Tender-Offer Statement — Third-Party Tender Offer — Schedule 14D-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D1 Borden Acquisition Corp. 6 48K
2: EX-11.(A)(1) Statement re: Computation of Earnings Per Share 133 731K
3: EX-11.(A)(2) Statement re: Computation of Earnings Per Share 14 69K
4: EX-11.(A)(3) Statement re: Computation of Earnings Per Share 2 20K
5: EX-11.(A)(4) Statement re: Computation of Earnings Per Share 3 24K
6: EX-11.(A)(5) Statement re: Computation of Earnings Per Share 3 23K
7: EX-11.(A)(6) Statement re: Computation of Earnings Per Share 5± 22K
8: EX-11.(A)(7) Statement re: Computation of Earnings Per Share 5 35K
9: EX-11.(A)(8) Statement re: Computation of Earnings Per Share 2 16K
10: EX-11.(C)(1) Statement re: Computation of Earnings Per Share 124 273K
11: EX-11.(C)(2) Statement re: Computation of Earnings Per Share 18 70K
12: EX-11.(C)(3) Statement re: Computation of Earnings Per Share 2 17K
13: EX-11.(C)(4) Statement re: Computation of Earnings Per Share 34 71K
14: EX-11.(G)(1) Statement re: Computation of Earnings Per Share 10 32K
23: EX-11.(G)(10) Statement re: Computation of Earnings Per Share 4 23K
24: EX-11.(G)(11) Statement re: Computation of Earnings Per Share 13 35K
25: EX-11.(G)(12) Statement re: Computation of Earnings Per Share 13 33K
26: EX-11.(G)(13) Statement re: Computation of Earnings Per Share 18 47K
27: EX-11.(G)(14) Statement re: Computation of Earnings Per Share 12 35K
28: EX-11.(G)(15) Statement re: Computation of Earnings Per Share 18 49K
29: EX-11.(G)(16) Statement re: Computation of Earnings Per Share 12 36K
30: EX-11.(G)(17) Statement re: Computation of Earnings Per Share 12 32K
31: EX-11.(G)(18) Statement re: Computation of Earnings Per Share 11 30K
32: EX-11.(G)(19) Statement re: Computation of Earnings Per Share 12 32K
15: EX-11.(G)(2) Statement re: Computation of Earnings Per Share 10 32K
33: EX-11.(G)(20) Statement re: Computation of Earnings Per Share 18 49K
34: EX-11.(G)(21) Statement re: Computation of Earnings Per Share 9 27K
35: EX-11.(G)(22) Statement re: Computation of Earnings Per Share 9 32K
16: EX-11.(G)(3) Statement re: Computation of Earnings Per Share 10 32K
17: EX-11.(G)(4) Statement re: Computation of Earnings Per Share 10 32K
18: EX-11.(G)(5) Statement re: Computation of Earnings Per Share 10 32K
19: EX-11.(G)(6) Statement re: Computation of Earnings Per Share 10 32K
20: EX-11.(G)(7) Statement re: Computation of Earnings Per Share 10 32K
21: EX-11.(G)(8) Statement re: Computation of Earnings Per Share 11 32K
22: EX-11.(G)(9) Statement re: Computation of Earnings Per Share 9 31K
EX-11.(C)(1) — Statement re: Computation of Earnings Per Share
Exhibit Table of Contents
EXHIBIT 11(c)(1)
CONFORMED COPY
____________________________________________________________
AGREEMENT AND PLAN OF MERGER
AMONG
WHITEHALL ASSOCIATES, L.P.,
BORDEN ACQUISITION CORP.
AND
BORDEN, INC.
DATED AS OF
SEPTEMBER 23, 1994
____________________________________________________________
AGREEMENT
TABLE OF CONTENTS
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Page
ARTICLE 1
THE EXCHANGE OFFER . . . . . . . . . . . . . 3
Section 1.1 The Exchange Offer . . . . . . . . . . . . . . . . . . . . . 3
Section 1.2 Company Action . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.3 Board of Directors; Section 14(f) . . . . . . . . . . . . . 10
ARTICLE 2
PLAN OF MERGER . . . . . . . . . . . . . . 12
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . 13
Section 2.5 Restatement of Surviving Corporation's
Certificate of Incorporation and By-Laws . . . . . . . 14
Section 2.6 Directors . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.8 Preparation of Proxy Statement; Shareholder
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.9 Merger Without Meeting of Shareholders . . . . . . . . . . . 17
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS . . . . . . . . . 18
Section 3.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . 18
Section 3.2 Company Stock Options and Related Matters . . . . . . . . . 20
Section 3.3 Exchange of Certificates . . . . . . . . . . . . . . . . . . 22
ARTICLE 4
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 28
Section 4.1 Representations and Warranties of
the Company . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.2 Representations and Warranties of
Purchaser and Parent . . . . . . . . . . . . . . . . . . . . 52
Section 4.3 Representations and Warranties of Parent . . . . . . . . . . 65
ARTICLE 5
COVENANTS . . . . . . . . . . . . . . . 67
Section 5.1 Conduct of Business of the Company . . . . . . . . . . . . . 67
Section 5.2 Conduct of Business of Purchaser . . . . . . . . . . . . . . 74
Section 5.3 No Solicitation . . . . . . . . . . . . . . . . . . . . . . 74
Section 5.4 Access to Information . . . . . . . . . . . . . . . . . . . 76
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Page
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Section 5.5 Notification . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 5.6 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 5.7 Certain Filings, Consents and Arrangements . . . . . . . . . 79
Section 5.8 Public Announcements . . . . . . . . . . . . . . . . . . . . 80
Section 5.9 Antitrust Filings and Divestitures . . . . . . . . . . . . . 80
Section 5.10 Employee Benefits . . . . . . . . . . . . . . . . . . . . . 81
Section 5.11 Indemnification and Insurance . . . . . . . . . . . . . . . 84
Section 5.12 Redemption of Series B Preferred Stock . . . . . . . . . . . 86
Section 5.13 Certain Agreements . . . . . . . . . . . . . . . . . . . . . 86
Section 5.14 Redemption of Rights. . . . . . . . . . . . . . . . . . . . 87
Section 5.15 Affiliates and Certain Stockholders. . . . . . . . . . . . . 88
Section 5.16 Proxy Solicitation For Shareholders' Meeting . . . . . . . . 89
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . . . 89
Section 6.1 Conditions to Each Party's Obligations
to Effect the Merger . . . . . . . . . . . . . . . . . . . . 89
Section 6.2 Conditions to Obligation of the Company . . . . . . . . . . 90
Section 6.3 Conditions to Obligations of Purchaser
and Parent to Effect the Merger . . . . . . . . . . . . . . 91
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER . . . . . . . . . . 92
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 97
Section 7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . 97
ARTICLE 8
MISCELLANEOUS . . . . . . . . . . . . . . 98
Section 8.1 Non-Survival of Representations and Warranties . . . . . . . 98
Section 8.2 Entire Agreement; Assignment . . . . . . . . . . . . . . . . 98
Section 8.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 99
Section 8.4 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 8.5 Gains and Transfer Taxes . . . . . . . . . . . . . . . . . . 104
Section 8.6 Interpretation . . . . . . . . . . . . . . . . . . . . . . . 104
Section 8.7 Parties in Interest . . . . . . . . . . . . . . . . . . . . 104
Section 8.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 8.9 Non-Recourse . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 8.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 107
Section 8.11 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 8.12 Descriptive Headings . . . . . . . . . . . . . . . . . . . . 108
Section 8.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 8.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . 108
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Page
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ANNEX A -- Conditions to the Offer
EXHIBIT A -- Restated Certificate of Incorporation of
Surviving Corporation
EXHIBIT B -- Affiliate Letter
-iii-
AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 23, 1994
AMONG BORDEN ACQUISITION CORP.,
A NEW JERSEY CORPORATION ("PURCHASER"),
WHITEHALL ASSOCIATES, L.P., A DELAWARE LIMITED
PARTNERSHIP ("PARENT"), AND BORDEN, INC.,
A NEW JERSEY CORPORATION (THE "COMPANY").
WHEREAS, Parent and the Company have entered into a letter agreement,
dated as of September 11, 1994, setting forth, among other things, the
intention of Parent and the Company to enter into this agreement and to
consummate the transactions contemplated hereby;
WHEREAS the respective Boards of Directors of Purchaser and the
Company have approved the acquisition of the Company by Purchaser;
WHEREAS, in furtherance thereof, it is proposed that Purchaser will
commence an exchange offer (the "Offer") to exchange shares of common stock,
par value $.01 per share ("Holdings Common Stock"), of RJR Nabisco Holdings
Corp., a Delaware Corporation ("Holdings"), owned by Parent for all of the
issued and outstanding shares of common stock, par value $.625 per share (the
"Common Stock"), of the Company (the "Shares") in accordance with the terms
provided herein;
WHEREAS, the Board of Directors of the Company has approved the
making of the Offer and recommended its acceptance by the Company's
stockholders;
WHEREAS, also in furtherance of such acquisition, the respective
Boards of Directors of Purchaser and the Company have determined that the
merger of Purchaser with and into the Company (the "Merger"), on the terms and
subject to the conditions set
2
forth in this Agreement, would be fair to and in the best interests of their
respective shareholders, and such Boards of Directors have approved such
Merger;
WHEREAS, Parent and Purchaser are unwilling to enter into this
Agreement unless the Company, contemporaneously with the execution and delivery
of this Agreement, grants to Purchaser a right (the "Conditional Purchase
Right") to purchase up to 28,138,000 shares of Common Stock (or such other
number of Shares as is equal to 19.9% of the Company's outstanding Shares on
the date hereof) (the "Option Shares"), in exchange for the number of whole
shares of Holdings Common Stock as set forth in the Conditional Purchase/Stock
Option Agreement, dated as of the date hereof (the "Conditional Purchase/Stock
Option Agreement"), among Purchaser, Parent and the Company; and in order to
induce Parent and Purchaser to enter into this Agreement, the Company has
agreed to grant Purchaser the Conditional Purchase Right and to execute and
deliver the Conditional Purchase/Stock Option Agreement;
WHEREAS, it is presently contemplated that the right of Purchaser to
purchase shares of Common Stock pursuant to the Offer and the right of
Purchaser to exercise the Conditional Purchase Right granted in the Conditional
Purchase/Stock Option Agreement will be assigned to Parent (or a direct or
indirect wholly owned subsidiary of Parent);
WHEREAS, Purchaser, Parent and the Company desire to make certain
representations, warranties, covenants and
3
agreements in connection with the Offer and the Merger and also to prescribe
various conditions to the Offer and the Merger; and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, Parent, Purchaser and the Company hereby
agree as follows:
ARTICLE 1
THE EXCHANGE OFFER
Section 1.1 The Exchange Offer. (a) Provided that (i) this
------------------
Agreement shall not have been terminated in accordance with Section 7.1 and
(ii) none of the events set forth in Annex A hereto shall have occurred or be
existing, Parent shall cause Purchaser to commence, and Purchaser shall
commence, the Offer as soon as reasonably practicable following the
effectiveness of a registration statement on Form S-4 relating to the Offer
(together with all amendments and supplements thereto, the "Form S-4") under
the Securities Act of 1933, as amended (the "Securities Act"). Each Share
accepted by Purchaser in accordance with the Offer shall be converted into the
right to receive from Purchaser that number of fully paid and nonassessable
shares of Holdings Common Stock equal to the Exchange Ratio. The "Exchange
Ratio" shall mean the quotient (rounded to the nearest 1/100,000) obtained by
dividing (i) $14.25 by (ii) the average of the average of the high and low
sales prices of Holdings Common Stock as reported on the New York Stock
Exchange Composite Tape on each of the ten consecutive
4
trading days immediately preceding the second trading day prior to the date of
expiration of the Offer (the "Valuation Period"); provided that the Exchange
Ratio shall not be less than 1.78125 or greater than 2.375. The obligations of
Purchaser to consummate the Offer and to accept for exchange the Shares
tendered pursuant to the Offer shall be subject only to the conditions set
forth in Annex A hereto and, without the written consent of the Company,
Purchaser shall not decrease the number of Shares being sought in the Offer,
change the form of consideration payable in the Offer (other than by adding
consideration), add additional conditions to the Offer or make any other change
in the terms or conditions of the Offer which is adverse to the holders of
Shares, it being agreed that a waiver by Purchaser of any condition in whole or
in part at any time and from time to time in its discretion shall not be deemed
to be materially adverse to any holder of Shares; provided that if Purchaser
shall have exercised the Conditional Purchase Right in whole or in part prior
to the termination of the Offer, Purchaser shall not be permitted to waive the
Minimum Condition (as defined herein). Purchaser agrees that upon the request
of the Company (and without limiting the number of times that Purchaser may
extend the Offer, or the total number of days for which the Offer may be
extended), Purchaser shall extend the Offer, one or more times, for an
aggregate of not more than twenty business days.
The Offer shall be made by means of an offering circular/prospectus
and related letter of transmittal (the "Letter of Transmittal") (collectively,
the "Offering Circular").
5
Purchaser expressly reserves the right to increase the number of shares of
Holdings Common Stock to be exchanged for each share of Common Stock in the
Offer. Upon the terms and subject to the conditions of the Offer, Purchaser
will accept (and Parent will cause Purchaser to accept) for exchange any and
all Shares which are validly tendered and not properly withdrawn on or prior to
the expiration of the Offer. Purchaser may, at any time, transfer or assign to
Parent or to one or more corporations directly or indirectly wholly owned by
Parent the right to purchase all or any portion of the Shares tendered pursuant
to the Offer, but any such transfer or assignment shall not relieve Purchaser
of its obligations under the Offer or materially prejudice the rights of
tendering shareholders to receive shares of Holdings Common Stock for Shares
validly tendered and not properly withdrawn and accepted for exchange. In the
event that Purchaser assigns the right to purchase all or any portion of the
Shares tendered pursuant to the Offer or an affiliate of Purchaser purchases
Shares under the Conditional Purchase/Stock Option Agreement, then for purposes
of any provision of this Agreement which is predicated upon Purchaser holding
or owning a specified number or percentage of Shares, the number of Shares held
or owned by Purchaser shall be deemed to include all Shares purchased by any
affiliate or affiliates pursuant to the transactions contemplated hereby or by
the Conditional Purchase/Stock Option Agreement.
(b) Promptly after the date hereof, in accordance with Rule 14d-2(e)
under the Securities Exchange Act of 1934, as
6
amended (together with the rules and regulations thereunder, the "Exchange
Act"), Parent, pursuant to its Registration Rights Agreement with Holdings
dated July 15, 1990 (the "1990 Registration Rights Agreement") and, if
applicable, its Registration Rights Agreement with Holdings dated February 9,
1989 (the "1989 Registration Rights Agreement"), shall request that Holdings
promptly prepare and file with the Securities and Exchange Commission (the
"SEC") the Form S-4 covering the registration of the Holdings Common Stock to
be exchanged in the Offer and that will be issued in the Merger, as well as all
other information and exhibits required by law with respect to the registration
and offering of the Holdings Common Stock (the "Offering Materials"). Not
later than the date of commencement of the Offer (which shall be the date that
the definitive Offering Circular is first published, sent or given to
shareholders of the Company), Purchaser shall file with the SEC a Tender Offer
Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer. The Schedule 14D-1
shall contain (included as an exhibit) or shall incorporate by reference the
Offering Circular (or portions thereof) and forms of the summary advertisement,
as well as all other information and exhibits required by law. Parent and
Purchaser each agrees promptly to correct any information in the Offering
Materials and the Schedule 14D-1 (together the "Offer Documents") that shall be
or have become false or misleading in any material respect and Parent and
Purchaser each further agrees to request Holdings to
7
take all steps necessary to cause the Offer Documents as so corrected to be
filed with the SEC and disseminated to holders of Shares, in each case as and
to the extent required by applicable federal securities laws. The Company and
its counsel shall be given an opportunity to review each of the Offer Documents
prior to its being filed with the SEC. Parent and Purchaser agree to provide
the Company and its counsel in writing with any written comments Parent and
Purchaser or their respective counsel may receive from the SEC with respect to
the Offer Documents promptly after the receipt of such comments.
Section 1.2 Company Action. (a) The Company hereby approves of and
--------------
consents to the Offer and represents and warrants that (x) its Board of
Directors, at a meeting duly called and held, has (i) determined that this
Agreement and the Conditional Purchase/Stock Option Agreement and the
transactions contemplated hereby, including the Offer and the Merger, and
thereby, taken together, are fair to the shareholders of the Company, and has
resolved to recommend that holders of Shares (A) accept the Offer, (B) tender
their Shares thereunder to Purchaser and, if required by applicable law, and
(C) approve and adopt this Agreement and Plan of Merger (collectively, the
"Recommendations") and (ii) approved this Agreement and the Conditional
Purchase/Stock Option Agreement and the transactions contemplated hereby and
thereby, and that such approval constitutes approval of this Agreement and the
Conditional Purchase/Stock Option Agreement and the transactions contemplated
hereby and thereby for purposes of Sections 14A:10A-4 and
8
14A:10A-5 of the New Jersey Business Corporation Act (the "NJBCA") and Article
VIII of the Company's Restated Certificate of Incorporation (the "Charter") and
renders inapplicable the "Change in Control" provisions of the 8-3/8% Sinking
Fund Debentures due 2016, the "Change in Control" provisions of the Medium Term
Notes, Series A, the "Change in Control" provisions of the 9-7/8% Notes due
1997, Paragraph 4.1 of the letter dated November 20, 1987 from the Company to
Wachovia Bank and Trust Company, N.A. with respect to a $20 million line of
credit for Borden Chemical & Plastics Operating Limited Partnership ("BCPO")
and Section 6.5 of the ESOP Loan Agreement dated as of February 6, 1989 between
the Company and First National Bank of Boston and (y) Lazard Freres and Co. and
CS First Boston Corporation have delivered to the Board of Directors of the
Company their respective written opinions to the effect that the consideration
to be received by holders of Shares pursuant to each of the Offer and the
Merger is fair to such holders from a financial point of view. The Company
hereby consents to the inclusion in the Offer Documents of the Recommendations,
provided that they have not theretofore been withdrawn as permitted pursuant to
Section 1.2(b) or 5.3 herein.
(b) The Company hereby agrees to file with the SEC contemporaneously
with the commencement of the Offer, and distribute contemporaneously with the
Offering Circular to its shareholders, a Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
9
Recommendations. The Company further agrees, subject to clause (iii) of the
proviso to the first sentence in Section 5.3, not to change the Recommendations
unless the average of the average of the high and the low sales prices of the
Holdings Common Stock as reported on the New York Stock Exchange Composite Tape
for the Valuation Period is less than the price per share that would yield an
Exchange Ratio of 2.375 or less without giving effect to the proviso in the
definition of Exchange Ratio. The Company will not have any right to terminate
this Agreement as a result of any such change in the Recommendations and
notwithstanding any such change in the Recommendations, the Company will
continue to be bound by its representations and warranties and covenants
contained herein (except representations and warranties and covenants with
respect to the Recommendations), including, without limitation, those with
respect to the Rights Agreement (as hereinafter defined), antitrust approvals
and divestitures (assuming that following receipt of such approvals Purchaser
purchases at least 28,138,000 Shares), Article VIII of the Charter and Sections
14A:10A-4 and 14A:10A-5 of the NJBCA. The Company, Parent and Purchaser each
agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 that 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 disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. To the knowledge of the Company after due inquiry,
all the directors of
10
the Company intend to tender their Shares pursuant to the Offer or to vote
their Shares in favor of approval and adoption of the Merger and this Agreement
at the shareholders' meeting referred to in Section 2.8. Parent and Purchaser
and their counsel shall be given an opportunity to review the Schedule 14D-9
prior to its being filed with the SEC.
(c) In connection with the Offer, if requested by Purchaser, the
Company shall promptly furnish Purchaser with mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of shares of Common Stock as of a recent date
and shall furnish Purchaser with such information and assistance (including,
without limitation, updated lists of shareholders, mailing labels and lists of
securities positions) as Purchaser or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of Shares.
Section 1.3 Board of Directors; Section 14(f). (a) If requested by
---------------------------------
Parent, the Company shall, following the acceptance for exchange of the Shares
to be exchanged pursuant to the Offer and/or the purchase of the Option Shares
in accordance with the Conditional Purchase/Stock Option Agreement, and from
time to time thereafter, take all actions necessary to cause the Applicable
Percentage (as defined below) of directors (and of members of each committee of
the Board of Directors) (rounded in each case to the next highest director or
member) of the Company selected by Parent to consist of persons designated or
elected by Parent (whether, at the election of the Company, by means of
11
increasing the size of the board of directors or seeking the resignation of
directors and causing Parent's designees to be elected). The "Applicable
Percentage" means the ratio of (i) the total voting power of all Shares
accepted for exchange pursuant to the Offer and/or purchased in accordance with
the Conditional Purchase/Stock Option Agreement to (ii) the total voting power
of the outstanding voting securities of the Company, rounded to the nearest
whole number and expressed as a percentage; provided that if Purchaser has
acquired at least 28,138,000 Shares the Applicable Percentage shall not be less
than 33-1/3%.
(b) The Company's obligations to cause designees of Parent to be
elected or appointed to the Board of Directors of the Company shall be subject
to Section 14(f) of the Exchange Act, and Rule 14f-1 promulgated thereunder.
The Company shall promptly take all actions required pursuant to Section 14(f)
and Rule 14f-1 in order to fulfill its obligations under this Section 1.3, and
shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors as is required under Section 14(f) and
Rule 14f-1. Parent and Purchaser will supply to the Company any information
with respect to any of them and their nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees
pursuant to this Section and prior to the Effective Time (as hereinafter
defined), any amendment by the Company or termination by the Company of this
Agreement or the Conditional Purchase/Stock Option Agreement, extension by the
Company for the
12
performance or waiver of the obligations, conditions or other acts of Parent or
Purchaser or waiver by the Company of its rights hereunder or thereunder, will
require the concurrence of a majority of directors of the Company then in
office who are not affiliated with Parent or Purchaser or selected by Parent
for appointment or election to the board of directors of the Company in
accordance with Section 1.3(a) hereof (the "Independent Directors").
ARTICLE 2
PLAN OF MERGER
Section 2.1 The Merger. At the Effective Time (as defined herein)
----------
and on the terms and subject to the conditions set forth in this Agreement, and
in accordance with the NJBCA, Purchaser shall be merged with and into the
Company. Upon the Effective Time, the separate existence of Purchaser shall
cease, and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall continue under the name "Borden, Inc." The
manner and basis of converting the shares of Purchaser and the Company into
shares of the Surviving Corporation or into or of any other corporation or, in
whole or in part, into cash shall be as provided for in Article 3 of this
Agreement.
Section 2.2 Closing. Unless this Agreement shall have been
-------
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 7.1 and subject to the satisfaction or waiver of the
conditions set forth in Article 6, the closing of the Merger (the "Closing")
will take place at
13
10:00 a.m. on the second Business Day after satisfaction of the conditions set
forth in Section 6.1 (or as soon as practicable thereafter following
satisfaction or waiver of the conditions set forth in Sections 6.2 and 6.3)
(the "Closing Date"), at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, unless another date, time or place
is agreed to in writing by the parties hereto.
Section 2.3 Effective Time. As promptly as practicable following
--------------
the satisfaction or waiver of the conditions to the Merger set forth in Article
6, the parties shall file a certificate of merger or other appropriate
documents (in any such case, the "Certificate of Merger"), executed in
accordance with the relevant provisions of the NJBCA, and shall make all other
filings or recordings required under the NJBCA in connection with the Merger.
The Merger shall become effective at such time as the Certificate of Merger is
duly filed with the Secretary of State of the State of New Jersey, or at such
later time as is permissible in accordance with the NJBCA and as Purchaser and
the Company shall agree should be specified in the Certificate of Merger (the
time the Merger becomes effective being the "Effective Time").
Section 2.4 Effects of the Merger. The Merger shall have the
---------------------
effects set forth in Section 14A:10-6 of the NJBCA (or any successor
provision). Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers,
immunities, purposes and franchises of the Company and Purchaser shall vest in
the
14
Surviving Corporation, and all debts, liabilities, obligations and duties of
the Company and Purchaser shall become debts, liabilities, obligations and
duties of the Surviving Corporation.
Section 2.5 Restatement of Surviving Corporation's Certificate of
-----------------------------------------------------
Incorporation and By-Laws. (a) The Charter, as in effect immediately prior to
-------------------------
the Effective Time, shall be restated so as to read in its entirety in the form
set forth as Exhibit A hereto, and, as so restated, until thereafter and
further amended or restated as provided therein and under the NJBCA, it shall
be the restated certificate of incorporation of the Surviving Corporation.
(b) The By-laws of Purchaser as in effect at the Effective Time
shall be the By-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
Section 2.6 Directors. The directors of Purchaser at the Effective
---------
Time shall be the directors of the Surviving Corporation, each to hold office
in accordance with the Restated Certificate of Incorporation and By-laws of the
Surviving Corporation and until the earlier of his or her resignation or
15
removal or until his or her successor is duly elected and qualified, as the
case may be.
Section 2.7 Officers. The officers of the Company at the Effective
--------
Time shall be the officers of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation and until the earlier of his or her resignation or removal or until
his or her respective successor is duly appointed and qualified, as the case
may be.
Section 2.8 Preparation of Proxy Statement; Shareholder Meeting.
---------------------------------------------------
(a) If approval of the Company's shareholders is required by applicable law in
order to consummate the Merger, provided that the Minimum Condition is
satisfied without being reduced or waived, following the acceptance for
exchange of Shares pursuant to the Offer, the Company, acting through its Board
of Directors, shall, in accordance with applicable law, as soon as practicable
following the expiration or termination of the Offer: (a) duly call, give
notice of, convene and, subject to Section 5.16, hold a special meeting of its
shareholders (the "Shareholders' Meeting") for the purpose of considering and
taking action upon this Agreement and the Merger and prepare and file with the
SEC a proxy statement (such proxy statement as amended or supplemented from
time to time, the "Proxy Statement"), and (b) use its best efforts (i) to
obtain and furnish the information required to be included by it in the Proxy
Statement and, after consultation with Parent and Purchaser, respond promptly
to any comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof and cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable time following the expiration or
termination of the Offer and (ii) to obtain the necessary approval by its
shareholders of this Agreement and the transactions contemplated hereby,
including the Merger.
16
(b) Subject to the Company's right, pursuant to Section 1.2(b)
hereof, to withdraw or modify the Recommendations, the Company shall include in
the Proxy Statement the recommendation of its Board of Directors that holders
of Shares vote in favor of the approval and adoption of this Agreement and the
transactions contemplated hereby, including the Merger.
(c) Notwithstanding the other provisions of this Section 2.8, the
Company agrees that (i) its obligations pursuant to Section 2.8(a) hereof
(including, without limitation, the obligation to submit the Agreement and the
Merger to a vote of its shareholders) shall not be affected by the withdrawal
or modification of the Recommendations (but there shall be no obligation of the
Board of Directors of the Company to continue the Recommendation that
shareholders approve and adopt the Agreement and the Merger) and (ii) (A) if
the Merger is not approved by the shareholders of the Company following the
acceptance for exchange of Shares pursuant to the Offer or the purchase of
Shares pursuant to the Conditional Purchase/Stock Option Agreement or (B) if
the Merger is not submitted to the shareholders of the Company but Purchaser
has acquired at least 28,138,000 Shares, the approval of the transactions
contemplated by this Agreement, including the Offer and the Merger, by the
Board of Directors of the Company shall constitute, solely for the purposes of
Sections 14A:10A-4 and 14A:10A-5 of the NJBCA and, to the extent that there are
no Continuing Directors (as defined in the Charter), Article VIII of the
Charter, an approval of any future "Business Combination" (as defined in
Section
17
14A:10A-3 of the NJBCA and Article VIII of the Charter) between the Company and
Parent or any affiliate thereof, provided that (x) such "Business Combination"
is approved by a majority of the Independent Directors and (y) if appropriate,
the Company shall have received the opinion of an investment banking firm
selected by the Independent Directors that such "Business Combination" is fair
to the Company's shareholders from a financial point of view (an "Excepted
Future Transaction").
(d) At the Shareholders' Meeting, each of Parent and Purchaser will
vote, or cause to be voted, all Shares acquired in the Offer or otherwise
beneficially owned by it or any of its respective subsidiaries in favor of the
approval and adoption of this Agreement and the transactions contemplated
hereby, including the Merger.
(e) The information provided and to be provided by Purchaser and the
Company, respectively, for use in the Proxy Statement shall, at the date it is
first mailed to shareholders of the Company and on the date of the
Shareholders' Meeting, be true and correct in all material respects and shall
not omit to state any material fact required to be stated therein or necessary
in order to make such information not misleading, and the Company and Purchaser
each agree to correct any information provided by it for use in the Proxy
Statement which shall have become false or misleading.
Section 2.9 Merger Without Meeting of Shareholders. Notwithstanding
--------------------------------------
the foregoing, in the event that Parent and Purchaser, or any other direct or
indirect subsidiary of Parent
18
shall acquire at least 90% of the outstanding Shares, the parties hereto agree
to take all necessary or appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
meeting of shareholders of the Company, in accordance with Section 14A:10-5.1
of the NJBCA.
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
Section 3.1 Effect on Capital Stock. At the Effective Time, by
-----------------------
virtue of the Merger and without any action on the part of the holder of any
shares of Common Stock or any shares of capital stock of Purchaser:
(a) Common Stock of Purchaser. Each share of common stock of
-------------------------
Purchaser issued and outstanding immediately prior to the Effective Time shall
be converted into a number of shares of common stock, par value $.01 per share,
of the Surviving Corporation equal to one one-thousandth of the total number of
outstanding shares of Common Stock immediately prior to the Merger, which shall
be all of the issued and outstanding capital stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Purchaser-Owned or
-----------------------------------------------------
Parent-Owned Common Stock. Each share of Common Stock that is owned by the
-------------------------
Company or by any subsidiary of the Company and each share of Common Stock that
is owned by Parent, Purchaser or any other subsidiary of Parent shall
automatically be cancelled and retired and shall cease to exist, and no cash,
Holdings Common
19
Stock or other consideration shall be delivered or deliverable in exchange
therefor.
(c) Conversion of Common Stock. Except as otherwise provided
--------------------------
herein, each issued and outstanding share of Common Stock shall be converted
into the right to receive that number of fully paid and nonassessable shares of
Holdings Common Stock equal to the Final Exchange Ratio (as defined herein).
The aggregate amount of Holdings Common Stock which a holder of Common Stock is
entitled to receive with respect to each such share of Common Stock shall be
hereinafter referred to as the "Merger Consideration". The "Final Exchange
Ratio" shall equal that number of fully paid and nonassessable shares of
Holdings Common Stock that was delivered by the Purchaser with respect to each
share of Common Stock that was validly tendered and not properly withdrawn and
accepted for exchange pursuant to the terms of the Offer.
(d) Cancellation and Retirement of Common Stock. All shares of
-------------------------------------------
Common Stock (other than shares referred to in Section 3.1(b)) issued and
outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Common
Stock shall cease to have any rights with respect thereto, except the right to
receive, upon surrender of such certificate to the Exchange Agent (as defined
herein) and acceptance thereof in accordance with Section 3.3, the Merger
Consideration (and/or any
20
cash in lieu of fractional shares of Holdings Common Stock to be issued or paid
in consideration therefor).
Section 3.2 Company Stock Options and Related Matters. (a) As
-----------------------------------------
of the Effective Time, each holder of a then outstanding option to purchase
Common Stock (an "Option") shall receive with respect to each share subject to
such Option an amount in cash equal to the excess, if any, of (i) the product
of the Final Exchange Ratio and the average of the average of the high and the
low sales prices of Holdings Common Stock as reported on each of the ten
consecutive trading days immediately preceding the Effective Time over (ii) the
per share exercise price of such Option, and the Company shall cause the
surrender and cancellation of each Option (and any related stock appreciation
right) with respect to which a payment by the Company is made. With respect to
Options not so surrendered and cancelled, such Options shall, if not previously
terminated or expired in accordance with their terms, terminate upon the
grantee leaving the Company except upon such grantee's death, Disability or
retirement at or after age sixty-five (or such earlier age as the Purchaser may
expressly agree) and except that, to the extent provided under any such
existing Option, if the grantee is terminated by the Company without Cause
within two years following a Change in Control of the Company, the grantee
shall have a period of ninety days following such termination within which to
exercise such Option. The terms Disability, Change in Control and Cause for
this purpose shall have the meanings set forth in the plans pursuant to which
the Options were granted.
21
No employee who has been previously granted an Option or stock appreciation
right shall be approved for retirement for purposes of any plan or agreement
under which such Option or right has been granted without the express consent
of the Purchaser. The Purchaser and the Company agree to continue to discuss
the manner in which outstanding stock options shall be treated after the
Merger.
(b) In addition to the foregoing, the Company shall take all steps
necessary so that no participant in any employee plans, programs or
arrangements of the Company shall have any right to acquire or receive any
Common Stock or other equity interest in the Company on or after the Effective
Time other than in connection with the exercise of Options outstanding on the
date hereof which have not been cancelled pursuant to Section 3.2(a). On or
prior to the Effective Time, the Company shall amend each of its (and cause the
amendment of each of its affiliate's) qualified defined contribution plans to
eliminate any investment in Common Stock after the Effective Time.
(c) At or immediately prior to the Effective Time, the Company shall
cause an amendment of each of its employee plans, programs and arrangements
pursuant to which an employee may be entitled to receive Common Stock (each a
"Stock Plan") to provide that any employee entitled to receive Common Stock in
respect of previously deferred bonuses or compensation shall receive instead
cash equal to the product of (i) the Final Exchange Ratio multiplied by the
average of the average of the high and the low closing sales prices of Holdings
Common Stock as reported on each
22
of the ten consecutive trading days immediately preceding the Effective Time
and (ii) the number of shares of Common Stock so deferred, plus interest equal
to the rate otherwise credited on deferred amounts under the applicable plans
or if no such rate is credited the prime rate established by Chemical Bank from
time to time on such deferred bonuses or compensation from the Effective Time
to the date of distribution.
(d) Subject to the terms of any Company Plan, any Merger
Consideration paid in respect of restricted shares of Common Stock held by any
employee or former employee of the Company or any of its affiliates shall
remain restricted and subject to the same terms and conditions imposed on such
restricted shares.
Section 3.3 Exchange of Certificates. (a) Exchange Agent. At or
------------------------ --------------
prior to the Effective Time, Purchaser shall deposit with or for the account of
a bank or trust company designated by Parent, which shall be reasonably
satisfactory to the Company (the "Exchange Agent"), for the benefit of the
holders of shares of Common Stock, for exchange in accordance with this Article
3, the Merger Consideration in respect of each Share outstanding immediately
prior to the Effective Time, except the shares of Common Stock referred to in
Section 3.1 (b) (the "Aggregate Merger Consideration").
(b) Exchange Procedures. As soon as reasonably practicable after
-------------------
the Effective Time, Purchaser will instruct the Exchange Agent to mail to each
holder of record immediately prior to the Effective Time (other than holders
referred to in Section
23
3.1(b)) of a certificate or certificates which represented shares of Company
Stock (the "Certificates") (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange Agent
and shall be in such form and have such other provisions as Parent or Purchaser
may reasonably specify) (the "Merger Letter of Transmittal") and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for Holdings Common Stock. Upon surrender to the Exchange Agent of
Certificates, together with such Merger Letter of Transmittal duly executed and
any other required documents, and acceptance thereof by the Exchange Agent,
each holder of a Certificate shall be entitled to a certificate or certificates
representing the number of full shares of Holdings Common Stock into which the
aggregate number of shares of Common Stock previously represented by such
Certificate surrendered shall have been converted pursuant to this Agreement.
The Exchange Agent shall accept such Certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. After
the Effective Time, there shall be no further transfer on the books and records
of the Company or its transfer agent of Certificates and if such Certificates
are presented to the Company for transfer, they shall be cancelled against
delivery of certificates for Holdings Common Stock as herein provided. If any
certificate for such Holdings Common Stock is to be issued in
24
a name other than that in which the Certificate surrendered for exchange is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed, with signature guaranteed, or otherwise
in proper form for transfer and that the person requesting such exchange shall
pay to Purchaser or its transfer agent any transfer or other taxes required by
reason of the issuance of certificates for such Holdings Common Stock in a name
other than that of the registered holder of the Certificate surrendered, or
establish to the satisfaction of Purchaser or its transfer agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 3.3(b), each Certificate (other than certificates referred to in
Section 3.1(b) shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration as contemplated by Section 3.1.
(c) No Fractional Shares. (i) No certificates or scrip
--------------------
representing fractional shares of Holdings Common Stock shall be issued upon
the surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a stockholder of
Holdings; and (ii) notwithstanding any other provision of this Agreement, each
holder of shares of Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of Holdings
Common Stock (after taking into account all shares of Common Stock delivered by
such holder) shall receive, in lieu thereof, a cash payment (without interest)
25
representing such holder's proportionate interest in the net proceeds from the
sale by the Exchange Agent (following the deduction of applicable transaction
costs of third parties other than the Exchange Agent, the Company, the
Purchaser or affiliates of any of the foregoing), on behalf of all such
holders, of the shares (the "Excess Shares") of Holdings Common Stock
representing all such fractions. Such sale shall be made as soon as
practicable after the Effective Time.
(d) Distributions with Respect to Unexchanged Shares. No dividends
------------------------------------------------
or other distributions with respect to Holdings Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate for shares of Common Stock with respect to the shares of Holdings
Common Stock represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 3.3(c), until the
surrender of such Certificate in accordance with this Article 3. Subject to
the effect of applicable laws, following surrender of any such Certificate,
there shall be delivered to the holder of such Certificate a certificate
representing whole shares of
26
Holdings Common Stock issued in exchange therefor and, without interest, (i) at
the time of such surrender or as promptly after the sale of the Excess Shares
as practicable, the amount of any cash payable in lieu of a fractional share of
Holdings Common Stock to which such holder is entitled pursuant to Section
3.3(c) and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares of
Holdings Common Stock and (ii) at the appropriate payment date, the amount of
dividends or other distributions payable with respect to such whole shares of
Holdings Common Stock with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender. In no event
shall the persons entitled to receive such dividends or other distributions be
entitled to receive interest on such dividends or other distributions.
(e) No Further Ownership Rights in Common Stock. All shares of
-------------------------------------------
Holdings Common Stock delivered and cash paid upon the surrender for exchange
of Certificates which represented shares of Common Stock in accordance with the
terms of this Article 3 (including any cash paid pursuant to Section 3.3(d))
shall be deemed to have been delivered (and paid) in full satisfaction of all
rights pertaining to the shares of Common Stock theretofore represented by such
Certificates, subject, however, to the Surviving Corporation's obligation, with
respect to shares of Common Stock, to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by the Company on such shares of Common Stock prior to
the date of this Agreement and which remain unpaid at the Effective Time.
(f) Termination of Exchange Fund. Any portion of the Merger
----------------------------
Consideration deposited with the Exchange Agent pursuant to this Article 3 (the
"Exchange Fund") which remains undistributed to the holders of the certificates
representing shares of Common Stock for nine months after the Effective Time
27
shall be delivered to Parent, upon demand, and any holders of shares of Common
Stock who have not theretofore complied with this Article 3 shall thereafter
look only to Parent and only as general creditors thereof for payment of their
claim for Holdings Common Stock (or any security or consideration into which
Holdings Common Stock is converted) and any cash in lieu of fractional shares
of Holdings Common Stock and shall look only to Parent and only as general
creditors thereof for payment of any dividends or distributions with respect to
Holdings Common Stock to which such holders may be entitled.
(g) No Liability. None of Parent, Purchaser, Holdings, the Company
------------
or the Exchange Agent shall be liable to any person in respect of any shares of
Holdings Common Stock (or dividends or distributions with respect thereto) or
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates
which represented shares of Common Stock shall not have been surrendered prior
to five years after the Effective Time (or immediately prior to such earlier
date on which any shares of Holdings Common Stock, any cash in lieu of
fractional shares of Holdings Common Stock or any dividends or distributions
with respect to Holdings Common Stock in respect of such Certificate would
otherwise escheat to or become the
28
property of any Governmental Entity (as defined herein)), any such shares,
cash, dividends or distributions in respect of such certificate shall, to the
extent permitted by applicable law, become the property of the Parent, free and
clear of all claims or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest
---------------------------
any cash included in the Exchange Fund, as directed by Parent, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Parent.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Company. The
---------------------------------------------
Company represents and warrants to Parent and Purchaser as follows:
(a) Organization, Standing and Corporate Power. Each of the Company
------------------------------------------
and each of its Significant Subsidiaries (as defined herein) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate
or partnership power and authority to carry on its business as now being
conducted, except for failures which, in the aggregate, would not have a
Material Adverse Effect (as defined herein) with respect to the Company.
Each of the Company and each of its Significant Subsidiaries is duly
qualified or licensed to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to
be so
29
qualified or licensed (individually or in the aggregate) is not reasonably
likely to have a Material Adverse Effect with respect to the Company.
Complete and correct copies of the Charter and By-laws of the Company are
included within the SEC Documents (as defined herein).
(b) Subsidiaries. All the outstanding shares of capital stock of
------------
each of the significant subsidiaries (as defined in Rule 1-02 of
Regulation S-X of the SEC) of the Company, (the "Significant
Subsidiaries"; which term shall include T.M.I. Associates, L.P. ("TMI"))
which is a corporation have been validly issued and are fully paid and
nonassessable and all outstanding shares of capital stock of each
Significant Subsidiary owned (of record and beneficially)
30
by the Company, by another Significant Subsidiary of the Company or by the
Company and another such Significant Subsidiary are owned, free and clear of
all pledges, claims, options, rights of first refusal, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"), except for such rights of first refusal, claims,
options, charges and encumbrances as would not in the aggregate have a Material
Adverse Effect with respect to the Company. Except as set forth in Section
4.1(b) of the disclosure schedule delivered to Parent by the Company at the
time of execution of this Agreement (the "Disclosure Schedule"), all ownership
interests of each Significant Subsidiary which is not a corporation and which
is held (of record and beneficially) by the Company, by another Significant
Subsidiary of the Company or by the Company and another such Significant
Subsidiary have been validly issued and are owned, free and clear of all Liens,
except for such rights of first refusal, claims, options, charges and
encumbrances as would not in the aggregate have a Material Adverse Effect with
respect to the Company.
(c) Capital Structure. The authorized capital stock of the Company
-----------------
consists of (i) 480,000,000 shares of Common Stock and (ii) 10,000,000
shares of preferred stock, without par value ("Preferred Stock"). As of
the date hereof, there are (i) 141,515,502 shares of Common Stock issued
and outstanding (including the shares of Common Stock held by the trust
created under the Supplemental Benefit Trust Agreement dated December 9,
1993); (ii) 53,465,136 shares of Common Stock held in the treasury of the
Company; (iii) 7,357,473 shares of Common Stock issuable upon exercise of
outstanding Options (of which 1,408,326 shares, with an average exercise
price of $12.31, are exercisable at prices of $14.25 or less);
(iv) 4,779,200 shares of Common Stock reserved for issuance upon
exercise of authorized but unissued Options; (v) 45,031 shares of Common
Stock reserved for issuance upon conversion of Preferred Stock designated
as Preferred Stock-Series B ("Series B Preferred Stock"), 45,031 shares of
which are issuable upon conversion of all outstanding shares of Series B
Preferred Stock; (vi) 6,000,000 shares of Common Stock reserved for
issuance upon
31
exercise of the Company's Lynx Equity Units (the "Lynx
Equity Units"), 5,950,000 shares of which are issuable upon exercise of
all outstanding Lynx Equity Units; (vii) 475,000 shares of Preferred Stock
designated as Preferred Stock-Series A ("Series A Preferred Stock"), none
of which are issued or outstanding; (viii) 688,700 shares of Series B
Preferred Stock, of which 6,822 shares are issued and outstanding; and
(ix) 2,400,000 shares of Preferred Stock designated as Series C Junior
Participating Preferred Stock ("Series C Preferred Stock") reserved for
issuance upon the exercise of the rights (the "Rights") distributed to the
holders of shares of Common Stock pursuant to the Rights Agreement, dated
as of January 28, 1986 between the Company and The Bank of New York, as
Rights Agent (the "Rights Agreement"), as amended as of November 29, 1988,
May 22, 1991, September 11, 1994 and the date hereof, none of which are
issued or outstanding. Except as set forth above, no shares of capital
stock or other equity securities of the Company are issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the
Company are, and all shares which may be issued pursuant to the Stock
Plans will be, when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. Except for the
Series B Preferred Stock, the Rights and the Lynx Equity Units, there are
no outstanding bonds, debentures, notes or other indebtedness or other
securities of the Company having the right to vote (or convertible
32
into, or exchangeable for, securities having the right to vote) on any
matters on which shareholders of the Company may vote. Except for the
Series B Preferred Stock, the Rights and the Lynx Equity Units, there are
no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company
or any of its Significant Subsidiaries is a party or by which any of them
is bound obligating the Company or any of its Significant Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other equity or voting securities of
the Company or of any of its Significant Subsidiaries or obligating the
Company or any of its Significant Subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. The only outstanding indebtedness
for borrowed money of the Company and its subsidiaries having (x) a
principal amount of $25,000,000 or more and (y) a maturity of one year or
longer is listed on Section 4.1(c) of the Disclosure Schedule. Other than
the Lynx Equity Units, the Stock Options and the Rights there are no
outstanding contractual obligations, commitments, understandings or
arrangements of the Company or any of its Significant Subsidiaries to
repurchase, redeem or otherwise acquire or make any payment in respect of
any shares of capital stock of the Company or any of its Significant
Subsidiaries. Except with respect to the Lynx
33
Equity Units, there are no agreements or arrangements to which the Company
or any of its subsidiaries is a party pursuant to which the Company is or
could be required to register shares of Common Stock or other securities
under the Securities Act.
(d) Authority; Noncontravention. The Company has the requisite
---------------------------
corporate power and authority to enter into this Agreement and the
Conditional Purchase/Stock Option Agreement, and, subject to the Company
Shareholder Approval (as defined herein) with respect to the Merger, to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Conditional
Purchase/Stock Option Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate and shareholder action on the part
of the Company, subject, in the case of the Merger, to the Company
Shareholder Approval. Each of this Agreement and the Conditional
Purchase/Stock Option Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms subject to
the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
34
good faith and fair dealing. Except as set forth in Section 4.1(d) of the
Disclosure Schedule, the execution and delivery of this Agreement and the
Conditional Purchase/Stock Option Agreement do not, and the consummation
of the transactions contemplated by this Agreement and the Conditional
Purchase/Stock Option Agreement and compliance with the provisions hereof
and thereof will not, conflict with, or result in any breach or violation
of or default (with or without notice or lapse of time or both) under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or a right to require the purchase or repurchase or give rise
to a loss of a material benefit under, or result in the creation of any
Lien upon, any of the properties, indebtedness or assets of the Company or
any of its Significant Subsidiaries under (i) the Charter or By-laws of
the Company or the comparable governing or organizational documents of any
of its Significant Subsidiaries, (ii) any loan or credit agreement (other
than the credit agreement dated August 16, 1994 between Citibank, N.A., as
administrative agent, and the Company and the credit agreement dated
August 16, 1994 between Citibank, N.A., as administrative agent, and T.M.
Investors Limited Partnership), note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license to
which the Company or any of its subsidiaries is a party or by which any of
their respective properties or assets is bound or (iii) except for the
governmental filings
35
and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule, regulation or arbitration
award applicable to the Company or any of its subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii)
and (iii) above, any such conflicts, breaches, violations, defaults,
rights, losses or Liens that individually or in the aggregate would not
have a Material Adverse Effect with respect to the Company. No consent,
approval, order or authorization of, or registration, declaration or
filing with, or notice to, any Federal, national, state or local
government or any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental
Entity"), is required by or with respect to the Company or any of its
Significant Subsidiaries in connection with the execution and delivery of
this Agreement or the Conditional Purchase/Stock Option Agreement by the
Company or the consummation by the Company of the transactions
contemplated hereby or thereby, except for (i) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and the
applicable requirements, if any, of any relevant foreign jurisdictions,
(ii) the filing with the SEC of (x) the Offer Documents and the Schedule
14D-9, (y) the Proxy Statement and (z) such reports under the Exchange Act
as may be required by law in connection with this Agreement, the
36
Conditional Purchase/Stock Option Agreement and the transactions
contemplated hereby or thereby, (iii) the filing of the Certificate of
Merger with the Secretary of State of the State of New Jersey and
appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, (iv) filings, consents and
approvals under Environmental Laws (as defined herein) of jurisdictions in
which the Company transacts business, (v) such reports or filings under
the securities laws of the various states or the securities laws of non-
U.S. jurisdictions in connection with the Offer and the Merger as may be
required by law in connection with this Agreement, the Conditional
Purchase/Stock Option Agreement and the transactions contemplated hereby
or thereby, and (vi) such other consents, approvals, orders,
authorizations, registrations, declarations, filings or notices as are set
forth in Section 4.1(d) of the Disclosure Schedule.
(e) SEC Documents. The Company has filed all required reports,
-------------
schedules, forms, statements and other documents with the SEC since
January 1, 1990, and the Company has delivered or made available to
Purchaser all reports, schedules, forms, statements and other documents
filed with the SEC since such date (collectively, and in each case
including all exhibits and schedules thereto and documents incorporated by
reference therein, the "SEC Documents"). As of their respective dates,
the SEC Documents complied in all material respects with the requirements
of the Securities
37
Act or the Exchange Act, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such SEC Documents, and
none of the SEC Documents (including any and all financial statements
included therein), except to the extent revised or superseded by a
subsequent filing with the SEC, as of such dates contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The consolidated financial statements of the Company included in all SEC
Documents filed since January 1, 1994 (the "SEC Financial Statements")
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited consolidated
quarterly statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated
in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments).
38
(f) Information Supplied. Neither the Schedule 14D-9, nor any of
--------------------
the information supplied by the Company for inclusion in the Offer
Documents, shall, at the respective times such Schedule 14D-9, the Offer
Documents or any amendments or supplements thereto are filed with the SEC
or are first published, sent or given to shareholders, as the case may be,
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 the light of the circumstances under which they
were made, not misleading. The Proxy Statement shall not, at the date the
Proxy Statement (or any amendment thereof or supplement thereto) is first
mailed to shareholders and at the time of the Shareholders Meeting and at
the Effective Time, be false or misleading with respect to any 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 the light of
the circumstances under which they are made, not misleading or necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Shareholders Meeting which has become
false or misleading. The Schedule 14D-9 and the Proxy Statement and
information statement will comply in all material respects as to form with
the requirements of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty (i) with respect to any
39
information supplied by Parent, the Purchaser or Holdings or any of their
representatives which is contained in any of the Offer Documents, the
Schedule 14D-9 or the Proxy Statement or (ii) with respect to the Proxy
Statement, to the extent that (A) on the date the Proxy Statement is first
mailed to shareholders, a majority of the board of directors of the
Company shall have been designated or elected by Parent or (B) if on such
date of first mailing a majority of such board shall not have been
designated or elected by Parent, between the date the Proxy Statement is
first mailed to shareholders and at the time of the Shareholders Meeting
or at the Effective Time, a majority of the board of directors of the
Company shall have been designated or elected by Parent and subsequent to
such time the Proxy Statement shall have become false or misleading with
respect to any material fact.
(g) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
the SEC Documents or in Section 4.1(g) of the Disclosure Schedule, since
the date of the most recent audited financial statements included in such
SEC Documents, the Company has conducted its business only in the ordinary
course consistent with past practice, and there is not and has not been
any change in the business, financial condition or results of operations
of the Company or any of its subsidiaries which has had, or would
reasonably be expected to have, a Material Adverse Effect with respect to
the Company.
(h) Benefit Plans. (i) Section 4.1(h) of the Disclosure Schedule
-------------
contains a true and complete list of each "employee benefit plan" (within
the meaning of section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), (including, without limitation,
multiemployer plans within the meaning of ERISA section 3(37)), stock
purchase, stock option, severance, employment, change-in-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation
and all other employee benefit plans, agreements, programs, policies or
other arrangements, whether or not subject to ERISA (including any funding
mechanism therefor now in effect or required in the future as a result of
the transactions contemplated by this Agreement, the Conditional
Purchase/Stock Option Agreement or otherwise), under which any employee or
former employee of the Company or any of its affiliates has any present or
future right to benefits or under which the Company or any of its
affiliates has any present or future liability. All such plans,
agreements, programs, policies and arrangements shall be collectively
referred to as the "Company Plans".
(ii) With respect to each Company Plan, the Company has
delivered to Purchaser a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the
extent applicable, any related trust agreement, annuity contract or other
funding instrument; except where the failure to deliver the
41
documents as set forth above, individually or in combination with the
breach of any other representation contained herein, would not reasonably
be expected to have a Material Adverse Effect.
(iii) (1) Each Company Plan has been established and administered
in all material respects in accordance with its terms, and in compliance
with the applicable provisions of ERISA, the Internal Revenue Code of
1986, as amended (the "Code"), and other applicable laws, rules and
regulations; (2) each Company Plan which is intended to be qualified
within the meaning of Code section 401(a) is so qualified and has received
a favorable determination letter as to its qualification and nothing has
occurred, whether by action or failure to act, which would cause the loss
of such qualification.
(iv) Except to the extent that the inaccuracy of any of the
following (or the circumstances giving rise to such inaccuracy)
individually or in combination with the breach of any other representation
contained herein, would not reasonably be expected to have a Material
Adverse Effect: (1) with respect to any Company Plan, no actions, suits
or claims (other than routine claims for benefits in the ordinary course)
are pending or threatened and the Company will promptly notify Purchaser
in writing of any pending or threatened claims arising between the date
hereof and the Effective Time; (2) no event has occurred and no condition
exists with respect to a Company Plan that would
42
subject the Company or any of its affiliates, either directly or by reason
of their affiliation with any member of their respective Controlled Groups
(defined as any organization which is a member of a controlled group of
organizations within the meaning of Code section 414(b), (c), (m) or (o)),
to any tax, fine, penalty or other liability imposed by ERISA, the Code or
other applicable laws, rules and regulations; (3) for each Company Plan
with respect to which a Form 5500 has been filed, no material change has
occurred with respect to the matters covered by the most recent Form 5500
since the date thereof; (4) except as disclosed on Section 4.1(h) of the
Disclosure Schedule, each Company Plan may be amended or terminated
without obligation or liability (other than those obligations and
liabilities for which specific assets have been set aside in a trust or
other funding vehicle or reserved for on the Company's most recent audited
financial statements included in the Recent SEC Documents); (5) no Company
Plan has incurred any "accumulated funding deficiency" as such term is
defined in ERISA section 302 and Code section 412 (whether or not waived);
(6) no event or condition exists which could be deemed a reportable event
within the meaning of ERISA section 4043 which could result in a liability
to the Company, its affiliates or any member of their respective
Controlled Groups; and (7) neither the Company, any affiliate nor any
member of their respective Controlled
43
Groups has engaged in a transaction which could subject any of them to
liability under ERISA section 4069.
(v) With respect to any multiemployer plan (within the meaning
of section 4001(a)(3) of ERISA) to which the Company, any affiliate or any
member of their respective Controlled Groups has any liability or
contributes (or has at any time contributed or had an obligation to
contribute): (1) neither the Company, its affiliates nor any member of
their respective Controlled Groups would be subject to withdrawal
liability in excess of $15,000,000 if, as of the Effective Time, the
Company, any affiliate or any member of their respective Controlled Groups
were to engage in a complete withdrawal (as defined in ERISA section 4203)
from any such multiemployer plan; (2) no such multiemployer plan is in
reorganization or insolvent (as those terms are defined in ERISA sections
4241 and 4245, respectively); and (3) neither the Company, any affiliate
nor any member of their respective Controlled Groups has engaged in a
transaction which could subject any of them to liability under ERISA
section 4212(c) which would reasonably be expected to have a Material
Adverse Effect.
(vi) Except as set forth in Section 4.1(h)(vi) of the Disclosure
Schedule, no Company Plan exists which could result in a payment of
$100,000 or more to any employee or former employee of the Company or any
affiliate of any money or other property or rights, or accelerate or
provide any other rights or benefits with a value in the aggregate of
44
$100,000 or more to any such employee or former employee as a result of
the transactions contemplated by this Agreement or the Conditional
Purchase/Stock Option Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Code section 280G.
(i) Tax Matters. Except where the failure to do so would not have a
-----------
Material Adverse Effect on the Company, each of the Company and each of
its subsidiaries, and any consolidated, combined, unitary or aggregate
group for tax purposes of which the Company or any of its subsidiaries is
or has been a member has timely filed all material Tax Returns required to
be filed by it, has paid all Taxes shown thereon to be due and has
provided adequate reserves in its financial statements for any Taxes that
have not been paid, whether or not shown as being due on any returns.
Except as set forth in Section 4.1(i) of the Disclosure Schedule, (i) no
claim for unpaid Taxes has become a lien or encumbrance of any kind
against the property of the Company or any of its subsidiaries or is being
asserted against the Company or any of its subsidiaries, except for such
claims which have become a lien or encumbrance which would not have a
Material Adverse Effect; (ii) no audit of any Tax Return of the Company or
any of its subsidiaries is being conducted by a Tax authority, except for
such audits which would not have a Material Adverse Effect; and (iii) no
extension of the statute of limitations on the assessment of any Taxes has
been granted by the Company or any of its subsidiaries and
45
is currently in effect, except for such extensions which would not have a
Material Adverse Effect. As used herein, "Taxes" shall mean any taxes of
any kind, including but not limited to those measured by or referred to as
income, gross receipts, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, value added, property or windfall profits taxes,
customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any governmental authority, domestic or
foreign. Neither the Company nor any of its subsidiaries has made an
election under Section 341(f) of the Internal Revenue Code. As used
herein, "Tax Return" shall mean any return, report or statement required
to be filed with any governmental authority with respect to Taxes.
(j) Article VIII of the Company's Restated Certificate of
-----------------------------------------------------
Incorporation and Sections 14A:10A-4 and 14A:10A-5 of the NJBCA. With
---------------------------------------------------------------
respect to Article VIII of the Charter and Sections 14A:10A-4 and 104:10A-
5 of the NJBCA, the Merger, this Agreement, the Conditional Purchase/Stock
Option Agreement, the transactions contemplated hereby or thereby and any
Excepted Future Transactions have been approved by the Board of Directors
of the Company. No other state takeover statute or similar statute or
regulation of the State of New Jersey (and, to the knowledge of the
Company after due inquiry, of any other state or jurisdiction)
46
applies or purports to apply to the Merger, this Agreement, the
Conditional Purchase/Stock Option Agreement or any of the other
transactions contemplated hereby or thereby and no provision of the
Charter (other than with respect to the Series C Preferred Stock which
will be redeemed pursuant to Section 5.15, subject to the conditions
therein) or By-laws of the Company or any governing instruments of its
Significant Subsidiaries would, directly or indirectly, restrict or impair
the ability of Purchaser to vote, or otherwise to exercise the rights and
receive the benefits of a shareholder with respect to, securities of the
Company or any of its subsidiaries that may be acquired or controlled by
Purchaser, Parent or any subsidiary of Parent or permit any shareholder to
acquire securities of the Company on a basis not available to Purchaser in
the event that Purchaser were to acquire securities of the Company.
(k) Environmental Matters. Except as set forth in Section 4.1(k) of
---------------------
the Disclosure Schedule or except to the extent that the inaccuracy of any
of the following (or the circumstances giving rise to such inaccuracy),
individually or in the aggregate, would not have a Material Adverse
Effect, in connection with any properties or facilities currently or
formerly owned, leased or used by the Company or any of its subsidiaries
and the current and former operations of the Company or any of its
subsidiaries:
(i) the Company or its subsidiaries hold, and are in compliance with
and have been in continuous compliance with
47
for the last five (5) years, all Environmental Permits, and are otherwise
in compliance and have been in compliance for the last five (5) years with
all applicable Environmental Laws and there is no condition that would
reasonably be expected to prevent or materially interfere with compliance
by the Company and its subsidiaries with Environmental Laws in the future;
(ii) no modification, revocation, reissuance, alteration, transfer,
or amendment of the Environmental Permits, or any review by, or approval
of, any third party of the Environmental Permits is required in connection
with the execution or delivery of this Agreement or the Conditional
Purchase/Stock Option Agreement or the consummation by the Company of the
transactions contemplated hereby or thereby or the continuation of the
business of the Company or its subsidiaries following such consummation;
(iii) neither the Company nor any of its subsidiaries has received
any Environmental Claim, and neither the Company nor any of its
subsidiaries has knowledge of any threatened Environmental Claim;
(iv) the Company and its subsidiaries have not entered into, have
not agreed to, and are not subject to any judgment, decree, order or other
similar requirement of any governmental authority under any Environmental
Laws, including without limitation those relating to compliance with
Environmental Laws or to investigation, cleanup, remediation or removal of
Hazardous Substances;
48
(v) There are no (A) underground or aboveground storage tanks,
(B) polychlorinated biphenyls, (C) asbestos or asbestos-containing
materials, (D) Hazardous Materials, (E) urea-formaldehyde insulation, (F)
sumps, (G) surface impoundments, (H) landfills or (I) sewer or septic
systems currently or formerly present at or about any of the properties or
facilities currently or formerly owned, leased or otherwise used by the
Company or any of its subsidiaries, that would reasonably be expected to
give rise to liability of the Company or any of its subsidiaries under any
Environmental Laws;
(vi) Hazardous Materials have not been generated, transported,
treated, stored, disposed of, released or threatened to be released at,
on, from or under any of the properties or facilities currently or
formerly owned, leased or otherwise used by the Company or any of its
subsidiaries, in violation of, or in a manner or to a location that would
reasonably be expected to give rise to liability of the Company or any of
its subsidiaries under, any Environmental Laws.
(vii) For purposes of this Agreement, the following terms shall have
the following meanings:
"Environmental Claim" means any written notice, claim, demand,
action, suit, complaint, proceeding or other communication by any
person to the Company or any of its subsidiaries alleging liability
or potential liability (including without limitation liability or
49
potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property
damage, personal injury, fines or penalties) arising out of, relating
to, based on or resulting from (i) the presence, discharge, emission,
release or threatened release of any Hazardous Materials at any
location, (ii) circumstances forming the basis of any violation or
alleged violation of any Environmental Laws or Environmental Permits,
or (iii) otherwise relating to obligations or liabilities under any
Environmental Law.
"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.
"Environmental Laws" means all applicable foreign, federal,
state and local statutes, rules, regulations, ordinances, orders,
decrees and common law relating in any manner to pollution or
protection of human health or the environment, to the extent and in
the form that such exist at the date hereof.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any
fraction thereof) and petroleum products, asbestos and asbestos-
containing materials, pollutants, contaminants and all other
50
materials and substances, including but not limited to
electromagnetic fields, regulated pursuant to any Environmental Laws
or that could result in liability under any Environmental Laws.
(l) Brokers. No broker, investment banker, financial advisor or
-------
other person, other than Lazard Freres and Co. and CS First Boston
Corporation, the fees and expenses of which will be paid by the Company
(pursuant to fee agreements, copies of which have been provided to
Purchaser), is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on
behalf of the Company.
(m) Compliance. Neither the Company nor any of its subsidiaries is
----------
in conflict with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties are
bound or affected, or (ii) 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 its or any of their
respective properties are bound or affected, except for any such
conflicts, defaults or violations which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
51
(n) Required Company Vote. Assuming the Series B Preferred Stock is
---------------------
redeemed as provided in Section 5.12 the affirmative vote of two-thirds of
the shares of the Common Stock (the "Company Shareholder Approval") is the
only vote of the holders of any class or series of the Company's
securities necessary to approve this Agreement, the Merger and the other
transactions contemplated hereby and the Conditional Purchase/Stock Option
Agreement and the transactions contemplated thereby.
(o) Rights Agreement. The Board of Directors of the Company, at a
----------------
meeting duly called and held, has resolved that the Rights shall be
redeemed immediately prior to the acceptance for payment of any of the
outstanding Shares pursuant to the Offer, provided that the Minimum
Condition has been satisfied. The Board of Directors of the Company has
amended the Rights Agreement, prior to the execution of this Agreement and
the Conditional Purchase/Stock Option Agreement, so that none of the
execution or the delivery of this Agreement or the Conditional
Purchase/Stock Option Agreement, or both such agreements taken together,
or commencement of the Offer or the acceptance of Shares for exchange
pursuant to the Offer, or the consummation of the transactions
contemplated by the Conditional Purchase/Stock Option Agreement will (i)
trigger the exercisability of the Rights (as defined in the Rights
Agreement), the separation of the Rights from the stock certificates to
which they are attached, or any other provisions of the Rights Agreement,
52
including causing Parent and/or Purchaser from becoming an Acquiring
Person (as defined in the Rights Agreement), the occurrence of a
Distribution Date (as defined in the Rights Agreement) or a Shares
Acquisition Date (as defined in the Rights Agreement) or (ii) trigger the
right of the holders of the common units of Borden Chemicals and Plastics
Limited Partnership, pursuant to the Second Amended and Restated Deposit
Agreement dated February 16, 1993, to require the Company to purchase the
common units held by them.
(p) Dividends. The Board of Directors of the Company, at a meeting
---------
duly called and held, has resolved that, until resolved otherwise, the
Company will not declare, set aside or pay any dividends other than
quarterly dividends on the shares of Common Stock in excess of $0.01 per
share.
Section 4.2 Representations and Warranties of Purchaser and Parent.
------------------------------------------------------
Purchaser and Parent represent and warrant, jointly and severally, to the
Company as follows:
(a) Organization, Standing and Corporate Power. Each of Purchaser
------------------------------------------
and Holdings has been duly incorporated, is validly existing as a
corporation and in good standing under the laws of the jurisdiction in
which it is incorporated and has the corporate power and authority to own
its property and conduct its business as now being conducted. Each of
Purchaser and Holdings is duly qualified to transact business and is in
good standing as a foreign corporation in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires
such
53
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a Material Adverse Effect with respect
to Purchaser or Holdings. Purchaser has delivered to the Company complete
and correct copies of its Certificate of Incorporation and By-laws.
Complete and correct copies of the Restated Certificate of Incorporation,
as amended, and By-Laws of Holdings are included within the Holdings SEC
Documents (as defined herein).
(b) Subsidiaries. Purchaser has no direct or indirect subsidiaries.
------------
Each of the Significant Subsidiaries (as defined in Rule 1-02 of
Regulation S-X of the SEC) of Holdings (which, including RJR Nabisco, Inc.
("RJRN"), R.J. Reynolds Tobacco Company ("RJRT"), R.J. Reynolds Tobacco
International, Inc. and Nabisco, Inc. ("NI") are collectively referred to
as the "Holdings Significant Subsidiaries") has been duly incorporated, is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, has the corporate power and authority to
own its property and to conduct its business and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not have a Material Adverse
Effect with respect to Purchaser or Holdings. All of the outstanding
shares of capital stock of
54
each Holdings Significant Subsidiary have been validly issued and are
fully paid and non-assessable and all outstanding shares of capital stock
of each Holdings Significant Subsidiary owned (of record and beneficially)
by Holdings, by another Holdings Significant Subsidiary or by Holdings and
another such Holdings Significant Subsidiary are owned free and clear of
all Liens, except for (i) such rights of first refusal, claims, options,
charges and encumbrances as would not in the aggregate have a Material
Adverse Effect with respect to Holdings and (ii) for shares of capital
stock of (x) RJRT and Nabisco Brands, Inc. that are pledged pursuant to
that certain RJRN Pledge Agreement dated May 13, 1992 made by RJRN in
favor of Manufacturers Hanover Trust Company, as collateral agent, and (y)
RJRN that are pledged pursuant to that certain Parent Pledge Agreement
dated as of February 2, 1989, amended and restated December 19, 1991,
between Holdings and Chemical Bank, as collateral agent.
(c) Capital Structure. The authorized capital stock of Holdings
-----------------
consists of (i) 2,200,000,000 shares of Holdings Common Stock and (ii)
150,000,000 shares of preferred stock, par value $.01 per share. As of
August 31, 1994, there were, (i) 1,147,681,192 shares of Holdings Common
Stock issued and outstanding, (ii) 114,206,576 shares of Holdings Common
Stock reserved for issuance pursuant to Holdings stock plans, (iii)
210,000,000 shares of Holdings Common Stock reserved for issuance upon
conversion of the Series A
55
Conversion Preferred Stock, par value $.01 per share, of Holdings
("Holdings Series A Stock"), (iv) 15,617,453 shares of Holdings Common
Stock reserved for issuance upon conversion of the ESOP Convertible
Preferred Stock, par value $.01 per share, of Holdings (the "Holdings ESOP
Stock"), (v) 266,750,000 shares of Holdings Common Stock reserved for
issuance upon conversion of the Series C Conversion Preferred Stock, par
value $.01 per share, of Holdings (the "Holdings Series C Stock"), (vi) no
shares of Holdings Common Stock held by Holdings in its treasury or by its
subsidiaries, (vii) 52,500,000 shares of Holdings Series A Stock
outstanding, (viii) 50,000 shares of Series B Preferred Stock, par value
$.01 per share, of Holdings (the "Holdings Series B Stock") outstanding,
(ix) 15,490,964 shares of Holdings ESOP Stock outstanding and (x)
26,675,000 shares of Holdings Series C Stock outstanding. Except for the
Holdings Common Stock, the Holdings Series A Stock, the Holdings Series B
Stock, the Holdings Series C Stock and the Holdings ESOP Stock, no shares
of capital stock or other equity securities of Holdings are issued,
reserved for issuance or outstanding. All outstanding shares of capital
stock of Holdings are, and all shares which may be issued pursuant to
Holdings stock plans will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
There are no outstanding bonds, debentures, notes or other indebtedness of
Holdings having the right to vote (or convertible into, or
56
exchangeable for, securities having the present right to vote) on any
matters on which stockholders of Holdings may vote. Except with respect
to preferred stock and options pursuant to Holdings stock plans referred
to above, there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind
to which Holdings is a party or by which it is bound obligating Holdings
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other equity or voting securities of
Holdings or obligating Holdings to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. Except with respect to certain shares of
Holdings Common Stock sold to employees of Holdings pursuant to stock
subscription agreements containing standard put and call rights upon the
occurrence of certain events, there are no outstanding contractual
obligations of Holdings to repurchase, redeem or otherwise acquire any
shares of capital stock of Holdings. The authorized capital stock of
Purchaser consists of 1000 shares of common stock, par value $.01 per
share, 100 shares of which have been validly issued, are fully paid and
nonassessable and are owned by Parent, free and clear of any Lien. Each
share of Holdings Common Stock to be delivered to shareholders of the
Company pursuant to the Offer or the Merger, or to the Company pursuant to
the Conditional Purchase/Stock Option Agreement,
57
is a "Registrable Security," as defined in the 1990 Registration Rights
Agreement or, as applicable, the 1989 Registration Rights Agreement.
(d) Authority; Noncontravention. (i) Purchaser has the requisite
---------------------------
corporate power and authority, and Parent has full partnership authority,
to enter into this Agreement and the Conditional Purchase/Stock Option
Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Conditional
Purchase/Stock Option Agreement by Parent and Purchaser and the
consummation by Parent and Purchaser of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action,
corporate or other, on the part of Parent and Purchaser. Each of this
Agreement and the Conditional Purchase/Stock Option Agreement has been
duly executed and delivered by Purchaser and Parent and constitutes a
valid and binding obligation of each of Purchaser and Parent, enforceable
against such party in accordance with its terms subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing. The execution and delivery of this Agreement and the
Conditional Purchase/Stock Option Agreement do not, and the consummation
of the transactions contemplated by
58
this Agreement and the Conditional Purchase/Stock Option Agreement and
compliance with the provisions hereof and thereof will not, conflict with,
or result in any breach or violation of or default (with or without notice
or lapse of time or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or a right to require the
purchase or repurchase or give rise to a loss of a material benefit under,
or result in the creation of any Lien upon, any of the properties,
indebtedness or assets of Purchaser or any of the properties, indebtedness
or assets of Parent under (i) the certificate of incorporation or by-laws
of Purchaser or the comparable governing or organizational documents of
Parent, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license to which Purchaser or Parent is a party or by which
any of its properties or assets is bound or (iii) except for the
governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule,
regulation or arbitration award applicable to each of Purchaser or Parent
or their respective properties or assets, other than, in the case of
clauses (ii) and (iii) above, any such conflicts, breaches, violations,
defaults, rights, losses or Liens that individually or in the aggregate
would not have a Material Adverse Effect with respect to Purchaser or
Parent. No consent, approval, order or authorization of, or
59
registration, declaration or filing with, or notice to, any Governmental
Entity is required by or with respect to Purchaser or Parent in connection
with the execution and delivery of this Agreement or the Conditional
Purchase/Stock Option Agreement by Purchaser and Parent or the
consummation by Purchaser and Parent of the transactions contemplated
hereby or thereby, except for (i) the filing with the SEC of (x) the Offer
Documents and the Schedule 14D-9, (y) the Proxy Statement and (z) such
reports or filings under the Exchange Act or under the securities laws of
the various states or the securities laws of non-U.S. jurisdictions in
connection with the offer and sale of the Holdings Common Stock as may be
required by law in connection with this Agreement, the Conditional
Purchase/Stock Option Agreement and the transactions contemplated hereby
or thereby, and (ii) with respect to Purchaser, except for (A) the filing
of a premerger notification and report form by Purchaser under the HSR Act
and the applicable requirements, if any, of any relevant foreign
jurisdictions, (B) the filing of the Certificate of Merger with the
Secretary of State of the State of New Jersey, (C) filings, consents and
approvals under Environmental Laws (as defined herein) of jurisdictions in
which the Company transacts business and (D) such other consents,
approvals, orders, authorizations, registrations, declarations, filings or
notices as may be required under the "takeover" laws of the various
states.
60
(ii) The execution and delivery by Purchaser and Parent of this
Agreement and the Conditional Purchase/Stock Option Agreement do not, and
the consummation of the transactions contemplated by this Agreement and
the Conditional Purchase/Stock Option Agreement and compliance with the
provisions hereof and thereof will not, conflict with, or result in any
breach or violation of or default (with or without notice or lapse of time
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or a right to require the purchase or
repurchase or give rise to a loss of a material benefit under, or result
in the creation of any Lien upon, any of the properties, indebtedness or
assets of Holdings or any of the Holdings Significant Subsidiaries under
(i) the certificate of incorporation or by-laws of Holdings or any of the
Holdings Significant Subsidiaries, (ii) any loan or credit agreement
(other than Holdings' and RJRN's credit agreement dated as of April 5,
1993, as amended, and Holdings' and RJRN's credit agreement dated as of
December 1, 1991, as amended), note (other than Holdings' 10 1/2% Senior
Notes due 1998 and Holdings' 13 1/2% Subordinated Debentures due 2001),
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license to which Holdings or any of its
subsidiaries is a party or by which any of its properties or assets is
bound or (iii) except for the governmental filings and other matters
referred to in the following sentence, any judgment,
61
order, decree, statute, law, ordinance, rule, regulation or arbitration
award applicable to Holdings or any of its subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii)
and (iii) above, any such conflicts, breaches, violations, defaults,
rights, losses or Liens that individually or in the aggregate would not
have a Material Adverse Effect with respect to Holdings. No consent,
approval, order or authorization of, or registration, declaration or
filing with, or notice to, any Governmental Entity is required by or with
respect to Holdings in connection with the execution and delivery of this
Agreement or the Conditional Purchase/Stock Option Agreement by Purchaser
and Parent or the consummation by Purchaser and Parent of the transactions
contemplated hereby or thereby, except for (i) the filing of a premerger
notification and report form by Purchaser under the HSR Act and the
applicable requirements, if any, of any relevant foreign jurisdictions and
(ii) the filing with the SEC of (x) the Form S-4, and (y) such reports or
filings under the Securities Act or Exchange Act or under the securities
laws of the various states or the securities laws of non-U.S.
jurisdictions in connection with the offer and sale of the Holdings Common
Stock as may be required by law in connection with this Agreement, the
Conditional Purchase/Stock Option Agreement and the transactions
contemplated hereby or thereby.
62
(e) SEC Documents. Holdings has filed all required reports,
-------------
schedules, forms, statements and other documents with the SEC since
January 1, 1990, and Purchaser has delivered or made available to the
Company all reports, schedules, forms, statements and other documents
filed with the SEC since such date (collectively, and in each case
including all exhibits and schedules thereto and documents incorporated by
reference therein, the "Holdings SEC Documents"). As of their respective
dates, the Holdings SEC Documents complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Holdings SEC Documents, and none of the Holdings SEC
Documents (including any and all consolidated financial statements
included therein), except to the extent revised or superseded by a
subsequent filing with the SEC, as of such date contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The consolidated financial statements of Holdings included in such
Holdings SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles (except, in the
63
case of unaudited consolidated quarterly statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position of Holdings and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case
of unaudited quarterly statements, to normal year-end audit adjustments).
(f) Information Supplied. Neither the Offer Documents, nor any of
--------------------
the information supplied by Parent or the Purchaser for inclusion in the
Schedule 14D-9, shall, at the respective times such Offer Documents or
Schedule 14D-9 (or any of the amendments or supplements thereto) are filed
with the SEC or are first published, sent or given to shareholders, as the
case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated or incorporated by reference
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
information supplied by Purchaser concerning Purchaser and Parent for
inclusion in the Proxy Statement shall not contain any statement which, at
such time and in light of the circumstances under which it shall be made,
is false or misleading with respect to any material fact, or shall omit to
state a material fact required to be stated therein or necessary in order
to make the statements
64
therein not false or misleading or necessary to correct any statement in
any earlier communication with respect to the solicitation of proxies for
the Shareholders Meeting which has become false or misleading.
Notwithstanding the foregoing, Purchaser makes no representation or
warranty with respect to any information supplied by the Company or any of
its representatives which is contained in any of the Offer Documents, the
Schedule 14D-9 or the Proxy Statement. The Offer Documents and, to the
extent that on the date the Proxy Statement is first mailed to
shareholders, at the time of the Shareholders Meeting or at the Effective
Time a majority of the board of directors of the Company shall have been
designated or elected by Parent, the Proxy Statement, will comply in all
material respects as to form with the requirements of the Exchange Act and
the rules and regulations thereunder.
(g) Brokers. No broker, investment banker, financial advisor or
-------
other person, other than Morgan Stanley & Co., the fees and expenses of
which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Purchaser or Parent.
(h) Interim Operations of Purchaser. Purchaser was incorporated on
-------------------------------
September 12, 1994, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
65
(i) Absence of Certain Changes or Events. Except as disclosed in the
------------------------------------
Holdings SEC Documents, since the date of the most recent audited financial
statements included in such Holdings SEC Documents, Holdings has conducted its
business only in the ordinary course consistent with past practice, and there
is not and has not been any change in the business, financial condition or
results of operations of Holdings or any of its subsidiaries which has had, or
would reasonably be expected to have, a Material Adverse Effect with respect to
Holdings.
Section 4.3 Representations and Warranties of Parent. Parent
----------------------------------------
represents and warrants to the Company as follows:
(a) Authority. Parent has all requisite power and authority to
---------
enter into this Agreement and to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement by Parent
and the consummation by Parent of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of Parent
and no other proceedings are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly
executed and delivered by and constitutes a valid and binding obligation
of Parent, enforceable against Parent in accordance with its terms.
(b) Title to Holdings Common Stock. Subject to any transfer of
------------------------------
shares to Purchaser (or its assignee) in connection with the transactions
contemplated by this
66
Agreement and the Conditional Purchase/Stock Option Agreement, Parent has
good and valid title to the shares of Holdings Common Stock that will
serve as the Aggregate Merger Consideration, free and clear of all Liens.
The shares of Holdings Common Stock that will serve as the aggregate
Merger Consideration have been approved for listing on the New York Stock
Exchange, Inc.
(c) Noncontravention. The execution and delivery by Parent of, and
----------------
the performance by Parent of its obligations under, this Agreement will
not contravene any provision of applicable law or the governing documents
of Parent or any agreement or other instrument, including, without
limitation, the 1990 Registration Rights Agreement or, as applicable, the
1989 Registration Rights Agreement, binding upon Parent or any of its
subsidiaries or any judgment, order or decree of any Governmental Entity
having jurisdiction over Parent or any of its subsidiaries, except for
such contravention that would not, individually, or in the aggregate, have
a Material Adverse Effect with respect to Parent.
ARTICLE 5
COVENANTS
Section 5.1 Conduct of Business of the Company. Except as
----------------------------------
contemplated by this Agreement, during the period from the date of this
Agreement to the date on which a majority of the board of directors of the
Company shall consist of designees or representatives of Parent, the Company
and each subsidiary shall
67
conduct its operations according to its ordinary course of business consistent
with past practice and shall use its best efforts to preserve intact its
business organization, to keep available the services of its current officers
and employees and to preserve existing relationships with licensors, licensees,
suppliers, contractors, distributors, customers and others having business
relationships with it to the end that their goodwill and ongoing businesses
shall be unimpaired at the date on which a majority of the board of directors
of the Company shall consist of designees or representatives of Parent.
Without limiting the generality of the foregoing, and except as otherwise
contemplated by this Agreement, or as required by law or contract existing on
the date hereof, prior to the date on which a majority of the board of
directors of the Company shall consist of designees or representatives of
Parent, neither the Company nor any of its subsidiaries shall, without the
prior written consent of Parent:
(a) (x) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock (except
(A) dividends and distributions by a direct or indirect wholly owned
subsidiary of the Company to its parent, (B) dividends and distributions
in the ordinary course of business by any other subsidiary to its parent
and (C) that the Company may continue the declaration and payment of
regular quarterly cash dividends not in excess of $0.01 per share on the
shares of Company Common Stock (with usual record and payment dates and in
accordance with its past dividend policy)), (y) split, combine or
reclassify any
68
of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (z), except for the redemption of the Rights and the
Series B Preferred Stock, purchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(b) authorize for issuance, issue, deliver, sell or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise), pledge or otherwise encumber any shares of its capital stock
or the capital stock of any of its subsidiaries, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities or any other securities or equity equivalents (including
without limitation stock appreciation rights) (other than (x) upon
exercise of options outstanding on the date hereof, as in effect on the
date hereof or as amended pursuant hereto, (y) in connection with any
employment agreements between the Company or any of its subsidiaries and
the employees thereof, as in effect on the date hereof, and in each case
subject to the provisions of Section 3.2 or 5.10 hereof, or (z) sales of
capital stock of any wholly owned
69
subsidiary of the Company to the Company or another wholly owned
subsidiary of the Company) provided, however, and not in limitation of the
foregoing, no additional equity securities or rights to purchase equity
securities will be granted after the date hereof;
(c) except as provided in Section 3.2 or 5.10 hereof, adopt or amend
any bonus, profit sharing, compensation, severance, termination, stock
option, stock appreciation right, pension, retirement, employment or other
employee benefit agreement, trust, plan or other arrangement for the
benefit or welfare of any director, officer or, except in the ordinary
course of business consistent with past practice with respect to employees
of the Company or any of its subsidiaries increase in any manner the
compensation or fringe benefits of any director, officer or, except in the
ordinary course of business consistent with past practice with respect to
employees of the Company or any of its subsidiaries or pay any benefit not
required by any existing agreement or place any assets in any trust for
the benefit of employees or directors of the Company or any of its
subsidiaries, other than contributions to the directors trust fund created
pursuant to the Advisory Directors Plan Trust Agreement in the ordinary
course of business and consistent with past practice; provided, however,
-------- -------
that notwithstanding the foregoing, any amendments required to be made to
the provisions of any employee pension plan which is intended to be
qualified under Section 401(a) of the Code in order to maintain such
qualified status may be made;
70
(d) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of any subsidiary not constituting an
inactive subsidiary of the Company;
(e) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of, or
by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof or
(y) any assets that are material, individually or in the aggregate, to the
Company and its subsidiaries taken as a whole, except purchases of
inventory in the ordinary course of business consistent with past
practice;
(f) sell, lease, license, mortgage or otherwise encumber or subject
to any Lien or otherwise dispose of any of its properties or assets,
except sales of (i) inventory in the ordinary course of business
consistent with past practice, (ii) properties or assets (A) with a value
of less than $10,000,000 individually but not more than $25,000,000 in the
aggregate, (B) that are currently being marketed or sold by the Company
pursuant to the Company's January 1994 restructuring plan to the extent
set forth in Section 5.1(f) of the Disclosure Schedule or (C) with respect
to which a definitive agreement has been entered into by the Company prior
to September 12, 1994 (provided that no material
--------
71
modification or amendment shall be made to any such agreements), (iii)
sales of accounts receivable in the ordinary course of business, (iv)
sales or pledges of accounts receivable, or mortgages of other property in
connection with certain financings or refinancings outside of the United
States, in an aggregate amount of such financings or refinancings not to
exceed $250 million, subject to the terms of any such refinanced debt not
becoming materially more restrictive to the Company and the Company paying
only market fees related thereto and (v) in connection with capital
expenditures permitted to be expended by the Company pursuant to Section
5.1(h);
(g) except in the ordinary course of business consistent with past
practice and except for (i) an increase in the amount of up to $300
million of the amount available or outstanding under the Amended and
Restated Credit Agreement dated as of August 16, 1994 between the Company
and Citibank, as amended and (ii) the refinancing of two issues of
industrial revenue bonds in an aggregate outstanding principal amount of
$40,000,000, subject in the case of (i) and (ii) to the terms of such
refinanced debt instruments not becoming materially more restrictive to
the Company and the Company paying only market fees related thereto, (y)
incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person (other than (A) guarantees by the Company
in favor of any of its wholly owned subsidiaries or by any of its
subsidiaries in
72
favor of the Company or (B) guarantees of subsidiaries or, in the ordinary
course of business, 50% owned affiliates of the Company, in an aggregate
amount not exceeding $10,000,000, on market terms (including fees)), issue
or sell any debt securities or warrants or other rights to acquire any
debt securities of the Company or any of its subsidiaries, guarantee any
debt securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in the ordinary
course of business consistent with past practice or (z) make any loans,
advances or capital contributions to, or investments in, any other person,
other than to the Company or any direct or indirect wholly owned
subsidiary of the Company;
(h) expend funds for capital expenditures other than in accordance
with the Company's current capital expenditure plans;
(i) waive, release, grant, or transfer any rights of value or modify
or change in any material respect any existing license, lease, contract or
other document, other than in the ordinary course of business consistent
with past practice;
(j) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation
73
or a dissolution, merger, consolidation, restructuring, recapitalization
or reorganization;
(k) enter into or amend any material collective bargaining
agreement, other than in the ordinary course of business;
(l) change any accounting principle used by it, unless required by
the SEC or the Financial Accounting Standards Board;
(m) make any tax election or settle or compromise any income tax
liability or file the 1994 federal income tax return prior to the last day
(including extensions) prescribed by law, in the case of any of the
foregoing, material to the business, financial condition or results of
operations of the Company and its subsidiaries taken as a whole;
(n) settle or compromise any litigation (whether or not commenced
prior to the date of this Agreement) or settle, pay or compromise any
claims not required to be paid, individually in an amount in excess of
$1,000,000 and in the aggregate in an amount in excess of $10,000,000,
other than in consultation and cooperation with Purchaser, and, with
respect to any such settlement, with the prior written consent of
Purchaser;
(o) take any action which would cause any debt securities of the
Company or any of its subsidiaries to no longer be listed on any national
securities exchange or registered pursuant to Section 13 or 15(d) of the
Exchange
74
Act, other than with respect to any such debt securities that have become
due as a result of the maturity thereof; or
(p) authorize any of, or commit or agree to take any of, the
foregoing actions.
Section 5.2 Conduct of Business of Purchaser. During the period
--------------------------------
from the date of this Agreement to the Effective Time, Purchaser shall not
engage in any activities of any nature except as provided in, or in connection
with the transactions contemplated by, this Agreement.
Section 5.3 No Solicitation. Except with respect to divestitures in
---------------
accordance with the Company's January 1994 restructuring plan, neither the
Company nor any of is subsidiaries shall, nor shall it or any of its
subsidiaries authorize or permit any of its officers, directors or employees or
any investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries to, (a) solicit,
initiate, encourage (including by way of furnishing information), or take any
other action to facilitate, any inquiry or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any acquisition or
purchase of a substantial amount of assets of, or any equity interest in, the
Company or any of its subsidiaries or any tender offer (including a self tender
offer) or exchange offer, merger, consolidation, business combination, sale of
substantially all assets, sale of securities, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries (other than the transactions contemplated by
75
this Agreement or the Conditional Purchase/Stock Option Agreement) or any other
transaction the consummation of which would or could reasonably be expected to
impede, interfere with, prevent or materially delay the Merger or the exercise
of the Conditional Purchase Right or which would or could reasonably be
expected to materially dilute the benefits to Purchaser of the transactions
contemplated hereby (collectively, "Transaction Proposals") or agree to or
endorse any Transaction Proposal or (b) enter into or participate in any
discussions or negotiations regarding any of the foregoing, or furnish to any
other person any information with respect to its business, properties or assets
or any of the foregoing, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing; provided, however, that the
-------- -------
foregoing clauses (a) and (b) shall not prohibit the Company from (i)
furnishing information pursuant to an appropriate confidentiality letter
concerning the Company and its businesses, properties or assets to a third
party who has made a Transaction Proposal, (ii) engaging in discussions or
negotiations with such a third party who has made a Transaction Proposal or
(iii) following receipt of a Transaction Proposal, taking and disclosing to its
shareholders a position contemplated by Rule 14e-2(a) under the Exchange Act or
changing the Recommendations, but in each case referred to in the foregoing
clauses (i) through (iii) only after the Board of Directors of the Company
concludes in good faith that such action is necessary or appropriate in order
for the Board of Directors
76
of the Company to act in a manner which is consistent with its fiduciary
obligations under applicable law. If the Board of Directors of the Company
receives a Transaction Proposal, then the Company shall promptly inform Parent
of the terms and conditions of such proposal and the identity of the person
making it and shall keep Parent generally informed with reasonable promptness
of any steps it is taking pursuant to the proviso of the first sentence with
respect to such Transaction Proposal.
Section 5.4 Access to Information. (a) The Company shall, and
---------------------
shall cause each of its subsidiaries to, afford to Purchaser and Parent and to
the officers, employees, counsel, financial advisors, environmental consultants
and other representatives of Purchaser and Parent ("Parent Representatives")
reasonable access during normal business hours during the period prior to the
Effective Time to all its properties, books, contracts, commitments, personnel
and records and, during such period, the Company shall, and shall cause each of
its subsidiaries to, furnish as promptly as practicable to Purchaser, Parent
and Parent Representatives such information concerning its business,
properties, financial conditions, operations and personnel as they may from
time to time reasonably request. Parent and Purchaser will hold, and will
cause the Parent Representatives to hold, any nonpublic information obtained
from the Company in confidence to the extent required by, and in accordance
with, the provisions of the letter dated August 1994, between Kohlberg Kravis
Roberts & Co. and the Company (the "Company Confidentiality Agreement"),
provided that
77
Parent and Purchaser may disclose any such nonpublic information to lenders or
potential lenders who are advised of the confidentiality of such information to
the extent necessary to satisfy the condition set forth in clause (iv) of the
first paragraph of Annex A hereto. The Company and Parent hereby agree that
the terms and provisions of the Company Confidentiality Agreement, other than
with respect to the use of Evaluation Material (as defined in the Company
Confidentiality Agreement), shall be superseded by this Agreement.
(b) Parent shall use its reasonable best efforts to make available
to the Company and to the officers, employees, counsel, financial advisors and
other representatives of the Company reasonable access during normal business
hours during the period prior to the Effective Time to all the properties,
books, contracts, commitments, personnel and records of Holdings and, during
such period, Parent shall use its reasonable best efforts to furnish as
promptly as practicable to the Company such information concerning the
business, properties, financial conditions, operations and personnel of
Holdings as the Company party may from time to time reasonably request. The
Company will hold, and will cause its directors, officers, partners, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, any nonpublic information obtained from Parent and Holdings
in confidence to the extent required by, and in accordance with, the provisions
of the letter dated September 11, 1994, between Holdings and the Company.
78
(c) No investigation pursuant to this Section 5.4 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
Section 5.5 Notification. Each of the Company, Parent and Purchaser
------------
will, in the event of, or promptly after obtaining knowledge of the occurrence
(or non-occurrence) or threatened occurrence (or non-occurrence) of, any fact
or event which would cause or constitute a material breach of or failure of any
of the representations and warranties, covenants or conditions set forth herein
or, in the case of the Company, would constitute or result in a Material
Adverse Effect, give notice thereof to each other party hereto and will use its
reasonable efforts to prevent or promptly to remedy such breach or satisfy such
conditions; provided, however, that the delivery of, or failure to deliver, any
-------- -------
notice pursuant to this Section 5.5 shall not limit or otherwise affect any
remedies available hereunder.
Section 5.6 Best Efforts. Upon the terms and subject to the
------------
conditions herein provided, each of the parties hereto agrees (subject to the
last sentence of Section 5.9 and to Section 8.3(f)) to use its 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 all things
necessary, proper or advisable under applicable laws and regulations to ensure
that the conditions set forth in Article 6 and Annex A are satisfied and to
consummate and make effective, in the most expeditious manner practicable, the
transactions
79
contemplated by this Agreement and the Conditional Purchase/Stock Option
Agreement, including, without limitation, using its best efforts to obtain all
necessary waivers, consents and approvals, and effecting all necessary
registrations and filings in accordance with Section 5.7. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of each
party to this Agreement shall take all such necessary action. The Company and
Parent and Purchaser will execute any additional instruments necessary to
consummate the transactions contemplated hereby.
Section 5.7 Certain Filings, Consents and Arrangements. Parent,
------------------------------------------
Purchaser and the Company will use their best efforts and cooperate with one
another (i) in promptly determining whether any filings are required to be made
or consents, approvals, permits or authorizations are required to be obtained
(or, which if not obtained, would result in an event of default, termination or
acceleration of any agreement) under any United States or foreign law or
regulation or from any Governmental Entity or third parties, including parties
to loan agreements, in connection with the transactions contemplated by this
Agreement, including the Offer and the Merger, and the Conditional
Purchase/Stock Option Agreement and (ii) subject to the last sentence of
Section 5.9 and to Section 8.3(f), in promptly making any such filings,
furnishing information required in connection therewith and in timely seeking
to obtain any such consents, approvals, permits or authorizations.
80
Section 5.8 Public Announcements. The initial press release with
--------------------
respect to the transactions contemplated hereby shall be mutually satisfactory
to the parties hereto and thereafter, except as may be required by applicable
laws, court process or by obligations pursuant to any listing agreement with a
national securities exchange, no party shall issue any press release or make
any public filings relating to the transactions contemplated by this Agreement,
including the Offer and the Merger, and the Conditional Purchase/Stock Option
Agreement, without affording the Company, on the one hand, and Parent, on the
other hand, the opportunity to review and comment upon such release or filing.
Section 5.9 Antitrust Filings and Divestitures. The Company and
----------------------------------
Parent shall, as promptly as practicable, file notification and report forms
under the HSR Act with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
make any other necessary filings with the applicable Government Entities
related to the transactions contemplated by this Agreement, including the Offer
and the Merger, and the Conditional Purchase/Stock Option Agreement and shall
use their best efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division or such other Governmental
Entities for additional information or documentation. Provided that following
receipt of such approvals Purchaser (or one of its affiliates) acquires at
least 28,138,000 Shares pursuant to the Offer and/or the Conditional
Purchase/Stock Option Agreement, the
81
Company agrees to make any and all divestitures or undertakings required by the
FTC, the Antitrust Division or any other applicable Governmental Entity in
connection with the transactions contemplated by this Agreement and the
Conditional Purchase/Stock Option Agreement, which divestitures in each case
shall be reasonably acceptable to Parent and Purchaser.
Section 5.10 Employee Benefits.
-----------------
(a) Prior to the occurrence of a "Change in Control" as defined in
the Supplemental Benefit Trust Agreement between the Company and Wachovia Bank
of North Carolina, N.A. (the "Trust Agreement"), the Company shall take all
such action as may be necessary so that no funding of the Trust created
thereunder shall occur as a result of the transactions contemplated by this
Agreement. The Trust Agreement shall be amended prior to a Change in Control
to permit the disposition of all Common Shares it holds. The Company may amend
the plans listed in Section 5.10(a) of the Disclosure Schedule that would have
been required to be funded pursuant to the terms of the Trust Agreement in a
manner which provides for a lump-sum distribution to, but does not result in
the constructive receipt of compensation by, a covered employee of his or her
deferred compensation thereunder in the event of the involuntary termination or
normal retirement (under the Employees Retirement Income Plan) of such
employee.
(b) Prior to the Effective Time, Purchaser shall not request that
the Company cancel, and the Company shall be under no obligation to cancel, the
CORE Management Arrangements. For this purpose, "CORE Management Arrangements"
mean those
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agreements between the Company and the executives so designated by the Company
and disclosed in Section 5.10(b) of the Disclosure Schedule which provide for
certain payments and benefits in the event of certain terminations of
employment.
(c) The Purchaser (or its affiliate) shall continue the Company's
Non-Exempt Associate Assistance Program and Exempt Associate Assistance
Program, on terms no less favorable than the terms in existence on the date
hereof, for the one-year period following the Effective Time. The Company
shall maintain, for the two-year period following the Effective Time, employee
plans and programs which are substantially similar in the aggregate to those
pension and welfare plans maintained for employees of the Company generally.
(d) Neither the Company nor any of its affiliates shall accelerate
the payment of any deferred award under any bonus plan or arrangement nor award
or pay any pro rata awards thereunder as a result, or in anticipation, of the
transactions contemplated by this Agreement; provided that the Company may pay
the 1994 annual bonuses pursuant to its Management Incentive Plan or other
similar annual bonus plan in a manner which is consistent with past practice
and the achievement of goals set forth therein.
(e) The Company shall ensure that no prohibited transaction (within
the meaning of Section 406 of ERISA or 4975 of the Code) shall occur with
respect to any Company Plan as a result of the transactions contemplated by
this Agreement.
83
(f) With respect to any of the eleven individuals listed in Section
5.10(f) of the Disclosure Schedule, in lieu of any other severance arrangement
for such individual, the Company shall pay such individual in the event of that
individual's termination by the Company after a "Change in Control" without
"Cause" (as those terms are defined in the Core Management Agreements referred
to in Section 5.10(b)) a cash severance amount equal to twelve months of
salary. The special severance payments set forth in this Section 5.10(f) shall
no longer be applicable when twelve (eighteen for that individual next to whose
name an asterisk appears in Section 5.10(f) of the Disclosure Schedule) months
have elapsed after the Change in Control. For any executive listed on Schedule
5.10(g), such executive's letter of employment shall be modified so that a
termination without cause prior to the second anniversary of a Change in
Control (as defined in such letters) shall include a termination by the
executive due to the occurrence of any one of the following events without his
advance consent:
i. the executive's office is relocated to a different city;
ii. the executive's base salary is reduced or executive's bonus
opportunity is materially lower than other Company executives of
comparable rank;
iii. there is a material diminution in the nature or scope of the
authority or responsibilities attached to the executive's
position. A diminution in nature or scope of authority or
responsibilities will not be deemed to occur simply because the
company or business in which the executive is engaged has
changed in size or structure; or
iv. in the case of the executive next to whose name a double
asterisk appears in Section 5.10(g) of the
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Disclosure Schedule, the business (either separately or as part
of a larger business unit) in which the executive is engaged is
sold or otherwise disposed of.
Section 5.11 Indemnification and Insurance. (a) The Certificate of
-----------------------------
Incorporation and By-laws of the Surviving Corporation shall contain provisions
identical with respect to elimination of personal liability and indemnification
to those set forth in Articles VI and VII of the Restated Certificate of
Incorporation set forth in Exhibit A hereto and Article X of the By-laws of the
Company, respectively, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were directors, officers, agents or employees of the
Company.
(b) Surviving Corporation shall maintain in effect for six years
from the Effective Time policies of directors' and officers' liability
insurance containing terms and conditions which are not less advantageous than
those policies maintained by the Company at the date hereof, with respect to
matters occurring prior to the Effective Time, to the extent available, and
having the maximum available coverage under the current policies of directors
and officers' liability insurance; provided that the Surviving Corporation
shall not be required to spend in excess of a $3,000,000 annual premium
therefor; provided further that if the Surviving Corporation would be required
to spend in excess of a $3,000,000 premium per annum to obtain insurance having
the maximum available coverage under the current policies, the
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Surviving Corporation will be required to spend $3,000,000 to maintain or
procure insurance coverage pursuant hereto, subject to availability of such (or
similar) coverage.
(c) In furtherance of and not in limitation of the preceding
paragraph, Parent and Purchaser agree that the officers and directors of the
Company that are defendants in all litigation commenced by shareholders of the
Company with respect to (x) the performance of their duties as such officers
and/or directors under federal or state law (including litigation under federal
and state securities laws) and (y) Purchaser's offer or proposal to acquire the
Company including, without limitation, any and all such litigation commenced on
or after the date of the Letter Agreement (as defined herein) (the "Subject
Litigation") shall be entitled to be represented, at the reasonable expense of
the Company, in the Subject Litigation by one counsel (and New Jersey counsel
if appropriate and one local counsel in each jurisdiction in which a case is
pending) each of which such counsel shall be selected by a plurality of such
director defendants; provided that neither the Company nor the Surviving
Corporation nor Parent shall be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld) and
that a condition to the indemnification payments provided in paragraph 5.11(a)
shall be that such officer/director defendant not have settled any Subject
Litigation without the consent of Parent or the Surviving Corporation; and
provided further that the Surviving Corporation and Parent shall have no
obligation hereunder to any
86
officer/director defendant when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and non-
appealable, that indemnification of such officer/director defendant in the
manner contemplated hereby is prohibited by applicable law.
Section 5.12 Redemption of Series B Preferred Stock. Without
--------------------------------------
limiting the conditions to the Offer set forth in Annex A hereto and provided
that the Minimum Condition is satisfied without having been waived or lowered,
the Company will, promptly after consummation of the Offer, in the manner and
to the extent permitted by the Charter, redeem all of its outstanding shares of
Series B Preferred Stock prior to any record date in connection with the Merger
at the amount provided for redemption in the Charter, and the Company agrees,
subject to first obtaining any required approvals under its debt instruments or
other agreements to which the Company is subject, promptly to commence taking
all steps necessary to effect such redemptions.
Section 5.13 Certain Agreements. Neither the Company nor any
------------------
subsidiary will waive any provision of any confidentiality or standstill or
similar agreement to which it is a party without the prior written consent of
Parent, unless the board of directors of the Company or such subsidiary
concludes in good faith that waiving such provision is necessary or appropriate
in order for the Board of Directors of the Company to act in a manner which is
consistent with its fiduciary obligations under applicable law.
87
Section 5.14 Redemption of Rights. The Company will redeem all
--------------------
outstanding Rights at a redemption price of one and two-thirds cents per Right
effective immediately prior to the acceptance for exchange of any Shares
pursuant to the Offer, provided that the Minimum Condition will be satisfied in
the Offer. The Company will amend the Rights Agreement in accordance with
Section 4.1(o) hereof prior to the acceptance for payment of any Shares
pursuant to the Offer if the Minimum Condition is waived to permit only such
purchase of Shares. The Company and Parent hereby agree that if the Company
amends any provision of the Rights Agreement in connection with a Transaction
Proposal or with respect to any Person (as defined in Section 7.1(f)) or if the
application of the Rights Agreement or any provision thereof is enjoined with
respect to any Person or Transaction Proposal or if the Company agrees to
redeem the Rights on terms more favorable than the terms set forth with respect
to Parent and Purchaser in this Agreement (any of such events, a "Third Party
Rights Amendment") in a manner that makes such Third Party Rights Amendment
less restrictive with respect to such Person, or in connection with such
Transaction Proposal, or is otherwise more favorable with respect to such
Person, or in connection with such Transaction Proposal, than the Rights
Agreement as then in effect with respect to Parent and Purchaser, the Company
shall be deemed (if and to the extent possible and without derogating the
obligations of the Company pursuant to the next sentence), without the
necessity of any action by the Company or the Rights Agent, to have so amended
the Rights Agreement with respect to
88
Parent and Purchaser to the same extent or to have agreed to redeem the Rights
with respect to Parent and Purchaser on terms as favorable. The Company agrees
to notify Parent promptly of any Third Party Rights Amendment and
simultaneously with the execution of the Third Party Rights Amendment to
execute a written amendment to the Rights Agreement with respect to the
foregoing.
Section 5.15 Affiliates and Certain Stockholders. Prior to the
-----------------------------------
Closing Date, the Company shall deliver to Parent a letter identifying all
persons who are, at the time the Merger is submitted for approval to the
shareholders of the Company, "affiliates" of the Company for purposes of Rule
145 under the Securities Act. The Company shall use its reasonable best
efforts to cause each such person to deliver to Parent on or prior to the
Closing Date a written agreement substantially in the form attached as Exhibit
B hereto. Parent shall not be required to cause Holdings to maintain the
effectiveness of the Form S-4 or any other registration statement under the
Securities Act for the purposes of resale of Holdings Common Stock by such
affiliates and the certificates representing Holdings Common Stock received by
such affiliates in the Merger shall bear a customary legend regarding
applicable Securities Act restrictions and the provisions of this Section 5.15.
Section 5.16 Proxy Solicitation For Shareholders' Meeting. If
--------------------------------------------
approval of the Company's shareholders is required by applicable law in order
to consummate the Merger, the Company, Purchaser and Parent agree that, if the
Company or Parent is
89
advised by its respective or joint proxy solicitors prior to the Shareholders'
Meeting that a vote in favor of the Merger is not likely to be obtained at the
Shareholders' Meeting, the Shareholders' Meeting shall, at the request of the
Independent Directors, be adjourned from time to time, provided that in no
event will the Shareholders' Meeting be required hereunder to be held more than
sixty days from the date that the Proxy Statement was first mailed to the
Company's shareholders, which sixty day period shall be extended by the number
of days, if any, that the Company or Parent is enjoined from soliciting proxies
for the Merger in connection with the Shareholders' Meeting or that the holding
of the Shareholders Meeting or the vote thereat is enjoined.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions to Each Party's Obligations to Effect the
----------------------------------------------------
Merger. The respective obligation of each party to effect the Merger is
------
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) If required by New Jersey law or the Charter, the Company
Shareholder Approval shall have been obtained;
(b) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired;
(c) Shares shall have been purchased pursuant to the Offer;
(d) The Form S-4 shall have become effective, and any required post-
effective amendment shall have become
90
effective, under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order, and any material "blue
sky" and other state securities laws applicable to the registration of the
Holdings Common Stock to be exchanged for Common Stock shall have been
complied with; and
(e) no statute, rule, regulation, executive order, decree, or
injunction shall have been enacted, entered, promulgated or enforced by
any Governmental Entity which prohibits the consummation of the Merger,
whether temporary, preliminary or permanent; provided, however, that the
-------- -------
parties hereto shall use their best efforts to have any such order, decree
or injunction vacated.
Section 6.2 Conditions to Obligation of the Company. If fewer than
---------------------------------------
66 2/3% of the Shares outstanding on a fully diluted basis (other than dilution
due to the Rights) shall have been accepted for exchange in the Offer, the
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) The representation and warranty of Purchaser and Parent set
forth in Section 4.2(i) of this Agreement shall be true and correct, as of
the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date.
Section 6.3 Conditions to Obligations of Purchaser and Parent to
----------------------------------------------------
Effect the Merger. If fewer than 66 2/3% of the Shares
-----------------
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outstanding on a fully diluted basis (other than dilution due to the Rights)
shall have been accepted for exchange in the Offer, the obligations of
Purchaser and Parent to effect the Merger are further subject to the
satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) The representation and warranty of the Company set forth in
Section 4.1(g) of this Agreement shall be true and correct, as of the date
of this Agreement and as of the Closing Date as though made on and as of
the Closing Date;
(b) The Company shall have performed in all material respects the
affirmative covenants required to be performed by it under Sections 5.1
(except to the extent the same would not cause a Material Adverse Effect
with resect to the Company), 5.9, 5.12 and 5.14 of this Agreement at or
prior to the Closing Date;
(c) The representation and warranty of the Company set forth in
Section 4.1(e) of this Agreement, applied mutatis mutandis to the SEC
------- --------
Documents filed by the Company with the SEC since the date of the
Agreement, shall be true and correct in all material respects as of the
Closing Date as though made on and as of the Closing Date.
Notwithstanding the foregoing, the obligations of the Company or Purchaser and
Parent to effect the Merger are not subject to the satisfaction or waiver of
any of the conditions set forth in this Section 6.2 or 6.3 to the extent that
the failure of any such condition to be satisfied is the result of any action
approved by a majority of those directors of the Company who are designees or
92
representatives of Parent or to the extent the same results from affirmative
action taken by the Company with the knowledge of the board of directors while
a majority of the directors of the Company consists of persons designated or
elected by Parent.
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
Section 7.1 Termination. This Agreement may be terminated and the
-----------
Merger contemplated hereby may be abandoned at any time, notwithstanding
approval thereof by the shareholders of the Company, but prior to the Effective
Time:
(a) by mutual written consent of Parent, Purchaser and the Company;
(b) by Parent or the Company, if any court of competent jurisdiction
or other governmental body located or having jurisdiction within the
United States or any country or economic region in which either the
Company or Parent, directly or indirectly, has material assets or
operations, shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting
the Merger and such order, decree, ruling or other action shall have
become final and nonappealable;
(c) by Parent if due to an occurrence or circumstance which would
result in a failure to satisfy any of the conditions to the Offer set
forth in Annex A hereto Purchaser shall have terminated the Offer, unless
such termination shall have been caused by or resulted from the failure of
Parent or Purchaser to perform in any material
93
respect their material covenants and agreements contained in this
Agreement.
(d) by Parent, if the Company shall have modified or amended in any
respect materially adverse to Parent or Purchaser or withdrawn its
approval or recommendation of the Offer, the Merger or this Agreement,
provided that any communication that advises that the Company has received
--------
a Transaction Proposal or is engaging in an activity permitted by clauses
(i) or (ii) of the proviso to the first sentence of Section 5.3 hereof
with respect to a Transaction Proposal and that takes no action or
position with respect to the Offer, the Merger, this Agreement or any
Transaction Proposal shall not be deemed to be a withdrawal, modification
or amendment of the Company's approval or recommendation of the Offer, the
Merger or this Agreement and provided, further, that a "stop-look-and-
-------- -------
listen" communication with respect to the Offer, the Merger or this
Agreement of the nature contemplated in Rule 14d-9(e) under the Exchange
Act made by the Company as a result of a Transaction Proposal (whether or
not a tender offer), without more, shall not be deemed to be a
modification or amendment of the Company's approval or recommendation of
the Offer, the Merger or this Agreement that is materially adverse to
Parent or Purchaser, if within 10 business days after the date of such
communication the Company shall have reaffirmed its recommendation of the
Offer, the Merger and this Agreement;
94
(e) by Parent if the Company shall have (i) entered into any definitive
agreement to effect the transaction contemplated by a Transaction Proposal,
(ii) recommended any Transaction Proposal from a person other than Parent or
Purchaser or any of its affiliates or (iii) resolved to do any of the
foregoing;
(f) by Parent, if any corporation (including the Company or any of
its subsidiaries), partnership, person, other entity or group (as defined
in Section 13(d)(3) of the Exchange Act) other than Parent or any of its
subsidiaries (collectively, "Persons") shall have become the beneficial
owner of more than 35% of the outstanding Shares (excluding any dilution
due to the Rights)(an "Alternative Acquisition");
(g) by the Company if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any of the conditions set forth in
Annex A hereto Purchaser shall have terminated the Offer, unless such
termination shall have been caused by or resulted from the failure of the
Company to perform in any material respect its material covenants and
agreements contained in this Agreement or (ii) prior to the purchase of
Shares pursuant to the Offer, any person shall have made a bona fide
Transaction Proposal (A) that the Board of Directors of the Company
determines in its good faith judgement is more favorable to the Company's
shareholders than the Offer and the Merger and (B) as a result of which
the Board of Directors concludes in good
95
faith that termination of this Agreement is necessary or appropriate in
order for the Board of Directors to act in a manner which is consistent
with its fiduciary obligations under applicable law, provided that such
--------
termination under this clause (ii) shall not be effective until payment of
the full fee and expense reimbursement required by Section 8.3(b) hereof;
(h) by Parent or the Company if, without fault of the terminating
party, the Effective Time shall not have occurred on or before June 30,
1995 (provided, that the right to terminate this Agreement under this
--------
Section 7.1(h) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
results in, the failure of the Merger to have been consummated within such
period);
(i) by the Company if (i) on or after December 15, 1994, the
termination date of the waiver granted to the Company of the provisions of
Subsection 6.01(j)(iii) of the Credit Agreement dated as of August 16,
1994 among the Company and the banks party thereto (the "Credit
Agreement") shall not then extend past December 15, 1994 and (ii) the
Company (A) shall have received written notice from the Administrative
Agent (as defined in the Credit Agreement) pursuant to the terms of the
Credit Agreement that, as a result of the applicability of the provisions
of Subsection 6.01(j)(iii) of the Credit Agreement, all amounts payable
under the Credit Agreement and the other Loan Documents (as
96
defined in the Credit Agreement) shall have become and be forthwith due
and payable (and provided that this Agreement shall be deemed to be
terminated hereby without any further action by any party immediately
prior to the receipt by the Company of such notice), (B) shall have been
advised in writing by the Administrative Agent that, as a result of the
provisions of Subsection 6.01(j)(iii) of the Credit Agreement, the
Required Banks (as defined in the Credit Agreement) have requested or
consented to such action or (C) the Company shall reasonably believe
either such action referred to in (A) or (B) above to be imminent based on
communications with the Administrative Agent, any of the banks party to
the Credit Agreement or representatives thereof; or
(j) by Parent or the Company if any required approval of the
shareholders of the Company shall not have been obtained by reason of the
failure to obtain the required vote upon a vote held at a duly held
meeting of shareholders or at any adjournment thereof.
Section 7.2 Effect of Termination. In the event of the termination
---------------------
and abandonment of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party or its directors, officers or shareholders, other than the provisions
of this Section 7.2, Section 1.3(a), Section 2.8(c), Section 4.1(j), the last
sentences of Sections 5.4(a) and (b), Section 5.14, Section 8.1 and Section
8.3. Nothing contained in this Section
97
shall relieve any party from liability for any breach of the covenants or
agreements contained in this Agreement.
Section 7.3 Amendment. Subject to Section 1.3(c), this Agreement
---------
may be amended or supplemented at any time before or after the date on which a
majority of the board of directors of the Company shall consist of designees or
representatives of Parent but, after such date, no amendment shall be made
which decreases or increases the Final Exchange Ratio or which adversely
affects the rights of the Company's shareholders hereunder without the approval
of the Company and such shareholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of the parties.
Section 7.4 Extension; Waiver. Subject to Section 1.3(c), at any
-----------------
time prior to the Effective Time, the parties may (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein of the other parties hereto or in any document, certificate or
writing delivered pursuant hereto or (iii) waive compliance by the other
parties hereto with any of the agreements or conditions contained herein. 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. The failure of any party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
98
ARTICLE 8
MISCELLANEOUS
Section 8.1 Non-Survival of Representations and Warranties. Except
----------------------------------------------
for Section 2.8(c) and 4.1(j), the representations and warranties made herein
shall not survive beyond the Effective Time or a termination of this Agreement.
Section 8.2 Entire Agreement; Assignment. This Agreement and the
----------------------------
other agreements (other than the Letter Agreement (as defined below) which has
been superseded by this Agreement except to the extent the terms of the Letter
Agreement are expressly referred to herein) referred to herein (a) constitute
the entire agreement among the parties with respect to the subject matter
hereof and, except as provided herein, supersede all other prior agreements and
understandings, both written and oral, between the parties or any of them with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise, provided that Parent may assign its rights and obligations
or those of Purchaser, and Purchaser may assign its rights and obligations, to
Parent or to any direct or indirect wholly owned subsidiary of Parent, but no
such assignment shall relieve Parent or Purchaser, as the case may be, of its
obligations hereunder if such assignee does not perform such obligations.
Section 8.3 Fees and Expenses. (a) The Company shall promptly, but
-----------------
in no event later than two business days following written notice thereof,
together with related bills or receipts, reimburse Parent and Purchaser for all
of their Expenses (as
99
defined below) as incurred from time to time in an aggregate amount of up to
$15,000,000, against which aggregate amount Expenses actually reimbursed (other
than the fee in the amount of $20,000,000 (the "Initial Advisory Fee")
reimbursed by the Company upon the execution of that certain letter agreement
dated September 11, 1994 between Parent and the Company (the "Letter
Agreement")) under the Letter Agreement may be credited. For purposes of this
Section 8.3, "Expenses" shall include all out-of-pocket expenses and fees
including the fees and disbursements of counsel, financial printers, experts,
consultants and accountants, as well as all fees and expenses payable to
investment banking firms and other financial institutions and their respective
agents and counsel, whether incurred prior to, on or after the date hereof,
incurred in connection with the transactions contemplated by this Agreement,
the Letter Agreement and the Conditional Purchase/Stock Option Agreement. The
parties acknowledge that the reimbursement of the Initial Advisory Fee shall
not limit the reimbursement of any additional advisory fees paid by Parent or
Purchaser to non-affiliates of Purchaser.
(b) If (i) (x) prior to termination of this Agreement, any Person
shall have commenced, publicly proposed or communicated to the Company a
Transaction Proposal (a "Pre-Termination Transaction Proposal") (y) this
Agreement is terminated pursuant to Section 7.1 and (z) on or prior to June
30, 1996, any Person who commenced, publicly proposed or communicated to the
Company a Pre-Termination Transaction Proposal enters into any definitive
agreement to effect the
100
transaction contemplated by such Transaction Proposal (whether or not related
to such Pre-Termination Transaction Proposal) or effects an Alternative
Acquisition; or (ii) prior to the purchase of Shares pursuant to the Offer,
this Agreement is terminated pursuant to Section 7.1(d) (other than solely in
the event that the average of the closing sales prices of the Holdings Common
Stock as reported on the New York Stock Exchange Composite Tape for the
Valuation Period is less than the price per share that would yield an Exchange
Ratio of 2.375 or less without giving effect to the proviso in the definition
of Exchange Ratio) or (iii) prior to the purchase of Shares pursuant to the
Offer, this Agreement is terminated pursuant to Section 7.1(e), 7.1(f) or
clause (ii) of Section 7.1(g); then in each case the Company shall promptly,
but in no event later than one business day after the first of such events
shall occur, pay Kohlberg Kravis Roberts & Co. ("KKR & Co.") a fee of
$30,000,000 in cash, which amount shall be payable in same day funds. No more
than $30,000,000 in aggregate shall be payable to KKR & Co. pursuant to this
Section 8.3(b), and no fee shall be payable to KKR & Co. pursuant to this
Section 8.3(b) if $30,000,000 has been paid to KKR & Co. pursuant to Section
8.3(c).
(c) If Parent, together with any subsidiary or affiliate of Parent
including Purchaser) shall acquire beneficial ownership (in one or more
transactions) of a majority of the outstanding shares of Common Stock, then the
Company shall promptly, but in no event later than one business day after such
event shall occur, pay KKR & Co. a fee of $30,000,000 in cash,
which amount shall be payable in same day funds. No fee shall be payable to
KKR & Co. pursuant to this Section 8.3(c) if $30,000,000 has been paid to KKR
& Co. pursuant to Section 8.3(b).
(d) If the fee of $30,000,000 in cash required to be paid by the
Company to KKR & Co. pursuant to Section 8.3(b) or 8.3(c) hereof (the
"Transaction Fee") is not paid within five business days after the events set
forth in such Sections requiring payment of the Transaction Fee occur, KKR &
Co., at its sole option, may demand (the "Fee Demand") that the Company tender
to KKR & Co., immediately in satisfaction of the Transaction Fee, such number
of shares (rounded to the nearest whole share) of (i) Common Stock ((A) if it
is publicly traded and (B) which at the request of KKR & Co. shall be issued in
shares of treasury stock, if available) or (ii), at the sole option of KKR &
Co. if the Conditional Purchase Right shall have been exercised, and the
Company shall at the time own Holdings Common Stock that is not subject to any
other call or exchange right, Holdings Common Stock equal to (x) $30,000,000
divided by (y) the Average Market Price. For purposes of this Section 8.3(d)
"Average Market Price" shall mean the average of the average of the high and
low prices of Common Stock, or Holdings Common Stock, as the case may be, as
reported on the New York Stock Exchange Composite Tape on each of the ten
consecutive trading days immediately preceding the second trading day prior to
the Fee Demand. The Company acknowledges that it is obligated hereunder to pay
the Transaction Fee in cash and that such
102
obligation is not derogated in any respect by the existence of the option of
KKR & Co. to seek satisfaction of such obligation by means of the Fee Demand.
(e) In addition to the other provisions of this Section 8.3, the
Company agrees promptly, but in no event later than two business days following
written notice thereof, together with related bills or receipts, to reimburse
KKR & Co., Parent and Purchaser for all reasonable out-of-pocket costs, fees
and expenses, including, without limitation, the reasonable fees and
disbursements of counsel and the expenses of litigation, incurred in connection
with collecting Expenses and the Transaction Fee as a result of any willful
breach by the Company of its obligations under Section 8.3.
(f) Except as otherwise provided in this Section 8.3, whether or not
the Merger is consummated, all costs and expenses incurred in connection with
the transactions contemplated by this Agreement and the Conditional
Purchase/Stock Option Agreement shall be paid by the party incurring such
expenses (including, in the case of the Company, the costs of printing the
Schedule 14D-9 and any other filings to be printed, and in each case all
exhibits, amendments or supplements thereto). Notwithstanding the foregoing,
the costs and expenses of preparing and distributing the Proxy Statement and
obtaining and complying with the antitrust requirements of any Governmental
Entity shall be paid by the Company.
Section 8.4 Definitions. For purposes of this Agreement:
-----------
103
(a) an "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, such first person;
(b) "Material Adverse Change" or "Material Adverse Effect" means,
when used in connection with any person, any change or effect that either
individually or in the aggregate with all other such changes or effects is
materially adverse to the business, financial condition or results of
operations of such person and its subsidiaries taken as a whole or
adversely effects the ability of such person to consummate the
transactions contemplated by this Agreement in any material respect;
(c) "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
and
(d) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board
of directors or other governing body (or, if there are no such voting
interests, more than 50% of the equity interests of which) are owned
directly or indirectly by such first person and includes, in addition,
with respect to the Company, BCPO and Borden Chemicals and Plastics
Limited Partnership ("BCPLP"). Notwithstanding anything to the contrary
contained herein,
104
neither BCPO nor BCPLP shall be a "subsidiary" for the purposes of Article
V hereof.
Section 8.5 Gains and Transfer Taxes. Any liability with respect to
------------------------
the transfer of the property of the Company arising out of the New York State
Real Property Gains Tax, the New York State Real Estate Transfer Tax or the New
York City Real Property Transfer Tax shall be borne by the Company and
expressly shall not be the liability of the shareholders of the Company.
Section 8.6 Interpretation. When a reference is made in this
--------------
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
Section 8.7 Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto, and, with respect to
the provisions of Section 5.11 and 8.3, shall inure to the benefit of the
persons or entities benefitting from the provisions thereof who are intended to
be third-party beneficiaries thereof. Except as provided in the preceding
sentence, nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
105
Section 8.8 Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if so given) by delivery, telegram
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered
to the respective parties at the following addresses:
If to Parent or Purchaser:
c/o Kohlberg Kravis Roberts & Co.
9 West 57th St.
New York, New York 10019
Attention: Clifton S. Robbins
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin
if to the Company:
180 East Broad Street
Columbus, Ohio 43215
Attention: Frank J. Tasco
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Andrew R. Brownstein, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 8.9 Non-Recourse. Notwithstanding anything that may be
------------
expressed or implied in this Agreement, Parent
106
covenants, agrees and acknowledges and the Company, by its acceptance of the
benefits of this Agreement, covenants, agrees and acknowledges that
notwithstanding that Parent is a partnership no recourse under this Agreement
or the Conditional Purchase/Stock Option Agreement or any documents or
instruments delivered in connection with this Agreement or the Conditional
Purchase/Stock Option Agreement shall be had against any officer, agent or
employee of Parent or against any partner of Parent or any director, officer,
employee, partner, affiliate or assignee of any of the foregoing, whether by
the enforcement of any assessment or by any legal or equitable proceeding, or
by virtue of any statute, regulation or other applicable law, it being
expressly agreed and acknowledged that no personal liability whatsoever shall
attach to, be imposed on or otherwise be incurred by an officer, agent or
employee of Parent or any partner of Parent or any director, officer, employee,
partner, affiliate or assignee of any of the foregoing, as such for any
obligations of Parent under the Agreement or any documents or instruments
delivered in connection with this Agreement or the Conditional Purchase/Stock
Option Agreement or for any claim based on, in respect of or by reason of such
obligations or their creation; provided, however, that the foregoing limitation
-------- -------
of liability shall in no way constitute a limitation on the rights of the
Company to enforce any remedies it may have against the undistributed assets of
Parent for the collection of any obligations or liabilities in connection with
this Agreement or the Conditional Purchase/Stock Option Agreement.
107
Section 8.10 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New Jersey, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
Section 8.11 Enforcement. The parties agree that irreparable damage
-----------
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New Jersey or the City of New York, this being in
addition to any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of (i) the United States District Court for the District
of New Jersey and the United States District Court for the Southern District of
New York in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement to the extent such courts would
have subject matter jurisdiction with respect to such dispute and (ii) the
courts of the State of New Jersey and the State of New York otherwise, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction or
venue by motion or other request for leave from any such court and (c) agrees
that it will not bring any action relating to this Agreement or any of the
transactions contemplated by this
108
Agreement in any court other than such courts sitting in the State of
New Jersey or the State of New York.
Section 8.12 Descriptive Headings. The descriptive headings used
--------------------
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 8.13 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 8.14 Severability. Whenever possible, each provision or
------------
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid,
109
illegal or unenforceable provision or portion of any provision
had never been contained herein.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the day and year first above written.
WHITEHALL ASSOCIATES, L.P.
By: KKR Associates, a limited
partnership, its General
Partner
By: /s/ Henry Kravis
------------------------------
Title: General Partner
BORDEN ACQUISITION CORP.
By: /s/ Clifton S. Robbins
------------------------------
Name: Clifton S. Robbins
Title: President
BORDEN, INC.
By: /s/ Allan L. Miller
------------------------------
Name: Allan L. Miller
Title: Senior Vice President,
Chief Administrative
Officer and General
Counsel
ANNEX A
-------
The capitalized terms used herein have the meanings set forth in the Agreement
and Plan of Merger (the "Agreement") to
which this Annex A is attached.
----------------------------------------------------------------
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for exchange, exchange or deliver any shares of Holdings
Common Stock for, subject to Rule 14e-1(c) under the Exchange Act, any Shares
tendered and may terminate or (subject to the terms of the Merger Agreement)
amend the Offer or may postpone the acceptance for exchange of the Shares
tendered, if immediately before acceptance for exchange of any such Shares
(whether or not any Shares have theretofore been accepted for exchange pursuant
to the Offer): (i) there shall not have been validly tendered and not properly
withdrawn pursuant to the Offer a number of Shares which, when added to any
Shares previously acquired by Parent or Purchaser (other than pursuant to the
Conditional Purchase Right) represent more than 41% of the Shares outstanding
on a fully diluted basis (other than dilution due to the Rights) (the "Minimum
Condition"); (ii) any waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall not have expired or been
terminated or the requisite approvals, authorizations or consents required by
the Investment Canada Act, Canada's Competition Act and the European Community
shall not have been obtained; (iii) the obtaining of all consents and waivers
on terms satisfactory to Parent necessary in order that the consummation of the
transactions contemplated by the Agreement and the Conditional Purchase/Stock
Option Agreement not constitute (A) an event of default or an event which with
or without notice or the passage of time would constitute an event of default
under any indebtedness, partnership agreement or equityholders agreement of the
Company or any subsidiary (or Borden Chemicals and Plastics Limited
Partnership, Borden Chemicals and Plastics Operating Limited Partnership and
T.M. Investors Limited Partnership) ("Indebtedness"), including, without
limitation, the Company's Amended and Restated Credit Agreement dated as of
August 16, 1994 with Citibank, N.A. as Administrative Agent and T.M. Investors
Limited Partnership's Amended and Restated Credit Agreement dated as of
August 16, 1994 with Citibank, N.A. as Administrative Agent, or (B) an event
which would individually or in combination with other events give rise to an
obligation on the part of the Company to repay or repurchase any Indebtedness,
partnership interest or equity interest, which event of default or other event
described in clause (A) or (B) above would give rise to, with or without notice
or the passage of time and taking into account any cross-acceleration or cross-
default provisions, the obligation to repay prior to maturity or the
acceleration of an aggregate of at least $25 million of Indebtedness or other
obligations; (iv) the Company shall not have refinanced, or
2
received commitments for refinancing or indications satisfactory to Parent from
lenders that it will be able to refinance, in each case on market terms
reasonably acceptable to Parent, the principal bank credit facilities of the
Company and TMI, provided that such refinancing shall not be required to
increase the available lines of credit under such facilities except to meet the
working capital and other reasonable needs of the Company and its subsidiaries
and shall principally be related to extending maturities and renegotiating
repayment schedules under such facilities as appropriate to meet the business
plan as determined by Parent and the Company; (v) the Form S-4 and any required
post-effective amendment shall not have become effective, under the Securities
Act and shall be the subject of any stop order or proceedings seeking a stop
order, and any material "blue sky" and other state securities laws applicable
to the registration of the Holdings Common Stock to be exchanged for Common
Stock shall not have been complied with; or (vi) any of the following shall
occur and remain in effect and shall, in the reasonable judgment of Purchaser
in any such case, make it inadvisable to proceed with the Offer or such
acceptance for exchange of any of the Shares or to proceed with the Merger:
(a) (i) any representation or warranty of the Company in the
Agreement shall have been untrue as of the date of the Agreement and shall
continue to be untrue, which untrue representations or warranties, in the
aggregate, would have a Material Adverse Effect on the Company; or there has
been a breach by the Company of any covenant or agreement set forth in the
Agreement or the Conditional Purchase/Stock Option Agreement having a Material
Adverse Effect on the Company which has not been cured; (ii) the SEC Documents
filed by the Company with the SEC since the date of the Agreement did not
comply in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and the SEC Documents
(including any and all financial statements included therein), except to the
extent revised or superseded by a subsequent filing with the SEC, as of such
dates contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; or (iii) the consolidated financial statements of the Company
included in the SEC Documents filed since the date of the Agreement did not
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were not prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited consolidated quarterly statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and did not
fairly present the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
3
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited quarterly statements, to normal year-end audit adjustments).
(b) there shall be any United states or foreign statute, rule,
regulation, decree, order or injunction promulgated, enacted, entered into or
enforced by any Governmental Entity, that (i) restrains or prohibits the making
or consummation of the Offer or the Merger or restrains or prohibits the
performance of this Agreement or the Conditional Purchase/Stock Option
Agreement, (ii) prohibits or materially limits the ownership or operation by
Parent or Purchaser of all or any substantial portion of the business or assets
of the Company or any of its subsidiaries or compels Parent or Purchaser to
dispose of or to hold separate all or any substantial portion of the business
or assets of the Company or any of its subsidiaries, or imposes any material
limitation on the ability of Parent or Purchaser to conduct such business or
own such assets or (iii) imposes material limitations on the ability of Parent
or Purchaser (or any other affiliate of Parent or Purchaser) to acquire or hold
or to exercise full rights of ownership of the Shares, including, but not
limited to, the right to vote the Shares purchased by Purchaser on all matters
properly presented to the shareholders of the Company; provided, however, that
-------- -------
Parent and Purchaser shall have used their best efforts to have any such
decree, order or injunction vacated or reversed;
(c) any change shall have occurred since the date hereof in the
business, financial condition or results of operations of the Company or any of
its subsidiaries which has had, or would reasonably be expected to have, a
Material Adverse Effect with respect to the Company, including, without
limitation, the commencement in respect of, or by, the Company of an
involuntary, or voluntary, proceeding under any applicable bankruptcy law,
decree, order or any other case or proceeding adjudging the Company a bankrupt
or insolvent, or the condition of the Company is such that it is unable to pay
all of its liabilities as such liabilities mature or has unreasonably small
capital for conducting the business theretofore or proposed to be conducted by
it;
(d) there shall have occurred (and the adverse effect of such
occurrence shall, in the reasonable judgment of Purchaser, be continuing) (i)
any general suspension of trading in, or limitation on prices for, securities
on any national securities exchange or in the over-the-counter market in the
United States, (ii) any extraordinary or material adverse change in United
States financial markets generally, including, without limitation, a decline of
at least 25% in either the Dow Jones Average of Industrial Stocks or the
Standard & Poor's 500 index from the date hereof, (iii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iv) any limitation (whether or not mandatory) by any
Governmental Entity, on, or any other event that would reasonably
4
be expected to materially adversely affect, the extension of credit by banks or
other lending institutions, (v) a commencement of a war or armed hostilities or
other national or international calamity directly or indirectly involving the
United States (other than in Haiti) which would reasonably be expected to have
a Material Adverse Effect or materially adversely affect (or materially delay)
the consummation of the Offer or (vi) in the case of any of the foregoing
existing at the time of commencement of the Offer, a material acceleration or
worsening thereof;
(e) the Agreement shall have been terminated in accordance with its
terms or the Offer shall have been amended or terminated with the consent of
the Company.
The foregoing conditions are for the sole benefit of the Parent and
Purchaser and may be asserted by the Parent or Purchaser regardless of the
circumstances giving rise to any such condition and may be waived by the Parent
or Purchaser in whole or in part, provided however, that if Purchaser shall
-------- -------
have exercised the Conditional Purchase Right in whole or in part prior to the
termination of the Offer Purchaser shall not be permitted to waive the Minimum
Condition. The Parent's or Purchaser's failure 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.
EXHIBIT A
---------
RESTATED CERTIFICATE OF INCORPORATION
OF
BORDEN, INC.
Pursuant to N.J.S. 14A:9-5(4)
Dated: , 1994
-------------
THE UNDERSIGNED corporation certifies that it has adopted the
following restated certificate of incorporation:
ARTICLE I
Corporate Name
The name of the corporation is Borden, Inc.
ARTICLE II
Purpose
The purpose for which this corporation is organized is to engage in
any activity within the purposes for which corporations may be organized under
the New Jersey Business Corporation Act.
ARTICLE III
Capital Stock
1. Authorized Shares
The corporation is authorized to issue 300,000,000 shares $.01 par
value
2. Pre-emptive Rights
The shareholders of the corporation shall not have pre-emptive
rights.
2
3. Shareholder Vote Required
The affirmative vote of a majority of votes cast by the shareholders
shall be required to authorize or approve any action or matter to be voted upon
by the shareholders, except that directors shall be elected as provided by law.
ARTICLE IV
Registered Office and Agent
The address of the corporation's current registered office is 65
Livingston Avenue, Roseland, New Jersey 07068; the name of the corporation's
current registered agent at that address is John R. MacKay 2nd.
ARTICLE V
Current Board of Directors
The current board of directors consists of three persons whose name
and addresses are as follows:
Clifton S. Robbins
9 West 57th Street
New York, New York 10019
Scott M. Stuart
9 West 57th Street
New York, New York 10019
Alexander Navab
9 West 57th Street
New York, New York 10019
ARTICLE VI
Indemnification
Every person who is or was a director or an officer of the
corporation shall be indemnified by the corporation to the fullest extent
allowed by law, including the indemnification
3
permitted by N.J.S. 14A:3-5(8), against all liabilities and expenses imposed
upon or incurred by that person in connection with any proceeding in which that
person may be made, or threatened to be made, a party, or in which that person
may become involved by reason of that person being or having been a director or
an officer of or of serving or having served in any capacity with any other
enterprise at the request of the corporation, whether or not that person is a
director or an officer or continues to serve the other enterprise at the time
the liabilities or expenses are imposed or incurred. During the pendency of
any such proceeding, the corporation shall, to the fullest extent permitted by
law, promptly advance expenses that are incurred, from time to time, by a
director or an officer in connection with the proceeding, subject to the
receipt by the corporation of an undertaking as required by law.
ARTICLE VII
Personal Liability of Directors or Officers
A director or officer of the corporation shall not be personally
liable to the corporation or its shareholders for the breach of any duty owed
to the corporation or its shareholders except to the extent that an exemption
from personal liability is not permitted by the New Jersey Business Corporation
Act.
4
IN WITNESS WHEREOF, the undersigned corporation has caused this
certificate to be executed on its behalf by its duly authorized officer as of
the date first above written.
BORDEN, INC.
By:
Name:
Title:
EXHIBIT B
[Closing Date]
RJR Nabisco Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019
Gentlemen:
I have been advised that I have been identified as a possible
"affiliate" of Borden, Inc., a New Jersey corporation (the "Company"), as that
term is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
General Rules and Regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933
(the "Securities Act"), although nothing contained herein should be construed
as an admission of such fact.
Pursuant to the terms of an Agreement and Plan of Merger dated as of
September 23, 1994 (the "Merger Agreement") among Borden Acquisition Corp., a
New Jersey corporation ("Purchaser"), Whitehall Associates, L.P., a Delaware
limited partnership, and the Company, Purchaser will be merged with and into
the Company (the "Merger"). As a result of the Merger, I will receive Merger
Consideration (as defined in the Merger Agreement), including shares of common
stock, par value $.01 per share ("Holdings Common Stock"), of RJR Nabisco
Holdings Corp., a Delaware corporation ("Holdings") in exchange for shares of
common stock, par value $.625 per share ("Common Stock"), of the Company owned
by me at the effective time of the Merger as determined pursuant to the Merger
Agreement.
A. In connection therewith, I represent, warrant and agree that:
1. I shall not make any sale, transfer or other disposition of the
Holdings Common Stock I receive as a result of the Merger in violation of
the Securities Act or the Rules and Regulations.
2. I have been advised that the issuance of Holdings Common Stock to
me as a result of the Merger has been registered with the Commission under
the Securities Act on a Registration Statement on Form S-4. However, I
have also been advised that, because at the time the Merger was submitted
for a vote of the stockholders of the Company I may have been an
"affiliate" of the Company and the distribution by me of the shares of
Holdings Common Stock I receive as a result of the Merger has not been
registered under the Securities Act, such shares must be held by me
indefinitely unless (i) such distribution of such shares has been
registered under the Securities Act, (ii) a sale of such shares is made in
conformity with the provisions of
2
Rule 145 promulgated by the Commission under the Securities Act or (iii)
such sale is pursuant to a transaction which, in the opinion of counsel
reasonably satisfactory to Holdings or as described in a "no-action" or
interpretive letter from the staff of the Commission, is not required to
be registered under the Securities Act.
3. I have carefully read this letter and the Merger Agreement and
have discussed the requirements of the Merger Agreement and other
limitations upon the sale, transfer or other disposition of the shares of
Holdings Common Stock to be received by me, to the extent I have felt
necessary, with my counsel or with counsel for the Company.
B. Furthermore, in connection with the matters set forth herein, I
understand and agree that:
1. Holdings is under no further obligation to register the sale,
transfer or other disposition of the shares of Holdings Common Stock
received by me as a result of the Merger or to take any other action
necessary in order to make compliance with an exemption from registration
available, except as set forth in paragraph C below.
2. Stop transfer instructions will be given to the transfer agents
of Holdings with respect to the shares of Holdings Common Stock I will
receive as a result of the merger, and there will be placed on the
certificates representing such shares, or any certificates delivered in
substitution therefor, a legend stating in substance:
"The shares represented by this certificate were issued in
a transaction to which Rule 145 under the Securities Act of
1933 applies. The shares represented by this certificate
may be transferred only in accordance with the terms of an
agreement dated , 1994 between the registered
holder hereof and RJR Nabisco Holdings Corp., a copy of
which agreement is on file at the principal offices of RJR
Nabisco Holdings Corp."
3. Unless the transfer by me of my shares of Holdings Common Stock
is a sale made in conformity with the provisions of Rule 145 of the Rules
and Regulations or made pursuant to a registration under the Securities
Act, Holdings reserves the right to put the following legend on the
certificates issued to my transferee:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were
acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof
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within the meaning of the Securities Act of 1933 and may not be sold,
pledged or otherwise transferred except pursuant to a registration
statement or in accordance with an exemption from the registration
requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth above shall be
removed and substitute certificates shall be delivered without any such legend
and the transfer agents will be instructed to effectuate transfers of shares of
Holdings Common Stock if the undersigned delivers to Holdings a letter from the
staff of the Commission or an opinion of counsel in form and substance
reasonably satisfactory to Holdings to the effect that such legend is not
required for the purposes of the Securities Act.
C. Holdings hereby represents, warrants and agrees that:
For as long as resales of any shares of Holdings Common Stock owned
by me are subject to Rule 145, Holdings will use all reasonable efforts to
make all filings of the nature specified in paragraph (c)(1) of Rule 144
of the Rules and Regulations.
Very truly yours,
Dates Referenced Herein and Documents Incorporated by Reference
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