinary and usual course of business consistent with past practice, and except
as required under existing agreements) increase in any manner the compensation
of any director, officer or employee or pay any benefit not required by any
plan, agreement or arrangement as in effect as of the date hereof (including,
without limitation, the granting of stock appreciation rights or performance
units);
(h) acquire, sell, lease or dispose of any assets outside the
ordinary and usual course of business consistent with past practice, enter into
any commitment or transaction outside the ordinary and usual course of business
consistent with past practice or grant any exclusive distribution rights outside
the ordinary and usual course of business consistent with past practice;
(i) except as may be required as a result of a change in Law or in
GAAP, change any of the accounting principles or practices used by it;
(j) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary and usual course of business
consistent with past practice or as required by GAAP;
(k) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein;
(l) make or revoke any Tax election, or settle or compromise any
material Tax liability or change (or make a request to any taxing authority to
change) any material aspect of its method of accounting for Tax purposes;
(m) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction in the ordinary and usual course of
business consistent with past practice of liabilities reflected or reserved
against in the consolidated financial statements of the Company and its
subsidiaries or incurred in the ordinary and usual course of business consistent
with past practice or waive the benefits of, or agree to
29
modify in any manner, any confidentiality, standstill or similar agreement to
which the Company or any of its subsidiaries is a party;
(n) enter into any agreement or arrangement that limits or otherwise
restricts the Company or any of its subsidiaries or any successor thereto or
that could, after the Effective Time, limit or restrict the Surviving
Corporation and its Affiliates (including Parent) or any successor thereto, from
engaging or competing in any material line of business or in any geographic
area;
(o) waive, release, grant or transfer any rights of material value
or modify or change in any material respect any existing Contract, other than in
the ordinary course of business consistent with past practice;
(p) enter into any new Contract, or modify or terminate any existing
Contract, except in the ordinary course of business consistent with past
practice, or enter into or modify any Contract between Restaurant Services and
the Company or any of its other subsidiaries other than as contemplated by
Section 6.7 hereof;
(q) settle or compromise any litigation (whether or not commenced
prior to the date of this Agreement) other than settlements or compromises of
litigation with respect to which the amount paid (after giving effect to
insurance proceeds actually received) in settlement or compromise is not
material to the Company;
(r) materially decrease or increase the level of capital
expenditures by the Company and its subsidiaries considered as a whole;
(s) effectuate a "plant closing" or "mass layoff," as those terms
are defined in the Worker Adjustment and Retraining Notification Act of 1988 or
any similar state Law;
(t) except as specifically contemplated by this Agreement, take any
action the taking of which, or omit to take any action the omission of which,
would cause any of the representations or warranties of the Company contained
herein to not continue to be true and correct in all material respects as though
made at and as of the date of such action or omission (except to the extent such
representation or warranty specifically refers to another date); or
(u) take, propose to take, or agree in writing or otherwise to take,
any of the actions described in Sections 5.1(a) through 5.1(t).
30
SECTION V.2. Access to Information. (a) Between the date hereof and
the Effective Time, the Company will give Parent and Sub and their authorized
representatives (including counsel, financial advisors and auditors) reasonable
access during normal business hours upon reasonable notice to all officers,
plants, offices, warehouses and other facilities and to all books and records of
the Company and its subsidiaries, will permit Parent and Sub to make such
inspections as Parent and Sub may reasonably require and will cause the
Company's officers and those of its subsidiaries to furnish Parent and Sub with
such financial and operating data and other information with respect to the
business, properties and personnel of the Company and its subsidiaries as Parent
or Sub may from time to time reasonably request, provided that no investigation
pursuant to this Section 5.2 shall affect or be deemed to modify any of the
representations or warranties made by the Company.
(b) Prior to the Effective Time, each of Parent and Sub will hold
and will cause its authorized representatives to hold in confidence all
documents and information concerning the Company and its subsidiaries furnished
to Parent or Sub in connection with the transactions contemplated by this
Agreement pursuant to the terms of that certain Confidentiality Agreement
entered into between the Company and Parent dated November 16, 1998 (the
"Confidentiality Agreement").
SECTION 5.3. Notification of Certain Events. The Company shall give
prompt notice to Parent, and Parent or Sub shall give prompt notice to the
Company, of (i) the occurrence or non-occurrence of any event which causes or is
reasonably likely to cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate in any material respect
or any covenant, condition or agreement contained in this Agreement not to be
complied with or satisfied and (ii) any failure of the Company on the one hand,
or Parent or Sub on the other hand, 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 5.3
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION VI.1. Stockholder Consent. Prior to the Effective Time, the
Company will take all action necessary in accordance with applicable law and its
Certificate of Incorporation and By-Laws to cause the stockholders of the
Company to
31
approve, by written consent, this Agreement and the Merger and such other
matters as may be necessary to effectuate the transactions contemplated hereby.
The Company will notify all of its stockholders who have not executed such
written consent as to the execution thereof, in such manner as is required by
the DGCL and the Company's Certificate of Incorporation and By-Laws, prior to
the Effective Date. In addition, the Company agrees to immediately notify Parent
in writing upon its receipt of any notices or other communications with respect
to the Dissenting Shares.
SECTION VI.2. Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate the
Merger and the other transactions contemplated by this Agreement. In furtherance
and not in limitation of the foregoing, each party hereto agrees to make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby as promptly as practicable
and in any event within ten business days of the date hereof and to supply as
promptly as practicable any additional information and documentary material that
may be requested pursuant to the HSR Act and to use its reasonable best efforts
to take, or cause to be taken, all other actions consistent with this Section
6.2 necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable.
(b) Each of Parent and the Company shall, in connection with the
efforts referenced in Section 6.2(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Antitrust Law, use its reasonable best efforts to (i) cooperate
in all respects with each other in connection with any filing or submission and
in connection with any investigation or other inquiry, including any proceeding
initiated by a private party; and (ii) keep the other party informed in all
material respects of any material communication received by such party from, or
given by such party to, the Federal Trade Commission (the "FTC"), the Antitrust
Division of the Department of Justice (the "DOJ") or any other Governmental
Entity and of any material communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
transactions contemplated hereby. For purposes of this Agreement, "Antitrust
Law" means the Sherman Act, as amended, the Clayton Act, as amended, the HSR
Act, the Federal Trade Commission Act, as amended, and all other Laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade or lessening of
competition through merger or acquisition.
32
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 6.2(a) and (b), each of Parent and the Company
shall use its reasonable best efforts to resolve such objections, if any, as may
be asserted by a Governmental Entity or other person with respect to the
transactions contemplated hereby under any Antitrust Law. In connection with the
foregoing, if any administrative or judicial action or proceeding, including any
proceeding by a private party, is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Agreement as violative of any
Antitrust Law, each of Parent and the Company shall cooperate in all respects
with each other and use its respective reasonable best efforts to contest and
resist any such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the transactions contemplated by this Agreement. In
connection with the receipt of any necessary approvals under any Antitrust Laws,
none of the Company, Parent, Sub or their respective subsidiaries shall be
required to divest or to hold separate, or otherwise to take or commit to take
any action that limits its freedom of action with respect to, or its ability to
retain, any material businesses, product lines or assets; provided, however,
that the Company agrees to take any action (including the divestiture of any
businesses, product lines or assets) requested by Parent, such actions to be
conditional upon the consummation of the Merger, in order to comply with any
Antitrust Laws or to satisfy any conditions imposed upon the consummation of the
transactions contemplated hereby by the FTC, the DOJ or any other any
Governmental Entity responsible for the enforcement of such Antitrust Laws.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 6.2 shall (i) limit a party's right to terminate this Agreement
pursuant to Section 8.1(b) or Section 8.1(c) so long as such party has up to
then complied in all material respects with its obligations under this Section
6.2.
SECTION VI.3. Public Announcements. Each of Parent, Sub and the
Company will consult with one another before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated by this Agreement, including, without limitation, the Merger, and
shall not issue any such press release or make any such public statement prior
to obtaining the consent of the other party, which consent shall not be
unreasonably withheld, except as may be required by applicable Law or by
obligations pursuant to any listing agreement with the New York Stock Exchange,
as determined by Parent, Sub or the Company, as the case may be. Notwithstanding
anything to the contrary herein, Parent shall have the right to discuss publicly
available information concerning the Company on conference calls or during
meetings with analysts and current or prospective investors or at the conference
sponsored by Schroder & Co., Inc scheduled to take place on or about March 2,
1999.
33
SECTION VI.4. Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, the Surviving Corporation shall, to the
fullest extent permitted by applicable Law, indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, a director or officer of the Company (each
an "Indemnified Party" and, collectively, the "Indemnified Parties") against all
losses, expenses (including reasonable attorneys' fees and expenses), claims,
damages or liabilities or, subject to the proviso of the next succeeding
sentence, amounts paid in settlement, arising out of actions or omissions
occurring at or prior to the Effective Time and whether asserted or claimed
prior to, at or after the Effective Time that are in whole or in part based on,
or arising out of the fact that such person is or was a director or officer of
the Company or any of its subsidiaries, including, without limitation, losses,
expenses, claims, damages or liabilities based on or arising out of or
pertaining to the transactions contemplated by this Agreement except, in the
case of directors who are Affiliated with MVE Investors, LLC or the members
thereof, for Misallocation Claims (as defined in Section 9.1), which shall be
handled in accordance with the provisions of Article IX. In the event of any
such loss, expense, claim, damage or liability (whether or not arising before
the Effective Time) other than, with respect to directors who are Affiliated
with MVE Investors, any loss, expense, claim, damage or liability based on or
arising out of any Misallocation Claim, (i) the Surviving Corporation shall pay
the reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to the Surviving Corporation,
promptly after statements therefor are received and otherwise advance to such
Indemnified Party upon request reimbursement of documented expenses reasonably
incurred, provided, however, that any such reimbursement shall be conditioned
upon receiving an agreement promptly to return such amounts to the Surviving
Corporation if a court of competent jurisdiction ultimately should determine
that indemnification of such person is prohibited by applicable Law, (ii) the
Surviving Corporation will cooperate in the defense of any such matter and (iii)
any determination required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under the DGCL and the
Surviving Corporation's certificate of incorporation or bylaws shall be made by
independent counsel mutually acceptable to the Surviving Corporation and the
Indemnified Party.
(b) For a period of six years after the Effective Time, the
Surviving Corporation shall maintain in effect the policies of directors' and
officers' liability insurance maintained by the Company (or a policy providing
substantially similar coverage) for the benefit of those persons who are covered
by such policies at the Effective Time (with respect to matters occurring prior
to the Effective Time), to the extent that such liability insurance can be
maintained annually at a total cost to the Surviving Corporation not greater
than $200,000; provided that if such insurance cannot
34
be so maintained or obtained at such cost, the Surviving Corporation shall
maintain or obtain as much of such insurance as can be so maintained or obtained
at a cost equal to $200,000.
(c) In the event the Surviving Corporation or any of its successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity or such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in either such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation shall assume the
obligations set for in this Section 6.4.
(d) To the fullest extent permitted by Law, from and after the
Effective Time, all rights to indemnification now existing in favor of the
directors and officers of the Company with respect to their activities as such
prior to the Effective Time (other than indemnification of directors Affiliated
with MVE Investors with respect to Misallocation Claims), as provided in the
Company's certificate of incorporation or bylaws, in effect on the date thereof
or otherwise in effect on the date hereof, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years from
the Effective Time, provided, however, that any such reimbursement shall be
conditioned upon receiving an agreement promptly to return such amounts to the
Surviving Corporation if a court of competent jurisdiction ultimately should
determine that indemnification of such person is prohibited by applicable Law.
(e) The provisions of this Section 6.4 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives. The Surviving Corporation shall pay for
all costs and fees (including reasonable attorneys' fees and expenses) incurred
by any Indemnified Party in connection with such Indemnified Party enforcing his
or her rights under this Section 6.4 in the event a court of competent
jurisdiction determines that the Surviving Corporation is responsible for
indemnifying such Indemnified Party hereunder.
SECTION VI.5. Employee Matters. (a) The Surviving Corporation will
honor the obligations of the Company and its subsidiaries under the provisions
of each employment, consulting, termination, severance, change in control and
indemnification agreement between and among the Company or any of its
subsidiaries and any current or former officer, director, consultant or employee
of the Company or any of its subsidiaries. During the period from the Effective
Time through December 31, 1999, Parent shall cause the Surviving Corporation and
its successors to maintain for all employees of the Company and its subsidiaries
employee benefit plans, programs, policies and practices in the aggregate no
less favorable than those benefits currently provided to the employees of
35
the Company and its subsidiaries.
(b) At the Effective Time, the Company will adopt a severance policy
for the benefit of the employees listed on Section 6.5(b) of the Company
Disclosure Schedule (the "Named Employees"). If the employment of any Named
Employee is terminated by the Company at any time without cause or any Named
Employee resigns for good reason, such Named Employee shall be entitled to the
benefits described on Section 6.5(b) of the Company Disclosure Schedule. Parent
agrees that it will cause the Surviving Corporation to honor all of the
Company's obligations under this Section 6.5(b). For purposes of this Section
6.5(b) only, "good reason" means any resignation following a change in title,
duties or responsibilities without such employee's consent, any reduction in
compensation or benefits from the current compensation and benefits provided to
such employees or a change in location of such employee's principal office or
the place where such employee conducts his principal employment activities, in
each case to a place more than 30 miles from such employee's current principal
office, provided, however, that with respect to any Named Employee who is a
member of senior management and designated as such on Section 6.5(b) of the
Company Disclosure Schedule, good reason shall not include a resignation because
the employee's position changed if such employee was offered a position with the
same or a higher salary and benefits no less favorable than the employee's
current benefits, such offered position has a comparable level of responsibility
and job title and is located within 30 miles of such employee's current
principal office. For purposes of this Section 6.5(b) only, "cause" means (i) a
material breach by the employee of any employment agreement currently in place
between such employee and the Company or any subsidiary of the Company (or, if
no such employment agreement is currently in place, the employee's continuing
failure to comply with the reasonable directives of any person to whom such
employee directly or indirectly reports or the Board of Directors of the Company
after written notice thereof and a period of 10 days to cure such failure) or
(ii) the conviction by the employee of any felony or any other offense involving
misappropriation of a material amount of money or property from the Company.
(c) The provisions of Section 6.5(b) are intended to be for the
benefit of, and may be enforceable by, each of the Named Employees. The
Surviving Corporation shall pay for all costs and fees (including reasonable
attorneys' fees and expenses) incurred by any Named Employee in connection with
such person enforcing his rights under Section 6.5(b) in the event that such
Employee's claim is successful, as determined by a court of competent
jurisdiction.
SECTION VI.6. Obligations of Sub. Subject to Sections 7.1 and 7.2
below, Parent will take all action necessary to cause Sub to perform its
obligations under
36
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION VI.7. Distribution. (a) Immediately prior to the Effective
Time, the Company shall make a distribution to the holders of record as of a
date not later than two business days prior to the Effective Time, of the Common
Stock, pro rata in accordance with the relative ownership of shares of Common
Stock, of eighty percent (80%) of the issued and outstanding capital stock of
Restaurant Services then owned by the Company and its subsidiaries, taken as a
whole, or otherwise effect a transfer of such interests to the holders of Common
Stock in a form mutually acceptable to Parent and the Company.
(b) In the event that Restaurant Services offers additional shares
of its capital stock to any person, the Company shall have the right to
participate, pro rata, in any such offering and to participate, pro rata, in any
additional offerings of capital stock of Restaurant Services in order to
maintain its percentage interest in the capital stock of Restaurant Services,
provided that the Company's rights hereunder shall terminate if at any time the
Company fails to participate in any such offering.
(c) The parties acknowledge that Parent, the Company and Restaurant
Services will enter into an agreement (the "Restaurant Services Agreement")
which shall provide (i) that the Company will provide certain transition
services to Restaurant Services for up to one year at the Company's cost, (ii)
that the Company will have the right to designate a member of the Board of
Directors of Restaurant Services for so long as the Company owns at least 10% of
the capital stock of Restaurant Services on a fully-diluted basis (excluding
employee stock options), (iii) that Parent, the Company and their Affiliates
will not compete with Restaurant Services in the business of providing cooking
oil to, retrieving cooking oil from, or storing or circulating cooking oil in
restaurants for a period of ten years, (iv) for the preemptive rights described
in Section 6.7(b) and (v) for mutual indemnity between the Company and
Restaurant Services in respect of any liabilities attributable to such party.
SECTION VI.8. Cooperation in Financing. The Company shall use its
reasonable efforts to assist Parent with Parent's efforts to finance the
transactions contemplated by this Agreement.
SECTION VI.9. Indenture. (a) After the Effective Time, the Surviving
Corporation or MVE shall (i) make the Change in Control Offer and, if necessary,
the Change of Control Payment (both as defined in the Indenture) required to be
made by MVE pursuant to Section 4.14 of the Indenture, and (ii) take any other
additional actions
37
required by the Indenture in conjunction with such payments.
(b) In the event Parent desires to make an offer prior to the
Effective Time to redeem the outstanding 12-1/2% Senior Secured Notes Due 2002
of MVE, Inc. (which offer would become effective upon or following the
consummation of the Merger), the Company and its subsidiaries (including without
limitation MVE, Inc.) shall cooperate with Parent with respect thereto.
SECTION VI.10. Subordinated Notes. After the Effective Time, the
Surviving Corporation shall (i) redeem all of the outstanding notes issued under
the Subordinated Note Agreement pursuant to Section 2.7(b) thereto and pay all
accrued and unpaid interest thereon and any premium payable in connection
therewith, and (ii) take any other additional actions required by the Note
Purchase Agreement.
SECTION VI.11. Repayment of Bank Debt. The Surviving Corporation
shall pay in full the Obligations (as defined in the Credit Agreement) of the
Company and MVE under the Credit Agreement.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION VII.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the party being benefitted thereby, to the extent
permitted by applicable Law:
(a) Any waiting period applicable to the Merger under the HSR Act
shall have expired or early termination thereof shall have been granted without
limitation, restriction or condition and all required consents or approvals
under foreign Antitrust Laws shall have been obtained; and
(b) No temporary restraining order, preliminary or permanent
injunction or other order issued by any Governmental Entity, and no other legal
restraint or prohibition, shall be in effect preventing or prohibiting the
consummation of the Merger.
SECTION VII.2. Additional Conditions to Parent's and Sub's
Obligations
38
to Effect the Merger. The obligations of Parent and Sub to consummate the
transactions contemplated by this Agreement are subject to the fulfillment at or
prior to the Effective Time of the following condition, any or all of which may
be waived in whole or in part by Parent and Sub:
(a) The representations and warranties of the Company set forth in
this Agreement shall be true and accurate as of the Effective Time as though
made on or as of such date (except for those representations and warranties that
address matters only as of a particular date or only with respect to a specific
period of time which need only be true and accurate as of such date or with
respect to such period and except for the representation set forth in Section
3.6 hereof which needs only to be true and correct as of the date hereof) and
the Company shall not have failed to perform or comply with any obligation,
agreement or covenant required by this Agreement to be performed or complied
with by it except, in each case where the failure of such representations and
warranties to be true and accurate (without giving effect to any limitation as
to "materiality" or "material adverse effect" set forth therein), or the failure
to perform or comply with such obligations, agreements or covenants, do not,
have a Material Adverse Effect on the Company or a materially adverse effect on
the Company's ability to consummate the Merger or the other transactions
contemplated hereby.
(b) The Company shall have delivered to Parent a certificate signed
by the president of the Company certifying as to the matters described in
Section 7.2(a).
(c) There shall have been no Material Adverse Change since the date
of this Agreement. For purposes hereof, Material Adverse Change means (i)
physical casualty or damage to the assets or property of the Company that
results in a cost to the Company, after taking into account third-party
insurance proceeds which have been or are reasonably likely to be received, of
an amount in excess of $35,000,000 or (ii) a probable reduction, after taking
into account third-party insurance proceeds which have been or are reasonably
likely to be received, in the Company's earnings before interest, taxes,
depreciation and amortization (to be calculated in a manner consistent with the
Financials) of an amount in excess of $7,500,000 in the twelve-month period
following the date on which the event giving rise to the probable reduction
occurs.
(d) There shall have not occurred a material disruption of or
material adverse change in financial, banking or capital market conditions that,
in the reasonable judgment of The Chase Manhattan Bank and Chase Securities
Inc., would materially impair their syndication of the Credit Facilities (as
defined in the Commitment Letter), but only to the extent that, as a result
thereof, The Chase Manhattan Bank and Chase Securities Inc. refuse to provide
the financing contemplated in the Commitment Letter.
39
(e) There shall have been delivered to Parent executed copies of (i)
the Indemnification and Warrant Purchase Agreement among Parent, the Company and
the members of MVE Investors in substantially the form of Exhibit A hereto (the
"Indemnification Agreement"), (ii) the Escrow Agreement and (iii) the Restaurant
Services Agreement (which shall contain terms reasonably satisfactory to
Parent).
(f) The Company shall have cancelled or terminated the ACI Warrant
and all agreements with A.C. Israel Enterprises, Inc. and American Securities
Capital Partners, L.P. or their Affiliates without any continuing cost to the
Company.
SECTION VII.3. Additional Conditions to the Company's Obligations to
Effect the Merger. The obligation of the Company to consummate the transactions
contemplated by this Agreement is subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the Company:
(a) The representations and warranties of Parent and Sub set forth
in this Agreement shall be true and accurate as of the Effective Time as though
made on or as of such date (except for those representations and warranties that
address matters only as of a particular date or only with respect to a specific
period of time which need only be true and accurate as of such date or with
respect to such period) and Parent and Sub shall not have failed to perform or
comply with any obligation, agreement or covenant required by this Agreement to
be performed or complied with by them except, in each case where the failure of
such representations and warranties to be true and accurate (without giving
effect to any limitation as to "materiality" or "material adverse effect" set
forth therein), or the failure to perform or comply with such obligations,
agreement or covenants, do not have a Material Adverse Effect on Parent and Sub
or a materially adverse effect on their ability to consummate the Merger;
(b) MVE Investors shall have been merged into Sub pursuant to an
agreement satisfactory to Parent and MVE Investors; provided that if no such
agreement has been executed prior to February 26, 1999, this condition shall be
deemed to have been fulfilled;
(c) Parent and Sub shall have delivered to the Company a certificate
signed by their respective presidents certifying as to the matters described in
Section 7.3(a); and
(d) Parent shall have delivered to the Company executed copies of
(i)
40
the Indemnification Agreement, (ii) the Escrow Agreement and (iii) the
Restaurant Services Agreement.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION VIII.1. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after approval of matters presented in connection with the Merger by
the stockholders of the Company:
(a) By the mutual written consent of Parent and the Company.
(b) By either of Parent or the Company if any of the conditions
specified in Section 7.1 have not been satisfied as of the date which is 90 days
after the date of execution of this Agreement or if satisfaction of any such
condition is or becomes impossible (other than through the failure of any party
seeking to terminate this Agreement to comply fully with its obligations under
this Agreement).
(c) By either party if the Closing has not occurred (other than
through failure of any party seeking to terminate this Agreement to comply fully
with its obligations under this Agreement) on or before the date which is 90
days from the date of execution of this Agreement, or such later date as the
parties may agree upon.
(d) By the Company:
(i) if any of the conditions specified in Section 7.3 have not
been satisfied as of the date which is 90 days from the date of execution of
this Agreement or if satisfaction of any such condition is or becomes impossible
(other than through the failure of the Company to comply fully with its
obligations under this Agreement) and the Company has not waived such condition
prior to the Effective Time;
(ii) if there shall be a breach by Parent or Sub of any of
their representations, warranties, covenants or agreements contained in this
Agreement and such breach materially adversely affects the Company's ability to
consummate the Merger, which breach cannot or has not been cured within 20 days
after the giving of written notice to Parent.
41
(e) By Parent or Sub:
(i) if any of the conditions specified in Section 7.2 have not
been satisfied as of the date which is 90 days from the date of execution of
this Agreement or if satisfaction of any such condition is or becomes impossible
(other then through the failure of Parent or Sub to comply fully with their
obligations under this Agreement) and the Company has not waived such condition
prior to the Effective Time;
(ii) if there shall be a breach by the Company of any of its
representations, warranties, covenants or agreements contained in this Agreement
and such breach or breaches, have a Material Adverse Effect on the Company or
materially adversely affects Parent's ability to consummate the Merger, which
cannot or has not been cured within 20 days after the giving of written notice
to the Company.
SECTION VIII.2. Effect of Termination. In the event of termination
of this Agreement by either the Company or Parent or Sub as provided in Section
8.1, this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other than
the provisions of Section 5.2(b), this Section 8.2, Section 8.3, Section 8.4 and
Article X.
SECTION VIII.3. Fees and Expenses. Except as otherwise provided
herein, all fees and expenses incurred in connection with the Merger, this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees or expenses, whether or not the Merger is consummated.
SECTION VIII.4. Liquidated Damages. (a) Notwithstanding anything to
the contrary in this Agreement, if this Agreement is terminated by Parent or Sub
pursuant to (i) Section 8.1(c) and all of the conditions to the Company's
obligations to effect the Merger have been satisfied, or (ii), Section
8.1(e)(ii), Parent's and Sub's sole and exclusive remedy against the Company
under this Agreement and with respect to the transactions contemplated hereby
shall be to exercise its right to terminate this Agreement and to receive the
payment from the Company, in cash in an amount equal to $15,000,000 as
liquidated damages (and not as a penalty), it being understood that Parent's and
Sub's actual damages in the event of such termination are difficult to ascertain
and that such proceeds represent the parties' best current estimate of such
damages and each party agrees that such estimate is reasonable. The Company
acknowledges that its obligations under this Section 8.4(a) are a material
inducement for Parent and Sub to enter into this Agreement.
42
(b) Notwithstanding anything to the contrary in this Agreement, if
this Agreement is terminated by the Company pursuant to (i) Section 8.1(c) and
all of the conditions to the Parent's and Sub's obligations to effect the Merger
have been satisfied, or (ii), Section 8.1(d)(ii), the Company's sole and
exclusive remedy against Parent and Sub under this Agreement and with respect to
the transactions contemplated hereby shall be to exercise its right to terminate
this Agreement and to receive the payment from Parent and Sub, in cash in an
amount equal to $15,000,000 as liquidated damages (and not as a penalty), it
being understood that the Company's actual damages in the event of such
termination are difficult to ascertain and that such proceeds represent the
parties' best current estimate of such damages and each party agrees that such
estimate is reasonable; provided, however, that in the case of termination by
the Company pursuant to (i) above, which termination is based upon the failure
of the condition specified in Section 7.2(d), the amount of liquidated damages
provided for in this Section 8.4(b) shall be $7,500,000. Parent and Sub
acknowledge that their obligations under this Section 8.4(b) are a material
inducement for the Company to enter into this Agreement.
SECTION VIII.5. Amendment. This Agreement may be amended by action
taken by the Company, Parent and Sub at any time before or after approval of the
Merger by the Company Requisite Vote but, after any such approval, no amendment
shall be made which requires the approval of the Company's stockholders under
applicable Law without such approval. This Agreement may not be amended except
by an instrument in writing signed on behalf of the parties hereto.
SECTION VIII.6. Extension; Waiver. At any time prior to the
Effective Time, each party hereto (for these purposes, Parent and Sub shall
together be deemed one party and the Company shall be deemed the other party)
may (i) extend the time for the performance of any of the obligations or other
acts of the other party, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document, certificate
or writing delivered pursuant hereto, or (iii) waive compliance by the other
party with any of the agreements or conditions contained herein. Any agreement
on the part of either party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of either party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
43
ARTICLE IX
SPECIAL INDEMNIFICATION
SECTION IX.1. Special Indemnification. At any time after the
Effective Time and prior to the sixth anniversary of the Effective Time (the
"Holdback Termination Date") the former holders of the Common Stock of the
Company shall indemnify Parent, Surviving Corporation and each of the members of
MVE Investors (the "Members") (each an "Indemnitee" and collectively, the
"Indemnitees") in respect of, and hold them harmless against, any and all debts,
obligations and other Liabilities, monetary damages, fines, fees, penalties,
interest obligations, deficiencies, losses and expenses, including amounts paid
in settlement, interest, court costs, reasonable costs of investigators,
reasonable fees and expenses of attorneys, accountants, financial advisors, and
other expenses, and other expenses of litigation incurred or suffered by the
Indemnitees or any Affiliate thereof ("Damages") arising out of or in connection
with (i) any action, suit or proceeding brought by or on behalf of any holder of
Common Stock challenging or disputing the allocation of the Merger Consideration
among the holders of Common Stock and the Class A Preferred Stock
("Misallocation Claims") and (ii) the lawsuits in the Minnesota District Court
for the First Judicial District (Dakota County) captioned R. Edwin Powell and
Ralph E. Powell Family Ltd. Partnership, Plaintiffs v. MVE Holdings, Inc., MVE,
Inc., CAIRE, Inc., MVE Investors, LLC, A.C. Israel Enterprises, Inc., American
Securities Capital Partners, L.P., Kevin S. Penn, Michael G. Fisch and J. David
O'Halloran, Defendants (Court File No. C5-97-10024) and R. Edwin Powell,
Plaintiff v. MVE Holdings, Inc., Defendant (Court File No. C9-98-6214),
currently consolidated by Order of the court on December 11, 1998, as Case No.
19-C9-98-6214 (collectively, the "Powell Claims").
SECTION IX.2. Method of Asserting Claims. All claims against the
former holders of Common Stock for indemnification by an Indemnitee pursuant to
Section 9.1 ("Indemnity Claims") shall be made in accordance with the provisions
of this Article IX and the Escrow Agreement (as defined below).
SECTION IX.3. Limitations. Notwithstanding anything to the contrary
herein, the aggregate amount of Damages under this Article IX payable by the
former holders of Common Stock shall not exceed the Holdback Amount and the
Indemnitees' sole recourse in respect of the holders of Common Stock shall be to
the Holdback Amount and they shall have no additional rights against the former
holders of Common Stock hereunder.
44
SECTION IX.4. Escrow Agreement. The Holdback Amount shall be held
subject to the terms and conditions of this Agreement, pursuant to an escrow
agreement (the "Escrow Agreement") by and among the parties hereto, ACI Capital
I, LLC and an escrow agent to be agreed upon by the parties hereto (the "Escrow
Agent"), in substantially the form attached hereto as Exhibit B. The Holdback
Amount shall be held in an interest-bearing account as provided under the Escrow
Agreement and interest accrued shall be added to the Holdback Amount.
SECTION IX.5. Distribution of Holdback Amount. The remaining portion
of the Holdback Amount shall be distributed, pro rata, to the former holders of
Common Stock on the Holdback Termination Date. Notwithstanding the foregoing,
any holder of Common Stock or, from and after the Effective Time, former holder
of Common Stock, shall be entitled to his pro rata share of the Holdback Amount
if such holder has executed and delivered to the Company a consent/release in
the form attached hereto as Exhibit C.
ARTICLE X
MISCELLANEOUS
SECTION X.1. Nonsurvival of Representations and Warranties. None of
the representations, warranties, covenants and agreements in this Agreement or
in any exhibit, schedule or instrument delivered pursuant to this Agreement
shall survive beyond the Effective Time, except for those covenants and
agreements contained herein and therein that by their terms apply or are to be
performed in whole or in part after the Effective Time including, but not
limited to, Sections 6.4, 6.5, Article IX and this Article X of this Agreement
and the Indemnification Agreement, the Escrow Agreement and the Restaurant
Services Agreement. This Section 10.1 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the Effective
Time.
SECTION X.2. Entire Agreement; Assignment. (a) This Agreement and
the Indemnification Agreement, the Escrow Agreement and the Restaurant Services
Agreement constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and thereof and supersede all other prior
or contemporaneous agreements and understandings, both written and oral, between
the parties with respect to
45
the subject matter hereof and thereof other than the Confidentiality Agreement.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by operation of Law (including, but not
limited to, by merger or consolidation) or otherwise; provided, however, that
Sub may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any direct wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent or Sub of its obligations
hereunder if such assignee does not perform such obligations; provided, further,
Parent may assign its rights and obligations hereunder in connection with a sale
or transfer of all or substantially all of its assets or a merger of Parent with
and into another person; provided, further, Parent may assign its rights
hereunder to any of its creditors. Any assignment in violation of the preceding
sentence shall be void. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION X.3. Notices. All notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given, (i) five business days following sending by registered or
certified mail, postage prepaid, (ii) when sent if sent by facsimile; provided
that the fax is promptly confirmed by telephone confirmation thereof, (iii) when
delivered, if delivered personally to the intended recipient and (iv) one
business day following sending by overnight delivery via a national courier
service, and in each case, addressed to a party at the following address for
such party:
if to Parent or to
Sub, to: Chart Industries, Inc.
5885 Landerbrook Drive
Suite 150
Mayfield Heights, Ohio 44124
Attention: Arthur S. Holmes
Facsimile: (440) 753-1451
46
with a copy to: Calfee, Halter & Griswold LLP
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114-2688
Attention: Thomas F. McKee
Facsimile: (216) 241-0816
if to the Company prior
to the Effective Time, to: MVE Holdings, Inc.
3505 County Road 42 West
Burnsville, Minnesota 55306
Attention: General Counsel
Facsimile: (612) 882-5180
with a copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Stephen Besen, Esq.
Facsimile: (212) 310-8007
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION X.4. Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without giving
effect to the conflict of Law principles thereof.
SECTION X.5. Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
SECTION X.6. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and its successors and
permitted assigns, and, except as provided in Sections 6.4 and 6.5, nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
SECTION X.7. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this
47
Agreement, or the application thereof to any person or any circumstance, is
invalid or unenforceable, (a) if necessary, a suitable and equitable provision
shall be substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision
and (b) the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
SECTION X.8. Specific Performance. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any court of
the United States located in the State of Delaware or in Delaware state court,
this being in addition to any other remedy to which they are entitled at Law or
in equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated hereby, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated hereby
in any court other than a federal or state court sitting in the State of
Delaware.
SECTION X.9. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION X.10. Interpretation. (a) The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." All terms defined in
this Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well
48
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time,
amended, qualified or supplemented, including (in the case of agreements and
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and all attachments thereto and instruments
incorporated therein. References to a person are also to its permitted
successors and assigns.
(b) The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to February 16, 1999. The phrase "made available" in this agreement
shall mean that the information referred to has been actually delivered to the
party to whom such information is to be made available.
(c) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
SECTION X.11. Definitions.
(a) "Affiliate" means, with respect to any person, any other person
controlling, controlled by or under common control with such particular person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a person whether through the ownership of
voting securities, contract or otherwise.
(b) "beneficial ownership" or "beneficially own" shall have the
meaning provided in Section 13(d) of the Exchange Act and the rules and
regulations thereunder.
(c) "Contract" means any contract, commitment, understanding,
instrument, lease, pledge, mortgage, indenture, note, license, agreement,
purchase or sales order, promise or other arrangement evidencing or creating any
obligation, whether written or oral.
(d) "know" or "knowledge" means, with respect to the Company, (i)
the actual knowledge of Kevin Penn or (ii) the knowledge of John M. Kucharik,
David Hoffman and Lewis Shender after due inquiry of the books and records of
the Company,
49
provided, however, that due inquiry shall not require any inquiry of other
employees of the Company or its subsidiaries.
(e) "Law" means any domestic or foreign law, order, writ,
injunction, decree, ordinance, award, stipulation, statute, judicial or
administrative doctrine, rule or regulation entered by a Governmental Entity.
(f) "Material Adverse Effect" means with respect to any entity, any
change, circumstance or effect that, individually or in the aggregate with all
other changes, circumstances and effects, is or is reasonably likely to be
materially adverse to (i) the assets, properties, condition (financial or
otherwise), or results of operations of such entity and its subsidiaries taken
as a whole, other than any change, circumstance or effect relating (w) to the
economy or financial markets in general, (x) changes in general political or
regulatory conditions in the United States or any foreign jurisdictions in which
such entity conducts business, (y) generally to the industries in which such
entity operates and not specifically relating to such entity or (z) to the
announcement or pendency of the Merger or (ii) the ability of such party to
consummate the transactions contemplated by this Agreement.
(g) "Permitted Lien" means Liens for taxes, fees, assessments,
governmental charges or claims that are not due and payable, inchoate mechanics;
warehousemen's, and other statutory Liens incurred in the ordinary course of
business, easements, rights-of-way, restrictions, municipal zoning ordinances,
reservations, permits and similar charges, encumbrances, title defects or other
irregularities and any other Liens that do not materially interfere with the
ordinary course of business of the Company.
(h) "person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).
(i) "subsidiary" means, when used with reference to any entity, any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other subsidiary of such party is a general or
managing partner or (ii)
50
the outstanding voting securities or interests of, which 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, is directly or indirectly owned or controlled by such party or by
any one or more of its subsidiaries.
[signature page follows]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed on its behalf as of the day and year first above written.
CHART INDUSTRIES, INC.
By: /s/ Arthur S. Holmes
-------------------------------------
Name: Arthur S. Holmes
Title: Chairman and CEO
CHART ACQUISITION COMPANY
By: /s/ Arthur S. Holmes
-------------------------------------
Name: Arthur S. Holmes
Title: Chairman and CEO
MVE HOLDINGS, INC.
By: /s/ John M. Kucharik
-------------------------------------
Name: John M. Kucharik
Title: President and CEO
52