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Search Agreement and Plan of Merger by:
AGREEMENT AND PLAN OF
MERGER
Dated as of
January 9, 2006
Among
CFCI
HOLDINGS, INC.,
HOLO
ACQUISITION CORP.
And
CFC
INTERNATIONAL, INC.
<PAGE>
TABLE OF
CONTENTS
ARTICLE I THE
MERGER...................................................1
SECTION 1.01. THE
MERGER.................................................1
SECTION 1.02.
CLOSING....................................................2
SECTION 1.03. EFFECTIVE
TIME.............................................2
SECTION 1.04. EFFECTS OF THE
MERGER......................................2
SECTION 1.05. CERTIFICATE OF INCORPORATION AND
BY-LAWS...................2
SECTION 1.06.
DIRECTORS..................................................3
SECTION 1.07. OFFICERS...................................................3
ARTICLE II EFFECT OF THE MERGER ON
THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES; COMPANY STOCK
OPTIONS AND WARRANTS........................................................3
SECTION 2.01. EFFECT ON CAPITAL
STOCK...................................3
SECTION 2.02. EXCHANGE OF
CERTIFICATES..................................4
SECTION 2.03. COMPANY STOCK OPTIONS; COMPANY PREFERRED
STOCK OPTION;
ESPP......................................................6
ARTICLE III REPRESENTATIONS AND
WARRANTIES OF THE COMPANY...............6
SECTION 3.01. ORGANIZATION, STANDING AND CORPORATE
POWER................7
SECTION 3.02. SUBSIDIARIES..............................................7
SECTION 3.03. CAPITAL
STRUCTURE.........................................8
SECTION 3.04. AUTHORITY;
NONCONTRAVENTION...............................9
SECTION 3.05. GOVERNMENTAL
APPROVALS....................................11
SECTION 3.06. COMPANY SEC DOCUMENTS; NO UNDISCLOSED
LIABILITIES.........11
SECTION 3.07. INFORMATION
SUPPLIED......................................13
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR
EVENTS......................13
SECTION 3.09.
LITIGATION................................................15
SECTION 3.10.
CONTRACTS.................................................15
SECTION 3.11. COMPLIANCE WITH
LAWS......................................17
SECTION 3.12. ENVIRONMENTAL
MATTERS.....................................18
SECTION 3.13. EMPLOYEES AND
LABOR.......................................19
SECTION 3.14. EMPLOYEE BENEFIT
PLANS....................................20
SECTION 3.15. TAXES.....................................................23
SECTION 3.16. TITLE TO ASSETS;
LEASES...................................25
SECTION 3.17. INTELLECTUAL
PROPERTY.....................................27
SECTION 3.18. CUSTOMER ACCOUNTS RECEIVABLE..............................28
SECTION 3.19. APPROVAL AND ADOPTION
REQUIREMENTS........................28
SECTION 3.20. STATE TAKEOVER
STATUTES...................................28
SECTION 3.21. TRANSACTIONS WITH
AFFILIATES..............................29
SECTION 3.22. SUPPLIERS AND
CUSTOMERS...................................29
SECTION 3.23.
INSURANCE.................................................29
SECTION 3.24.
INVENTORY.................................................30
SECTION 3.25. SUFFICIENCY OF
ASSETS.....................................30
SECTION 3.26. BROKERS AND OTHER
ADVISORS................................30
SECTION 3.27. OPINION OF FINANCIAL
ADVISOR..............................30
ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER SUB.....30
SECTION 4.01. ORGANIZATION, STANDING AND CORPORATE
POWER................31
SECTION 4.02. AUTHORITY;
NONCONTRAVENTION...............................31
SECTION 4.03. GOVERNMENTAL APPROVALS....................................32
SECTION 4.04. INFORMATION
SUPPLIED......................................32
SECTION 4.05.
LITIGATION................................................32
SECTION 4.06. OWNERSHIP AND OPERATIONS OF MERGER
SUB....................32
SECTION 4.07.
FINANCING.................................................32
SECTION 4.08. INTERESTED
STOCKHOLDER....................................33
SECTION 4.09. NO CAPITAL
OWNERSHIP......................................33
SECTION 4.10. BROKERS AND OTHER
ADVISORS................................33
ARTICLE V COVENANTS RELATING TO
CONDUCT OF BUSINESS...................33
SECTION 5.01. CONDUCT OF
BUSINESS.......................................33
SECTION 5.02. NO SOLICITATION BY THE
COMPANY............................37
ARTICLE VI ADDITIONAL
AGREEMENTS........................................40
SECTION 6.01. PREPARATION OF THE INFORMATION
STATEMENT..................40
SECTION 6.02. ACCESS TO INFORMATION;
CONFIDENTIALITY....................41
SECTION 6.03. COMMERCIALLY REASONABLE
EFFORTS...........................42
SECTION 6.04. INDEMNIFICATION, EXCULPATION AND
INSURANCE................43
SECTION 6.05. FEES AND EXPENSES.........................................44
SECTION 6.06. PUBLIC
ANNOUNCEMENTS......................................45
SECTION 6.07. EMPLOYEE
MATTERS..........................................45
SECTION 6.08. PRINCIPAL STOCKHOLDERS' AGREEMENT.........................47
SECTION 6.09. SECTION 16
MATTERS........................................47
SECTION 6.10. STOCK PLANS; COMPANY PREFERRED STOCK
OPTION...............47
SECTION 6.11. INDEMNIFICATION OBLIGATIONS OF ROGER F. HRUBY.............47
ARTICLE VII CONDITIONS
PRECEDENT........................................48
SECTION 7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO
EFFECT
THE
MERGER................................................48
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF PARENT AND
MERGER SUB........48
SECTION 7.03. CONDITIONS TO OBLIGATION OF THE
COMPANY...................50
SECTION 7.04. FRUSTRATION OF CLOSING
CONDITIONS.........................50
ARTICLE VIII TERMINATION, AMENDMENT
AND WAIVER..........................51
SECTION 8.01.
TERMINATION...............................................51
SECTION 8.02. EFFECT OF
TERMINATION.....................................52
SECTION 8.03. AMENDMENT.................................................52
SECTION 8.04. EXTENSION;
WAIVER.........................................52
SECTION 8.05. PROCEDURE FOR TERMINATION, AMENDMENT OR
WAIVER............52
ARTICLE IX GENERAL
PROVISIONS...........................................53
SECTION 9.01. NONSURVIVAL OF REPRESENTATIONS AND
WARRANTIES.............53
SECTION 9.02.
NOTICES...................................................53
SECTION 9.03.
DEFINITIONS...............................................54
SECTION 9.04.
INTERPRETATION............................................55
SECTION 9.05.
COUNTERPARTS..............................................55
SECTION 9.06. ENTIRE AGREEMENT; NO THIRD-PARTY
BENEFICIARIES............55
SECTION 9.07. GOVERNING
LAW.............................................55
SECTION 9.08.
ASSIGNMENT................................................55
SECTION 9.09. JURISDICTION; WAIVER OF JURY
TRIAL........................56
SECTION 9.10. SPECIFIC
ENFORCEMENT......................................56
SECTION 9.11.
SEVERABILITY..............................................57
Exhibit A.........Form of Principal Stockholders' Agreement
Exhibit B.........Certificate of Incorporation of Surviving Corporation
Exhibit C.........Terms of Non-competition Agreement
<PAGE>
Table of Defined Terms
----------------------
Section
-------
2005 Stockholder
Litigation..............................................6.11(c)
Affected
Employees.......................................................6.07(a)
Affiliate................................................................9.03(a)
Affiliated
group.........................................................3.15(a)
Agreement...............................................................Preamble
Alternative Acquisition Agreement........................................5.02(a)
Appraisal
Shares.........................................................2.01(d)
Appraisal Shares
Amounts.................................................6.11(c)
Business
Day.............................................................9.03(b)
Certificate..............................................................2.01(c)
Certificate of Merger....................................................1.03
Change of
Recommendation.................................................5.02(d)
Change of Recommendation Notice..........................................5.02(d)
Closing..................................................................1.02
Closing Date.............................................................1.02
Code.....................................................................2.02(g)
Common Stock Merger
Consideration........................................2.01(c)
Company.................................................................Preamble
Company Benefit Agreements...............................................3.08(d)
Company By-laws..........................................................3.01
Company Certificate......................................................3.01
Company Class B Stock....................................................2.01
Company Common Stock.....................................................2.01
Company Disclosure Letter........................................... Article
III
Company
Notice...........................................................5.02(c)
Company Plans............................................................3.14(a)
Company Preferred Stock..................................................2.01
Company Preferred Stock
Option...........................................3.03(b)
Company SEC Documents....................................................3.06(a)
Company Stock
Options....................................................3.03(b)
Company Stock
Plans......................................................2.03(a)
Company Transaction Costs................................................6.11(c)
Confidentiality Agreement................................................6.02
Contract.................................................................3.04(b)
Credit Agreement.........................................................3.02
Debt
obligations.....................................................3.10(a)(ii)
DGCL.....................................................................1.01
Effect...................................................................3.01
Effective Time...........................................................1.03
Employees................................................................3.13
Employment
Agreements...................................................Recitals
Environmental Laws.......................................................3.12
ERISA....................................................................3.14(a)
Escrow Agreement.........................................................6.09
Escrow Amount............................................................6.09
Exchange
Act.............................................................3.06(a)
Exchange
Fund............................................................2.02(a)
Expense Reimbursement....................................................6.05(b)
Executives..............................................................Recitals
Filed Company SEC
Document...............................................3.06(a)
Final Change Deadline....................................................5.02(c)
GAAP.....................................................................3.06(a)
Governmental Authority...................................................3.05
HSR Act..................................................................3.05
Indemnitee...............................................................6.04(a)
Information Statement....................................................3.05
Initial Proposal
Deadline................................................5.02(c)
Intellectual Property Rights.............................................3.17(d)
IRS......................................................................3.14(b)
Knowledge................................................................9.03(c)
Laws.....................................................................3.11
Leased Real
Property.....................................................3.16(b)
Lender...................................................................3.02
Liens....................................................................3.02
Major Business
Partners.............................................3.10(a)(iii)
material.................................................................3.01
Material Adverse Effect..................................................3.01
Merger..................................................................Recitals
Merger
Sub..............................................................Preamble
Multiemployer
Plans......................................................3.14(a)
Outside Date.............................................................8.01(b)
Owned Real
Property......................................................3.16(a)
Parent..................................................................Preamble
Parent Disclosure Letter..............................................Article
IV
Paying
Agent.............................................................2.02(a)
person...................................................................9.02(e)
Permits..................................................................3.11
Permitted
Liens..........................................................9.03(d)
Preferred Stock Merger
Consideration.....................................2.01(c)
Principal Company Stockholders..........................................Recitals
Principal Stockholder
Consent...........................................Recitals
Principal Stockholders'
Agreement.......................................Recitals
Representatives..........................................................5.02(a)
Restraints...............................................................7.01(c)
Run-Off
Insurance........................................................6.04(c)
SEC......................................................................2.04(a)
Secretary...............................................................Recitals
Section 203..............................................................3.20
Section
262..............................................................2.01(d)
Section 3.10
Contracts...................................................3.10(a)
Securities
Act...........................................................3.06(a)
Shareholder Litigation
Costs.............................................6.11(c)
SOX......................................................................3.06(a)
Stockholder Approval.....................................................3.19
Subsidiary...............................................................9.03(f)
Superior Proposal........................................................5.02(f)
Surviving Corporation....................................................1.01
Takeover
Proposal........................................................5.02(f)
Taxes....................................................................3.15(g)
Tax
Returns..............................................................3.15(g)
<PAGE>
AGREEMENT AND
PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this
"Agreement"), dated as
of January 9,
2006, among CFCI HOLDINGS,
INC., a Virginia
corporation
("Parent"), HOLO
ACQUISITION CORP., a Delaware
corporation and a wholly
owned Subsidiary of
Parent ("Merger Sub"), and CFC INTERNATIONAL, INC., a Delaware corporation (the
"Company").
WHEREAS, the Board of Directors of each of Merger Sub and the
Company has
approved and declared
advisable, and the Board of Directors
of Parent has
approved, this Agreement and the merger
of Merger Sub with and into the Company
(the "Merger"), upon the terms and subject to the conditions
set forth in this
Agreement;
WHEREAS, simultaneously with the execution and delivery of this
Agreement
and as a condition and inducement to the willingness of Parent and Merger Sub
to
enter into this Agreement, Roger Hruby, RFH Investments, LP, Roger F. Hruby
IRA,
and the Roger Hruby Trust u/a/d 9/17/85
(collectively, the
"Principal Company
Stockholders"), the Company and Parent are entering
into an agreement (the
"Principal Stockholders' Agreement") pursuant to which each of the Principal
Company Stockholders agrees,
among other things, to take
certain actions in
furtherance of the Merger, including
causing the execution and
delivery of
written consents in
accordance with Section
228 of the DGCL (a
"Principal
Stockholders' Consent") pursuant to which the record holders of the shares of
Company Common Stock
beneficially owned by
each of the Principal Company
Stockholders will consent to the
adoption of this Agreement and the approval of
the Merger without a meeting, without prior notice and without a vote;
WHEREAS, immediately
following the execution
and delivery of
this
Agreement, each of the record holders of the shares of Company Common
Stock
beneficially owned by
the Principal Company
Stockholders will execute
a
Principal Stockholders' Consent and deliver it to the secretary of
the Company
(the "Secretary"), and the Secretary shall certify and acknowledge
that the
Stockholder Approval has been duly obtained; and
WHEREAS, Parent,
Merger Sub and the
Company desire to
make certain
representations, warranties, covenants and
agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations,
warranties, covenants and
agreements contained in this
Agreement, the parties
hereto agree as follows:
ARTICLE I
The Merger
Section 1.01. The Merger. Upon the terms and subject to the conditions
set
forth in this Agreement and in accordance
with the General Corporation Law of
the State of Delaware (the "DGCL"), Merger Sub shall be merged with
and into the
Company as of the Effective Time
pursuant to Section 251 of the DGCL. As of the
Effective Time, the separate
corporate existence of Merger Sub
shall thereupon
cease, and the Company shall be the surviving corporation
in the Merger (the
"Surviving Corporation").
Section 1.02. Closing.
Upon the terms and subject to the
conditions set
forth in this Agreement, the closing of the Merger (the "
Closing") will take
place at 10:00 a.m. (Chicago Illinois local time) on a date to be
specified by
the parties, which
shall be no later than the
second business day
after
satisfaction or (to the extent
permitted by applicable
Law) waiver of the
conditions set forth in Article VII (other than those conditions
that by their
terms cannot be satisfied until the Closing,
but subject to the satisfaction or
waiver of such conditions at such time), at the offices of Holland & Knight
LLP,
131 South Dearborn, 30th Floor, Chicago,
Illinois 60603, unless another time,
date or place is agreed to in writing by the parties hereto; provided, however,
that if all the conditions set
forth in Article VII
shall not have
been
satisfied or (to the extent permitted by
applicable Law) waived on such second
business day, the Closing will take place on the first business day on which
all
such conditions shall
have been satisfied or (to the
extent permitted by
applicable Law) waived. The date on which the Closing occurs is
referred to in
this Agreement as the "Closing Date".
Section 1.03. Effective Time. Upon the terms and subject to
the conditions
set forth in this Agreement, as promptly as practicable after the Closing and
on
the Closing Date, the parties
shall file with the
Secretary of State of the
State of Delaware a certificate of merger (the "Certificate of Merger") duly
prepared, executed and
acknowledged by the parties in
accordance with the
relevant provisions of the DGCL, and, as promptly as practicable on or after
the
Closing Date, the parties shall make all other filings or
recordings required
under the DGCL.
The Merger shall
become effective as of such time as the
Certificate of Merger is duly filed with
the Secretary of State of the State of
Delaware, or as of such subsequent time
or date as Parent and the Company shall
agree and shall specify in the Certificate of Merger (the time and date at
which
the Merger becomes effective being the "Effective Time").
Section 1.04. Effects of the Merger.
From and after the Effective Time, the
Merger shall have the effects
set forth in the DGCL,
including Section 259
thereof. Without limiting the generality
of the foregoing, and subject thereto,
as of the Effective Time, all the
properties, rights, privileges,
powers and
franchises of the
Company and Merger
Sub shall vest
in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger
Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.05.
Certificate of Incorporation and
By-laws.
(a) The certificate of incorporation
of the Company shall be amended
at the Effective Time to read as set forth on Exhibit B
hereto, and as so
amended, shall
be the certificate of
incorporation of the
Surviving
Corporation until thereafter amended as provided therein or by applicable
Law.
(b) The By-laws of Merger Sub,
as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation
until
thereafter amended as provided
therein or by applicable Law.
Section 1.06. Directors.
The directors of Merger Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation until
the
earlier of their death,
resignation or removal
or until their respective
successors are duly elected and qualified, as the case may be.
Section 1.07. Officers.
The officers of the Company
immediately prior to
the Effective Time shall be the officers of the Surviving Corporation until the
earlier of their death,
resignation or removal
or until their respective
successors are duly elected and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the
Capital Stock of the Constituent
Corporations; Exchange of Certificates;
Company Stock Options and Other Rights
Section 2.01. Effect on Capital Stock. As of the Effective
Time, by virtue
of the Merger and without any action on the part of the Company, Parent, Merger
Sub or any holder of any shares of common stock, par value $0.01 per share, of
the Company ("Company Common Stock"), any shares of Class B common stock, par
value $0.01 per share, of the Company
("Company Class B Stock"),
any shares of
voting preferred stock,
par value $0.01 per share, of the
Company ("Company
Preferred Stock") or any shares of capital stock of Merger Sub:
(a) Capital Stock of Merger
Sub. Each issued and outstanding share
of
capital stock of Merger Sub shall be
converted into and become one validly
issued, fully paid and nonassessable
share of common stock, par value $0.01
per share, of the Surviving
Corporation.
(b) Cancellation of Treasury
Stock, and Parent-Owned Stock. Each share
of Company Common Stock, Company Class B Stock or Company Preferred Stock
that is owned by the Company, Parent
or Merger Sub immediately prior to the
Effective Time shall no longer be
outstanding and shall automatically
be
canceled and retired and shall cease
to exist, and no consideration shall
be delivered in exchange therefor.
(c) Conversion of Company
Common Stock and Company Class B Stock. Each
issued and outstanding
share of Company Common Stock and
Company Class B
Stock (other than shares to be
canceled in accordance with Section
2.01(b)
and Appraisal Shares) shall be converted into the right to receive $16.75
in cash, without interest (the "Common Stock
Merger Consideration"). All
such
shares of Company Common Stock and
Company Class B Stock shall no
longer be outstanding and shall automatically
be canceled and retired and
shall cease to exist, and each holder of a certificate which
immediately
prior to the Effective Time represented
any such shares of Company Common
Stock or Company Class B Stock
(each, a "Certificate") shall
cease to have
any rights with
respect thereto, except the right to receive the Common
Stock Merger Consideration.
(d) Appraisal Rights.
Notwithstanding anything in this
Agreement to
the
contrary, shares ("Appraisal Shares")
of Company Common Stock or
Company Class B Stock
issued and outstanding
immediately prior to the
Effective Time that are held by any holder who is entitled
to demand and
properly demands appraisal of such shares pursuant to, and who
complies in
all respects with,
the provisions of Section 262 of the DGCL ("Section
262") shall not be converted
into the right to receive the
consideration
payable as provided in Section 2.01(c),
but instead such holder shall be
entitled to payment of the fair value
of such shares in accordance with the
provisions of Section 262. As of the
Effective Time, all Appraisal Shares
shall no longer be outstanding
and shall automatically be canceled
and
shall cease to exist, and each holder of Appraisal
Shares shall cease to
have any rights with respect
thereto, except the right to receive the
fair
value of such Appraisal Shares in
accordance with the provisions of Section
262.
Notwithstanding the foregoing,
if any such holder shall
fail to
perfect or otherwise shall waive,
withdraw or lose the right to appraisal
under Section 262 or a court of
competent jurisdiction shall determine that
such holder is not entitled to the
relief provided by Section 262, then the
right of such holder to be paid the
fair value of such holder's Appraisal
Shares under
Section 262 shall cease to exist and such Appraisal
Shares
shall be deemed to have been converted as of the Effective Time into, and
shall have
become, the right
to receive the
Common Stock Merger
Consideration as provided
in Section 2.01(c). The
Company shall serve
prompt notice to Parent of any demands
for appraisal of any
shares of
Company Common
Stock or Company Class B Stock
and Parent shall have the
right to
participate in and, subject
to applicable Law,
direct all
negotiations and
proceedings with respect to
such demands. None of the
Company and its Subsidiaries shall, without the written consent of Parent,
make any payment with
respect to, or settle or offer to settle, any such
demands, or agree to do any of the
foregoing.
Section 2.02. Exchange of
Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate
a bank or trust company (the
"Paying Agent")
reasonably acceptable to the
Company to
act as agent
for payment of
the Common Stock
Merger
Consideration pursuant to Section 2.01(c) upon surrender of certificates
representing the
Company Common Stock
and Company Class
B Stock
("Certificates"). As of or
prior to the Effective
Time, Parent shall
deposit, or cause to be deposited,
with the Paying Agent cash sufficient to
pay the aggregate amounts payable pursuant to Section 2.01(c) in exchange
for the outstanding
shares of Company Common Stock and Company Class B
Stock (such cash being hereinafter
referred to as the "Exchange Fund").
(b) Exchange
Procedures. As promptly
as practicable after
the
Effective Time, Parent shall cause the Paying Agent to mail
to each holder
of record of a Certificate (i) a
form of letter of transmittal (which shall
specify that
delivery shall be effected,
and risk of loss and title to
Certificates shall pass,
only upon proper delivery of Certificates to the
Paying Agent and which shall be in such form as
Parent and the Company may
reasonably agree
to use) and (ii)
instructions for use in surrendering
Certificates in exchange for the
cash amounts specified in Section 2.01(c).
Upon
surrender of a Certificate for
cancellation to the Paying Agent,
together with such
letter of transmittal, duly
completed and validly
executed, and such other documents as may be reasonably
required by the
Paying Agent, the holder of record
of such Certificate shall be entitled to
receive in exchange
therefor the amount of cash into
which the shares of
Company Common Stock or Company
Class B Stock formerly represented by
such
Certificate shall have been
converted pursuant to Section 2.01(c),
and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of shares of
Company Common Stock or Company Class B
Stock that is not registered in the transfer records of the Company, the
proper amount of cash may be paid in exchange therefor to a person other
than the person in whose name a
Certificate so surrendered is registered if
such Certificate shall be properly endorsed or otherwise be in
proper form
for transfer and the person
requesting such issuance shall pay any transfer
or other taxes required by reason of the
payment to a person other than the
registered holder
of such Certificate or
establish to the reasonable
satisfaction of the
Paying Agent that
such tax has been paid or is not
applicable. Until surrendered as
contemplated by this Section 2.02(b), each
Certificate shall
be deemed at any time
after the Effective
Time to
represent only the right to receive upon such surrender
the amount of cash
such holder shall be entitled to
receive pursuant to Section 2.01(c).
No
interest will be paid or will accrue
on the cash payable upon surrender of
any Certificate.
(c) No Further Ownership
Rights in Company Common Stock or Company
Class B Stock. All
cash paid upon
the surrender of
Certificates in
accordance with the terms of this Article II shall be deemed to have been
paid in full satisfaction of all
rights pertaining to the shares of Company
Common Stock
or Company Class B Stock
previously represented by such
Certificates. As of the close of
business on the day on which the Effective
Time occurs, the stock
transfer books of the Company
shall be closed and
there shall be no further registration
of transfers on the stock transfer
books of the Surviving Corporation
of the shares of Company Common Stock or
Company Class B Stock, in each case
that were outstanding immediately prior
to
the Effective Time.
If, at any
time after the
Effective Time,
Certificates are presented to the
Surviving Corporation or the Paying Agent
for any reason, such
Certificates shall be canceled
and exchanged as
provided in this Article II.
(d) No Liability.
None of Parent, Merger Sub,
the Company or the
Paying Agent shall be liable to any
person in respect of any cash delivered
to a public official pursuant to any
applicable abandoned property, escheat
or similar Law. Any portion of the
cash included in the Exchange Fund that
remains undistributed to the holders
of Certificates for one year after the
Effective Time shall be returned to
Parent, upon demand, and any holders of
Certificates who have not theretofore complied with this Article II shall
thereafter look only to Parent for, and Parent shall
remain liable for,
payment of such funds to which
such holder may be due pursuant to Section
2.01(c).
(e) Investment of Exchange
Fund. Parent may cause the Paying Agent
to
invest, as directed by Parent in its
sole discretion, any cash included in
the Exchange Fund, and any capital
gain, interest or other income resulting
from such investments
shall inure to the benefit of Parent and shall be
paid to Parent from time to time by
the Paying Agent.
(f) Lost Certificates. If any
Certificate shall have been lost, stolen
or
destroyed, upon the making of
an affidavit of that fact by the person
claiming such Certificate to be
lost, stolen or destroyed and, if
required
by Parent or the Paying Agent, the
posting by such person of a bond in such
reasonable amount as Parent or the Paying Agent may
direct as indemnity
against any successful
claim that may be made against it
with respect to
such
Certificate, the Paying Agent will issue in exchange for such lost,
stolen or destroyed Certificate the amount of cash which such
holder would
be entitled pursuant to Section
2.01(c).
(g)
Withholding Rights. The Paying Agent, Parent and the Surviving
Corporation shall be entitled to
deduct and withhold from the consideration
otherwise payable to any holder of shares of Company
Common Stock, shares
of
Company Class B Stock, or
Company Stock Options
pursuant to this
Agreement such amounts as may be required to be
deducted and withheld with
respect to the making of such
payment under the Internal
Revenue Code of
1986, as amended, and the rules and
regulations promulgated thereunder (the
"Code"), or under any provision of state, local or
foreign tax Law. To the
extent that such amounts are so
withheld and paid over to the appropriate
taxing authority,
such amounts shall be treated for
purposes of this
Agreement as having
been paid to the person in
respect of which such
deduction and withholding was made.
Section 2.03.
Company Stock Options;
Company Preferred Stock Option.
(a) Before the Closing, the Board of Directors of the Company (or, if
appropriate, any
committee of the Board
of Directors of the
Company
administering the Company
Stock Plans) shall adopt such
resolutions and
take all such other
actions as may be necessary
to provide that each
Company Stock Option granted under
the Company's 1995 Employee Stock Option
Plan, 2000
Employee Stock Option
Plan, 1995 Stock
Option Plan For
Non-Employee Directors
or the 2000 Stock Option
Plan for Non-Employee
Directors (together,
the "Company Stock
Plans"), as the case may be,
outstanding immediately
prior to the Effective Time,
whether or not then
vested or
exercisable, shall be canceled
as of the Effective Time in
exchange for a lump sum payment in
cash payable at the time of cancellation
equal to the excess, if any, of (i)
the product of (A) the number of shares
of Company Common Stock
subject to such Company Stock
Option and (B) the
Common Stock Merger Consideration
over (ii) the product of (x) the number
of shares of Company Common Stock subject to such Company Stock
Option and
(y) the per share exercise price of
such Company Stock Option.
(b) Before the Closing, the Board of
Directors of the Company shall
adopt such resolutions
and the Company and Roger F.
Hruby shall take all
such
other actions as may be
necessary to provide
that the option to
purchase 534 shares of the
Company Preferred Stock at an exercise
price of
$500 per share
held by Roger F. Hruby
(the "Company Preferred
Stock
Option"), if unexercised and
outstanding immediately prior to the Effective
Time, shall be canceled as of the Effective
Time. If for any reason the
Company Preferred
Stock Option is exercised
by Roger F. Hruby prior to
Closing, at the
Closing, all issued and
outstanding shares of Company
Preferred Stock shall be cancelled
without additional consideration.
ARTICLE III
Representations and
Warranties of the Company
Except as set forth in the disclosure
letter delivered by the Company
to
Parent dated as of the date hereof certified by a duly authorized officer of
the
Company (the "Company
Disclosure Letter") (each
section of which qualifies the
correspondingly numbered representation, warranty
or covenant to the extent
specified therein and such other representations, warranties or covenants to
the
extent a
matter in such section
is disclosed in such a way as to make its
relevance to such other representation,
warranty or covenant readily apparent),
the Company represents and warrants to Parent and Merger Sub as follows:
Section 3.01.
Organization, Standing and Corporate
Power. Each of the
Company and its Subsidiaries (i) is a corporation or limited liability company,
as the case may be, duly organized,
validly existing and in good standing under
the Laws of the jurisdiction in which it is incorporated or formed, as the case
may be, and (ii) has all requisite
corporate or limited liability
company, as
the case may be, power and
authority to carry on its business
as now being
conducted. Each of the Company
and its Subsidiaries is
duly qualified or
licensed to do business and is in good standing in the jurisdictions
set forth
in Section 3.02 of the Company Disclosure Letter, which jurisdictions are all
of
the jurisdictions in which the nature of its business or the ownership, leasing
or operation of its properties or other
assets makes such qualification
or
licensing necessary, other than in such jurisdictions where the failure to be
so
qualified or licensed individually or in the
aggregate has not had and is not
reasonably likely to have a Material
Adverse Effect. For
purposes of this
Agreement, "Material Adverse
Effect" shall mean any state
of facts, change,
development, effect, condition or occurrence (any such item, an
"Effect") that
is or is reasonably likely to
adversely affect in a
material respect the
business, assets, liabilities,
properties, condition (financial
or otherwise),
results of operations or prospects of the Company and its Subsidiaries taken as
a whole or that impairs in any material
respect the ability of the Company to
perform its obligations under this Agreement or prevents or materially impedes,
interferes with, hinders or delays the
consummation of the Merger or any of the
other transactions contemplated hereby; provided that, in any such case
referred
to in clause (i) or (ii) the following shall not be deemed "material"
or to have
a "Material Adverse Effect": any change or event caused by or
resulting from (A)
actions or omissions
of the Company or Parent taken with the prior written
consent of the other or required
in this Agreement, (B) the
execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby or the announcement thereof, or
(C) any outbreak of major hostilities in
which the United States is involved or
any act of terrorism within the United
States or directed against its facilities or citizens wherever
located; and
provided, further, that in no event shall a change in the
trading price of the
Company's capital stock,
by itself, be considered
material or constitute a
Material Adverse Effect.
Section 3.01 of the Company
Disclosure Letter sets
forth the officers and directors of the Company and each of its Subsidiaries.
The Company has provided to Parent true and complete copies of the
certificate
of incorporation of the
Company as in effect on the date hereof
("Company
Certificate") and the By-laws of the Company as in effect on the date hereof
("Company By-laws") and, provided the Parent access to the minutes of
all of the
meetings of the stockholders, the Board of Directors and each committee of
the
Board of Directors of the Company held since January 1, 2000.
Section 3.02. Subsidiaries.
Section 3.02 of the Company Disclosure Letter
sets forth a true and complete list of all the
Subsidiaries of the Company and,
for each such Subsidiary, the jurisdiction of incorporation or
formation. All
the outstanding shares of capital stock
of, or other equity or voting interests
in, each such Subsidiary are duly
authorized, validly issued,
fully paid and
nonassessable and are owned, directly or
indirectly, by the Company free
and
clear of all pledges, claims, liens,
charges, options, rights of first
refusal
or similar rights, encumbrances
and security interests of any
kind or nature
whatsoever (collectively,
"Liens"), and free of any restriction on the right to
vote, sell or otherwise dispose of such
capital stock or other equity or voting
interests, other than as set forth in
Section 3.02 of the Company
Disclosure
Letter and other than liens or
restrictions in favor of LaSalle
Bank National
Association ("Lender") pursuant to the Amended and Restated Loan and Security
Agreement, dated May 17, 2001, as
amended, between the Company and
Lender, as
included in the filed SEC Documents (the "Credit Agreement"). Except for the
capital stock of, or other equity or voting interests in, its Subsidiaries, the
Company does not beneficially own, directly or indirectly, any capital stock
of,
or other equity or voting interests or
investment (whether equity or debt) in,
any person, nor is the
Company or any of its
Subsidiaries subject to any
obligation or requirement to provide for
or to make any investment (in the form
of a loan, capital contribution or otherwise) to or in, any person.
Section 3.03. Capital Structure.
(a) The authorized capital
stock of the Company consists of 10,000,000
shares of Company Common Stock,
750,000 shares of Company Class B Stock and
750 shares of Company
Preferred Stock. As of the close of business
on
December 30, 2005, (i)
3,999,049 shares of Company Common Stock
(excluding
treasury shares) were issued and outstanding,
none of which were held by
any
Subsidiary of the Company,
(ii) 512,989 shares of
Company Class B
Stock, none of which were held by any Subsidiary of
the Company, (iii) no
shares of Company Preferred Stock (excluding treasury shares) were issued
and outstanding, (iv) 582,727 shares of Company Common Stock,
no shares of
Company Class B Stock and no shares
of Company Preferred Stock were held by
the Company in its treasury,
(v) 512,989 shares of
Company Common Stock
were
reserved for issuance pursuant
to conversion of the Company Class B
Stock, (vi)
294,000 shares of Company Common
Stock were reserved for
issuance pursuant to the Company Stock Plans (of
which 246,116 shares of
Company Common Stock were subject to
outstanding options to purchase shares
of Company Common Stock granted under the Company Stock
Plans), (vii) 534
shares of Company Preferred
Stock were reserved for issuance
pursuant to
the Company Preferred Stock
Option, and (viii) no shares of Company
Common
Stock will be (x) subject to a right of repurchase
by the Company, (y)
subject to forfeiture
back to the Company or (z) subject to transfer or
lock-up restrictions,
in each of cases (x), (y) and
(z), following the
consummation of the Merger.
(b) Section 3.03(b) of the
Company Disclosure Letter sets forth, as of
the date hereof, a true and complete
list of (i) all outstanding options to
purchase Company Common Stock
(collectively, "Company Stock
Options"), the
number of shares of Company Common
Stock subject to each such Company Stock
Option or other such right, the
grant dates and exercise prices and vesting
schedule of each such Company Stock
Option, or other right and the names of
the holder of each such Company
Stock Option or other right and
(ii) all
outstanding options to
purchase Company Preferred
Stock (the "Company
Preferred Stock Option"), the number of shares of Company Preferred Stock
subject to the Company Preferred
Stock Option, the grant date and
exercise
price and vesting schedule of the Company Preferred
Stock Option and the
name of the holder of the
Company Preferred Stock
Option. Except as set
forth in Section
3.03(a) of this Agreement,
(i) there are not issued,
reserved for issuance or outstanding
any (A) shares of capital stock of, or
other equity or voting interests
in, the Company, (B) securities of the
Company or any of its Subsidiaries
convertible into or exchangeable
or
exercisable for
shares of capital stock
of, or other equity or voting
interests in,
the Company or any of its
Subsidiaries or (C)