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Search Agreement and Plan of Merger by:
Execution Copy
AGREEMENT AND PLAN OF MERGER
among
PROJECT ATHENA HOLDING CORPORATION,
PROJECT ATHENA MERGER CORPORATION
and
INDUSTRIAL DISTRIBUTION GROUP, INC.
Dated as of February 20, 2008
TABLE OF CONTENTS
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Page
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ARTICLE I
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THE MERGER
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Section
1.01.
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The
Merger
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1
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Section
1.02.
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Closing
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1
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Section
1.03.
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Effective
Time
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1
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Section
1.04.
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Effect
of the Merger
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1
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Section
1.05.
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Certificate
of Incorporation; Bylaws
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2
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Section
1.06.
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Directors
and Officers
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2
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ARTICLE II
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CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
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Section
2.01.
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Conversion
of Securities
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2
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Section
2.02.
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Treatment
of Options and Other Equity Awards
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3
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Section
2.03.
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No
Further Rights; Stock Transfer Books
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3
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Section
2.04.
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Exchange
of Certificates
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4
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Section
2.05.
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Appraisal
Rights
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5
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ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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Section
3.01.
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Organization
and Qualification; Subsidiaries
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6
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Section
3.02.
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Charter
Documents
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7
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Section
3.03.
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Capitalization
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7
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Section
3.04.
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Corporate
Authority Relative to This Agreement
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8
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Section
3.05.
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No
Conflict; Required Filings and Consents
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9
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Section
3.06.
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Permits;
Compliance
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9
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Section
3.07.
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SEC
Filings; Financial Statements; Undisclosed
Liabilities
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10
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Section
3.08.
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Absence
of Certain Changes or Events
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11
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Section
3.09.
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Absence
of Litigation
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11
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Section
3.10.
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Employee
Benefit Plans
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11
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Section
3.11.
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Labor
and Employment Matters
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12
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Section
3.12.
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Real
Property
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13
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Section
3.13.
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Intellectual
Property
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13
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Section
3.14.
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Taxes
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14
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Section
3.15.
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Environmental
Matters
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15
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Section
3.16.
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Material
Contracts
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16
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Section
3.17.
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Insurance
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17
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Section
3.18.
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Company
Rights Agreement
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17
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Section
3.19.
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Takeover
Statutes
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18
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Section
3.20.
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Affiliate
Transactions
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18
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Section
3.21.
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Customers
and Suppliers
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18
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Section
3.22.
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Guarantees,
Bonds and Letters of Credit
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18
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Section
3.23.
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Opinion
of Financial Advisor
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18
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Section
3.24.
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Brokers
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19
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ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER CO
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Section
4.01.
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Organization
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19
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Section
4.02.
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Authority
Relative to This Agreement
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19
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Section
4.03.
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No
Conflict; Required Filings and Consents
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19
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Section
4.04.
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Absence
of Litigation
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20
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Section
4.05.
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Operations
of Merger Co.
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20
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Section
4.06.
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Financing
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20
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Section
4.07.
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Capitalization
of Merger Co
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20
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Section
4.08.
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No
Vote of Parent Stockholders
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20
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Section
4.09.
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Finders
or Brokers
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21
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Section
4.10.
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Lack
of Ownership of Company Common Stock
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21
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Section
4.11.
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No
Additional Representations
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21
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Section
4.13.
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Solvency
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21
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ARTICLE V
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COVENANTS OF BUSINESS PENDING MERGER
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Section
5.01.
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Conduct
of Business by the Company Pending the Merger
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21
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Section
5.02.
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Conduct
of Business by Parent and Merger Co Pending the
Merger
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23
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Section
5.03.
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No
Control of Other Party’s Business
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23
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ARTICLE VI
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ADDITIONAL AGREEMENTS
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Section
6.01.
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Proxy
Statement; Other Filings
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24
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Section
6.02.
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Information
Supplied
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24
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Section
6.03.
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Company
Stockholders’ Meeting
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25
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Section
6.04.
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Access
to Books and Records; Confidentiality
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25
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Section
6.05.
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No
Solicitation of Transactions
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26
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Section
6.06.
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Directors’
and Officers’ Indemnification, Advancement of Expenses
and Insurance
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28
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Section
6.07.
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Employee
Benefits Matters
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30
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Section
6.08.
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Notification
of Certain Matters
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31
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Section
6.09.
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Further
Action; Reasonable Best Efforts
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31
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Section
6.10.
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Public
Announcements
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32
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Section
6.11.
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Resignations
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32
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Section
6.12.
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State
Takeover Statutes
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33
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ARTICLE VII
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CONDITIONS TO THE MERGER
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Section
7.01.
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Conditions
to the Obligations of Each Party
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33
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Section
7.02.
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Conditions
to the Obligations of Parent and Merger Co
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33
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Section
7.03.
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Conditions
to the Obligation of the Company
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34
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Section
7.04.
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Frustration
of Closing Conditions
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34
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ARTICLE VIII
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TERMINATION, AMENDMENT AND WAIVER
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Section
8.01.
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Termination
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34
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Section
8.02.
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Effect
of Termination
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36
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Section
8.03.
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Fees
and Expenses
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36
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Section
8.04.
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Amendment
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38
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Section
8.05.
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Waiver
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38
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-
iii -
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ARTICLE IX
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GENERAL PROVISIONS
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Section
9.01.
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Non-Survival
of Representations, Warranties and Agreements
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38
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Section
9.02.
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Notices
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38
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Section
9.03.
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Certain
Definitions
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39
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Section
9.04.
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Severability
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42
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Section
9.05.
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Disclaimer
of Other Representations and Warranties; Company Disclosure
Schedules
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42
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Section
9.06.
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Entire
Agreement; Assignment
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43
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Section
9.07.
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Parties
in Interest
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43
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Section
9.08.
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Governing
Law
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43
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Section
9.09.
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Waiver
of Jury Trial
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44
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Section
9.10.
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Headings
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44
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Section
9.11.
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Counterparts
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44
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Exhibit A
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Form
of Certificate of Merger
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iv -
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 20,
2008 (this “ Agreement
”), is by and among Project Athena Holding Corporation, a
Delaware corporation (“ Parent
”), Project Athena Merger Corporation, a Delaware corporation
and a wholly-owned subsidiary of Parent (“ Merger Co
”), and Industrial Distribution Group, Inc., a Delaware
corporation (the “ Company
”).
WHEREAS, the respective Boards of Directors of each of the
Company, Parent and Merger Co deem it in the best interests of
their respective companies and stockholders to consummate the
merger (the “ Merger
”), on the terms and subject to the conditions set forth in
this Agreement, of Merger Co with and into the Company, and each
such Board of Directors has adopted this Agreement (and, in the
case of the Board of Directors of the Company (the “
Company
Board ”), recommended that this Agreement be approved
by the Company’s stockholders); and
WHEREAS, in order to induce Parent and Merger Co to enter
into this Agreement, the directors and certain of the executive
officers of the Company have entered into and delivered to Parent
and Merger Co, concurrently with the execution and delivery of this
Agreement, support agreements.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to
be legally bound hereby, Parent, Merger Co and the Company hereby
agree, subject to the conditions herein contained, as
follows:
ARTICLE I
THE MERGER
Section 1.01. The
Merger . Upon the
terms and subject to the conditions set forth in Article VII ,
and in accordance with the Delaware General Corporation Law (the
“ DGCL ”),
at the Effective Time, Merger Co shall be merged with and into the
Company, the separate corporate existence of Merger Co shall cease
and the Company shall continue as the surviving corporation of the
Merger (the “ Surviving
Corporation ”).
Section 1.02. Closing
. Unless
this Agreement shall have been terminated in accordance with
Section
8.01 , and subject to the satisfaction or waiver of the
conditions set forth in Article VII ,
the closing of the Merger (the “ Closing
”) will take place at 11:00 A.M., Eastern Time, on a date to
be specified by the parties, which shall be no later than the
second Business Day following the satisfaction or waiver of the
conditions set forth in Article VII
(other than those that by their terms are to be satisfied or waived
at the Closing, but subject to satisfaction or waiver of those
conditions), at the offices of Kilpatrick Stockton LLP, 1100
Peachtree Street, NE, Atlanta, Georgia 30309, unless
another time, date and/or place is agreed to in writing by Parent
and the Company (the date on which the Closing occurs, the “
Closing
Date ”).
Section 1.03.
Effective
Time . Upon the
terms and subject to the conditions set forth in this Agreement, at
the Closing, the parties shall (a) file a certificate of merger in
such form as is required by, and executed and acknowledged in
accordance with, the relevant provisions of the DGCL, in
substantially the form attached hereto as Exhibit A (the
“ Certificate of
Merger ”), and (b) make all other filings or
recordings required under the DGCL to effect the
Merger. The Merger shall become effective at such date
and time as is specified in the Certificate of
Merger. The date and time at which the Merger becomes
effective is referred to in this Agreement as the “
Effective
Time ”.
Section 1.04.
Effect
of the Merger . At the
Effective Time, the effect of the Merger shall be as provided in
the applicable provisions of the DGCL and this
Agreement.
Section 1.05. Certificate of
Incorporation; Bylaws .
(a)
Certificate of
Incorporation . At the Effective Time, the
Certificate of Incorporation of Merger Co, 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 as provided by law.
(b)
Bylaws .
At the Effective Time, the Bylaws of Merger Co, as in effect
immediately prior to the Effective Time, shall be the Bylaws
of the Surviving Corporation until thereafter amended as
provided by law, the Certificate of Incorporation of the
Surviving Corporation and such Bylaws.
Section 1.06. Directors
and Officers . At the
Effective Time, (a) the directors of Merger Co shall be the
directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation, and (b) the officers of Merger Co shall be
the officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified
or until the earlier of their death, resignation or
removal.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.01. Conversion
of Securities . At the
Effective Time, by virtue of the Merger and without any action on
the part of Merger Co, the Company or the holders of any of the
following securities, the following shall occur:
(a)
Conversion of
Company Common Stock . Each share of the
common stock, par value $0.01 per share, of the Company (the
“ Company Common
Stock ”) (all issued and outstanding shares of
Company Common Stock being hereinafter collectively referred
to as the “ Shares
”) issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant
to Section
2.01(b) and any Dissenting Shares) shall be cancelled
and shall be converted automatically into the right to receive
$10.30 per share in cash, without interest (the “
Per
Share Merger Consideration ”), payable in the
manner provided in Section
2.04 . (The result of (i) the number of
Shares entitled to payment pursuant to this Section
2.01(a) times (ii) the Per Share Merger Consideration
is referred to herein from time to time as the “
Merger
Consideration ”.)
(b)
Cancellation of
Treasury Stock and Parent-Owned Stock . Each
Share held in the treasury of the Company and each Share
directly owned by Parent, Merger Co or any direct or indirect
wholly-owned subsidiary of Parent, Merger Co or the Company
immediately prior to the Effective Time shall automatically be
cancelled without any conversion thereof, and no payment or
distribution shall be made with respect thereto.
(c)
Capital Stock of
Merger Co . Each share of common stock, par
value $0.01 per share,
of Merger Co issued and outstanding immediately prior to the
Effective Time shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock,
par value $0.01 per share, of the Surviving
Corporation. Following the Effective Time, each
certificate evidencing ownership of shares of Merger Co common
stock shall evidence ownership of such shares of the Surviving
Corporation.
(d)
Adjustments
. If, between the date of this Agreement and the
Effective Time, there is a reclassification, recapitalization,
stock split, stock dividend, subdivision, combination or
exchange of shares with respect to, or rights issued in
respect of, the Shares, the Per Share Merger Consideration
shall be adjusted accordingly, without duplication, to provide
the holders of Shares the same economic effect as contemplated
by this Agreement prior to such event.
2
Section
2.02.
Treatment
of Options and Other Equity Awards .
(a)
Options
. As of the Effective Time, each option then
outstanding to purchase shares of Company Common Stock (each,
a “ Company Stock
Option ”) granted under any plan, arrangement or
agreement, including without limitation those set forth in
Schedule
3.03(a) (collectively, the “ Company Stock
Option Plans ”), regardless of whether vested or
exercisable, shall fully vest and be deemed to be exercised
and cancelled. Each holder of a Company Stock
Option with respect to which the exercise price therefor is
less than the Per Share Merger Consideration (an “
In-the-Money
Option ”) shall be entitled to receive, in
consideration of the deemed exercise and cancellation of such
In-the-Money Option, a payment of an amount of cash, without
interest, equal to the product of (i) the total number of
shares of Company Common Stock subject to such In-the-Money
Option multiplied by (ii) the excess, if any, of the Per Share
Merger Consideration over the exercise price per share of such
In-the-Money Option, less applicable Taxes, if any, required
to be withheld with respect to such payment. Any
Company Stock Option that is not an In-the-Money Option shall
not be entitled to any payment in respect
thereof.
(b)
Restricted
Shares . As of the Effective Time, each
Share then subject to vesting or other restrictions pursuant
to any Company Stock Option Plan (collectively, “
Restricted
Shares ”) shall become fully vested or
unrestricted and shall be converted into the right to receive
the Per Share Merger Consideration under Section
2.01(a) , less any required withholding
Taxes.
(c)
Company
Action . Prior to the Effective Time, the
Company shall take or cause to be taken all actions necessary
to (i) effectuate the treatment of the Company Stock Options
and Restricted Shares set forth in this Section
2.02 (which shall include, with respect to Company
Stock Options, delivery of at least 15 days’ prior
written notice of the treatment described in Section
2.02(a) ), and (ii) terminate each of the Company Stock
Option Plans (in each case, to the extent not already
terminated) effective as of or prior to the Effective
Time. Parent shall cause the Surviving Corporation
to pay to the holders of the Company Stock Options the cash
payments to which they are entitled pursuant to this
Section
2.02 prior to the later of (x) five (5) Business Days
following the Effective Time and (y) the next regularly
scheduled payroll date of the Surviving
Corporation.
Section 2.03.
No
Further Rights; Stock Transfer Books . At the
Effective Time, the stock transfer books of the Company shall be
closed, and there shall be no further registration of transfers on
the records of the Company of Shares issued and outstanding
immediately prior to the Effective Time. From and after
the Effective Time, the holders of Certificates representing Shares
outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares, except as otherwise
provided in this Agreement or by law. On or after the
Effective Time, any Certificates presented to the Paying Agent or
Parent for any reason shall be cancelled against delivery of the
Per Share Merger Consideration to which the holders thereof are
entitled pursuant to Section
2.01(a) , without interest.
3
Section
2.04.
Exchange
of Certificates .
(a)
Paying
Agent . Prior to the Effective Time, Parent
shall enter into a paying agent agreement, in form and
substance reasonably acceptable to the Company, with a bank or
trust company reasonably acceptable to the