AGREEMENT AND PLAN
OF
MERGER
----------
By and Among
PLENUM PUBLISHING CORPORATION,
KLUWER BOSTON, INC.
and
PPC ACQUISITION CORP.
June 10, 1998
TABLE OF CONTENTS
Page
----
ARTICLE I THE OFFER........................................................1
SECTION 1.1 The Offer............................................1
SECTION 1.2 Company Action.......................................3
SECTION 1.3 Directors............................................4
ARTICLE II THE MERGER.......................................................5
SECTION 2.1 The Merger...........................................5
SECTION 2.2 Effective Time; Closing..............................5
SECTION 2.3 Effects of the Merger; Subsequent Actions............5
SECTION 2.4 Certificate of Incorporation and By-Laws of
the Surviving Corporation............................5
SECTION 2.5 Directors............................................6
SECTION 2.6 Officers.............................................6
SECTION 2.7 Conversion of Shares.................................6
SECTION 2.8 Conversion of Purchaser Common Stock.................6
SECTION 2.9 Stockholders' Meeting................................6
SECTION 2.10 Merger Without Meeting of Stockholders...............7
ARTICLE III DISSENTING SHARES; PAYMENT FOR SHARES............................7
SECTION 3.1 Dissenting Shares....................................7
SECTION 3.2 Exchange of Certificates.............................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................9
SECTION 4.1 Organization and Qualification; Subsidiaries.........9
SECTION 4.2 Charter and By-laws..................................9
SECTION 4.3 Capitalization.......................................9
SECTION 4.4 Authority Relative to this Agreement................10
SECTION 4.5 No Conflict; Required Filings and Consents..........10
SECTION 4.6 SEC Reports and Financial Statements................11
SECTION 4.7 Information.........................................12
SECTION 4.8 Changes.............................................12
SECTION 4.9 Opinion of Financial Advisor........................13
SECTION 4.10 Takeover Statutes...................................13
SECTION 4.11 Litigation..........................................13
SECTION 4.12 Employee Plans and Arrangements.....................13
SECTION 4.13 Assets..............................................15
SECTION 4.14 Intellectual Property...............................15
SECTION 4.15 Taxes...............................................16
SECTION 4.16 Environmental Laws and Regulations..................16
SECTION 4.17 Insurance...........................................17
SECTION 4.18 Brokers.............................................17
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT
AND PURCHASER...................................................18
SECTION 5.1 Organization and Qualification......................18
SECTION 5.2 Authority Relative to this Agreement and
the Stock Purchase Agreements.......................18
SECTION 5.3 No Conflict; Required Filings and Consents..........18
SECTION 5.4 Information.........................................19
SECTION 5.5 Financing...........................................19
SECTION 5.6 Brokers.............................................19
ARTICLE VI COVENANTS.......................................................19
SECTION 6.1 Conduct of Business of the Company..................19
SECTION 6.2 Access to Information...............................21
SECTION 6.3 Reasonable Best Efforts.............................22
SECTION 6.4 Consents............................................22
SECTION 6.5 Public Announcements................................23
SECTION 6.6 Indemnification.....................................23
SECTION 6.7 Notification of Certain Matters.....................24
SECTION 6.8 No Solicitation.....................................24
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER........................26
SECTION 7.1 Conditions to Each Party's Obligation
to Consummate the Merger............................26
ARTICLE VIII TERMINATION; AMENDMENTS; WAIVER...........................26
SECTION 8.1 Termination.........................................26
SECTION 8.2 Effect of Termination...............................27
SECTION 8.3 Fees and Expenses...................................27
SECTION 8.4 Amendment...........................................28
SECTION 8.5 Extension; Waiver...................................29
ARTICLE IX MISCELLANEOUS...................................................29
SECTION 9.1 Non-Survival of Representations and Warranties......29
SECTION 9.2 Entire Agreement; Assignment........................29
SECTION 9.3 Validity............................................29
SECTION 9.4 Notices.............................................29
SECTION 9.5 Governing Law.......................................31
SECTION 9.6 Consent to Jurisdiction; Waiver of Immunities.......31
SECTION 9.7 Descriptive Headings................................31
SECTION 9.8 Counterparts........................................31
SECTION 9.9 Parties in Interest.................................31
SECTION 9.10 Certain Definitions.................................31
SECTION 9.11 Specific Performance................................32
ii
LIST OF SCHEDULES
Schedule 4.8 -- Material Changes
Schedule 4.11 -- Litigation
Schedule 4.12(a) -- Employee Benefit Plans
Schedule 4.12(i) -- Employment/Termination Agreements
Schedule 4.12(j) -- Labor Union
Schedule 4.14(b) -- Licenses
Schedule 4.16 -- Environmental Matters
Schedule 4.17 -- Insurance
iii
LIST OF DEFINED TERMS
Page
----
Acquisition Proposal........................................................23
Affiliate...................................................................29
Agreement....................................................................1
Antitrust Laws..............................................................21
Benefit Plans...............................................................12
Board........................................................................1
Certificates.................................................................7
Closing......................................................................5
Closing Date.................................................................5
Code........................................................................12
Commonly Controlled Entity..................................................12
Company......................................................................1
Company Process Agent.......................................................28
Company Representatives.....................................................20
Confidentiality Agreement...................................................27
Consent.....................................................................10
Control.....................................................................29
Dissenting Shares............................................................7
Effective Time...............................................................5
Employee Pension Benefit Plan...............................................12
Employee Welfare Benefit Plan...............................................12
Environmental Claim.........................................................15
Environmental Laws..........................................................16
Environmental Permits.......................................................15
ERISA.......................................................................12
Exchange Act................................................................10
Executive Stock Purchase Agreement...........................................1
GAAP........................................................................11
GCL..........................................................................4
Governmental Entity.........................................................10
HSR Act.....................................................................10
Hazardous Materials.........................................................16
Indemnified Parties.........................................................21
Indemnified Party...........................................................21
Independent Directors........................................................4
Intellectual Property.......................................................14
Lien.........................................................................9
Material Adverse Effect on the Company.......................................8
Material Adverse Effect on Parent...........................................16
Merger.......................................................................4
Minimum Condition............................................................1
iv
Offer........................................................................1
Offer Documents..............................................................1
Offer to Purchase............................................................1
Other Filings...............................................................11
Parent.......................................................................1
Parent Process Agent........................................................28
Parent Representatives......................................................20
Paying Agent.................................................................7
PBGC........................................................................13
Pension Plan................................................................12
Person......................................................................29
Preferred Stock..............................................................9
Prohibited Transaction......................................................13
Proxy Statement..............................................................6
Purchaser....................................................................1
Purchase Price...............................................................1
Reimbursable Expenses.......................................................26
Reportable Event............................................................13
Schedule 14D-1...............................................................2
Schedule 14D-9...............................................................3
SEC..........................................................................1
SEC Reports.................................................................10
Shares.......................................................................1
Significant Subsidiaries.....................................................8
Superior Proposal...........................................................23
Stockholders' Meeting........................................................6
Subsidiaries................................................................29
Subsidiary..................................................................29
Salomon Smith Barney........................................................12
Surviving Corporation........................................................4
Tax.........................................................................15
Taxes.......................................................................15
Tax Returns.................................................................15
Termination Fee.............................................................26
Violation...................................................................10
Voting Debt..................................................................9
Welfare Plan................................................................12
v
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June 10,
1998, by and among Kluwer Boston, Inc., a Massachusetts corporation ("Parent"),
PPC Acquisition Corp., a Delaware corporation and subsidiary of Parent
("Purchaser"), and Plenum Publishing Corporation (the "Company"), a Delaware
corporation.
WHEREAS, the respective Boards of Directors of Parent, Purchaser and the
Company deem it advisable and in the best interests of the stockholders of such
corporations to effect the merger of Purchaser and the Company pursuant to this
Agreement;
WHEREAS, the respective Boards of Directors of Parent, Purchaser and the
Company have approved the acquisition of the Company by Parent and, in
furtherance of such acquisition, Parent proposes to make or to cause Purchaser
to make a cash tender offer (the "Offer") for all of the outstanding shares of
common stock of the Company, par value $.10 per share (the "Shares"), at a price
of $73.50 net to the seller per Share (the "Purchase Price") on the terms set
forth in the Offer Documents (as such term is defined below), and the Board of
Directors of the Company (the "Board") has unanimously approved the Offer and
resolved to recommend that it be accepted by the stockholders of the Company;
WHEREAS, certain stockholders of the Company and Parent are entering into
Stock Purchase Agreements, dated as of the date hereof ("Stock Purchase
Agreements"), pursuant to which the Company, and such stockholders will, among
other things, agree to sell Shares to Parent under certain circumstances; and
WHEREAS, the Company and Parent are entering into an Option Agreement,
dated as of the date hereof ("Option Agreement"), pursuant to which the Company
will grant to Parent an option to acquire an additional 19.9% of its Shares at
the Purchase Price.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer.
(a) Provided that nothing shall have occurred that would result in the
failure of any of the conditions set forth in Annex I hereto, Parent and
Purchaser shall, as promptly as practicable following the date hereof and in any
event not later than five (5) business days after the public announcement of the
execution hereof, commence their Offer to purchase the Shares at a price equal
to the Purchase Price. The Offer shall be made by means of an offer to purchase
(the "Offer to Purchase" and, together with a letter of transmittal relating
thereto, the "Offer Documents") which shall be subject solely to the condition
that there be validly tendered and not withdrawn prior to the expiration of the
Offer that number of Shares
1
which, when added to any Shares acquired pursuant to the Stock Purchase
Agreements simultaneously with the acceptance of Shares pursuant to the Offer,
represents at least a majority of the Shares outstanding on a fully diluted
basis (the "Minimum Condition") and to the other conditions set forth in Annex I
hereto (including the expiration of applicable waiting periods under the HSR Act
(as hereinafter defined)). As soon as practicable, Parent and Purchaser shall
file with the Securities and Exchange Commission (the "SEC") a Schedule 14D-1
(which schedule, together with all amendments and supplements thereto, is
hereinafter referred to as the "Schedule 14D-1") with respect to the Offer. The
Company and its counsel shall be given the opportunity to review the Schedule
14D-1 (as defined below) before it is filed with the SEC. In addition, Parent
and Purchaser agree to provide the Company and its counsel with any comments,
whether written or oral, that Parent and/or its counsel may receive from time to
time from the SEC or its staff with respect to the Schedule 14D-1 promptly after
the receipt of such comments or other communications. Without the prior written
consent of the Company, neither Parent nor Purchaser shall decrease the price
per Share or change the form of consideration payable in the Offer, decrease the
number of Shares sought to be purchased in the Offer, change the conditions set
forth in Annex I, impose additional conditions to the Offer or amend any other
term of the Offer in any manner materially adverse to the holders of the Shares.
Subject to the terms of the Offer and this Agreement and the satisfaction or
waiver of all the conditions of the Offer set forth in Annex I hereto as of any
expiration date of the Offer, Parent and/or Purchaser will accept for payment
and pay for all Shares validly tendered and not properly withdrawn pursuant to
the Offer as soon as practicable after such expiration date of the Offer.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer on one or more occasions for up to ten business
days for each such extension beyond the then scheduled expiration date (the
initial scheduled expiration date being 20 business days following commencement
of the Offer), if at the then scheduled expiration date of the Offer any of the
conditions to Purchaser's obligation to accept for payment and pay for the
Shares shall not be satisfied or waived, until such time as such conditions are
satisfied or waived, (ii) increase the Purchase Price and extend the Offer for
any period required by any rule, regulation, interpretation or provision of the
SEC or the staff thereof applicable to the Offer and (iii) extend the Offer for
an aggregate period of not more than 10 business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (ii) of
this sentence if there shall not have been tendered and not withdrawn pursuant
to the Offer at least 90% of the outstanding Shares.
(b) The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or Purchaser with respect to information supplied by the Company in writing for
inclusion in the Offer Documents. Each of Parent and Purchaser, on the one hand,
and the Company, on the other hand, agrees to correct promptly any information
provided by it for use in the Offer Documents if and to the extent that it shall
have become false or misleading in any material respect and Parent and Purchaser
further agree to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to stockholders of the
Company, in each case as and to the extent required by applicable federal
securities laws.
2
SECTION 1.2 Company Action.
(a) The Company hereby approves of and consents to the Offer and
represents that, at a meeting duly called and held, its Board of Directors has
(i) unanimously determined that this Agreement and the transactions contemplated
hereby and thereby, including, without limitation, the Offer and the Merger, are
fair to and in the best interest of the Company's stockholders, (ii) unanimously
approved this Agreement and the transactions contemplated hereby and thereby,
including, without limitation, the Offer and the Merger and (iii) unanimously
resolved to recommend that the stockholders of the Company accept the Offer,
tender their Shares thereunder to Purchaser and approve and adopt this Agreement
and the Merger; provided, that such recommendation may be withdrawn, modified or
amended if, in the good faith opinion of the Directors, only after receipt of
advice from legal counsel, the failure to withdraw, modify or amend such
recommendation would result in the Board violating its fiduciary duties to the
Company's stockholders under applicable law. The Company consents to the
inclusion of such recommendation and approval in the Offer Documents.
(b) Contemporaneously with the commencement of the Offer as provided for
in Section 1.1, the Company will file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (which schedule, together with all amendments and
supplements thereto, is hereafter referred to as the "Schedule 14D-9") which
shall reflect the recommendations and actions of the Company's Board of
Directors referred to above. The Company further agrees to take all steps
necessary to cause the Schedule 14D-9 to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Each of the Company, on the one
hand, and Parent and Purchaser, on the other hand, agrees to promptly correct
any information provided by it for use in the Schedule 14D-9 if and to the
extent that it shall have become false or misleading in any material respect and
the Company further agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to
stockholders of the Company, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall be given the
opportunity to review the Schedule 14D-9 before it is filed with the SEC. In
addition, the Company agrees to provide Parent and its counsel with any
comments, whether written or oral, that the Company and/or its counsel may
receive from time to time from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments or other communications.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to Parent and Purchaser mailing labels, security position
listings and any available listing, or computer file containing the names and
addresses of all record holders of the Shares as of a recent date, and shall
furnish Parent and Purchaser with such additional information (including, but
not limited to, updated lists of holders of the Shares and their addresses,
mailing labels and lists of security positions) and assistance as Parent,
Purchaser or their respective agents may reasonably request in communicating the
Offer to the record and beneficial holders of the Shares. Except for such steps
as are necessary to disseminate the Offer Documents, Parent and Purchaser shall
hold in confidence the information contained in any of such labels and lists and
the additional information referred to in the preceding sentence, will use such
information in connection with the Offer, and, if this Agreement is terminated,
will upon request of the Company deliver or cause to be delivered to the Company
all copies of such information then in its possession or the possession of its
agents or representatives.
3
SECTION 1.3 Directors.
(a) Promptly upon the purchase of Shares by Parent or Purchaser or any of
its Subsidiaries pursuant to the Offer and/or pursuant to any of the Stock
Purchase Agreements which represents at least a majority of the outstanding
Shares, Purchaser shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company as
is equal to the product of the total number of directors on such Board (giving
effect to the directors designated by Purchaser pursuant to this sentence)
multiplied by the percentage that the number of Shares so accepted for payment
bears to the total number of Shares then outstanding. In furtherance thereof,
the Company shall, upon request of the Purchaser, use its reasonable best
efforts promptly either to increase the size of its Board of Directors or secure
the resignations of such number of its incumbent directors, or both, as is
necessary to enable Purchaser's designees to be so elected to the Company's
Board of Directors, and shall take all actions available to the Company to cause
Purchaser's designees to be so elected. At such time, the Company shall, if
requested by Purchaser, also cause persons designated by Purchaser to constitute
at least the same percentage (rounded up to the next whole number) as is on the
Company's Board of Directors of (i) each committee of the Company's Board of
Directors, (ii) each board of directors (or similar body) of each Subsidiary of
the Company and (iii) each committee (or similar body) of each such board.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.3(a), including mailing to
stockholders the information required by such Section 14(f) and Rule 14f-1 as is
necessary to enable Purchaser's designees to be elected to the Company's Board
of Directors. Purchaser or Parent will supply the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1. The provisions of this Section 1.3 are in addition to and shall not
limit any rights which Purchaser, Parent or any of their affiliates may have as
a holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise.
(c) In the event Purchaser's designees are elected to the Company's Board
of Directors, until the Effective Time (as defined below), the Company's Board
shall have at least two directors who are directors on the date hereof
("Independent Directors"), provided that, in such event, if the number of
Independent Directors shall be reduced below two for any reason whatsoever, any
remaining Independent Directors (or Independent Director, if there be only one
remaining) shall be entitled to designate persons to fill such vacancies who
shall be deemed to be Independent Directors for purposes of this Agreement or,
if no Independent Director then remains, the other directors shall designate two
persons to fill such vacancies who shall not be stockholders, affiliates or
associates of Purchaser or Parent and such persons shall be deemed to be
Independent Directors for purposes of this Agreement. Notwithstanding anything
in this Agreement to the contrary, in the event that Purchaser's designees are
elected to the Company's Board, after the acceptance for payment of Shares
pursuant to the Offer and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors shall be required to (i) amend or
terminate this Agreement by the Company, (ii) exercise or waive any of the
Company's rights, benefits or remedies hereunder or (iii) take any other action
by the Company's Board under or in connection with this Agreement.
4
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the General Corporation Law of the State of
Delaware (the "GCL"), at the Effective Time Purchaser shall be merged (the
"Merger") with and into the Company. Following the Merger, the separate
corporate existence of Purchaser shall cease and the Company shall continue as
the surviving corporation (the "Surviving Corporation"). At the option of Parent
and provided that such amendment does not delay the Effective Time, the Merger
may be structured so that, and this Agreement shall thereupon be amended to
provide that, the Company shall be merged with and into Purchaser or another
direct or indirect wholly-owned subsidiary of Parent with Purchaser or such
other subsidiary of Parent continuing as the Surviving Corporation; provided,
however, that the Company shall be deemed not to have breached any of its
representations and warranties herein if and to the extent such breach would
have been attributable to such election.
SECTION 2.2 Effective Time; Closing. As soon as practicable after the
satisfaction or waiver (to the extent permitted hereunder) of the conditions set
forth in Article VII, the Company shall execute in the manner required by the
GCL and deliver to the Secretary of State of the State of Delaware a duly
executed and verified certificate of merger, or, if permitted, a certificate of
ownership and merger, and the parties shall take such other and further actions
as may be required by law to make the Merger effective. The time the Merger
becomes effective in accordance with applicable law is referred to as the
"Effective Time." Prior to such filing, a closing (the "Closing") shall be held
at the offices of Bressler, Amery & Ross, 17 State Street, 34th Floor, New York,
New York 10004, or such other place as the parties hereto shall agree, for the
purpose of confirming the satisfaction or waiver of the conditions set forth in
Article VII. The date on which the Closing occurs is referred to herein as the
"Closing Date."
SECTION 2.3 Effects of the Merger; Subsequent Actions. The Merger shall
have the effects set forth in Section 259 of the GCL. Without limiting the
generality of the foregoing, and subject thereto and any other applicable laws,
at the Effective Time, all properties, rights, privileges, powers and franchises
of the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities, restrictions, disabilities and duties of the Company and
Purchaser shall become debts, liabilities, restrictions, disabilities and duties
of the Surviving Corporation.
SECTION 2.4 Certificate of Incorporation and By-Laws of the Surviving
Corporation.
(a) The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law.
(b) The By-Laws of Purchaser in effect at the Effective Time shall be the
By-Laws of the Surviving Corporation, until thereafter amended in accordance
with the provisions thereof and hereof and applicable law.
5
SECTION 2.5 Directors. Subject to applicable law, the directors of
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.6 Officers. The officers of the Purchaser immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
SECTION 2.7 Conversion of Shares. Subject to Section 3.1 below, at the
Effective Time, by virtue of the Merger and without any action on the part of
Parent, Purchaser, the Company or the holders of the following securities, each
Share issued and outstanding immediately prior to the Effective Time (other than
any Shares held by Parent, Purchaser, any wholly-owned subsidiary of Parent or
Purchaser, or in the treasury of the Company, which Shares, by virtue of the
Merger and without any action on the part of the holder thereof, shall be
cancelled and retired and shall cease to exist with no payment being made with
respect thereto, and other than Dissenting Shares) shall be converted into the
right to receive the Purchase Price, without interest thereon, upon surrender of
the certificate formerly representing such Share.
SECTION 2.8 Conversion of Purchaser Common Stock. At the Effective Time,
each share of common stock, par value $.01 per share, of Purchaser issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become one validly issued, fully paid and non-assessable share of
common stock, par value $.10 per share, of the Surviving Corporation.
SECTION 2.9 Stockholders' Meeting.
(a) If required by the GCL in order to consummate the Merger, the Company,
acting through the Board, shall, in accordance with the GCL:
(i) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Stockholders' Meeting") as soon as practicable following
the acceptance for payment of and payment for the Shares by Parent and/or
Purchaser pursuant to the Offer for the purpose of considering and taking action
upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and use its
reasonable best efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined) and, after
consultation with Parent, to respond promptly to any comments made by the SEC
with respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement (including any amendment or supplement
thereto, the "Proxy Statement") to be mailed to its stockholders, provided that
no amendment or supplement to the Proxy Statement will be made by the Company
without consultation with Parent and its counsel and (y) to obtain the necessary
approvals of the Merger and this Agreement by its stockholders; and
(iii) subject to the fiduciary obligations of the Board under
applicable law, include in the
6
Proxy Statement the recommendation of the Board that stockholders of the Company
vote in favor of the approval of the Merger and the adoption of this Agreement.
(b) At such meeting, each of Parent and Purchaser will vote (and will
cause each of their respective affiliates to vote), all of the Shares (if any)
then owned by them (or their respective affiliates) in favor of the approval of
the Merger and the adoption of this Agreement.
SECTION 2.10 Merger Without Meeting of Stockholders. Notwithstanding
Section 2.9, in the event that Parent, Purchaser or any other subsidiary of
Parent shall acquire at least 90% of the Shares pursuant to the Offer and the
Stock Tender Agreement, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for Shares by Parent
and/or Purchaser pursuant to the Offer without a meeting of stockholders of the
Company, in accordance with Section 253 of the GCL.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.1 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Shares outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing and who has demanded appraisal for such Shares in accordance with
Section 262 of the GCL, if such Section 262 provides for appraisal rights for
such Shares in the Merger ("Dissenting Shares"), shall not be converted into the
right to receive the Purchase Price as provided in Section 2.7, unless and until
such holder fails to perfect or withdraws or otherwise loses his right to
appraisal and payment under the GCL. If, after the Effective Time, any such
holder fails to perfect or withdraws or loses his right to appraisal, such
Dissenting Shares shall thereupon be treated as if they had been converted as of
the Effective Time into the right to receive the Purchase Price, if any, to
which such holder is entitled, without interest or dividends thereon. The
Company shall give Parent prompt notice of any demands received by the Company
for appraisal of Shares and, prior to the Effective Time, Parent shall have the
right to participate in all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, the Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands.
SECTION 3.2 Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall designate a bank or trust
company reasonably acceptable to the Company to act as paying agent (the "Paying
Agent") in effecting the exchange for the Purchase Price of certificates (the
"Certificates") that, prior to the Effective Time, represented Shares. Upon the
surrender of each such Certificate formerly representing Shares, together with a
properly completed letter of transmittal, the Paying Agent shall pay the holder
of such Certificate the Purchase Price multiplied by the number of Shares
formerly represented by each such Certificate, in exchange therefor, and each
such Certificate shall forthwith be cancelled. Until so surrendered and
exchanged, each such Certificate (other than Certificates representing
Dissenting Shares or Shares held by Parent, Purchaser or the Company, or any
direct or indirect subsidiary thereof, or in the treasury of the Company) shall
represent solely the right to receive the Purchase Price. No interest shall be
paid or accrue on the Purchase Price. If the Purchase Price (or any portion
thereof) is to be delivered to any
7
person other than the person in whose name the Certificate formerly representing
Shares surrendered in exchange 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 the Purchase Price 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.
(b) Prior to the Effective Time, Parent or Purchaser shall deposit, or
cause to be deposited, in trust with the Paying Agent such funds as needed for
timely payment hereunder; provided, however, that no such deposit shall relieve
Parent or Purchaser of their obligation to pay the Purchase Price pursuant to
Section 2.7.
(c) The Purchase Price shall be invested by the Paying Agent as directed
by Parent, provided that such investments shall be limited to direct obligations
of the United States of America, 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, commercial paper rated of the highest quality by Moody's
Investors Services, Inc. or Standard & Poor's Corporation, or certificates of
deposit issued by a commercial bank having at least $1,000,000,000 in assets;
provided further that no loss on investment made pursuant to this Section 3.2(c)
shall relieve Parent or Purchaser of their obligation to pay the Purchase Price
pursuant to Section 2.7.
(d) Promptly after the Effective Time, the Paying Agent shall mail to each
record holder of Certificates that immediately prior to the Effective Time
represented Shares a form of letter of transmittal and instructions for use in
surrendering such Certificates and receiving the Purchase Price in exchange
therefor.
(e) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Shares. If, after the
Effective Time, Certificates formerly representing Shares are presented to the
Surviving Corporation or the Paying Agent, they shall be cancelled and exchanged
for the Purchase Price as provided in this Article III, subject to applicable
law in the case of Dissenting Shares.
(f) Promptly following the date which is six months after the Effective
Time, the Paying Agent shall deliver to Parent all cash and documents in its
possession relating to the transactions described in this Agreement, and the
Paying Agent's duties shall terminate. Thereafter, each holder of a Certificate
formerly representing a Share may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws) receive in exchange therefor the Purchase Price, without any interest
thereon.
8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser that:
SECTION 4.1 Organization and Qualification; Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each entity which the Company owns, directly or
indirectly, a majority of the outstanding voting securities (each a "Subsidiary"
or collectively the "Subsidiaries") is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each of the Company and its Subsidiaries has the requisite
corporate power and authority to own, operate or lease its properties and to
carry on its business as it is now being conducted, and is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction in which
the nature of its business or the properties owned, operated or leased by it
makes such qualification, licensing or good standing necessary, except where the
failure to have such power or authority, or the failure to be so qualified,
licensed or in good standing, would not have a Material Adverse Effect on the
Company. The term "Material Adverse Effect on the Company," as used in this
Agreement, means any adverse change, circumstance or effect that, individually
or in the aggregate with all other adverse changes, circumstances and effects,
has had or will have a material adverse effect on the business, financial
condition, properties or results of operations of the Company and its
Subsidiaries taken as a whole, other than any adverse change, circumstance or
effect relating to or arising out of (i) the economy or securities markets in
general, (ii) the announcement of the Agreement or the transactions contemplated
hereby (including any impact on employees, vendors or customers resulting
therefrom) or (iii) the industry of the Company and its Subsidiaries in general,
and not specifically relating to the Company or its Subsidiaries.
SECTION 4.2 Charter and By-laws. The Company has heretofore made available
to Parent a complete and correct copy of the charter and the By-laws or
comparable organizational documents, each as amended as of the date hereof, of
the Company and each of its Subsidiaries.
SECTION 4.3 Capitalization.
(a) The authorized capital stock of the Company consists of 12,000,000
shares of Common Stock, $.10 par value per share ("Common Stock") and 1,000,000
shares of preferred stock, par value $1.00 per share ("Preferred Stock"). As of
the close of business on May 15, 1998, 3,510,251 shares of Common Stock were
issued and outstanding, excluding 2,336,990 shares of Common Stock in treasury.
As of the date hereof there were no shares of Preferred Stock issued and
outstanding. The Company has no shares of capital stock reserved for future
issuance. The Company has no outstanding options to purchase any shares of
capital stock. Since March 31, 1998 the Company has not issued any shares of
capital stock. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any of its Subsidiaries issued and
outstanding. There are no existing options, warrants, calls, subscriptions or
other rights, convertible securities, agreements, arrangements or commitments of
any character, relating to the issued or unissued capital stock of the Company
or any of its Subsidiaries, obligating the Company or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of its Subsidiaries or securities
9
convertible into or exchangeable for such shares or equity interests, and
neither the Company nor any of its Subsidiaries is obligated to grant, extend or
enter into any such option, warrant, call, subscription or other right,
convertible security, agreement, arrangement or commitment. There are no
outstanding contractual obligations of the Company or any of its Subsidiaries to
(i) repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries or (ii) provide funds to or make any
investment in (in the form of a loan, capital contribution or otherwise) any
entity other than a wholly-owned Subsidiary.
(b) Each of the outstanding shares of capital stock of each of the Company
and its Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and such shares of capital stock of the Subsidiaries as are owned
by the Company or by a Subsidiary of the Company are owned in each case free and
clear of any lien, claim, option, charge, security interest, limitation,
encumbrance and restriction of any kind (any of the foregoing being a "Lien").
All outstanding shares of capital stock of each of the Subsidiaries are owned by
the Company.
(c) There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of its Subsidiaries.
SECTION 4.4 Authority Relative to this Agreement.
The Company has all necessary corporate power and authority to execute and
deliver this Agreement, and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized and approved by the Board and no other corporate
proceedings on the part of the Company are necessary to authorize or approve
this Agreement, or to consummate the transactions contemplated hereby (other
than, with respect to the Merger, and subject to Section 2.10, the approval and
adoption of the Merger and this Agreement by the affirmative vote of the holders
of a majority of the Shares then outstanding). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and Purchaser,
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity.
SECTION 4.5 No Conflict; Required Filings and Consents.
(a) None of the execution, delivery or performance of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or the compliance by the Company with any of the provisions hereof will
(i) conflict with or violate the Certificate of Incorporation or By-Laws of the
Company or the comparable organizational documents of any of its Subsidiaries,
(ii) conflict with or violate any statute, ordinance, rule, regulation, order,
judgment or decree applicable to the Company or its Subsidiaries, or by which
any of them or any of their respective properties or assets may be bound or
affected, or (iii) result in a violation or breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in any loss of any material benefit, or
10
the creation of any Lien on any of the property or assets of the Company or any
of its Subsidiaries (any of the foregoing referred to in clause (ii) or this
clause (iii) being a "Violation") pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
respective properties may be bound or affected, except in the case of the
foregoing clauses (ii) or (iii) for any such Violations which would not in the
aggregate have a Material Adverse Effect on the Company or limit or restrict the
ability of the Company to consummate the transactions contemplated hereby or
thereby.
(b) None of the execution, delivery or performance of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or the compliance by the Company with any of the provisions hereof will
require any consent, waiver, approval, authorization or permit of, or
registration or filing with or notification to (any of the foregoing being a
"Consent"), any government or subdivision thereof, domestic, foreign or
supranational or any administrative, governmental or regulatory authority,
agency, commission, tribunal or body, domestic, foreign or supranational (a
"Governmental Entity"), except for (i) compliance with any applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (ii) the filing of a certificate of merger, or, if permitted, a
certificate of ownership and merger, pursuant to the GCL, (iii) notifications
required by certain state Blue Sky, takeover and environmental statutes, (iv)
compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and any requirements of any foreign or supranational
Antitrust Laws, and (v) Consents, the failure of which to obtain or make would
not in the aggregate have a Material Adverse Effect on the Company or limit or
restrict the ability of the Company to consummate the transactions contemplated
hereby.
SECTION 4.6 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements required to be filed by
the Company with the SEC since January 1, 1997 (the "SEC Reports"). As of their
respective dates, the SEC Reports (including, without limitation, any financial
statements or schedules included therein) complied in all material respects with
the requirements of the Exchange Act or the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder applicable, as
the case may be, to such SEC Reports, and none of the SEC Reports contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(b) The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the SEC
Reports and the audited financial statements as of and for the year ended
December 31, 1997, which the Company has provided to Parent, present fairly in
all material respects the consolidated financial position and the consolidated
results of operations and cash flows of the Company and its consolidated
Subsidiaries as of the dates or for the periods presented therein in conformity
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved except as otherwise noted
therein, including the related notes. The Company has also provided to Parent
unaudited condensed consolidated financial statements for the period ending
March 31, 1998, filed with the SEC on May 15, 1998. Such statements were
prepared in accordance with generally accepted accounting principles for interim
financial information and with the
11
instructions to SEC Form 10-Q and Article 10 of Regulation S-X promulgated under
the Exchange Act and, in the opinion of management, all adjustments consisting
of normal recurring accruals considered necessary for a fair presentation have
been included.
SECTION 4.7 Information. None of the information provided or that may be
provided by the Company for use in the Offer Documents, the Schedule 14D-1 or
any other document to be filed with the SEC or any other Governmental Entity in
connection with the transactions contemplated by this Agreement (the "Other
Filings"), and neither the Proxy Statement nor the Schedule 14D-9, shall, at the
time filed with the SEC or such other Governmental Entity, and, in the case of
the Proxy Statement, at the time mailed to the Company's stockholders, at the
time of the Stockholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information provided or that may be provided by Parent or Purchaser specifically
for use in such documents. The Schedule 14D-9 and the Proxy Statement will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder.
SECTION 4.8 Changes. Since December 31, 1997, except as set forth in the
SEC Reports filed prior to the date hereof or as otherwise disclosed in Schedule
4.8 hereto:
(a) there has been no event, effect or change (including the incurrence of
any liabilities or obligations of any nature whether or not accrued, contingent
or otherwise) having a Material Adverse Effect on the Company;
(b) the Company has not adopted any amendment to its Certificate of
Incorporation or By-laws;
(c) the Company has not issued, reissued, pledged or sold, or authorized
the issuance, reissuance, pledge or sale of (i) additional shares of capital
stock of any class, or securities convertible into, exchangeable for or
evidencing the right to substitute for, capital stock of any class, or any
rights, warrants, options, calls, commitments or any other agreements of any
character, to purchase or acquire any capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for,
capital stock, or (ii) any other securities in respect of, in lieu of, or in
substitution for, Shares;
(d) neither the Company nor any of its Subsidiaries declared, set aside or
paid any dividend or other distribution (whether in cash, securities or property
or any combination thereof) in respect of any class or series of its capital
stock other than between the Company and any of its wholly-owned Subsidiaries,
or its regular quarterly dividend of $.32 per share of Common Stock to
stockholders of record on March 23, 1998;
(e) Neither the Company nor any of its Subsidiaries has split, combined,
subdivided, reclassified or redeemed, purchased or otherwise acquired or
proposed to redeem or purchased or otherwise acquired any shares of its capital
stock or any of its other securities; and
12
(f) Neither the Company nor any of its Subsidiaries has taken or omitted
to take any action, nor has any event occurred, which (if taken, omitted or
occurring after the date hereof) would constitute a breach of Section 6.1 of
this Agreement.
SECTION 4.9 Opinion of Financial Advisor. The Company has received the
opinion of Salomon Brothers Inc and Smith Barney Inc. collectively doing
Business as "Salomon Smith Barney" ("Salomon Smith Barney"), dated the date
hereof, to the effect that, as of such date, the Purchase Price is fair to the
holders of Shares, a copy of which opinion has been delivered to Parent. The
Company has been authorized by Salomon Smith Barney to permit inclusion of such
opinion (and reference thereto) in the Offer Documents, the Schedule 14D-9 and
the Proxy Statement.
SECTION 4.10 Takeover Statutes. The Company is subject to Section 203 of
the GCL. By reason of action taken by the Company, such section is not
applicable to the transactions contemplated hereby.
SECTION 4.11 Litigation. Except as set forth in Schedule 4.11 there are no
suits, claims, actions, proceedings, including, without limitation, arbitration
proceedings or alternative dispute resolution proceedings, or investigations
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries not set forth in the SEC Reports filed prior to the date
hereof.
SECTION 4.12 Employee Plans and Arrangements.
(a) Schedule 4.12(a) lists each "employee pension benefit plan" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) (hereinafter a "Pension Plan") and "employee welfare
benefit plan" (as defined in Section 3 (i) of ERISA, (hereinafter a "Welfare
Plan") and each pension, retirement, bonus, incentive compensation, profit
sharing, stock option, stock purchase, stock bonus, phantom stock, deferred
compensation, hospitalization, medical, dental, vision, life insurance,
accidental death and dismemberment insurance, business travel insurance,
cafeteria and flexible spending, sick pay, disability, severance, golden
parachute, or other plans, policy, contract, fund or arrangement maintained or
contributed to, or required to be maintained or contributed to, by the Company,
any of its Subsidiaries or any other person that, together with the Company, is
treated as a single employer under Section 4.14(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code") (each a "Commonly
Controlled Entity") for the benefit of any present or former employees of the
Company or any of its Subsidiaries. The Company has never maintained, or
incurred any liability whatsoever, with respect to a multiemployer plan (as
defined in Section 4001(a)(3) of ERISA). The Company has made available to
Purchaser true, complete and correct copies of (i) each Pension Plan and Welfare
Plan collectively, the ("Benefit Plans") (ii) the most recent annual report on
Form 5500 as filed with the Internal Revenue Service with respect to, (iii) the
most recent summary plan description (or similar document) with respect to each
applicable Benefit Plan, and (iv) each trust agreement relating to the Pension
Plan.
(b) Except where a failure would not have a Material Adverse Effect on the
Company, each Benefit Plan has been administered in accordance with its terms.
Except where a failure would not have a Material Adverse Effect on the Company,
the Company, its Subsidiaries all the Benefit Plans are in compliance with the
applicable provisions of ERISA, the Code, and all other laws, ordinances or
regulations of any Governmental Entities. Except where a failure would not have
a Material Adverse
13
Effect on the Company, there are no investigations by any Governmental Entities,
termination proceedings or other claims (except claims for benefits payable in
the normal operations of the Pension Plans), suits or proceedings against or
involving any Benefit Plan or asserting any rights to or claims for benefits
under any Benefit Plan.
(c) Except where a failure would not have a Material Adverse Effect on the
Company, (i) all contributions to the Benefit Plan required to be made by the
Company or any of its Subsidiaries in accordance with the terms of the Benefit
Plans, and, when applicable, Section 302 of ERISA or Section 412 of the Code,
have been timely made, (ii) there has been no application for or waiver of the
minimum funding standards imposed by Section 412 of the Code with respect to any
Benefit Plan that is a Pension Plan and (iii) no Pension Plan had an
"accumulated funding deficiency" within the meaning of Section 412(a) of the
Code as of the end of the most recently completed plan year.
(d) (i) Each Pension Plan that is intended to be a tax-qualified plan has
been the subject of a post Tax Reform Act of 1986 determination letter from the
Internal Revenue Service to the effect that such Company Pension Plan and each
related trust is qualified and exempt from Federal income taxes under Sections
401(a) and 501(a), respectively, of the Code; (ii) No such determination letter
has been revoked, and revocation has not been threatened; (iii) No event has
occurred and no circumstances exist that would adversely affect the
tax-qualification of such Pension Plan except for any events or circumstances
that would not have a Material Adverse Effect on the Company; and (iv) Such
Pension Plan has not been amended since the effective date of its most recent
determination letter in any respect that might adversely affect its
qualification, increase its cost or require security under Section 307 of ERISA.
The Company has made available to Purchaser a copy of the most recent
determination letter received with respect to each Pension Plan for which such a
letter has been issued, as well as a copy of any pending application for a
determination letter.
(e) Except where a failure would not have a Material Adverse Effect on the
Company: (i) no non-exempt "prohibited transaction" (as defined in Section 4975
of the Code or Section 406 of ERISA) has occurred that involves the assets of
any Benefit Plan; (ii) no Pension Plan has been terminated or has been the
subject of a "reportable event" (as defined in Section 4043 of ERISA and the
regulations thereunder) for which the 30-day notice requirement has not been
waived by the Pension Benefit Guaranty Corporation ("PBGC"); and (iii) none of
the Company, any of its Subsidiaries or any trustee, administrator or other
fiduciary of the Pension Plan has engaged in any transaction or acted in a
manner that could, or has failed to act so as to, subject the Company, any such
Subsidiary or any trustee, administrator or other fiduciary to any liability for
breach of fiduciary duty under ERISA or any other applicable law.
(f) No Commonly Controlled Entity has incurred any liability to a Pension
Plan (other than for contributions not yet due) or to the PBGC (other than for
the payment of premiums not yet due other than liabilities that would have a
Material Adverse Effect on the Company).
(g) Except where the failure would not have a Material Adverse Effect on
the Company, no Commonly Controlled Entity has (i) engaged in a transaction
described in Section 4069 of ERISA that could subject the Company to a liability
at any time after the date hereof or (ii) acted in a manner that could, or
failed to act so as to, result in fines, penalties, taxes or related charges
under (x) Section 502(c), (i) or (1) of ERISA, (y) Section 4071 of ERISA or (z)
Chapter 43 of the Code.
14
(h) The Company and its Subsidiaries comply with the applicable
requirements of parts 6 and 7 of subtitle B of Title I of ERISA ((S)(S) 601 et
seq.) with respect to each Benefit Plan that is a group health plan, as such
term is defined in Section 5000(b)(1) of the Code and other than medical
continuation requirements mandated pursuant to (S)(S) 601 et seq. no Benefit
Plan that is a group health plan provides or is required to provide post
employment or post retirement medical or health benefits to any former employees
or employees of the Company or any Commonly Controlled Entity.
(i) Schedule 4.12(i) lists (i) all employment agreements between the
Company or any of its Subsidiaries and any of their respective directors or
officers and between the Company or any of its Subsidiaries and any of its or
their employees which is not terminable by the Company or its Subsidiaries on
less than 90 days' notice, and (ii) all agreements and plans pursuant to which
any director, officer or employee of the Company or any of its subsidiaries is
entitled to benefits upon termination of their employment or a change in control
of the Company.
(j) Except as set forth in Schedule 4.12(j), none of the employees of the
Company or any of its Subsidiaries is represented by a union or subject to a
collective bargaining agreement.
SECTION 4.13 Assets. The Company or one of its Subsidiaries has (a) good
and marketable title to or a valid leasehold interest under a capitalized lease
in all assets recorded on the Company's balance sheet as of December 31, 1997
included in the financial statements referred to in Section 4.6(b), except for
assets disposed of in the ordinary course of business since such date, and (b) a
valid leasehold or other interest in all other assets used by it in its
business, except in each case for exceptions to the foregoing that would not
have a Material Adverse Effect on the Company. The consummation of the
transactions contemplated hereby will not affect the ownership or right to use
any of the Company's assets, except for exceptions to the foregoing that would
not have a Material Adverse Effect on the Company.
SECTION 4.14 Intellectual Property.
(a) Except for any exceptions to the following that would not have a
Material Adverse Effect on the Company, the Company and its Subsidiaries own or
have the right to use the Intellectual Property used by it and reasonably
necessary for the Company and its Subsidiaries to conduct their business as it
is currently conducted or proposed to be conducted and consistent with past
practice.
(b) Except for any exceptions to the following that would not have a
Material Adverse Effect on the Company: (i) all of the registered Intellectual
Property owned by the Company and its Subsidiaries is subsisting and unexpired
(except as such has expired by the passing of time without the possibility of
extension or renewal), free of all Liens, has not been abandoned and, to the
knowledge of the Company, all Intellectual Property used by the Company whether
or not registered does not infringe the Intellectual Property rights of any
third party; (ii) none of the Intellectual Property owned by the Company and its
Subsidiaries is the subject of any license, security interest or other agreement
granting rights therein to any third party, except as set forth on Schedule
4.14(b), (iii) to the knowledge of the Company, no judgment, decree, injunction,
rule or order has been rendered by any Governmental Entity which would limit,
cancel or question the validity of, or the Company's or its Subsidiaries' rights
in and to, any Intellectual Property owned by the Company; and (iv) the Company
has not received notice of any pending or threatened suit,
15
action or proceeding that seeks to limit, cancel or question the validity of, or
the Company's or its Subsidiaries' rights in and to, any Intellectual Property.
(c) For purposes of this Agreement "Intellectual Property" shall mean all
rights, privileges and priorities provided under U.S., state and foreign law
relating to intellectual property, including without limitation all (i)(A)
inventions, discoveries, processes, formulae, designs, methods, techniques,
procedures, concepts, developments, technology, new and useful improvements
thereof and know-how relating thereto, whether or not patented or eligible for
patent protections; (B) copyrights and copyrightable works, including computer
applications, programs, software, databases and related items; (C) trademarks,
service marks, trade names, and trade dress, the goodwill of any business
symbolized thereby, and all common-law rights relating thereto; and (D) trade
secrets and other confidential information; and (ii) all registrations,
applications, recordings, and licenses or other similar agreements related to
the foregoing.
SECTION 4.15 Taxes. The Company and each of its Subsidiaries have (i)
filed all Tax Returns which they are required to file under applicable laws and
regulations, (ii) paid all Taxes which have become due and payable, and (iii)
accrued as a liability on the balance sheet included in the Company's 1997
financial statements described in Section 4.6 all Taxes which were accrued but
not yet due and payable as of the date thereof, except for failures to take any
of such actions which, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. For purposes of this Agreement, "Tax" or
"Taxes" shall mean any federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, social security, unemployment,
disability, payroll, license, employee or other withholding, or other tax of any
kind, including any interest or penalties in respect of the foregoing, and "Tax
Returns" means returns, declarations, reports, information returns, or other
documents filed or required to be filed in connection with the determination,
assessment or collection of Taxes of any person or the administration of any
laws, regulations or administrative requirements relating to any Taxes.
SECTION 4.16 Environmental Laws and Regulations. Except as disclosed in
Schedule 4.16:
(i) The Company and its Subsidiaries hold and are in compliance with
all Environmental Permits (as defined below), and the Company and its
Subsidiaries are otherwise in compliance with all Environmental Laws (as defined
below) and there are no conditions that might prevent or interfere with such
compliance in the future, except where the failure to hold or to be in such
compliance would not reasonably be expected to have a Material Adverse Effect on
the Company;
(ii) As of the date hereof, neither the Company nor any of its
Subsidiaries has received any Environmental Claim (as defined below) and there
is no threatened Environmental Claim that would reasonably be expected to have a
Material Adverse Effect on the Company;
(iii) Neither the Company nor any of its Subsidiaries has entered
into any consent decree, order or agreement under any Environmental Law;
(iv) There are no (A) underground storage tanks, (B) polychlorinated
biphenyls,
16
(C) friable asbestos or asbestos-containing materials, (D) sumps, (E) surface
impoundments, (F) landfills, or (G) sewers or septic systems present at any
facility currently owned by the Company or any of its Subsidiaries the presence
of which would reasonably be expected to have a Material Adverse Effect on the
Company;
(v) None of the Company or its Subsidiaries has contractually
assumed any liabilities or obligations under any Environmental Laws that would
reasonably be expected to have a Material Adverse Effect on the Company;
(vi) To the knowledge of the Company, there has not been any Release
of Hazardous Materials at any property currently or formerly owned or operated
by the Company, any of its Subsidiaries or predecessors in interest nor, to the
knowledge of the Company, at any disposal facility that may have received
Hazardous Materials generated by the Company, any of its Subsidiaries or a
predecessor in interest; and
(vii) For purposes of this Agreement, the following terms shall have
the following meanings: (A) "Environmental Claim" means any written or oral
notice, claim, demand, action, suit, complaint, proceeding or other
communication by any person alleging liability or potential liability (including
without limitation liability or potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resource damages, property
damage, personal injury, reasonable engineering and attorneys fees, fines or
penalties) arising out of, relating to, based on or resulting from (1) the
presence, discharge, emission, release or threatened release of any Hazardous
Materials at any location, whether or not owned, leased or operated by the
Company or any of its Subsidiaries or (2) circumstances forming the basis of any
violation or alleged violation of any Environmental Law or Environmental Permit
or (3) otherwise relating to obligations or liabilities under any Environmental
Laws; (B) "Environmental Permits" means all permits, licenses, registrations and
other governmental authorizations required under Environmental Laws for the
Company and its Subsidiaries to conduct their operations and businesses on the
date hereof and consistent with past practices; (C) "Environmental Laws" means
all applicable federal, state and local statutes, rules, regulations,
ordinances, orders, decrees and common law relating in any manner to
contamination, pollution or protection of the environment, including without
limitation the Comprehensive Environmental Response, Compensation and Liability
Act, the Solid Waste Disposal Act, the Clean Air Act, the Clean Water Act, the
Toxic Substances Control Act, the Occupational Safety and Health Act, the
Emergency Planning and Community-Right-to-Know Act, the Safe Drinking Water Act,
all as amended, and similar state laws; (D) "Hazardous Materials" means all
hazardous or toxic substances, wastes, materials or chemicals, petroleum
(including crude oil or any fraction thereof) and petroleum products, solid
waste, special waste, friable asbestos and asbestos-containing materials,
pollutants, contaminants and all other materials, and substances regulated
pursuant to, or that could reasonably be expected to provide the basis of
liability under, any Environmental Law and (E) "Release" means any spilling,
leaking, pumping, emitting, emptying, discharging, injecting, escaping,
leaching, migrating, dumping, or disposing of Hazardous Materials (including the
abandonment or discarding of barrels, containers or other closed receptacles
containing Hazardous Materials) into the environment.
SECTION 4.17 Insurance. Schedule 4.17 sets forth insurance policies in
force for the benefit of the Company as of April 15, 1998. All such policies
have been renewed in the ordinary course of business consistent with past
practice.
17
SECTION 4.18 Brokers. Except for the engagement of Salomon Smith Barney,
whose fees will be paid by the Company and a copy of whose engagement letter has
been provided to Parent, none of the Company, any of its Subsidiaries, or any of
their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company that:
SECTION 5.1 Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws of Massachusetts
and each material subsidiary of Parent is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Parent and its
material subsidiaries (including Purchaser) has the requisite corporate power
and authority to own, operate or lease its properties and to carry on its
business as it is now being conducted, and is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction in which the nature of
its business or the properties owned, operated or leased by it makes such
qualification, licensing or good standing necessary, except where the failure to
have such power or authority, or the failure to be so qualified, licensed or in
good standing, would not have a Material Adverse Effect on Parent. The term
"Material Adverse Effect on Parent," as used in this Agreement, means any
adverse change, circumstance or effect that, individually or in the aggregate
with all other adverse changes, circumstances and effects, has had or will have
a materially adverse effect on the business, financial condition, properties or
results of operations of Parent and its Subsidiaries taken as a whole.
SECTION 5.2 Authority Relative to this Agreement and the Stock Purchase
Agreements. Each of Parent and Purchaser has all necessary corporate power and
authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Purchaser and the consummation by Parent and Purchaser of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Boards of Directors of Parent and Purchaser and by Parent as
stockholder of Purchaser, and no other corporate proceedings on the part of
Parent or Purchaser are necessary to authorize or approve this Agreement, or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by each of Parent and Purchaser and, assuming the due and
valid authorization, execution and delivery by the Company, constitutes a valid
and binding obligation of each of Parent and Purchaser enforceable against each
of them in accordance with its terms, except that such enforceability (i) may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to the enforcement of creditors' rights generally and (ii) is subject
to general principles of equity.
SECTION 5.3 No Conflict; Required Filings and Consents.
18
(a) None of the execution, delivery or performance of this Agreement by
Parent or Purchaser, the consummation by Parent or Purchaser of the transactions
contemplated hereby or compliance by Parent or Purchaser with any of the
provisions hereof will (i) conflict with or violate the organizational documents
of Parent or Purchaser, (ii) conflict with or violate any statute, ordinance,
rule, regulation, order, judgment or decree applicable to Parent or Purchaser,
or any of their subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iii) result in a violation
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
Purchaser, or any of their subsidiaries, is a party or by which any of their
respective properties or assets may be bound or affected, except in the case of
the foregoing clauses (ii) and (iii) for any such violations which would not
have a Material Adverse Effect on Parent or limit or restrict the ability of
Parent or Purchaser to consummate the transactions contemplated hereby.
(b) None of the execution and delivery of this Agreement by Parent and
Purchaser, the consummation by Parent and Purchaser of the transactions
contemplated hereby or compliance by Parent and Purchaser with any of the
provisions hereof will require any Consent of any Governmental Entity, except
for (i) compliance with any applicable requirements of the Exchange Act, (ii)
the filing of a certificate of merger, or, if permitted, a certificate of
ownership and merger, pursuant to the GCL, (iii) notifications required by
certain state Blue Sky, takeover and environmental statutes, (iv) compliance
with the HSR Act and any requirements of any foreign or supranational Antitrust
Laws and (v) Consents the failure of which to obtain or make would not have a
Material Adverse Effect on Parent or limit or restrict the ability of Parent or
Purchaser to consummate the transactions contemplated hereby.
SECTION 5.4 Information. None of the information provided or that may be
provided by Parent or Purchaser for use in the Proxy Statement, the Schedule
14D-9 or the Other Filings, and neither the Offer Documents nor the Schedule
14D-1, shall, at the time filed with the SEC or any other Governmental Entity,
and, in the case of the Proxy Statement, at the time mailed to the Company's
stockholders, at the time of the Stockholders' Meeting or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, neither Parent nor Purchaser makes
any representation or warranty with respect to any information provided or that
may be provided by the Company specifically for use in such documents. The
Schedule 14D-1 and the Offer Documents will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
SECTION 5.5 Financing. Parent or Purchaser will have available to it at
the time required the funds necessary to consummate the Merger and the
transactions contemplated hereby.
SECTION 5.6 Brokers. Except for Credit Suisse First Boston Corporation,
whose fees will be paid by Parent, none of Parent, Purchaser, any of their
Subsidiaries, or any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement.
ARTICLE VI
COVENANTS
19
SECTION 6.1 Conduct of Business of the Company. Except as expressly
contemplated by this Agreement or with the prior written consent of Parent,
during the period from the date of this Agreement to the Effective Time, the
Company will, and will cause each of its Subsidiaries to, conduct its operations
only in the ordinary and usual course of business consistent with past practice
and will use its reasonable best efforts, and will cause each of its
Subsidiaries to use its reasonable best efforts, to preserve intact the business
organization of the Company and each of its Subsidiaries, to keep available the
services of its and their present officers and key employees, and to preserve
the good will of those having business relationships with it. Without limiting
the generality of the foregoing, and except as otherwise expressly contemplated
by this Agreement, the Company will not, and will not permit any of its
Subsidiaries to, prior to the Effective Time, without the prior written consent
of Parent:
(a) adopt any amendment to its Certificate of Incorporation or By-laws or
comparable organizational documents;
(b) except for issuances of capital stock of the Company's Subsidiaries to
the Company or a wholly-owned Subsidiary of the Company, issue, reissue, pledge
or sell, or authorize the issuance, reissuance, pledge or sale of (i) additional
shares of capital stock of any class, or securities convertible into,
exchangeable for or evidencing the right to substitute for, capital stock of any
class, or any rights, warrants, options, calls, commitments or any other
agreements of any character, to purchase or acquire any capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe for, capital stock, or (ii) any other securities in respect of, in
lieu of, or in substitution for, Shares outstanding on the date hereof;
(c) declare, set aside or pay any dividends or other distribution (whether
in cash, securities or property or any combination thereof) in excess of the
regular quarterly dividend in an amount equal to the last paid regular quarterly
cash dividend paid by the Company which would normally be paid approximately
three months after such last paid regular quarterly dividend was paid, if any
such dividends are declared and paid;
(d) split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem or purchase or otherwise acquire, any shares of
its capital stock, or any of its other securities; (e) except for (i) increases
in salary and wages granted to officers and employees of the Company or its
Subsidiaries in conjunction with promotions or other changes in job status or
normal compensation reviews (within the amounts projected in the Company's 1998
operating plan previously provided to Parent) in the ordinary course of business
consistent with past practice, or (ii) increases in salary, wages and benefits
to employees of the Company pursuant to collective bargaining agreements in
effect on the date hereof, increase the compensation or fringe benefits payable
or to become payable to its directors, officers or employees (whether from the
Company or any of its Subsidiaries), or pay or award any benefit not required by
any existing plan or arrangement (including, without limitation, the granting of
stock options, stock appreciation rights, shares of restricted stock or
performance units) or grant any additional severance or termination pay to
(other than as required by existing agreements or policies listed on Schedule
4.12(i) hereto), or enter into any employment or severance agreement with, any
director, officer or other employee of the Company or any of its Subsidiaries
or, except pursuant to arrangements disclosed in Schedule 4.12(i), establish,
adopt, enter into, amend, accelerate any rights or benefits or
20
waive any performance or vesting criteria under any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, savings, welfare, deferred compensation, "golden
parachute", employment, termination, severance or other employee benefit plan,
agreement, trust, fund, policy or arrangement for the benefit or welfare of any
directors, officers or current or former employees (any of the foregoing being
an "Employee Benefit Arrangement"), except in each case to the extent required
by applicable law or regulation; provided, however, that nothing herein will be
deemed to prohibit the payment of benefits as they become payable;
(f) acquire, sell, lease or dispose of any assets or securities which are
material to the Company and its Subsidiaries, or enter into any commitment to do
any of the foregoing or enter into any material commitment or transaction, other
than transactions between a wholly owned Subsidiary of the Company and the
Company or another wholly owned Subsidiary of the Company;
(g) (i) incur, assume or pre-pay any long-term debt or incur or assume any
short-term debt, (ii) assume except in the ordinary course of business
consistent with past practice, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person or (iii) make any advances except in the ordinary course of
business consistent with past practice (other than advances to Salomon Smith
Barney required under a letter Agreement between Salomon Smith Barney and the
Company dated February 24, 1998), loans or capital contributions to, or
investments in, any other person (except for investments in short term interest
bearing instruments purchased with excess cash of the Company, and for loans,
advances, capital contributions or investments between any wholly owned
Subsidiary of the Company and the Company or another wholly owned Subsidiary of
the Company);
(h) settle or compromise any material suit or claim or material threatened
suit or claim;
(i) other than in the ordinary course of business consistent with past
practice, (i) modify, amend or voluntarily terminate any contract, (ii) waive,
release, relinquish or assign any contract (or any rights of the Company or any
of its Subsidiaries thereunder), right or claim, or (iii) cancel or forgive any
indebtedness owed to the Company or any of its Subsidiaries except for any
indebtedness relating to goods properly returned to the Company;
(j) make any tax election not required by law or settle or compromise any
tax liability, in either case that is material to the Company and its
Subsidiaries;
(k) make any material change, other than in the ordinary course of
business and consistent with past practice or as required by applicable law,
regulation or change in generally accepted accounting principles, applied by the
Company (including tax accounting principles);
(l) release any person or entity from, or waive any provision of, any
standstill agreement to which it is a party or any confidentiality agreement
between it and another person or entity; or
(m) agree in writing or otherwise to take any of the foregoing actions
prohibited under Section 6.1 or any action which would cause any representation
or warranty in this Agreement to be or become untrue or incorrect in any
material respect.
21
SECTION 6.2 Access to Information. From the date of this Agreement until
the Effective Time, the Company will, and will cause its Subsidiaries, and each
of their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives"), to give Parent
and Purchaser and their respective officers, employees, counsel, advisors and
representatives (collectively, the "Parent Representatives") reasonable access,
during normal business hours, to the offices and other facilities and to the
books and records of the Company and its Subsidiaries and will cause the Company
Representatives and the Company's Subsidiaries to furnish Parent, Purchaser and
Parent Representatives to the extent available with such financial and operating
data and such other information with respect to the business and operations of
the Company and its Subsidiaries as Parent and Purchaser may from time to time
reasonably request. Parent will comply with the terms of the Confidentiality
Agreement (as hereinafter defined).
SECTION 6.3 Reasonable Best Efforts. Subject to the terms and conditions
herein provided and to applicable legal requirements, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, and to assist and cooperate with the
other parties hereto in doing, as promptly as practicable, all things necessary,
proper or advisable under applicable laws and regulations to ensure that the
conditions set forth in Annex I and Article VII are satisfied, to remove any
injunctions or other impediments or delays, legal or otherwise and to consummate
and make effective the transactions contemplated by this Agreement.
In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent and/or Purchaser or any of
their respective subsidiaries, should be discovered by the Company or Parent, as
the case may be, which should be set forth in the Offer Documents, the Proxy
Statement, the Other Filings, Schedule 14D-1 or Schedule 14D-9, the discovering
party will promptly inform the other parties of such event or circumstance. If
at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, including the execution
of additional instruments, the proper officers and directors of each party to
this Agreement shall take all such necessary or desirable action.
SECTION 6.4 Consents.
(a) Each of the parties will, and will cause its Subsidiaries to, use its
reasonable best efforts to obtain as promptly as practicable all Consents of any
Governmental Entity or any other public or private person required in connection
with, and waivers of any Violations that may be caused by, the consummation of
the transactions contemplated by this Agreement.
(b) The Company shall obtain as promptly as practicable either a letter of
Non-Applicability from the New Jersey Department of Environmental Protection
indicating that the transactions contemplated hereby do not trigger the
Industrial Site Recovery Act or a Negative Declaration letter indicating that no
remedial actions have to be taken at the New Jersey warehouse in connection with
the transactions contemplated hereby.
(c) Each of the Company and Parent shall use its reasonable best efforts
to file as soon as practicable notifications under the HSR Act and to respond as
promptly as practicable to any inquiries received from the Federal Trade
Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and
22
requests received from any State Attorney General or other Governmental Entity
in connection with antitrust matters. Each of the Company and Parent shall
further take all reasonable actions necessary to file any other forms or
notifications which may be required by any foreign Governmental Entity and to
obtain any approvals which may be required in connection therewith.
(d) In furtherance and not in limitation of the foregoing, each of Parent
and the Company shall use its reasonable best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any antitrust, competition or trade
regulatory laws, rules or regulations of any domestic or foreign government or
Governmental Entity or any multinational authority ("Antitrust Laws"); provided,
however, that nothing in this Agreement shall require, or be construed to
require, Purchaser or any of its affiliates to proffer to, or agree to, sell or
hold separate and agree to sell, before or after the Effective Time, any
material assets, businesses, or interest in any assets or businesses of
Purchaser, the Company or any of their respective affiliates (or to consent to
any sale, or agreement to sell, by the Company of any of its material assets or
businesses) or to agree to any material changes or restrictions in the
operations of any such assets or businesses.
(e) Any party hereto shall promptly inform the others of any material
communication from the United States Federal Trade Commission, the Department of
Justice or any other domestic or foreign government or governmental or
multinational authority regarding any of the transactions contemplated by this
Agreement. If any party or any affiliate thereof receives a request for
additional information or documentary material from any such government or
authority with respect to the transactions contemplated by this Agreement, then
such party will endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other party, an
appropriate response in compliance with such request. Parent will advise the
Company promptly in respect of any understandings, undertakings or agreements
(oral or written) which Parent proposes to make or enter into with the Federal
Trade Commission, the Department of Justice or any other domestic or foreign
government or governmental or multinational authority in connection with the
transactions contemplated by this Agreement.
SECTION 6.5 Public Announcements. The mutual press release with respect to
the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither Parent and Purchaser, on the one hand, nor the Company, on the other,
shall issue any press release or otherwise make any public statement with
respect to the transactions contemplated by this Agreement without prior
consultation with the other party, except as may be required by law or as
contemplated by the first clause of Section 6.8(a)(ii) (it being understood and
agreed that the Company intends to file a Current Report on Form 8-K with
respect to the transaction contemplated hereby promptly after the date hereof).
SECTION 6.6 Indemnification.
(a) From and after the date hereof, Parent and Purchaser shall indemnify
and hold harmless each person who is, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, an officer, director or
employee of the Company or any of its Subsidiaries (collectively, the
"Indemnified Parties" and individually, the "Indemnified Party") against all
losses, liabilities, expenses, claims or damages in connection with any claim,
suit, action, proceeding or investigation based in whole or in part on the fact
that such Indemnified Party is or was a director, officer or employee of the
Company
23
or any of its Subsidiaries and arising out of acts or omissions occurring prior
to and including the Effective Time (including but not limited to the
transactions contemplated by this Agreement) to the fullest extent permitted by
the GCL, for a period of not less than six years following the Effective Time;
provided, however, that in the event any claim or claims are asserted or made
within such six-year period, all rights to indemnification in respect of any
such claim or claims shall continue until final disposition of any and all such
claims.
(b) Parent shall cause the Certificate of Incorporation and By-Laws of the
Surviving Corporation and its Subsidiaries to include provisions for the
limitation of liability of directors and indemnification of the Indemnified
Parties to the fullest extent permitted under applicable law and shall not
permit the amendment of such provisions in any manner adverse to the Indemnified
Parties, as the case may be, without the prior written consent of such persons,
for a period of six years from and after the date hereof.
(c) Without limitation of the foregoing, in the event any such Indemnified
Party is or becomes involved in any capacity in any action, proceeding or
investigation in connection with any matter, including, without limitation, the
transactions contemplated by this Agreement, occurring prior to, and including,
the Effective Time, Parent will pay as incurred such Indemnified Party's legal
and other expenses (including the cost of any investigation and preparation)
incurred in connection therewith, subject to the provision by such Indemnified
Party of an undertaking to reimburse such payments in the event of a final
determination by a court of competent jurisdiction that such Indemnified Party
is not entitled thereto. Subject to the undertaking to reimburse referred to in
the previous sentence, Parent shall pay all expenses, including attorneys' fees,
that may be incurred by any Indemnified Party in enforcing the indemnity and
other obligations provided for in this Section 6.6 or any action involving an
Indemnified Party resulting from the transactions contemplated by this
Agreement.
(d) Any determination to be made as to whether any Indemnified Party has
met any standard of conduct imposed by law shall be made by legal counsel
reasonably acceptable to such Indemnified Party, Parent and the Surviving
Corporation, retained at Parent's and the Surviving Corporation's expense.
(e) This Section 6.6 is intended to benefit the Indemnified Parties and
their respective heirs, executors and personal representatives and shall be
binding on the successors and assigns of Parent, Purchaser and the Surviving
Corporation.
SECTION 6.7 Notification of Certain Matters. Parent and the Company shall
promptly notify each other of (a) the occurrence or non-occurrence of any fact
or event which would be reasonably likely (i) to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time or (ii) to cause
any material covenant, condition or agreement under this Agreement not to be
complied with or satisfied in all material respects and (b) any failure of the
Company or Parent, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder in any
material respect; provided, however, that no such notification shall affect the
representations or warranties of any party or the conditions to the obligations
of any party hereunder.
SECTION 6.8 No Solicitation.
24
(a) The Company and its Subsidiaries shall not, and the Company and its
Subsidiaries shall ensure that their respective officers, directors and
consultants (including, but not limited to, investment bankers, attorneys and
accountants) and will use its best efforts to ensure that its employees,
representatives and agents do not, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Purchaser, any of its affiliates or representatives) concerning any
proposal or offer to acquire all or a substantial part of the business or
properties of the Company or any of its Subsidiaries or any capital stock of the
Company or any of its Subsidiaries, whether by merger, tender offer, exchange
offer, sale of assets or similar transaction involving the Company or any
Subsidiary, division or operating or principal business unit of the Company (an
"Acquisition Proposal"), except that nothing contained in this Section 6.8 or
any other provision hereof shall prohibit the Company or the Company's Board
from (i) taking and disclosing to the Company's stockholders a position with
respect to a tender or exchange offer by a third party pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act, or (ii) making such disclosure to
the Company's stockholders as, in the good faith judgment of the Board, after
receiving advice from Company counsel, is required under applicable law;
provided that the Company may not, except as permitted by Section 6.8(b),
withdraw or modify its position with respect to the Offer or the Merger or
approve or recommend, or propose to approve or recommend any Acquisition
Proposal, or enter into any agreement with respect to any Acquisition Proposal.
Except as permitted by Section 6.8(b), the Company shall, and shall cause each
of its Subsidiaries to, immediately cease and cause to be terminated any
existing activities, discussions or negotiations by the Company, any of its
Subsidiaries or any officer, director, employee or affiliate of, or investment
banker, attorney, accountant or other advisor or representative of, the Company
or any of its Subsidiaries with parties conducted heretofore with respect to any
of the foregoing.
(b) Notwithstanding the foregoing, the Company may furnish information
concerning the Company and its Subsidiaries to any corporation, partnership,
person or other entity or group pursuant to appropriate confidentiality
agreements with terms substantially similar to those contained in the
Confidentiality Agreement, and may negotiate and participate in discussions and
negotiations with such entity or group concerning an Acquisition Proposal if (i)
such entity or group, which has not been solicited by or on behalf of the
Company after the date hereof, has submitted a bona fide written proposal to the
Company relating to the acquisition of all or substantially all of the business
or properties of the Company and its subsidiaries or the acquisition of all of
the capital stock of the Company with respect to which the Board concludes in
good faith, after consulting with a nationally recognized investment banking
firm (including but not limited to Salomon Smith Barney), (A) the proposal is
more favorable to the Company's stockholders (in their capacities as
stockholders), from a financial point of view, than the Offer and the Merger and
(B) the bidder is fully capable of completing the transaction in accordance with
the terms of such proposal, and (ii) in the good faith opinion of the Board of
Directors of the Company, only after receipt of written advice from legal
counsel to the Company, the failure to provide such information or access or to
engage in such discussions or negotiations would cause the Board of Directors to
violate its fiduciary duties to the Company's stockholders under applicable law
(an Acquisition Proposal which satisfies clauses (i) and (ii) being referred to
herein as a "Superior Proposal"). The Company shall provide reasonable notice to
Purchaser to the effect that it has received an Acquisition Proposal, including
its terms and conditions (but excluding the identity of the party or parties
making such Acquisition Proposal, unless the terms and conditions of such
Acquisition Proposal contains a purchase price that includes stock of such party
or parties). At any time after 48 hours following notification to Purchaser of
25
the Company's intent to do so (which notification shall include the identity of
the bidder and the material terms and conditions of the proposal) and if the
Company has otherwise complied with the terms of this Section 6.8(b), the Board
of Directors may withdraw or modify its approval or recommendation of the Offer
and may cause the Company to enter into an agreement with respect to a Superior
Proposal, provided it shall concurrently with entering into such agreement pay
or cause to be paid to Purchaser the Termination Fee (as defined below) plus any
amount payable at the time for reimbursement of expenses pursuant to Section
8.3(b). If the Company shall have notified Purchaser of its intent to enter into
an agreement with respect to a Superior Proposal in compliance with the
preceding sentence and has otherwise complied with such sentence, the Company
may enter into an agreement with respect to such Superior Proposal (with the
bidder and on terms no less favorable than those specified in such notification
to Purchaser) after the expiration of such 48 hour period.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to Each Party's Obligation to Consummate the
Merger. The respective obligations of Parent, Purchaser and the Company to
consummate the Merger and the transactions contemplated hereby are subject to
the satisfaction, at or before the Effective Time, of each of the following
conditions:
(a) Stockholder Approval. If required by the GCL, the stockholders of the
Company shall have duly approved the transactions contemplated by this
Agreement.
(b) Injunctions, Illegality. The consummation of the Merger shall not be
restrained, enjoined or prohibited by any order, judgment, decree, injunction or
ruling of a court of competent jurisdiction or any Governmental Entity and there
shall not have been any statute, rule or regulation enacted, promulgated or
deemed applicable to the Merger by any Governmental Entity which prevents the
consummation of the Merger.
(c) Purchase of Shares. Parent and/or Purchaser shall have purchased all
Shares validly tendered and not withdrawn pursuant to the Offer; provided,
however, that this condition shall not be applicable to the obligations of
Parent or Purchaser if Parent and/or Purchaser fails to purchase Shares tendered
pursuant to the Offer in violation of the terms of this Agreement or the Offer.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company (with any
termination by Parent also being an effective termination by Purchaser):
(a) by mutual consent of Parent and the Company;
26
(b) by Parent or the Company:
(i) if any court or Governmental Entity shall have issued an order, decree
or ruling or taken any other action (which order, decree, ruling or other action
the parties hereto shall use their reasonable best efforts to lift) restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable; or
(ii) if (x) the Offer shall have expired without any Shares being
purchased therein or (y) Purchaser shall not have accepted for payment all
Shares tendered pursuant to the Offer by March 31, 1999; provided, however, that
the right to terminate this Agreement under this Section 8.1(b)(ii) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of Purchaser, to
purchase the Shares pursuant to the Offer on or prior to such date; or
(iii) if the Supervisory Board of Wolters Kluwer nv shall not have
approved the transactions contemplated hereby by June 10, 1998.
(c) by the Company:
(i) if Parent and/or Purchaser fails to commence the Offer as
provided in Section 1.1 hereof; provided, that the Company may not terminate
this Agreement pursuant to this Section 8.1(c)(i) if the Company is at such time
in breach of its obligations under this Agreement such as to cause a Material
Adverse Effect on the Company;
(ii) in connection with entering into a definitive agreement in
accordance with Section 6.8(b), provided it has complied with all provisions of
such section, including the notice provisions therein, and that it makes
simultaneous payment of the Termination Fee plus any amounts then due as a
reimbursement of expenses; or
(iii) if Parent or Purchaser shall have made a material
misrepresentation or have breached in any material respect any of their
respective representations, covenants or other agreements contained in this
Agreement, which breach (a) cannot be or has not been cured, in all material
respects, within 30 days after the giving of written notice to Parent or
Purchaser, as applicable, and (b) limits or restricts the ability of Parent or
Purchaser to consummate the transactions contemplated hereby.
(d) by Parent:
(i) if prior to the purchase of Shares pursuant to the Offer, the
Company shall have breached any representation, warranty, covenant or other
agreement contained in this Agreement which (A) would give rise to the failure
of a condition set forth in paragraph (e) or (f) of Annex I hereto and (B)
cannot be or has not been cured, in all material respects, within 30 days after
the giving of written notice to the Company; or
(ii) if any event set forth in paragraph (d) of Annex I hereto shall
have occurred.
SECTION 8.2 Effect of Termination. In the event of the termination of this
Agreement
27
pursuant to Section 8.1, this Agreement shall forthwith become void and have no
effect, without any liability on the part of any party or its directors,
officers or stockholders, other than the provisions of this Section 8.2, Section
8.3 and the last sentence of Section 6.2, which shall survive any such
termination. Nothing contained in this Section 8.2 shall relieve any party from
liability for any breach of this Agreement or the Confidentiality Agreement.
SECTION 8.3 Fees and Expenses.
(a) Except as contemplated by this Agreement, each party hereto shall bear
its own expenses and costs in connection with this Agreement and the
transactions contemplated hereby.
(b) If
(w) the Company shall terminate this Agreement pursuant to Section
8.1(c)(ii) hereof,
(x) Parent shall terminate this Agreement pursuant to Section
8.1(d)(ii) hereof,
(y) either the Company or Parent terminates this Agreement pursuant
to Section 8.1(b)(ii) and (a) prior thereto there shall have been publicly
announced another Acquisition Proposal (provided, however, that solely for
purposes of this clause (a), the term Acquisition Proposal shall not include (1)
the purchase of less than 5% of any class or series of capital stock of the
Company if such purchase does not involve an offer to acquire additional shares
of capital stock of the Company that could cause any person, entity or "group"
(as defined in Section 13(d)(3) of the Exchange Act), other than Purchaser or
its affiliates or any group of which any of them is a member, to beneficially
own 5% or more of any such class or series or (2) any purchase of 5% or more of
any class or series of capital stock of the Company which can properly be
reported on a Schedule 13G and (b) an Acquisition Proposal pursuant to which any
Person acquires all or a substantial part of the business or properties of the
Company or any of its Subsidiaries, any of the capital stock (or securities
exercisable for or convertible into such capital stock) of any of the
Subsidiaries of the Company or any capital stock (or securities exercisable for
or convertible into such capital stock) of the Company which represents 20% or
more of the equity interest or voting power of the Company shall be consummated
on or prior to March 31, 1999, or
(z) Parent shall terminate this Agreement pursuant to Section
8.1(d)(i) hereof and an Acquisition Proposal pursuant to which any Person
acquires all or a substantial part of the business or properties of the Company
or any of its Subsidiaries, any of the capital stock (or securities exercisable
for or convertible into such capital stock) of any of the Subsidiaries of the
Company or any capital stock (or securities exercisable for or convertible into
such capital stock) of the Company which represents 20% or more of the equity
interest or voting power of the Company shall be consummated on or prior to
March 31, 1999,
then, the Company shall pay to Purchaser an amount equal to Seven Million Five
Hundred Thousand Dollars ($7,500,000)(the "Termination Fee"), plus an amount
equal to Purchaser's actual documented reasonable out-of-pocket fees and
expenses (including, without limitation, reasonable legal, investment banking,
financing commitment fees and commercial banking fees and expenses) incurred by
Purchaser and Parent in connection with the due diligence investigation, the
Offer, the Merger, this Agreement and
28
the consummation of the transactions contemplated hereby (the "Reimbursable
Expenses"), which shall be payable by wire transfer of same day funds to an
account designated by Purchaser. The Company shall also be obligated to pay to
Purchaser the Reimbursable Expenses in such manner if Parent shall terminate
this Agreement pursuant to Section 8.1(d)(i) hereof (regardless of whether an
Acquisition Proposal is consummated thereafter). The Termination Fee and
Purchaser's good faith estimate of its Reimbursable Expenses shall be paid
concurrently with any such termination, together with delivery of a written
acknowledgment by the Company of its obligation to reimburse Purchaser for its
actual expenses in excess of such estimated expenses payment, except that the
Termination Fee and such expenses shall be payable in connection with a
termination described in clauses (y) or (z) above upon the consummation of an
Acquisition Proposal referenced in such clauses. All fees and expenses paid
pursuant to this Section shall constitute liquidated damages and the Company
shall have no further liability to Purchaser or Parent under this Agreement
after the payment of such fees and expenses, provided that nothing in this
sentence shall affect any liability the Company may have to Purchaser or Parent
under Stock Purchase Agreements (if any) and the Option Agreement.
SECTION 8.4 Amendment. This Agreement may be amended by Parent and the
Company at any time before or after any approval of this Agreement by the
stockholders of the Company but, after any such approval, no amendment shall be
made which decreases the Purchase Price or changes the form thereof without the
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
SECTION 8.5 Extension; Waiver. At any time prior to the Effective Time,
any party hereto may (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (ii) waive any inaccuracies
in the representations and warranties contained herein by any other party or in
any document, certificate or writing delivered pursuant hereto by any other
party or (iii) waive compliance with any of the agreements of any other party or
with any conditions to its own obligations. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. The covenants and other agreements contained herein shall
survive in accordance with their respective terms.
SECTION 9.2 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments referred
to herein) and the letter agreement between Salomon Smith Barney, on behalf of
the Company, and Wolters Kluwer U.S. Corporation, on its own behalf and for
Parent and its other affiliates, dated April 6, 1998 (the "Confidentiality
Agreement"), constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder will be assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other party (except
that Parent may assign its rights and Purchaser may assign its rights,
29
interest and obligations to any affiliate or direct or indirect subsidiary of
Parent without the consent of the Company). 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 9.3 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
SECTION 9.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or Purchaser:
Kluwer Boston, Inc.
c/o Kluwer Academic Publishers bv
Spuiboulevard 50, 311GR Dordrecht
3300 AZ Dordrecht, The Netherlands
Attention: Jeffrey K. Smith
Fax #: (011)(31)(78) 639-2268
with a copy to:
Wolters Kluwer U.S. Corporation
161 North Clark Street, 48th Floor
Chicago, Illinois 60601-3221
Attention: Bruce C. Lenz
Fax #: (312) 425-02[cad 220]33 or 0234
and to:
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
Attention: Arnold J. Schaab, Esq.
Fax #: (212) 326-0806
If to the Company:
Plenum Publishing Corporation
233 Spring Street
New York, New York 10013
Attention: Martin E. Tash
Fax #: (212) 463-0742
with copies to:
Bressler, Amery & Ross, P.C.
17 State Street
30
New York, New York 10004
Attention: Bernard Bressler
Fax #: (212) 425-9337
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
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.6 Consent to Jurisdiction; Waiver of Immunities. The Company,
Parent and Purchaser irrevocably submit to the jurisdiction of any Delaware
state or federal court thereof in any action or proceeding arising out of or
relating to this Agreement, and the Company, Parent and Purchaser hereby
irrevocably agree that all claims in respect of such action or proceeding may be
heard and determined in such Delaware court or in such federal court. Parent and
Purchaser hereby irrevocably appoint The Corporation Trust Company (the "Parent
Process Agent"), with an office on the date hereof at Corporation Trust Center,
1209 Orange Street, Wilmington, Delaware, as its agent to receive on behalf of
Parent or Purchaser service of copies of the summons and complaint and any other
process which may be served in any such action or proceeding. Such service may
be made by mailing or delivering a copy of such process to Parent or Purchaser
in care of Parent Process Agent at Parent Process Agent's above address, and
Parent and/or Purchaser hereby irrevocably authorize and direct Parent Process
Agent to accept such service on their behalf. The Company hereby irrevocably
appoints The Corporation Trust Company (the "Company Process Agent"), with an
office on the date hereof at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware, as its agent to receive on behalf of the Company service
of copies of the summons and complaint and any other process which may be served
in any such action or proceeding. Such service may be made by mailing or
delivering a copy of such process to the Company in care of the Company Process
Agent at the Company Process Agent's above address, and the Company hereby
irrevocably authorizes and directs the Company Process Agent to accept such
service on its behalf. As an alternative method of service, the Company, Parent
and Purchaser also irrevocably consent to the service of any and all process in
any such action or proceeding by the mailing of copies of such process to the
respective party at its address specified in Section 9.4. The Company, Parent
and Purchaser agree that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
SECTION 9.7 Descriptive Headings. The descriptive headings and captions
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 9.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.9 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except with respect to
Sections 2.9 and 6.6, nothing in this Agreement, express or implied, is intended
to confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
31
SECTION 9.10 Certain Definitions. As used in this Agreement:
(a) the term "Affiliate," as applied to any person, shall mean any other
person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "Control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise;
(b) the term "Person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act); and
(c) the term "Subsidiary", "Subsidiaries" or "subsidiaries" means, with
respect to Parent, the Company or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the Company or
such other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, stock or other equity
interests the holders of which are generally entitled to more than 50% of the
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 9.11 Specific Performance. The parties hereto 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 hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
* * * * *
IN WITNESS WHEREOF, each of the parties has caused this Agreement and Plan
of Merger to be executed on its behalf by its respective officer thereunto duly
authorized, all as of the day and year first above written.
KLUWER BOSTON, INC.
By: /s/ Jeffrey K. Smith
-------------------------------
Name: Jeffrey K. Smith
Title: President
PPC ACQUISITION CORP.
By: /s/ Jeffrey K. Smith
-------------------------------
Name: Jeffrey K. Smith
Title: President
32
PLENUM PUBLISHING CORPORATION
By: /s/ Martin E. Tash
-------------------------------
Name: Martin E. Tash
Title: President and Chairman of the Board
33
ANNEX I
Certain Conditions of the Offer. Notwithstanding any other provisions of
the Offer, and in addition to (and not in limitation of) Purchaser's rights to
extend and amend the Offer at any time in its sole discretion (subject to the
provisions of the Merger Agreement), Purchaser shall not be required to accept
for payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-l(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate or amend the Offer as to any Shares not then paid for,
if (i) any applicable waiting period under the HSR Act has not expired or
terminated, (ii) the Minimum Condition has not been satisfied, or (iii) at any
time on or after the date of the Merger Agreement and before the time of
acceptance for payment for any such Shares, any of the following events shall
have occurred:
(a) there shall be threatened or pending any suit, action or proceeding by
any Governmental Entity against Purchaser, Parent, the Company or any Subsidiary
of the Company (i) seeking to prohibit or impose any material limitations on
Purchaser's or Parent's ownership or operation (or that of any of their
respective Subsidiaries or affiliates) of all or a material portion of their or
the Company's businesses or assets (or that of any of its Subsidiaries), or to
compel Purchaser or Parent or their respective Subsidiaries and affiliates to
dispose of or hold separate any material portion of the business or assets of
the Company or Parent and their respective Subsidiaries, in each case taken as a
whole, (ii) challenging the acquisition by Purchaser or Parent of any Shares
under the Offer, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or the performance of any of the other transactions
contemplated by the Agreement or the Stock Purchase Agreements, or seeking to
obtain from the Company, Purchaser or Parent any damages that are material in
relation to the Company and its Subsidiaries taken as a whole, (iii) seeking to
impose material limitations on the ability of Purchaser, or render Purchaser
unable, to accept for payment, pay for or purchase some or all of the Shares
pursuant to the Offer and the Merger or (iv) seeking to impose material
limitations on the ability of Purchaser or Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote the Shares purchased by it on all matters properly presented to the
Company's stockholders or there shall be pending any suit, action or proceeding
by any Governmental Entity against Purchaser, Parent, the Company or any
Subsidiary of the Company which is reasonably likely to have a Material Adverse
Effect on the Company;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated, or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger of
applicable waiting periods under HSR Act, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (iv) of paragraph (a) above;
(c) there shall have occurred any events after the date of the Agreement
which have or will have a Material Adverse Effect on the Company;
(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or Purchaser its
approval or recommendation of the Offer, the Merger or the Agreement, or
approved or recommended any Acquisition Proposal or (ii) the Company shall have
entered into any agreement with respect to any Superior Proposal in accordance
with Section 6.8(b) of the Agreement;
34
(e) the representations and warranties of the Company set forth in the
Agreement shall not be true and correct, in each case (i) as of the date
referred to in any representation or warranty which addresses matters as of a
particular date, or (ii) as to all other representations and warranties, as of
the date of the Agreement and as of the scheduled expiration of the Offer unless
the inaccuracies without giving effect to any materiality or material adverse
effect qualifications or materiality exceptions contained therein under such
representations and warranties, taking all the inaccuracies under all such
representations and warranties together in their entirety, do not result in
Material Adverse Effect on the Company;
(f) the Company shall have failed to perform any obligation or to comply
with any agreement or covenant to be performed or complied with by it (i) under
Section 6.1 or 6.8 of the Agreement or (ii) under any other agreement or
covenant to be performed or complied with by it under the Agreement, unless the
failure to so perform or comply would not have a Material Adverse Effect on the
Company;
(g) the Agreement shall have been terminated in accordance with its terms;
The foregoing conditions are for the benefit of Parent and Purchaser, may
be asserted by Parent or Purchaser regardless of the circumstances giving rise
to any such conditions and may be waived by Parent or Purchaser in whole or in
part at any time and from time to time in their reasonable discretion, in each
case, subject to the terms of the Merger Agreement. The failure by Parent or
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
35
SCHEDULE 4.8
MATERIAL CHANGES
After March 31, 1998, the Company realized losses of approximately $3.4
million dollars as a result of liquidating its securities portfolio. The only
remaining investments are 34,825 shares of Gradco Systems, Inc. and an
investment of $1.1 million dollars at cost in Tutor Time Learning Systems stock
and a note receivable.
36
SCHEDULE 4.11
LITIGATION
None.
37
SCHEDULE 4.12(a)
EMPLOYEE BENEFIT PLANS
1. Profit Sharing Plan (effective 1/1/89, as amended on 3/20/92, 3/17/93,
5/16/94 and 12/13/94).
2. Incentive Compensation Plan for Executive Officers and Key Employees.
3. Employee Medical Benefit Plan managed by Corporate Healthcare Financing,
Inc.
4. Group Insurance Program providing term life and accidental death and
dismemberment coverage - Fortis Benefits Insurance Company (Policy 65121).
5. See Schedule 4.12(i) for "golden parachute" agreements.
6. Sick pay policy for hourly personnel - 7 days per year.
7. Severance pay: seven months to one year - 1 week; one year or more - 2
weeks.
8. Travel Insurance - $500,000 Hartford Insurance Co. Policy No. 12ETB108204,
Expires May 1, 2000.
38
SCHEDULE 4.12(i)
EMPLOYMENT/TERMINATION AGREEMENTS
1. Second Amended Contingent Compensation Agreements dated 8/1/96 with
the following persons:
a. Martin E. Tash;
b. Mark Shaw;
c. Harry Allcock;
d. Ken Derham;
e. Ghanshyam Patel.
2. Contingent Compensation Contracts dated 8/1/96 with the following
persons:
a. John Hwang;
b. Carol Bischoff;
c. Tom Mulak.
39
SCHEDULE 4.12(j)
LABOR UNION
At the Company warehouse in Edison, New Jersey the hourly workers are
represented by Local 29, Retail/Wholesale & Deparment Store Union, AFL-CIO.
40
SCHEDULE 4.14(b)
LICENSES
1. Translation Rights Agreement dated March 3, 1998 between Plenum Publishing
Corporation ("Plenum") and Editoriale Armenia (granting license to publish
Tao of Immunology).
2. Firstsearch Electronic Collections Online Agreement dated September 2,
1997 between Plenum and OCLC Online Computer Library Center, Incorporated
(granting right to make journals available online).
3. Agreement dated June 17, 1997 between Plenum and Blackwells (granting
access to CatchWord journals).
4. General Agreement dated April 16, 1997 between Plenum and UMI Company
(granting license to reproduce and distribute various works).
5. Rights Agreement dated January 1, 1997 between Plenum and The British
Library Board (granting license to use material in journals and other
works).
6. Agreement dated October 31, 1996 between Plenum and Kenneth Marshall
(granting license to publish paperback editions of A Sexual Odyssey).
7. Comprehensive Publisher Photocopy Agreement dated June 28, 1995 between
Plenum and Copyright Clearance Center, Inc. (granting right to reproduce
and distribute substantially all print publications of Plenum).
8. Agreement dated March 30, 1990 between Plenum and University Microfilms,
Inc. (granting license to reproduce and distribute various works in
microform).
9. Agreement dated April 10, 1989 between Plenum and MacMillan Book Clubs,
Inc. (granting book club rights in Comprehensive Handbook of Cognitive
Therapy).
10. Agreement dated February 6, 1986 between Plenum and the Institute for
Scientific Information, Inc. (granting license reproduce and distribute
two journals).
11. License Agreement between Plenum and Information Access Company (granting
license reproduce and distribute two journals).
12. Miscellaneous agreements in which Plenum grants permission to reprint a
certain number of copies of material owned by Plenum.
13. License Agreement dated January 21, 1994 between IFI/Plenum Data
Corporation ("IFI") and The American Chemical Society (granting license to
utilize computer databases).
14. Database License Agreement dated November 1, 1991 between Maxwell Online,
Inc. and IFI (granting license to utilize computer databases).
41
SCHEDULE 4.16
ENVIRONMENTAL MATTERS
Set forth below is a summary of the file maintained by the New Jersey
Department of Environmental Protection ("NJDEP") with respect to real property
located at 200 and 220 McGaw Drive, Edison Township, New Jersey, which Plenum
purchased on November 16, 1990. The NJDEP file was generated in connection with
the action taken by a prior owner, L. Perrigo Company ("Perrigo"), to comply
with the requirements of the Environmental Cleanup Responsibility Act ("ECRA").
This Act was subsequently amended and is now known as the Industrial Site
Recovery Act ("ISRA").
Prior Owners and Operators
On December 31, 1983, Albert Frassetto purchased the property from I.C.E.
Associates. He owned the property until it was sold to Plenum Publishing
Corporation ("Plenum"). The site consists of a warehousing space and two office
areas located on the main floor and on a mezzanine. From September 1979 through
August 1994 First National State Bank leased the mezzanine area for office
space. Thereafter, from September 1984 through December 1989 the New Jersey
Teachers Academy leased this space.
ECRA
The requirements of ECRA are triggered when an "industrial establishment"
terminates, transfers or closes its business activities. Industrial
establishments are defined in the statute as places of business which utilize
hazardous substances and have an Standard Industrial Classification Code ("SIC")
set out in the statute. The statute covers all manufacturing operations and
certain other activities. Perrigo intially took the position that the property
was not subject to the requirements of ECRA because of the owner's SIC code.
However, this analysis was incorrect because the SIC code of the property is
based upon the business operations undertaken at the facility. In this case,
NJDEP decided that the SIC code for Perrigo, the tenant was 51, an ECRA subject
activity.
In July 1990, Perrigo submitted a request for an Administrative Consent
Order ("ACO") allowing the termination of activities before the ECRA
investigation and cleanup was completed. The company agreed to establish a
$500,000 financial assurance to secure its cleanup obligation.
In October 1990, Perrigo submitted its General Information Submission
("GIS") and Site Evaluation Submission ("SES") forms to the NJDEP. These forms
generally discussed the business activities conducted at the site. In addition,
they showed that the primary environmental concern for the property was the
existence of two 4,000 gallon underground storage tanks ("USTs"). These USTs
were used for storage of No. 2 heating oil. No other environmental concerns
existed because the facility was used primarily for storage of finished and
packaged goods.
Perrigo hired an environmental consultant to handle the closure of the
USTs and post-excavation sampling. In its report, the consultant stated that no
holes were noted in the tanks after they were removed from the ground. Further,
all post-excavation soil samples were well below the NJDEP's existing cleanup
limits. Based on this information, no further action was approved for these
areas of concern.
42
In a Report of Inspection, the NJDEP case manager also requested further
information concerning a hole observed in the facility's wall and floor drains.
Perrigo was able to resolve these issues by showing that the hole was related to
stormwater runoff from the roof, and the floor drains emptied to the sanitary
sewer line.
Sale of Property to Plenum
In October 1990, Frassetto advised the NJDEP that a contract to sell the
property to Plenum had been executed. An amendment to the ACO was executed. This
amendment authorized the transaction to close. However, no substantive cleanup
requirements were imposed because of its execution.
On March 26, 1991, Perrigo submitted a Negative Declaration Affidavit
stating that the cleanup for the property was complete and performed in
accordance with NJDEP regulatory requirements. This Negative Declaration was
approved by NJDEP on April 3, 1991. With the issuance of this letter, the ECRA
review was closed.
43
SCHEDULE 4.17
INSURANCE
Policy Number 488-30-26-58
-------------------------------------------------------------------------------
COMMON POLICY DECLARATIONS
PREMIUM STATEMENT
-------------------------------------------------------------------------------
NAMED INSURED: PRODUCER:
PLENUM PUBLISHING CORP. HARVEY DANN CO INC
(SEE AIL 03 #2) 122 EAST 42ND STREET
233 SPRING STREET SUITE 1013
NEW YORK, NY 10013 NEW YORK, NY
10168
Premium Statement for the period from 05/15/97 to 05/15/98
This policy consists of the following coverage parts for which a premium is
indicated. This premium may be subject to adjustment.
Agreement and Plan of Merger - Plenum Publishing Corp. and Kluwer Boston Inc.
Was this helpful?