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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LCS INDUSTRIES, INC.,
CUSTOMERONE HOLDING CORPORATION
AND
CATALOG ACQUISITION CO.
DATED
AS OF
DECEMBER 17, 1998
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TABLE OF CONTENTS
ARTICLE I
THE OFFER
SECTION 1.1 The Offer......................................
SECTION 1.2 Company Actions................................
SECTION 1.3 Directors......................................
ARTICLE II
THE MERGER
SECTION 2.1 The Merger.....................................
SECTION 2.2 Effect on Shares...............................
SECTION 2.3 Surrender and Payment..........................
SECTION 2.4 Dissenting Shares..............................
SECTION 2.5 Stock Options..................................
SECTION 2.6 Merger Without Meeting of Stockholders.........
SECTION 2.7 Closing........................................
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1 Certificate of Incorporation...................
SECTION 3.2 Bylaws.........................................
SECTION 3.3 Directors and Officers.........................
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
SECTION 4.1 Corporate Existence and Power..................
SECTION 4.2 Corporate Authorization........................
SECTION 4.3 Governmental Authorization.....................
SECTION 4.4 Non-Contravention..............................
SECTION 4.5 Capitalization.................................
SECTION 4.6 Subsidiaries...................................
SECTION 4.7 SEC Documents..................................
SECTION 4.8 Financial Statements; No Undisclosed
Liabilities..................................
SECTION 4.9 Disclosure Documents...........................
SECTION 4.10 Absence of Certain Changes....................
SECTION 4.11 Litigation....................................
SECTION 4.12 Taxes.........................................
SECTION 4.13 Employee Plans................................
SECTION 4.14 Labor Matters.................................
SECTION 4.15 Compliance with Laws..........................
SECTION 4.16 Finders' Fees.................................
SECTION 4.17 Environmental Matters.........................
SECTION 4.18 Property......................................
SECTION 4.19 Trademarks....................................
SECTION 4.20 Material Contracts............................
SECTION 4.21 Insurance.....................................
SECTION 4.22 Year 2000 Compliance..........................
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER AND MERGER SUBSIDIARY
SECTION 5.1 Corporate Existence and Power.................
SECTION 5.2 Corporate Authorization.......................
SECTION 5.3 Governmental Authorization....................
SECTION 5.4 Non-Contravention.............................
SECTION 5.5 Disclosure Documents..........................
SECTION 5.6 Finders' Fees.................................
SECTION 5.7 Financing.....................................
SECTION 5.8 Solvency......................................
SECTION 5.9 Share Ownership...............................
SECTION 5.10 Merger Subsidiary's Operations................
ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.1 Conduct of the Company........................
SECTION 6.2 Stockholder Meeting; Proxy Material...........
SECTION 6.3 Access to Information; Confidentiality
Agreement...................................
SECTION 6.4 No Solicitation...............................
SECTION 6.5 Conveyance Taxes..............................
SECTION 6.6 Directors Stock Plan. .......................
ARTICLE VII
COVENANTS OF BUYER
SECTION 7.1 Obligations of Merger Subsidiary..............
SECTION 7.2 Voting of Shares..............................
SECTION 7.3 Director and Officer Insurance................
SECTION 7.4 Investment Banking Fees.......................
ARTICLE VIII
COVENANTS OF BUYER
AND THE COMPANY
SECTION 8.1 Reasonable Efforts.............................
SECTION 8.2 Certain Filings................................
SECTION 8.3 Public Announcements...........................
SECTION 8.4 Conveyance Taxes...............................
SECTION 8.5 Further Assurances.............................
SECTION 8.6 Employee Matters...............................
SECTION 8.7 Stockholder Litigation.........................
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1 Conditions to the Obligations of Each
Party.......................................
ARTICLE X
TERMINATION
SECTION 10.1 Termination..................................
SECTION 10.2 Effect of Termination........................
ARTICLE XI
DEFINED TERMS
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices......................................
SECTION 12.2 Nonsurvivial of Representations and
Warranties..................................
SECTION 12.3 Amendments; No Waivers.......................
SECTION 12.4 Expenses.....................................
SECTION 12.5 Successors and Assigns.......................
SECTION 12.6 Governing Law................................
SECTION 12.7 Severability.................................
SECTION 12.8 Third Party Beneficiaries....................
SECTION 12.9 Entire Agreement.............................
SECTION 12.10 Counterparts; Effectiveness..................
iii
ANNEX I
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December
17, 1998 (this "Agreement"), by and among LCS Industries, Inc., a Delaware
corporation (the "Company"), CustomerONE Holding Corporation, a Delaware
corporation ("Buyer"), and Catalog Acquisition Co., a Delaware corpo ration and
a wholly owned subsidiary of Buyer ("Merger Subsidiary").
WHEREAS, the respective Boards of Directors of
Buyer, Merger Subsidiary and the Company have determined that it is fair to, and
in the best interests of their respective stockholders to consummate the
acquisition of the Company by Buyer upon the terms and subject to the conditions
set forth herein; and
WHEREAS, in furtherance of such acquisition, Buyer
will cause Merger Subsidiary to make a tender offer (as it may be amended from
time to time as permitted under this Agreement, the "Offer") to purchase all of
the issued and outstanding shares of Common Stock, par value $.01 per share, of
the Company (the "Shares") for $17.50 per Share, net to the seller in cash (the
"Offer Price"), upon the terms and subject to the conditions of this Agreement
and the Offer; and
WHEREAS, the Board of Directors of the Company has
approved the Offer and resolved and agreed to recom mend that holders of Shares
tender their Shares pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition,
the respective Boards of Directors of Buyer, Merger Subsidiary and the Company
have approved the merger of Merger Subsidiary with and into the Company in
accordance with the Delaware General Corporation Law (the "DGCL") whereby each
issued and outstanding Share (other than Shares held by the Company as treasury
stock or owned by Buyer, Merger Subsidiary or any other subsidiary of Buyer
immediately prior to the Effective Time and other than Dissenting Shares (as
defined in Section 2.4 hereof)), will be converted into the right to receive the
Offer Price;
WHEREAS, Buyer, Merger Subsidiary and the Company
desire to make certain representations, warranties, covenants and agreements in
connection with the Offer and
the Merger (as defined in Section 2.1) and also to pre scribe various conditions
to the Offer and the Merger.
NOW, THEREFORE, in consideration of the
representations, warranties, covenants and agreements con tained in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Subject to the
provisions of this Agreement, as promptly as practicable, but in no event later
than five business days after the initial public announcement of the Offer,
Merger Subsid iary shall, and Buyer shall cause Merger Subsidiary to, commence
(as defined in Rule 14d-2 promulgated under the Securities Exchange Act of 1934,
as amended (the "Ex change Act")) the Offer. The obligation of Merger Sub
sidiary to, and Buyer to cause Merger Subsidiary to, commence the Offer and
accept for payment, and pay for, any and all Shares tendered pursuant to the
Offer shall be subject only to the conditions set forth in Annex I hereto and to
the terms and conditions of this Agreement; provided, however, that Merger
Subsidiary shall not, without the Company's written consent, waive the Minimum
Condition (as defined in Annex I hereto). Merger Subsid iary expressly reserves
the right to modify the terms of the Offer; provided that, without the Company's
written consent, Merger Subsidiary shall not (i) reduce the num ber of Shares
which Merger Subsidiary is offering to purchase in the Offer, (ii) reduce the
Offer Price, (iii) modify or add to the conditions set forth in Annex I hereto,
(iv) change the form of consideration payable in the Offer or (v) otherwise
amend or modify the Offer in any manner adverse to the holders of the Shares.
Not withstanding the foregoing, if on any scheduled expira tion date the number
of Shares that have been physically tendered and not withdrawn are more than 50%
of the Shares outstanding on a fully diluted basis but less than 90% of the
outstanding shares of each class of capital stock of the Company on a fully
diluted basis, Merger Subsidiary may extend the Offer for up to 10 additional
business days from the date that all conditions to the Offer (other than the
Minimum Condition) shall first have been satisfied, so long as Merger Subsidiary
irrevocably waives the satisfaction of any condition set forth in
Annex A which relates to the occurrence of a Material Adverse Effect on the
Company (as defined in Section 4.1). Further, Merger Subsidiary may extend the
Offer beyond any scheduled expiration date up to the Outside Termination Date
(as defined in Section 10.1) if at the initial expiration date of the Offer, or
any extension thereof, the conditions in clauses (a) and (b) to Annex I hereto
are not satisfied or waived. Subject to the terms and conditions of the Offer,
Merger Subsidiary shall, and Buyer shall cause Merger Subsidiary to, pay, as
promptly as practicable after expiration of the Offer, for all Shares validly
tendered and not withdrawn.
(b) On the date of commencement of the Offer, Buyer
and Merger Subsidiary shall file with the Securi ties and Exchange Commission
(the "SEC"), a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer which shall contain an offer to purchase and form of the related letter of
transmittal and summary advertisement (together with any supplements or
amendments thereto, collectively, the "Offer Documents") and promptly there
after shall disseminate the Offer Documents to the stock holders of the Company.
Buyer, Merger Subsidiary and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect; and each
of Buyer and Merger Subsidiary further agrees to take all steps necessary to
amend or supplement the Offer Documents and to cause the Offer Documents as so
amended or supplemented to be filed with the SEC and to be disseminated to the
Company's stockholders, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents prior to their being
filed with the applicable authorities or dissemi nated to the Company's
stockholders. Buyer and Merger Subsidiary agree to provide the Company and its
counsel any comments Buyer, Merger Subsidiary or their counsel may receive from
the SEC or its staff with respect to the Offer Documents promptly after the
receipt of such com ments and shall provide the Company and its counsel an
opportunity to participate, including by way of discus sion with the SEC or its
staff, in the response of Buyer and/or Merger Subsidiary to such comments.
(c) Buyer shall provide or cause to be pro vided to
Merger Subsidiary on a timely basis the funds necessary to accept for payment,
and pay for, any Shares
that Merger Subsidiary becomes obligated to pay for pur suant to the Offer or
the Merger.
SECTION 1.2 Company Actions. (a) The Company hereby
consents to the Offer and represents that its Board of Directors, at a meeting
duly called and held on December 17, 1998, has (i) determined that this
Agreement and the transactions contemplated hereby, including the terms of the
Offer and the Merger, are fair to and in the best interests of the Company's
stockholders, (ii) ap proved this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, and (iii) resolved to recommend
acceptance of the Offer and ap proval and adoption of this Agreement and the
Merger by its stockholders; provided however, that prior to the purchase by
Merger Subsidiary of Shares pursuant to the Offer, the Company may modify,
withdraw or change such recommendation to the extent that the Board of Directors
of the Company determines, after consultation with out side legal counsel to the
Company, that the failure to so withdraw, modify or change such recommendation
would likely be inconsistent with the fiduciary duties of the Board of Directors
of the Company under applicable laws.
(b) The Board of Directors of the Company has
received the written opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation ("DLJ") to the effect that, as of such date, the Merger
Consideration (as de fined in Section 2.2(c)) to be received by holders of
Shares pursuant to the Offer and the Merger, taken to gether, is fair from a
financial point of view to such holders. The Company has provided a copy of such
opinion to the Buyer.
(c) In connection with the Offer, if requested by
Merger Subsidiary, the Company shall furnish or shall cause to be furnished to
Merger Subsidiary mailing labels and any available listing or computer file
containing the names and addresses of all holders of record of Shares and lists
of securities positions of Shares held in stock depositories, in each case as of
a recent date, and shall provide to Merger Subsidiary such additional
information (including, without limitation, updated lists of stock holders,
mailing labels and lists of securities posi tions) and such other assistance as
Buyer or Merger Sub sidiary may reasonably request in connection with the Offer.
Except for such steps as are necessary to dissem inate the Offer Documents,
Buyer and Merger Subsidiary shall hold in confidence the information contained
in any
of such labels and lists and the additional information referred to in the
preceding sentence, will use such information only in connection with the Offer,
and, if this Agreement is terminated, will upon request of the Company deliver
or cause to be delivered to the Company all copies of such information then in
its possession or the possession of its agents or representatives.
(d) As soon as practicable after the filing of the
Offer Documents with the SEC, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (such Schedule 14D-9, as
amended or sup plemented from time to time, the "Schedule 14D-9") which shall,
subject to the fiduciary duties of the Company's Board of Directors under
applicable laws and the provi sions of this Agreement, reflect the
recommendation of the Company's Board of Directors described in Section 1.2(a)
hereof, and disseminate the Schedule 14D-9 to the stockholders of the Company.
Buyer, Merger Subsidiary and the Company each agrees promptly to correct any in
formation provided by it for use in the Schedule 14D-9 if and to the extent that
such Schedule 14D-9 shall have become false or misleading in any material
respect; and the Company further agrees to take all steps necessary to amend or
supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or
supplemented to be filed with the SEC and to be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable federal
securities laws. Buyer and Merger Subsidiary and their counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 prior to its
being filed with the applicable authorities or disseminated to the Company's
stockholders. The Com pany agrees to provide Buyer and Merger Subsidiary and
their counsel any comments the Company or its counsel may receive from the SEC
or its staff with respect to the Schedule 14D-9 promptly after the receipt of
such com ments and shall provide Buyer and Merger Subsidiary and their counsel
an opportunity to participate, including by way of discussion with the SEC or
its staff, in the re sponse of the Company to such comments.
SECTION 1.3 Directors. (a) Subject to paragraph (b)
below, promptly upon the acceptance for payment by Merger Subsidiary of any
Shares pursuant to the Offer, Buyer shall be entitled to designate such number
of di rectors, rounded up to the next whole number, on the Company's Board of
Directors as is equal to the product of (i) the total number of directors on the
Company's
Board of Directors (giving effect to the election of any additional directors
pursuant to this sentence) and (ii) the percentage that the aggregate number of
Shares bene ficially owned by Merger Subsidiary (including Shares accepted for
payment pursuant to the Offer) bears to the total number of Shares outstanding.
The Company shall take all action necessary to cause Merger Subsidiary's
designees to be elected or appointed to the Company's Board of Directors,
including, without limitation, in creasing the number of directors and seeking
and accept ing resignations of incumbent directors. At such times, the Company
will use its reasonable best efforts to cause individuals designated by Buyer to
constitute the same percentage as such individuals represent on the Company's
Board of Directors of each Committee of the Board of Directors (other than a
Committee established to take action under this Agreement), each Board of
Directors of any Subsidiary of the Company and each Committee of each such
board. Notwithstanding the foregoing, until the Effective Time (as defined in
Section 2.1(b)), the Com pany shall retain as members of its Board of Directors
at least two directors who are directors of the Company on the date hereof (the
"Continuing Directors").
(b) The Company's obligations to appoint designees
to the Board of Directors shall be subject to Section 14(f) of the Exchange Act
and Rule 14f-1 promul gated 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(b) and shall include in the Schedule
14D-9 such in formation with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section 1.3. Buyer and Merger Subsidiary shall supply in
writing and be solely responsible to the Company for any information with
respect to themselves and their nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
(c) From and after the time, if any, that Buyer's
designees constitute a majority of the Company's Board of Directors and prior to
the Effective Time, (i) any amendment of this Agreement, the Company Certificate
of Incorporation or the Company By-Laws or any of its Subsidiaries, (ii) any
termination of this Agreement by the Company, (iii) any extension of time for
performance of any of the obligations of Buyer or Merger Subsidiary hereunder,
(iv) any waiver of any condition to the obli gations of the Company or any of
the Company's rights hereunder and any termination pursuant to Section 10.1(i)
hereof, (v) any amendment or change to the policies of directors' and officers'
liability insurance maintained by the Company and its Subsidiaries on the date
hereof, (vi) any amendment or change to, or decision in connec tion with, the
indemnification of the individuals who on or prior to the Effective Time were
officers, directors, employees or agents of the Company or any of its Subsid
iaries under the Company Certificate of Incorporation or Company By-laws, the
certificate of incorporation or by-laws of any Subsidiary of the Company, or
under any ex isting agreement between such person or persons and the Company or
a Subsidiary of the Company and (vii) any amendment or change to any Plan (as
defined in Section 4.13(a) hereof) or modifications to existing compensation
policies or severance obligations (including those agree ments or obligations
referenced in Section 4.13 hereof or set forth on Schedule 4.13 of the
disclosure schedule delivered by the Company in connection herewith and at
tached hereto (the "Company Disclosure Schedule")) may be effected only by the
action of a majority of the direc tors of the Company then in office who are
Continuing Directors, which action shall be deemed to constitute the action of a
committee specifically designated by the Board of Directors to approve the
actions and transac tions contemplated hereby; provided, that if there shall be
no Continuing Directors, such actions may be effected by majority vote of the
entire Board of Directors of the Company. Any actions with respect to the
enforcement of this Agreement by the Company shall be effected only by the
action of a majority of the Continuing Directors.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. (a) Subject to the
terms and conditions of this Agreement, and in accordance with the DGCL, at the
Effective Time, Merger Subsidiary shall be merged (the "Merger") with and into
the Company, whereupon the separate existence of Merger Subsidiary shall cease,
and the Company shall be the surviving cor poration (the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Delaware.
(b) The Company, Buyer and Merger Subsidiary will
cause a certificate of merger (the "Certificate of
Merger") with respect to the Merger to be executed and filed with the Secretary
of State of the State of ▇▇▇▇ ▇▇▇▇ (the "Secretary of State") as provided in the
DGCL. The Merger shall become effective on the date the Certif icate of Merger
has been duly filed with the Secretary of State or at such date as is agreed
between the parties specified in the Certificate of Merger, and such time is
hereinafter referred to as the "Effective Time."
(c) From and after the Effective Time, the
Surviving Corporation shall possess all the rights, priv ileges, powers and
franchises and be subject to all of the restrictions, disabilities, liabilities
and duties of the Company and Merger Subsidiary.
SECTION 2.2 Effect on Shares. At the Effec
tive Time:
(a) Cancellation of Certain Stock. Each Share held
by the Company as treasury stock or owned by Buyer, Merger Subsidiary or any
other Subsidiary of Buyer and the Dissenting Shares (defined in Section 2.4
hereof, but except as provided in Section 2.4 hereof) immediately prior to the
Effective Time shall automatically be can celed and retired and cease to exist,
and no payment shall be made with respect thereto.
(b) Capital Stock of Merger Subsidiary. Each share
of common stock of Merger Subsidiary issued and outstanding immediately prior to
the Effective Time shall be converted into and become one fully paid and
non-assessable share of common stock, par value $0.01, of the Surviving
Corporation with the same rights, powers and privileges as the shares so
converted and shall consti tute the only outstanding shares of capital stock of
the Surviving Corporation.
(c) Conversion of Shares. Each Share issued and
outstanding immediately prior to the Effective Time shall, except as otherwise
provided in Section 2.2(a) hereof, be converted into the right to receive the
Offer Price, without interest (the "Merger Consideration").
SECTION 2.3 Surrender and Payment. (a) Prior to the
Effective Time, Buyer shall appoint a depositary (the "Depositary") for the
purpose of exchanging certifi ▇▇▇▇▇ representing Shares for the Merger
Consideration. The Depositary shall at all times be a commercial bank having a
combined capital and surplus of at least
$500,000,000. Buyer will pay to the Depositary immedi ately prior to the
Effective Time, the Merger Consider ation to be paid in respect of the Shares.
For purposes of determining the Merger Consideration to be so paid, Buyer shall
assume that no holder of Shares will perfect his right to appraisal of his
Shares. Promptly after the Effective Time, Buyer will send, or will cause the
Depos itary to send, but in no event later than three business days after the
Effective Time, to each holder of Shares at the Effective Time a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates represent ing Shares to the Depositary) and
instructions for use in effecting the surrender of Shares in exchange for the
Merger Consideration.
(b) Each holder of Shares that has been con verted
into a right to receive the Merger Consideration, upon surrender to the
Depositary of a certificate or certificates properly representing such Shares,
together with a properly completed letter of transmittal covering such Shares,
will be entitled to receive the Merger Con sideration payable in respect of such
Shares less any amounts required to be withheld under applicable federal, state,
local or foreign income tax regulations. Until so surrendered, each such
certificate shall, after the Ef fective Time, represent for all purposes, only
the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is
to be paid to a Person other than the registered holder of the Shares
represented by the certificate or certificates surrendered in exchange therefor,
it shall be a condition to such payment that the certificate or certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay to the Deposi
tary any transfer or other taxes required as a result of such payment to a
Person other than the registered holder of such Shares or establish to the
satisfaction of the Depositary that such tax has been paid or is not payable.
For purposes of this Agreement, "Person" means an indi vidual, a corporation,
limited liability company, a part nership, an association, a trust or any other
entity or organization, including a government or political subdi vision or any
agency or instrumentality thereof.
(d) After the Effective Time, the stock trans fer
books of the Company shall be closed and thereafter there shall be no further
registration of transfers of Shares. If, after the Effective Time, certificates
rep resenting Shares are presented to the Surviving Corpora tion, they shall be
canceled and exchanged for the con sideration provided for, and in accordance
with the pro cedures set forth, in this Article II.
(e) Any portion of the Merger Consideration paid to
the Depositary pursuant to Section 2.3(a) that remains unclaimed by the holders
of Shares one year after the Effective Time shall be returned to Surviving Corpo
ration, upon demand, and any such holder who has not exchanged his Shares for
the Merger Consideration in accordance with this Section 2.3 prior to that time
shall thereafter look only to the Surviving Corporation for payment of the
Merger Consideration in respect of his Shares, without any interest thereon.
Notwithstanding the foregoing, Buyer, Merger Subsidiary and the Surviving
Corporation shall not be liable to any holder of Shares for any amount paid to a
public official pursuant to applicable abandoned property laws. Any amounts
remain ing unclaimed by holders of Shares on the day immediately prior to such
time as such amounts would otherwise escheat to or become property of any
governmental entity shall, to the extent permitted by applicable law, become the
property of Buyer free and clear of any claims or interest of any Person
previously entitled thereto.
(f) Any portion of the Merger Consideration paid to
the Depositary pursuant to Section 2.3(a) hereof to pay for Shares for which
appraisal rights have been perfected shall be returned to Surviving Corporation
upon demand.
SECTION 2.4 Dissenting Shares. Notwithstanding
Section 2.2 hereof, Shares issued and outstanding immediately prior to the
Effective Time and held by a holder who has properly exercised and perfected
appraisal rights under Section 262 of the DGCL (the "Dissenting Shares"), shall
not be converted into the right to re ceive the Merger Consideration, but the
holders of Dis senting Shares shall be entitled to receive such consid eration
as shall be determined pursuant to Section 262 of the DGCL; provided, however,
that if any such holder shall have failed to perfect or shall withdraw or lose
his right to appraisal and payment under the DGCL, such holder's Shares shall
thereupon be deemed to have been
converted as of the Effective Time into the right to receive the Merger
Consideration, without any interest thereon, and such Shares shall no longer be
Dissenting Shares. The Company shall give Buyer (i) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
instruments served pursuant to the DGCL received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. The Company will not voluntarily make any payment
with respect to any demands for appraisal and will not, except with the prior
written consent of Buyer, settle or offer to settle any such demands.
SECTION 2.5 Stock Options. (a) Immediately prior to
the Effective Time, each outstanding employee or director stock option (an
"Option") to purchase Shares granted under the 1983 Incentive Stock Option Plan,
the 1993 Incentive Stock Option Plan, the 1993 Non-Employee Directors Stock
Option Plan or the 1996 Non-Employee Directors Stock Option Plan (collectively,
the "Option Plans") or any other compensation plan or arrangement of the Company
shall be canceled, and each holder of any such Option, whether or not then
vested or exercisable, shall be paid by the Company at the Effective Time for
each such Option an amount determined by multiplying (i) the excess, if any, of
the Merger Consideration over the applicable exercise price of such Option by
(ii) the number of Shares such holder could have purchased (assum ing full
vesting of all Options) had such holder exer cised such Option in full
immediately prior to the Effec tive Time.
(b) Prior to the Effective Time, the Company shall
use its best efforts (i) to obtain any consents from holders of Options and (ii)
make any amendments to the terms of the Option Plans or compensation plans or
arrangements, to the extent such consents or amendments are necessary to give
effect to the transactions contem plated by Section 2.5(a). Notwithstanding any
other provision of this Section 2.5, payment may be withheld in respect of any
Option until necessary consents are ob tained.
(c) The Company shall promptly amend the 1994
Employee Stock Purchase Plan to provide for (i) the sus pension of participation
during any offering periods commencing subsequent to the date of this agreement
for the pendency of the Merger and subject to the successful
consummation of the Merger and (ii) the termination of the 1994 Employee Stock
Purchase Plan as of the Effective Time.
SECTION 2.6 Merger Without Meeting of Stock
holders. Notwithstanding Section 6.2 hereof, in the event that Buyer, Merger
Subsidiary or any other subsid iary of Buyer shall acquire at least 90% of the
outstand ing shares of each class of capital stock of the Company, pursuant to
the Offer or otherwise, the parties hereto agree to take all necessary and
appropriate action to cause the Merger to become effective as soon as practica
ble after such acquisition, without a meeting of stock holders of the Company,
in accordance with Section 253 of the DGCL.
SECTION 2.7 Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m., New York City time, on a date to be
specified by the parties hereto, which shall be no later than the third business
day after satisfaction or waiver of all of the conditions set forth in Article
IX hereof (the "Closing Date"), at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP in
New York, New York unless another time, date or place is agreed to in writing by
the parties hereto.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1 Certificate of Incorporation. The
certificate of incorporation of Merger Subsidiary in effect at the Effective
Time shall be the certificate of incorporation of the Surviving Corporation
until thereaf ter amended in accordance with applicable law or such certificate
of incorporation.
SECTION 3.2 Bylaws. The by-laws of Merger
Subsidiary in effect at the Effective Time shall be the by-laws of the Surviving
Corporation until thereafter amended in accordance with applicable law, the
certifi cate of incorporation or such by-laws.
SECTION 3.3 Directors and Officers. From and after
the Effective Time, until successors are duly elected or appointed and qualified
in accordance with applicable law, the directors of Merger Subsidiary at the
Effective Time shall be the initial directors of the
Surviving Corporation and the officers of Merger Subsid iary at the Effective
Time shall be the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected and appointed or qualified.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Buyer and
Merger Subsidiary that:
SECTION 4.1 Corporate Existence and Power. The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and except as set forth on
Schedule 4.1 of the Company Disclosure Schedule, has all corporate powers and
all governmental licenses, authorizations, consents and approvals (collectively,
"Licenses") required to carry on its business as now conducted except where the
failure to have any such License, individually or in the aggregate, would not
have a Material Adverse Effect (as defined below). The Company is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified, indi vidually or in the
aggregate, would not have a Material Adverse Effect. As used herein, the term
"Material Ad verse Effect" means a material adverse effect on the condition
(financial or otherwise), business, assets, prospects or results of operations
of the Company and its Subsidiaries (as defined in Section 4.6) taken as a
whole, or the Buyer and the Merger Subsidiary, as the case may be, that is not a
result of general changes in the economy or the industries in which such
entities operate, provided, however, that "prospects" shall not include the
prospects of the Company's IT and Consultancy Services businesses. The Company
has heretofore deliv ered or made available to Buyer true and complete copies of
the Company Certificate of Incorporation and Company By-laws as currently in
effect. In all material re spects, the minute books of the Company contain
accurate records of all meetings and accurately reflect all other actions taken
by the stockholders, the board of directors
and all committees of the board of directors of the Com pany. Complete and
accurate copies of all such minute books and of the stock register of the
Company have been made available by the Company to Buyer.
SECTION 4.2 Corporate Authorization. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby are within the Company's
corporate powers and, except for any required approval by the Company's
stockholders in connection with the consum mation of the Merger, have been duly
authorized by all necessary corporate action. This Agreement, assuming due and
valid authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except that (i) enforcement
may be subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific perfor ▇▇▇▇▇ and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the discre
tion of the court before which any proceeding therefor may be brought.
SECTION 4.3 Governmental Authorization. Ex cept as
set forth in Schedule 4.3 of the Company Disclo sure Schedule, the execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby require no action by or
in respect of, or filing with, any gov ernmental body, agency, official or
authority (each, a "Governmental Entity") other than: (i) the filing of a
certificate of merger in accordance with the DGCL; (ii) compliance with any
applicable requirements of the HartScott-▇▇▇▇▇▇ Antitrust Improvements Act of
▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"); (iii) compliance with any applicable requirements of the
Exchange Act; (iv) compliance with the applicable requirements of state blue sky
laws; (v) compliance with the applicable requirements of any applicable takeover
laws and (vi) such other actions by or in respect of, or filings with, the
failure of which to obtain or make, individually or in the aggregate, would not
have a Mate rial Adverse Effect and which would not materially impair the
ability of the Company to consummate the transactions contemplated hereby.
SECTION 4.4 Non-Contravention. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby do not and will not (i)
contravene or conflict with the Certificate of Incorporation or By-laws of the
Company or any Subsidiary, (ii) except as set forth in Schedule 4.4 of the
Company Disclosure Schedule and assuming compliance with the matters referred to
in Section 4.3 hereof, contravene or conflict with or con stitute a violation of
any provision of any law, regula tion, judgment, injunction, order or decree
binding upon or applicable to the Company or any Subsidiary of the Company,
(iii) except as set forth in Schedule 4.4 of the Company Disclosure Schedule,
with or without the giving of notice or passage of time or both, constitute a
mate rial default under or give rise to a right of termina tion, cancellation or
acceleration of any right or obli gation of the Company or any Subsidiary of the
Company or to a material loss of any benefit to which the Company or any
Subsidiary of the Company is entitled under any provision of any agreement,
contract or other instrument binding upon the Company or any Subsidiary of the
Company or any license, franchise, permit or other similar autho rization held
by the Company or any Subsidiary of the Company, or (iv) result in the creation
or imposition of any Lien (as defined below) on any asset of the Company or any
Subsidiary of the Company, excluding from the foregoing clauses (ii), (iii) or
(iv), such violations, breaches, defaults or Liens, individually or in the ag
gregate, which would not have a Material Adverse Effect. For purposes of this
Agreement, "Lien" means, with re spect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
SECTION 4.5 Capitalization. The authorized capital
stock of the Company consists of 15,000,000 Shares and 1,000,000 shares of
preferred stock (the "Pre ferred Stock"). As of December 16, 1998, there were
(i) 4,898,447 Shares issued and outstanding; (ii) 214,663 Shares held in the
Company's treasury; and (iii) no shares of Preferred Stock issued and
outstanding. As of December 16, 1998, there were (i) options outstanding
pursuant to the 1996 Non-Qualified Non-Employee Directors Stock Option Plan
("the 1996 Plan") to acquire an aggre gate of 22,000 Shares, at an exercise
price of $15.00; (ii) options outstanding pursuant to the 1993 Non-Quali fied
Non-Employee Directors Stock Option Plan ("the 1993 Plan") to acquire an
aggregate of 11,600 Shares, with an
exercise price range of a minimum exercise price of $3.53 and a maximum exercise
price of $16.00; additional op tions outstanding granted to non-employee
directors to acquire an aggregate of 48,000 Shares, with an exercise price range
of a minimum exercise price of $2.05 and a maximum exercise price of $5.38; and
additional options outstanding granted to certain officers of the Company to
acquire an aggregate of 25,000 Shares, with an exercise price of $5.75. Schedule
4.5 of the Company Disclosure Schedule accurately sets forth information
regarding the exercise price, date of grant and number of granted op tions for
each holder of options pursuant to the 1993 Qualified Stock Option Plan and the
1983 Qualified Stock Option Plan (the "Qualified Plans"). As of December 16,
1998, there were options outstanding pursuant to the Qualified Plans to acquire
an aggregate of 552,450 Shares for a total of 659,050 Shares under all plans.
All out standing shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
set forth in this Section 4.5, and except for changes since December 16, 1998
resulting from the exercise of employee options outstanding on such date, there
are outstanding (i) no shares of capital stock or other voting securities of the
Company, (ii) no securities of the Company or of any Subsidiary of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (iii) except as set forth on Schedule 4.5 of the
Company Dis closure Schedule, no options, warrants, calls, subscrip tions or
other rights to acquire from the Company, and no obligation of the Company to
issue, any capital stock, voting securities or securities convertible into or ex
changeable for capital stock or voting securities of the Company, (iv) no
outstanding contractual obligations or commitments of any character restricting
the transfer of, or requiring the registration for sale of, any capital stock of
the Company, (v) no outstanding contractual obligations or commitments of any
character granting any preemptive or antidilutive right with respect to, any
capital stock of the Company and (vi) no voting trusts or similar agreements to
which the Company is a party with respect to the voting of the capital stock of
the Company (the items in clauses (i), (ii) and (iii) being referred to
collectively as the "Company Securities"). There are no outstanding obligations
of the Company or any Subsid iary of the Company to repurchase, redeem or
otherwise acquire any Company Securities. Neither the Company nor any Subsidiary
of the Company has issued any stock appre ciation right or similar payment
obligation based on the value of the Company's common equity.
SECTION 4.6 Subsidiaries. (a) Each Subsidiary of
the Company (a "Subsidiary") (i) is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, (ii) except as set forth in Schedule 4.6(a) of the Company
Disclosure Schedule, has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and (iii) except as set forth in Schedule 4.6(a) of
the Company Disclosure Schedule, is duly quali fied to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except in each case to the extent the failure of this
representa tion and warranty to be true would not have a Material Adverse
Effect. The Company has heretofore delivered or made available to Buyer a
complete and correct copy of the charter and bylaws of each Subsidiary of the
Company, as currently in effect. In all material respects, the minute books of
each Subsidiary of the Company contain accurate records of all meetings and
accurately reflect all other actions taken by the stockholders, the boards of
directors and all committees of the boards of direc tors of each Subsidiary of
the Company. Complete and accurate copies of all such minute books and of the
stock register of each Subsidiary of the Company have been made available to the
Buyer. For purposes of this Agreement, "Subsidiary" means with respect to any
Person, any corpo ration or other legal entity of which such Person owns,
directly or indirectly, more than 50% of the outstanding stock or other equity
interests, the holders of which are entitled to vote for the election of the
board of direc tors or other governing body of such corporation or other legal
entity. All Subsidiaries and their respective jurisdictions of incorporation are
identified on Schedule 4.6 of the Company Disclosure Schedule.
(b) Each outstanding share of capital stock of each
Subsidiary of the Company has been duly and validly authorized and issued and is
fully paid and nonassessable. Except as set forth in Schedule 4.6(b) each
outstanding share of capital stock of each Subsid iary is owned by the Company
and/or one or more of its Subsidiaries and such shares are owned free and clear
of any Liens. There are no subscriptions, options, war rants, calls, rights,
convertible securities or other agreements or commitments of any character
relating to the issuance, transfer, sale, delivery, voting or redemp tion
(including any rights of conversion or exchange under any outstanding security
or other instrument) for, any of the capital stock or other equity interests of
any of such Subsidiaries. There are no agreements requiring the Company or any
of its Subsidiaries to make contribu tions to the capital of, or lend or advance
funds to, any Subsidiaries of the Company.
SECTION 4.7 SEC Documents. The Company has filed
all required reports, proxy statements, forms and other documents with the SEC
since October 1, 1996 ("Com pany SEC Documents"). As of their respective dates,
to the knowledge of the Company, (i) the Company SEC Docu ments complied in all
material respects with the require ments of the Securities Act of 1933, as
amended (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 (ii) none of the Company SEC Documents contained any untrue
statement of a material fact or omitted 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 were made, not misleading.
SECTION 4.8 Financial Statements; No Undisclosed
Liabilities. The financial statements of the Company included in the Company SEC
Documents (i) comply as to form in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, (ii) are in conformity
with United States generally ac cepted accounting principles ("GAAP"), applied
on a con sistent basis (except in the case of unaudited state ments, as
permitted by Form 10-Q of the SEC) during the periods involved (except as may be
indicated in the re lated notes and schedules thereto) and (iii) fairly pres ent
in all material respects 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 statements, to normal year-end audit adjustments).
Except as set forth in Schedule 4.8 of the Company Disclosure Schedule and
except as set forth in the Company SEC Documents filed and publicly available
prior to the date of this Agree ment, and except for liabilities and obligations
incurred
in the ordinary course of business consistent with past practices since the date
of the most recent consolidated balance sheet included in the Company SEC
Documents filed and publicly available prior to the date of this Agree ment,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of the Company
and its consolidated Subsidiaries or in the notes thereto. To the knowledge of
the Company the books and records of the Company and its Subsidiaries have been,
and are being, maintained, in all material re spects, in accordance with GAAP
and any other applicable legal and accounting requirements.
SECTION 4.9 Disclosure Documents. (a) Each document
required to be filed by the Company with the SEC in connection with the
transactions contemplated by this Agreement (the "Company Disclosure
Documents"), includ ing, without limitation, the Schedule 14D-9 will, when
filed, comply as to form in all material respects with the applicable
requirements of applicable law, including without limitation, the Exchange Act.
The Company Dis closure Documents will not at the time of the filing thereof, at
the time of any distribution thereof or at the time of consummation of the
Offer, contain any untrue statement of a material fact or omit to state any mate
rial fact necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading; provided that this
representation and warranty will not apply to statements or omissions in the
Company Disclosure Documents based upon information furnished to the Company in
writing by Buyer and Merger Subsidiary specifically for use therein.
(b) The information with respect to the Company or
any Subsidiary of the Company that the Company furnishes to Buyer and Merger
Subsidiary in writing spe cifically for use in the Offer Documents will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the state ments made therein, in the light of
the circumstances under which they were made not misleading in the case of any
of the Offer Documents, at the time of the filing thereof and at the time of any
distribution thereof.
SECTION 4.10 Absence of Certain Changes. Except as
disclosed in the Company SEC Documents filed by the Company and as set forth in
Schedule 4.10 of the
Company Disclosure Schedule, the Company and its Subsid iaries have conducted
their business in the ordinary course of business and there has not been since
December 31, 1997:
(a) any event, occurrence or facts (whether or not
in the ordinary course of business) which, indi vidually or in
the aggregate, has had or reasonably could be expected to have a
Material Adverse Effect;
(b) any declaration, setting aside or payment of
any dividend (other than regular quarterly divi dends) or other
distribution with respect to any shares of capital stock of the
Company, or any re purchase, redemption or other acquisition by
the Company or any Subsidiary of the Company of any outstanding
shares of capital stock or other securi ties of, or other
ownership interests in, the Com pany or any Subsidiary of the
Company;
(c) any amendment of any material term of any
outstanding security of the Company or any Subsid iary of the
Company;
(d) any incurrence, assumption or guarantee by the
Company or any Subsidiary of the Company of any indebtedness for
borrowed money other than in the ordinary course of business;
(e) any creation or assumption by the Company or
any Subsidiary of the Company of any Lien on any asset other than
in the ordinary course of business and other than Liens which do
not have and could not reasonably be expected, individually or in
the ag gregate, to have a Material Adverse Effect;
(f) any making of any loan, advance or capital
contributions to or investment in any Person other than advances
to employees in the ordinary course of business not in excess of
customary amounts and loans, advances or capital contributions to
or in vestments in wholly-owned Subsidiaries of the Com pany made
in the ordinary course of business;
(g) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or
assets of the Company or any Subsid iary of the Company which
individually or in the
aggregate, has had or could reasonably be expected to have a
Material Adverse Effect;
(h) any transaction or commitment made, or any
contract or agreement entered into, by the Company or any
Subsidiary of the Company relating to its assets or business
(including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of the Company of
any contract or other right, in either case, that have had or
could reasonably be expected individually or in the aggregate, to
have a Material Adverse Effect, other than transactions and
commitments in the ordi nary course of business and those
contemplated by this Agreement;
(i) any change in any method of accounting or
accounting practice by the Company or any Subsidiary of the
Company, except for any such change required by reason of a
concurrent change in GAAP;
(j) any transaction, agreement or understand ing
between the Company or any Subsidiary of the Company on the one
hand and any current director or officer of the Company or any
Subsidiary of the Company or any transaction which would be
subject to proxy statement disclosure under the Exchange Act
pursuant to the requirements of Item 404 of Regula tion S-K (an
"Affiliate Transaction");
(k) any (i) grant of any severance or termina tion
pay to any director, officer or employee of the Company or any
Subsidiary of the Company, (ii) em ployment, deferred
compensation or other similar agreement (or any amendment to any
such existing agreement) with any director, officer or employee
of the Company or any Subsidiary of the Company entered into,
(iii) increase in benefits payable under any existing severance
or termination pay policies or employment agreements or (iv)
increase in compensa tion, bonus or other benefits payable to
directors, officers or employees of the Company or any Subsid
iary of the Company, in each case, other than in the ordinary
course of business not in excess of custom ary amounts; or
(l) authorization of, or committing or agreeing to
take any of, the foregoing actions except as otherwise permitted
by this Agreement.
SECTION 4.11 Litigation. Except as set forth in
either the Company SEC Documents or in Schedule 4.11 of the Company Disclosure
Schedule, there is no action, suit, investigation or proceeding pending against,
or to the knowledge of the Company, threatened against, the Company or any
Subsidiary of the Company or any of their respective properties before any court
or arbitrator or any Governmental Entity which, if determined or resolved
adversely to the Company or any Subsidiary of the Company in accordance with the
plaintiff's demands, could reason ably be expected to have, individually or in
the aggre gate, a Material Adverse Effect. Except as set forth in either the
Company SEC documents or in Schedule 4.11 of the Company Disclosure Schedule,
neither the Company nor any Subsidiary of the Company is subject to any outstand
ing order, writ, injunction or decree which has had or, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
SECTION 4.12 Taxes. (a) Except as set forth on
Schedule 4.12: (i) the Company and each of its Subsid iaries has properly
prepared and filed or has had prop erly prepared and filed on its behalf in a
timely manner (within any applicable extension periods) with the appro priate
Governmental Entity all Tax Returns with respect to Taxes of the Company or any
of its Subsidiaries, or with respect to any Taxes for which the Company or any
such Subsidiary may be liable, other than those Tax Re turns the failure of
which to file, individually or in the aggregate, would not have a Material
Adverse Effect; (ii) all Taxes shown to be due and payable on all filed Tax
Returns of or with respect to the Company or any of its Subsidiaries have been
paid in full or have been properly provided for in the SEC Documents in
accordance with GAAP; (iii) there are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any federal, state,
local or foreign income or other material Tax Returns required to be filed by or
with respect to the Company and its Subsidiaries; (iv) none of the Tax Returns
of or with respect to the Company or any of its Subsidiaries is currently being
audited or examined by any Governmental Entity; and (v) no defi ciency for any
income Taxes has been assessed with re spect to the Company or any of its
Subsidiaries which has not been abated or paid in full.
(b) For purposes of this Agreement, (i) "Taxes"
shall mean all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts, sales,
use, ad valorem, goods and ser vices, capital, transfer, franchise, profits,
license, withholding, payroll, employment, employer health, ex cise, estimated,
severance, stamp, occupation, property or other taxes, customs duties, fees,
assessments or charges of any kind whatsoever, together with any inter est and
any penalties, additions to tax or additional amounts imposed by any taxing
authority and (ii) "Tax Return" shall mean any report, return, documents, decla
ration or other information or filing required to be supplied to any taxing
authority or jurisdiction with respect to Taxes.
SECTION 4.13 Employee Plans. (a) Schedule 4.13(a)
of the Company Disclosure Schedule lists all "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and all other employee benefit plans or other benefit
arrangements, including but not limited to all employment and consulting
agreements and all bonus and other incentive compensation, deferred
compensation, disability, severance, retention, salary continuation, vacation,
stock award, stock option, stock purchase, collective bargaining or workers'
compensation agree ments, plans, policies and arrangements which the Company or
any trade or business, whether or not incorporated (an "ERISA Affiliate"), that
together with the Company would be deemed a "single employer" within the meaning
of Sec tion 4001(b) of ERISA, maintains, is a party to, has contributed to or
has any obligation to or liability for current or former employees and directors
of the Company (each an "Employee Benefit Plan" and collectively, the "Employee
Benefit Plans"). Schedule 4.13(a) separately identifies each of such plans and
arrangements Employee Benefit Plan subject to Title IV of ERISA.
(b) True, correct and complete copies of the
following documents with respect to each of the Em ployee Benefit Plans (as
applicable) have been delivered or made available to Buyer: (i) the most recent
plan, document or agreement, related trust documents and all amendments thereto,
(ii) the most recent summary plan description and all related summaries of
material modifi cations, (iii) the annual report on Form 5500 and at tached
schedules filed with the Internal Revenue Service in the last three years, (iv)
the most recent actuarial report, (v) the most recent Internal Revenue Service
determination letter, and (vi) a description of any non- written Employee
Benefit Plan.
(c) Except as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company, (i) all payments
required to be made by or under any Employee Benefit Plan, any related trusts,
or any collective bargaining agreement have been timely made; (ii) the Company
and its ERISA Affiliates have performed all material obligations required to be
performed by them under any Employee Benefit Plan; (iii) the Employee Bene fit
Plans comply in all respects and have been maintained in compliance with their
terms and the requirements of ERISA, the Code and other applicable laws; and
(iv) there are no actions, suits, arbitrations or claims (other than routine
claims for benefits) pending or, to the knowledge of the Company, threatened
with respect to any Employee Benefit Plan.
(d) The Company and its ERISA Affiliates have not
incurred any unsatisfied withdrawal liability with respect to any "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA.
(e) Each Employee Benefit Plan and its related
trust which are intended to be "qualified" within the meaning of Sections 401(a)
and 501(a) of the Internal Revenue Code of 1986, as from time to time amended
(the "Code"), respectively, have been determined by the Inter nal Revenue
Service to be so "qualified" under such Sec tions, as amended by the Tax Reform
Act of 1986, and the Company knows of no fact which would adversely affect the
qualified status of any such Employee Benefit Plan and its related trust.
(f) Except as set forth on Schedule 4.13(f) of the
Company Disclosure Schedule, or as contem plated by this Agreement, neither the
execution and de livery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming due, or
increase the amount of compensa tion due, to any current or former employee or
director of the Company or any of its subsidiaries; (ii) increase any benefits
otherwise payable under any Employment Bene fit Plan; or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(g) No Employee Benefit Plan has an "ac cumulated
funding deficiency" within the meaning of Sec tion 302 of ERISA or Section 412
of the Code, nor has any waiver of the minimum funding standards of Section 302
of ERISA and Section 412 of the Code been requested of or granted by the
Internal Revenue Service with respect to any Employee Benefit Plan, nor has any
lien in favor of any such plan arisen under Section 412(n) of the Code or
Section 302(f) of ERISA.
(h) The "benefits liabilities," as de fined in
Section 4001(a)(16) of ERISA, of each of the Employee Benefit Plans subject to
Title IV of ERISA using the actuarial assumptions that were used in the most
recent actuarial valuation (a true and complete copy of which has been provided
to Buyer) in the event it termi nated each such plan, do not exceed the fair
market value of the assets of each such plan.
(i) No stock or other security issued by the
Company forms or has formed a material part of the assets of any Employee
Benefit Plan.
(j) No Employee Benefit Plan provides medical,
surgical, hospitalization, death or similar benefits (whether or not insured)
for current or former employees or directors of the Company or any of its ERISA
Affiliates for periods extending beyond their retirement or other termination of
service, other than (i) coverage mandated by applicable Laws, (ii) death
benefits under any "pension plan" as defined in Section 3(2) of ERISA, or (iii)
benefits, the full cost of which is borne by such current or former employee or
director (or his or her beneficiary).
SECTION 4.14 Labor Matters. Except to the extent
set forth in Schedule 4.14 of the Disclosure Schedule (i) there is no labor
strike, dispute, slowdown, stoppage or lockout actually pending or threatened,
to the knowledge of the Company, against the Company or any Subsidiary of the
Company and during the past three years there has not been any such action; (ii)
to the knowledge of the Company, there is no current union organizing activities
among the employees of the Company or any Subsidiary of the Company nor does any
question concern ing representation exist concerning such employees; (iii) there
is no unfair labor practice charge or com plaint against the Company or any
Subsidiary of the Com pany pending or, to the knowledge of the Company, threat
ened before the National Labor Relations Board or any similar state or foreign
agency; (iv) there is no griev ance pending relating to any collective
bargaining agree ment or other grievance procedure; (v) to the knowledge of the
Company, no charges with respect to or relating to the Company or any Subsidiary
of the Company are pending before the Equal Employment Opportunity Commission or
any other agency responsible for the prevention of unlawful employment
practices; and (vi) there are no collective bargaining agreements, employment
contracts or severance agreements with any union or any employees of the Company
or any Subsidiary of the Company.
SECTION 4.15 Compliance with Laws. Except as set
forth in Schedule 4.11 (as applicable) and Schedule 4.15 of the Company
Disclosure Schedule, the Company and its Subsidiaries are in compliance in all
material re spects with all laws, statutes, ordinances or regulations except
where such violations, individually or in the aggregate, would not have a
Material Adverse Effect.
SECTION 4.16 Finders' Fees. Except for DLJ, there
is no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf, of the Company or any Subsidiary
of the Company who would be entitled to any fee or commission from the Company,
any Subsidiary of the Company, Buyer or any of Buyer's affiliates upon
consummation of the trans actions contemplated by this Agreement. Other than the
fee payable to DLJ pursuant to the agreement between DLJ and the Company dated
September 2, 1997, as amended April 15, 1998 (the "DLJ Letter"), the Company has
no obliga tions or Commitments to any investment banker or ▇▇▇▇▇ cial advisor in
connection with any future transactions that may be considered or entered into
by the Company after the Effective Time.
SECTION 4.17 Environmental Matters. (a) Except as
set forth in the Company SEC Documents or in Schedule 4.17 of the Company
Disclosure Schedule:
(i) to the Company's knowledge, the
Com pany is and for the past five years has been in material
compliance with Environmental Laws and possesses all permits,
authorizations, licenses or approvals required by Environmental
Laws and neces sary for the operation of the Company and each of
its Subsidiaries;
(ii) the Company has not received
any written communication from any person or entity
(including any Governmental Entity) stating or al leging that the
Company or any of its Subsidiaries is in violation of or may have
liability under Envi ronmental Law (as defined in Section 4.17(c)
hereof) with respect to any actual or alleged environmental
contamination, which if adversely determined could reasonably be
expected to result in the Company or any of its Subsidiaries
incurring material liability under Environmental Laws; neither
the Company nor its Subsidiaries nor, to the Company's knowledge,
any Governmental Entity is conducting or has con ducted any
environmental remediation or environmen tal investigation which
could reasonably be expected to result in liability for the
Company or its Sub sidiaries under Environmental Law; and the
Company and its Subsidiaries have not received any request for
information under Environmental Law from any Governmental Entity
with respect to any actual or alleged environmental
contamination, except, in each case, for communications,
environmental remediation and investigations and requests for
information which would not, individually or in the aggregate,
reasonably be expected to result in the Company or any of its
Subsidiaries incurring material liability under Environmental
Laws;
(iii) since January 1, 1998, the
Company and its Subsidiaries have not received any written
communication from any person or entity (including any
Governmental Entity) stating or alleging that the Company or its
Subsidiaries may have violated any Environmental Law, or that the
Company or its Subsidiaries has caused or contributed to any envi
ronmental contamination that has caused any property damage or
personal injury under Environmental Law, except, in each case,
for statements and allegations of violations and statements and
allegations of responsibility for property damage and personal
injury which would not, individually or in the ag gregate, result
in the Company or any of its Subsid iaries incurring material
liability under Environ mental Laws;
(iv) the Company and its
Subsidiaries are not aware of any facts, circumstances or
conditions arising out of or related to the Company or its
Subsidiaries or to any real property currently or formerly owned,
operated or leased by or for the Company or its Subsidiaries,
which could reasonably
be expected to result in the Company or its Subsid iaries
incurring material liability under Environ mental Laws; and
(v) to the knowledge of the
Company, the transactions contemplated by this Agreement do not
trigger the New Jersey Industrial Site Recovery Act or any
similar environmental property transfer law;
(b) (i) The Company has provided Buyer with true
and correct copies of any and all material environ mental investigation, study,
audit, test, review and other analysis in the possession of the Company or its
Subsidiaries conducted in relation to the business of the Company or any
property or facility now or previously owned, operated or leased by the Company
or any Subsid iary; and (ii) the Company has not knowingly withheld from Buyer
any consent decree, consent order or similar document in force and to which it
is a party relating to any property currently owned, leased or operated by the
Company or its Subsidiaries.
(c) For purposes of this Section 4.17, "Envi
ronmental Law" means all applicable state, federal and local laws, regulations
and rules, including common law, judgments, decrees and orders relating to
pollution, the preservation of the environment, and the release of mate rial
into the environment.
SECTION 4.18 Property. The Company and its
Subsidiaries, as the case may be, have good and valid title to, or in the case
of leased property, have valid leasehold interests in all properties and assets
neces sary to conduct the business of the Company as currently conducted, free
and clear of all Liens or encumbrances of any nature whatsoever, except (i) any
Lien for current Taxes, payments of which are not yet delinquent, (ii) such
imperfections in title, easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Company's business
operations or (iii) as disclosed in the Company SEC Documents. There are no
developments affecting any of such properties or assets pending or, to the
knowledge of the Company threatened, which, could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 4.19 Trademarks. (a) The Company and its
Subsidiaries own or possess adequate licenses or other valid rights to use all
trademarks, trademark rights, copyrights, patents, software, trade names and
trade name rights which are material to the Company's business and operations
(collectively, "Material Trade marks") used or held for use in connection with
the busi ness of the Company and the Subsidiaries as currently conducted in all
material respects. Except set forth in Schedule 4.19(a), all Material Trademarks
are validly registered or registrations have been applied for.
(b) The Company, except as set forth in Sched ule
4.19(b) of the Company Disclosure Schedule, is un aware of any assertion or
claim challenging the validity of any Material Trademark. Except as set forth in
Sched ule 4.19(b) of the Company Disclosure Schedule, the con duct of the
business of the Company and its Subsidiaries as currently conducted does not
conflict with any trade ▇▇▇▇, trademark right, copyright, patent, software li
cense, trade name or trade name right of any third party in a manner that could
reasonably be expected, individu ally or in the aggregate, to have a Material
Adverse Effect. To the knowledge of the Company, there are no material
infringements of any Material Trademarks.
SECTION 4.20 Material Contracts. (a) Except as set
forth on Schedule 4.20 of the Company Disclosure Schedule, the Company SEC
Documents list all Material Contracts (as defined below) of the Company, and
except as set forth on Schedule 4.20 of the Company Disclosure Schedule or in
the Company SEC Documents, to the knowl edge of the Company, each Material
Contract is valid, binding and enforceable and in full force and effect; except
where such failure to be valid, binding and en forceable and in full force and
effect, individually or in the aggregate, would not have a Material Adverse Ef
fect, and there are no defaults thereunder, except those defaults that,
individually or in the aggregate, would not have a Material Adverse Effect. For
purposes of this Agreement, "Material Contracts" shall mean (i) all con tracts,
agreements or understandings with customers of the Company and its Subsidiaries
in the last fiscal year where each customers' contracts, agreements or under
standings in the aggregate account for more than $3 mil lion of the Company's
annual revenues; (ii) all acquisi tion, merger, asset purchase or sale
agreements entered into and not rescinded by the Company in the last two fiscal
years with a transaction value in excess of $3
million; and (iii) any other agreement within the meaning set forth in Item
601(b)(10) Regulation S-K of Title 17, Part 229 of the Code of Federal
Regulations. The Company has previously made available to the Buyer true and cor
rect copies of the Material Contracts.
SECTION 4.21 Insurance. Schedule 4.21 of the
Company Disclosure Schedule sets forth the insurance policies and programs
maintained by the Company.
SECTION 4.22 Year 2000 Compliance. As set forth on
Schedule 4.22 of the Company Disclosure Sched ule, the Company has a remediation
program which it pres ently believes will result in all Date Data and Date
Sensitive Systems of the Company and each Subsidiary of the Company being Year
2000 Compliant prior to December 31, 1999. "Date Data" means any data of any
type that includes date information or which is otherwise derived from,
dependent on or related to date information. "Date-Sensitive System" means any
software, microcode or hardware system or component, including any electric or
electronically controlled system or component, that pro cesses any Date Data and
that is installed, in develop ment or on order by the Company or any Subsidiary
of the Company for their internal use, or which the Company or any Subsidiary of
the Company sells, leases, licenses, assigns or otherwise provides, or the
provision or opera tion of which the Company and any Subsidiary of the Com pany
provides the benefit, to its customers, vendors, suppliers, affiliates or any
other third party. "Year 2000 Compliant" means (i) with respect to Date Data,
that such data is in proper format and accurate for all dates in the twentieth
and twenty-first centuries, and (ii) with respect to Date-Sensitive Systems,
that each such system accurately processes all Date Data, including for the
twentieth and twenty-first centuries, without loss of any functionality or
performance, including but not lim ited to calculating, comparing, sequencing,
storing and displaying such Date Data (including all leap year con siderations),
when used as a stand-alone system or in combination with other software or
hardware.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER AND MERGER SUBSIDIARY
Buyer and Merger Subsidiary represent and war rant
to the Company that:
SECTION 5.1 Corporate Existence and Power. Each of
Buyer and Merger Subsidiary is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation, and
except as set forth on Schedule 5.1 of the disclosure schedule delivered by
Buyer and Merger Subsidiary attached hereto (the "Buyer Disclosure Schedule"),
has all corporate powers and all Licenses required to carry on its business as
now conducted except where the failure to have any such License would not,
individually or in the aggregate, have a Material Adverse Effect. Each of Buyer
and Merger Subsidiary is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the fail ure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect.
Each of Buyer and Merger Subsidiary has heretofore delivered or made available
to the Company true and complete copies of the Buyer's and Merger Subsidiary's
Certificate of Incorpora tion and By-laws as currently in effect.
SECTION 5.2 Corporate Authorization. The execution,
delivery and performance by Buyer and Merger Subsidiary of this Agreement and
the consummation by Buyer and Merger Subsidiary of the transactions contem
plated hereby are within the corporate powers of Buyer and Merger Subsidiary and
have been duly authorized by all necessary corporate action. This Agreement,
assuming due and valid authorization, execution and delivery by the other
parties hereto, constitutes a valid and binding agreement of each of Buyer and
Merger Subsidiary except that (i) enforcement may be subject to applicable bank
ruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting cred itors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
SECTION 5.3 Governmental Authorization. The
execution, delivery and performance by Buyer and Merger Subsidiary of this
Agreement and the consummation by Buyer and Merger Subsidiary of the
transactions contem plated by this Agreement require no action by or in re spect
of, or filing with, any governmental body, agency, official or authority other
than (i) the filing of a certificate of merger in accordance with the DGCL; (ii)
compliance with any applicable requirements of the HSR Act; and (iii) compliance
with any applicable require ments of the Exchange Act.
SECTION 5.4 Non-Contravention. The execution,
delivery and performance by Buyer and Merger Subsidiary of this Agreement and
the consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the certificate of
incorporation or by-laws of Merger Subsid iary or Buyer, (ii) assuming
compliance with the matters referred to in Section 5.3 hereof, contravene or
conflict or constitute a violation of any provision of law, regu lation,
judgment, injunction, order or decree binding upon or applicable to Buyer or
Merger Subsidiary, or (iii) with or without the giving of notice or passage of
time or both, constitute a material default under or give rise to a right of
termination, cancellation or accelera tion of any right or obligation of Buyer
or Merger Sub sidiary or to a material loss of any benefit to which Buyer or
Merger Subsidiary or any license, franchise, permit or other similar
authorization held by Buyer or Merger Subsidiary, or (iv) result in the creation
or imposition of any Lien on any asset of Buyer or Merger Subsidiary excluding
from the foregoing clauses (ii), (iii) or (iv) such violations, breaches,
defaults or Liens which would not have a Material Adverse Effect, and which will
not materially impair the ability of Buyer and Merger Subsidiary to consummate
the transactions contem plated hereby.
SECTION 5.5 Disclosure Documents. (a) The
information with respect to Buyer and its Subsidiaries and Merger Subsidiary
that Buyer and Merger Subsidiary furnish to the Company in writing specifically
for use in any Company Disclosure Document will not contain, any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading (i) in the case of the Company Proxy Statement (defined in Section
6.2 herein), at the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stock holders of the Company, at the time
the stockholders vote on adoption of this Agreement and at the Effective Time,
and (ii) in the case of any Company Disclosure Document other than the Company
Proxy Statement, at the time of the filing thereof, at the consummation of the
Offer and at the time of any distribution thereof.
(b) The Offer Documents, when filed, will comply as
to form in all material respects with the ap plicable requirements of the
Exchange Act. The Offer Documents will not at the time of the filing thereof, at
the time of any distribution, publication or any mailing thereof or at the time
of consummation of the Offer, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the state ments made therein,
in the light of the circumstances under which they were made, not misleading;
provided that this representation and warranty will not apply to state ments or
omissions in the Offer Documents based upon information furnished to Buyer or
Merger Subsidiary in writing by the Company specifically for use therein.
SECTION 5.6 Finders' Fees. There is no in vestment
banker, broker, finder or other intermediary who might be entitled to any fee or
commission in connection with or upon consummation of the transactions contem
plated by this Agreement based upon arrangements made by or on behalf of Buyer
or Merger Subsidiary.
SECTION 5.7 Financing. Buyer has provided to the
Company copies of an equity commitment letter from Onex Corporation satisfactory
to the Company. Buyer and Merger Subsidiary have or will have, prior to the
expira tion of the Offer and prior to the Effective Time, suffi cient funds
available to purchase all of the Shares out standing on a fully diluted basis
and to pay all related fees and expenses pursuant to the Offer and the Merger
and this Agreement.
SECTION 5.8 Solvency. At and following the
expiration date of the Offer and at the Closing Date, each of Buyer and Merger
Subsidiary, in each case to gether with their respective Subsidiaries, will be,
on a consolidated basis, Solvent after giving effect to the
purchase and sale of the Shares and any other transac tions contemplated hereby
or by Merger Subsidiary or any of its affiliates on such date or which would be
other wise taken into account in determining whether the pur chase and sale of
the Shares or any of the transactions contemplated hereby were a fraudulent
conveyance or im permissible dividend under applicable law. For the pur pose of
the representation and warranty contained in this Section, Buyer shall be
entitled to assume that the rep resentations and warranties of the Company
regarding its liabilities on a consolidated basis are true and correct in all
material respects.
SECTION 5.9 Share Ownership. As of the date
hereof, Buyer and Merger Subsidiary do not own any
Shares.
SECTION 5.10 Merger Subsidiary's Operations. Merger
Subsidiary was formed solely for the purpose of engaging in the transactions
contemplated hereby and has not engaged in any business activities or conducted
any operations other than in connection with the transactions contemplated
hereby.
ARTICLE VI
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 6.1 Conduct of the Company. From the date
hereof until the Effective Time, the Company and its Subsidiaries shall conduct
their business in the ordinary course, consistent with past practices, and shall
use their best commercially reasonable efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of their present officers, employees and business associ ates. Without
limiting the generality of the foregoing, other than (i) in the ordinary course
of business consis tent with past practices, (ii) as set forth on Schedule 6.1
of the Company Disclosure Schedule, (iii) as specifi cally contemplated by this
Agreement or (iv) with the written consent of Buyer or Merger Subsidiary (such
con sent which shall not be unreasonably withheld), from the date hereof until
the Effective Time, the Company will not:
(a) declare, set aside or pay any dividend (other
than regular quarterly dividends) or other distribution with
respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any
Subsid iary of the Company of any outstanding shares of capital
stock or other securities of, or other own ership interests in,
the Company or any Subsidiary of the Company;
(b) issue or sell any additional shares of, or
securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire,
any shares of capital stock of any class of the Company or any
Subsidiary of the Company, other than issuances pursuant to the
exer cise of options outstanding on the date hereof and disclosed
on Schedule 4.5 of the Company Disclosure Schedule;
(c) amend any material term of the certificate of
incorporation, by-laws or any outstanding secu rity of the
Company or any Subsidiary of the Com pany;
(d) split, combine or reclassify its outstand ing
capital stock;
(e) incur, assume or guarantee by the Company or
any Subsidiary of the Company of any indebtedness for borrowed
money;
(f) make any loan, advance or capital contri bution
to or invest in any Person;
(g) cause or willfully permit any damage,
destruction or other casualty loss (whether or not covered by
insurance) affecting the business or assets of the Company or any
Subsidiary of the Com pany which has had or could reasonably be
expected to have a Material Adverse Effect;
(h) enter into any transaction, commitment,
contract or agreement by the Company or any Subsid iary of the
Company relating to their assets or business (including the
acquisition or disposition of any assets) or relinquish any
contract or other right, in either case, that have had or could
rea sonably be expected to have a Material Adverse Ef fect, other
than those contemplated by this Agree ment;
(i) neither the Company nor any Subsidiary of the
Company shall pay, discharge, or satisfy any material claims,
liabilities or other obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise) other than the
payment, discharge or satisfaction in the ordinary course of
business, consistent with past practices, of liabil ities
reflected or reserved against in the ▇▇▇▇▇▇▇ dated financial
statements of the Company or in curred since the most recent date
thereof pursuant to an agreement or transaction described in this
Agreement or incurred in the ordinary course of business,
consistent with past practices;
(j) neither the Company nor any Subsidiary of the
Company will amend or modify any existing Affil iate Transaction
or enter into any new Affiliate Transaction other than with the
prior written con sent of the Buyer;
(k) change any method of accounting or account ing
practice by the Company or any Subsidiary of the Company, except
for any such change required by reason of a concurrent change in
GAAP;
(l) (A) grant any severance or termination pay to
any director, officer or employee of the Company or any
Subsidiary of the Company, (B) enter into any employment,
deferred compensation or other simi lar agreement (or any
amendment to any such existing agreement) with any director,
officer or employee of the Company or any Subsidiary of the
Company, (C) increase the benefits payable under any existing
severance or termination pay policies or employment agreements or
(D) increase the compensation, bonus or other benefits payable to
any director, officer or employee of the Company or any
Subsidiary of the Company; or
(m) authorize any of, or commit or agree to take
any of, the foregoing actions except as other wise permitted by
this Agreement.
SECTION 6.2 Stockholder Meeting; Proxy Mate rial.
The Company shall cause a meeting of its stock holders (the "Company Stockholder
Meeting") to be duly
called and held as soon as reasonably practicable for the purpose of voting on
the approval and adoption of this Agreement and the Merger. The Board of
Directors of the Company shall recommend approval and adoption of this Agreement
and the Merger by the Company's stockholders; provided that the Company's Board
of Directors may with draw, modify or change such recommendation if it has
determined, after consultation with outside legal counsel to the Company, that
such recommendation would likely be inconsistent with the Board of Directors'
fiduciary du ties under applicable law. In connection with such meet ing, the
Company (i) will promptly, after the consumma tion of the Offer, prepare and
file with the SEC, will use its reasonable efforts to have cleared by the SEC
and will thereafter mail to its stockholders as promptly as practicable a proxy
statement and all other proxy materi als for such meeting (the "Company Proxy
Statement"), (ii) will use its reasonable efforts to obtain the neces sary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby and (iii) will oth erwise comply in all material respects
with all legal requirements applicable to such meeting.
SECTION 6.3 Access to Information; Confidenti ality
Agreement. (a) From the date hereof until the Effective Time, the Company will
give Buyer, its counsel, financial advisors, auditors and other authorized repre
sentatives reasonable access during normal business hours to the offices,
properties, books and records of the Company and the Subsidiaries of the
Company, will furnish to Buyer, its counsel, financial advisors, auditors and
other authorized representatives such financial and oper ating data and other
information as such Persons may reasonably request and will instruct the
Company's em ployees, counsel, financial advisors and independent auditors to
cooperate with Buyer in its investigation of the business of the Company and the
Subsidiaries of the Company; provided that all requests for information, to
visit plants or facilities or to interview the Company's employees or agents
should be directed to and coordinated with an executive officer of the Company;
and provided further that any information received by Buyer or its
representatives shall remain subject to the Confidential ity Agreement dated
December 3, 1998 between Buyer and the Company (the "Confidentiality
Agreement").
(b) The Company shall confer on a regular and
frequent basis with one or more designated representa tives of Buyer to report
operational matters of material ity, the general status of ongoing operations
and such other matters as Buyer may reasonably request.
(c) The parties hereto agree that the Confi
dentiality Agreement shall be hereby amended to provide that any provision
therein which in any manner limits, restricts or prohibits the voting or
acquisition of Shares by Buyer or any of its affiliates or the represen tation
of Buyer's designees on the Company's Board of Directors or which in any manner
would be inconsistent with this Agreement or the transactions contemplated
hereby shall be amended as of the date hereof to permit the acquisition of
Shares pursuant to the Offer and the Merger, the voting of Shares at the Company
Stockholder Meeting or to otherwise affect the transactions contem plated
hereby. The Confidentiality Agreement shall oth erwise remain in full force and
effect.
SECTION 6.4 No Solicitation. From the date
of this Agreement until the termination of this Agree ment, the Company and its
Subsidiaries will not, and the Company will use its reasonable efforts to ensure
that the respective officers, directors, employees, agents, advisors or other
representatives of the Company and its Subsidiaries will not, directly or
indirectly (i) so licit, initiate or encourage any Acquisition Proposal (as
defined below) or (ii) engage in negotiations or discus sions with, or disclose
any nonpublic information relat ing to the Company or any Subsidiary of the
Company or afford access to the properties, books or records of the Company or
any Subsidiary of the Company to, any Person concerning an Acquisition Proposal;
provided that, if the Company's Board of Directors determines in good faith,
after consultation with outside legal counsel to the Company, that the failure
to engage in such negotiations or discussions or provide such information would
likely be inconsistent with the Board of Directors' fiduciary duties under
applicable law, the Company may in response to an Acquisition Proposal, which
must be a Superior Proposal (as defined below), furnish information with respect
to the Company and its Subsidiaries pursuant to a confidentiality agreement and
participate in negotiations and enter into agreements regarding such Acquisition
Proposal. The Company will promptly inform Buyer as to the fact that information
is to be provided and the iden tity of the third party after receipt of any
Acquisition Proposal and will keep Buyer informed of the status and details of
any such Acquisition Proposal, indication or request. For purposes of this
Agreement, "Acquisition
Proposal" means any offer or proposal for a merger or other business combination
involving the Company or any Subsidiary of the Company or the acquisition of any
eq uity interest in, or a substantial portion of the assets of, the Company or
any Subsidiary of the Company, other than the transactions contemplated by this
Agreement. For purposes of this Agreement, "Superior Proposal" means any bona
fide Acquisition Proposal, which proposal was not solicited by the Company after
the date of this Agreement, made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities (the value of
any such securities to be deter mined in good faith with the advice of a
nationally rec ognized investment banking firm) more than a majority of the
Shares then outstanding or all or substantially all of the assets of the
Company, and otherwise on terms which the Board of Directors of the Company
determines in good faith to be more favorable to the Company and its
stockholders than the Offer and the Merger (based on advice of the Company's
financial advisor that the value of the consideration provided for in such
proposal is superior to the value of the consideration provided for in the Offer
and Merger) and has a reasonable prospect of being consummated in accordance
with its terms. Further more, nothing contained in this Section 6.4 shall pro
hibit the Company or its Board of Directors from taking and disclosing to the
Company's stockholders a position with respect to a tender or exchange offer by
a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the
Exchange Act or from making such disclosure to the Company's stockholders or
making such disclosure as may be required by applicable law.
SECTION 6.5 Conveyance Taxes. The Company shall
timely pay any real property transfer or gains, sales, use, transfer, value
added, stock transfer and stamp taxes, any transfer, recording, registration and
other fees, and any similar taxes (collectively, the "Conveyance Taxes") which
become payable prior to the Effective Time in connection with the transactions
con templated hereunder that are required to be paid in con nection therewith.
SECTION 6.6 Directors Stock Plan. Immediately prior
to the acceptance for payment by Merger Subsidiary of any Shares tendered
pursuant to the Offer, the Company shall amend the Company's 1996 Non-Qualified
Non-Employee Directors Stock Option Plan to provide that the Merger Subsidiary's
designees elected or appointed pursuant to
Section 1.3 hereof shall not be entitled to receive any of the Company's capital
stock or other benefits under the Company's Directors Stock Plan.
ARTICLE VII
COVENANTS OF BUYER
Buyer agrees that:
SECTION 7.1 Obligations of Merger Subsidiary. Buyer
will take all action necessary to cause Merger Subsidiary to perform its
obligations under this Agree ment and to consummate the Offer and the Merger on
the terms and conditions set forth in this Agreement.
SECTION 7.2 Voting of Shares. Merger Subsid iary
shall and Buyer shall cause Merger Subsidiary to vote all Shares beneficially
owned by Merger Subsidiary or its affiliates in favor of adoption and approval
of the Merger and this Agreement at the Company Stockholder Meeting.
SECTION 7.3 Director and Officer Insurance. (a)
Buyer, Merger Subsidiary and the Company agree that all rights to
indemnification and all limitations on liability existing in favor of any
officer, director, employee or agent of the Company and any of its subsid iaries
(the "Indemnitees") as provided in the Company Certificate of Incorporation,
Company By-laws or a Mate rial Contract as in effect as of the date hereof shall
survive the Merger and continue in full force and effect. For five years after
the Effective Time, Buyer will, and will cause the Surviving Corporation to,
provide offi cers' and directors' liability insurance in respect of acts or
omissions occurring prior to the Effective Time covering each such Person
currently covered by the Com pany's officers' and directors' liability insurance
pol icy on terms with respect to coverage and amount no less favorable than
those of such policy in effect on the date hereof. Buyer agrees that, should the
Surviving Corpora tion fail to comply with the obligations of this Section 7.3,
Buyer shall be responsible therefor. It is under stood that the Indemnitees will
seek to be reimbursed for any liability or loss from such Indemnitee's liability
insurance policy prior to seeking any other reimbursement provided for herein,
including that referred to in the first sentence of this section.
(b) In the event the Company or the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other person or entity or (ii) transfers all or
substantially all of its properties or assets to any Person, then, and in each
case, proper provision shall be made so that successors and assigns of the
Company or the Surviving Corporation, as the case may be, honor the obligations
set forth in this Section 7.3 and the agreements set forth in Section 8.6(b)
hereof.
(c) The obligations of the Company, the Sur viving
Corporation, and Buyer under this Section 7.3 and Section 8.6 hereof shall not
be terminated or modified in such a manner as to adversely affect any Person to
whom this Section 7.3 or Section 8.6 hereof applies without the consent of such
affected Person (it being expressly agreed that the Persons to whom this Section
7.3 and Section 8.6(b) hereof applies shall be third party bene ficiaries of
this Section 7.3 and Section 8.6(b) hereof).
SECTION 7.4 Investment Banking Fees. The Company
has provided to Buyer a copy of the DLJ Letter.
ARTICLE VIII COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
SECTION 8.1 Reasonable Efforts. Subject to the
terms and conditions of this Agreement, each party will use its reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions con templated by this Agreement, and
to consummate the Merger by April 30, 1999. Nothing in this Section 8.1 or other
wise in this Agreement shall prevent or restrict the Company from entering into
a definitive agreement with a third party in connection with an Acquisition
Proposal that the Board of Directors determines in good faith, after
Consultation with its legal counsel, is a Superior Proposal.
SECTION 8.2 Certain Filings. The Company and Buyer
shall cooperate with one another and use their best
commercially reasonable efforts (a) in connection with the preparation of the
Company Disclosure Documents and the Offer Documents, and (b) in determining
whether any action by or in respect of, or filing with, any Govern mental Entity
is required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (c) in
seeking promptly any such actions, consents, approvals or waivers or making any
such fil ings, furnishing information required in connection therewith or with
the Company Disclosure Documents or the Offer Documents and seeking timely to
obtain any such actions, consents, approvals or waivers.
SECTION 8.3 Public Announcements. The initial press
releases with respect to the execution of this Agreement shall be approved in
advance by both Buyer and the Company. Buyer and the Company will consult with
each other before issuing any press release or making any public statement with
respect to this Agreement and the transactions contemplated hereby and, except
as may be required by applicable law or any listing agreement with any national
securities exchange or foreign securities exchange, will not issue any such
press release or make any such public statement prior to such consultation.
SECTION 8.4 Conveyance Taxes. Buyer and the Company
shall cooperate in the preparation, execution and filing of all Tax Returns,
questionnaires, applications, or other documents regarding any Conveyance Taxes
which become payable in connection with the transactions con templated hereunder
that are required or permitted to be filed on or before the Effective Time.
SECTION 8.5 Further Assurances. At and after the
Effective Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company or
Merger Subsidiary, any deeds, bills of sale, assignments or assurances and to
take and do, in the name and on behalf of the Company or Merger Subsidiary, any
other actions and things to vest, perfect or confirm of record or otherwise in
the Surviving Corporation any and all right, title and interest in, to and under
any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger.
SECTION 8.6 Employee Matters. (a) For a period of
one year immediately following the Closing Date Buyer agrees to cause the
Surviving Corporation and its Subsidiaries to provide to all active employees of
the Company who continue to be employed by the Company as of the Effective Time
("Continuing Employees") coverage under existing benefit plans or arrangements
which is no less favorable than those provided to the employees imme diately
prior to the Closing Date. During the second year following the Closing Date,
Buyer agrees to cause the Surviving Corporation and its Subsidiaries to provide
Continuing Employees coverage under benefit plans and arrangements no less
favorable in the aggregate than those provided to the employees immediately
prior to the Closing Date.
(b) Buyer shall, and shall cause its Subsid iaries
to, honor in accordance with their terms all agreements, contracts,
arrangements, commitments and understandings described in Schedule 8.6 of the
Company Disclosure Schedule.
SECTION 8.7 Stockholder Litigation. The Com pany
and the Buyer agree that in connection with any litigation which may be brought
against the Company or its directors relating to the transactions contemplated
hereby, the Company will keep Buyer, and any counsel which Buyer may retain,
informed of the course of such litigation, to the extent Buyer is not otherwise
a party thereto, and the Company agrees that it will consult with Buyer prior to
entering into any settlement or compromise of any such stockholder litigation;
provided that no such settlement or compromise will be entered into without
Buyer's prior written consent, which consent shall not be unreasonably withheld.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.1 Conditions to the Obligations of Each
Party. The obligations of the Company, Buyer and Merger Subsidiary to consummate
the Merger are subject to the satisfaction on or prior to the Effective Time of
the following conditions, except to the extent permitted by applicable law, that
such conditions may be waived:
(i) if required by the DGCL, this Agreement shall
have been adopted by the stockholders of the Company in
accordance with such Law;
(ii) any applicable waiting period under the HSR
Act relating to the Merger shall have expired;
(iii) no provision of any applicable law or
regulation and no judgment, injunction, order or decree shall
prohibit the consummation of the Merger; and
(iv) Buyer or Merger Subsidiary shall have
purchased the Shares pursuant to the Offer.
ARTICLE X
TERMINATION
SECTION 10.1 Termination. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time (notwithstanding any approval of this Agreement by the stockholders of the
Company):
(i) by mutual written consent of the Company and
Buyer;
(ii) by either the Company or Buyer, if the Offer
has not been consummated within 45 business days after the date
of execution of this Agreement (as such date may be extended
pursuant to the pro viso to this sentence, the "Outside
Termination Date"); provided, however, that the right to termi
nate this Agreement under this paragraph shall not be available
to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure to
meet the date requirements of this paragraph;
(iii) by either the Company or Buyer, if there
shall be any law or regulation that makes consumma tion of the
Merger illegal or if any judgment, in junction, order or decree
enjoining Buyer or the Company from consummating the Merger is
entered and such judgment, injunction, order or decree shall
become final and nonappealable;
(iv) by the Company, if Buyer or Merger Subsid iary
breaches or fails in any material respect to perform or comply
with any of its material covenants and agreements contained
herein or breaches its representations and warranties in any
material re spect;
(v) by Buyer, if the Company breaches or fails in
any material respect to perform or comply with any of its
material covenants and agreements con tained herein or breaches
its representations and warranties in any material respect; or
(vi) by either the Company or Buyer, upon the
Company entering into a definitive agreement in connection with
an Acquisition Proposal that the Board of Directors determines in
good faith, after consultation with its legal counsel is a
Superior Proposal.
The party desiring to terminate this Agreement pursuant to clauses (ii), (iii),
(iv) or (v) shall give written notice of such termination to the other party in
accor dance with the notice procedures set forth in Section 12.1.
SECTION 10.2 Effect of Termination. (a) If
this Agreement is terminated pursuant to Section 10.1 hereof, this Agreement
shall become void and of no effect with no liability on the part of any party
hereto; pro vided that the agreements contained in Sections 4.16, 10.2 and 12.4
hereof shall survive the termination hereof; and provided, further that the
Confidentiality Agreement shall remain in full force and effect and Sec tion
6.3(b) hereof shall have no binding effect whatso ever.
(b) In the event that this Agreement is terminated
by the Company pursuant to Section 10.1(v) hereof, the Company shall pay to
Buyer by wire transfer of immediately available funds to an account designated
by Buyer on the next business day following such termina tion, an amount equal
to $3,000,000.
ARTICLE XI
DEFINED TERMS
For the purposes of this Agreement, the follow ing
terms shall have the following respective meanings:
"Acquisition Proposal" shall have the meaning set
forth in Section 6.4.
"Affiliate Transaction" shall have the meaning set
forth in Section 4.10 (j).
"Agreement" shall have the meaning set forth in the
Introduction.
"Buyer" shall have the meaning set forth in
Introduction.
"Buyer Disclosure Schedule" shall have the meaning
set forth in Section 5.1.
"Certificate of Merger" shall have the meaning set
forth in Section 2.1(b).
"Closing" shall have the meaning set forth in
Section 2.7.
"Closing Date" shall have the meaning set forth in
Section 2.7.
"Code" shall have the meaning set forth in Section
4.13(e).
"Company" shall have the meaning set forth in the
Introduction.
"Company By-laws" means the by-laws of the Company
as in effect on the date of this Agreement.
"Company Certificate of Incorporation" means the
certificate of incorporation of the Company as in effect on the date of this
Agreement.
"Company Disclosure Documents" shall have the
meaning set forth in Section 4.9.
"Company Disclosure Schedule" shall have the
meaning set forth in Section 1.3(c).
"Company Proxy Statement" shall have the mean ing
set forth in Section 6.2.
"Company SEC Documents" shall have the meaning
set forth in Section 4.7.
"Company Securities" shall have the meaning set
forth in Section 4.5.
"Company Stockholder Meeting" shall have the
meaning set forth in Section 6.2.
"Confidentiality Agreement" shall have the meaning
set forth in Section 6.3.
"Continuing Directors" shall have the meaning set
forth in Section 1.3(a).
"Continuing Employees" shall have the meaning set
forth in Section 8.6(a).
"Conveyance Taxes" shall have the meaning set forth
in Section 6.5.
"Date Data" shall have the meaning set forth in
Section 4.22.
"Date-Sensitive System" shall have the meaning set
forth in Section 4.22.
"Depositary" shall have the meaning set forth in
Section 2.3(a).
"DGCL" shall have the meaning set forth in the
Introduction.
"Dissenting Shares" shall have the meaning set
forth in Section 2.4.
"DLJ" shall have the meaning set forth in Sec tion
1.2 (b).
"Effective Time" shall have the meaning set forth
in Section 2.1(b).
"Employee Benefit Plans" shall have the meaning set
forth in Section 4.13(a).
"Environmental Law" shall have the meaning set
forth in Section 4.17(c).
"ERISA" shall have the meaning set forth in
Section 4.13.
"ERISA Affiliate" shall have the meaning set forth
in Section 4.13(a).
"Exchange Act" shall have the meaning set forth in
Section 1.1(a).
"GAAP" shall have the meaning set forth in Section
4.8.
"Group" shall have the meaning set forth in Annex
I.
"Governmental Entity" shall have the meaning set
forth in Section 4.3.
"HSR Act" shall have the meaning set forth in
Section 4.3.
"Indemnitees" shall have the meaning set forth in
Section 7.3.
"Knowledge" or "knowledge" means, with respect to
the Company and/or any Subsidiary thereof, knowledge of the current President,
Chief Financial Officer and Executive Vice President of the Company after
reasonable investigation and inquiry commensurate with that of a reasonable
person holding such a position with a public company.
"Licenses" shall have the meaning set forth in
Section 4.1.
"Lien" shall have the meaning set forth in Section
4.4.
"Material Adverse Effect" shall have the mean ing
set forth in Section 4.1.
"Material Contracts" shall have the meaning set
forth in Section 4.20.
"Material Trademarks" shall have the meaning set
forth in Section 4.19(a).
"Merger" shall have the meaning set forth in
Section 2.1(a).
"Merger Consideration" shall have the meaning set
forth in Section 2.2(c).
"Merger Subsidiary" shall have the meaning set
forth in the Introduction.
"Minimum Condition" shall have the meaning set
forth in Annex I.
"Offer" shall have the meaning set forth in the
Introduction.
"Offer Documents" shall have the meaning set forth
in Section 1.1(b).
"Offer Price" shall have the meaning set forth in
the Introduction.
"Option" shall have the meaning set forth in
Section 2.5(a).
"Option Plans" shall have the meaning set forth in
Section 2.5(a).
"Outside Termination Date" shall have the mean ing
set forth in Section 10.1(ii).
"PBGC" shall have the meaning set forth in Section
4.13(c).
"Person" shall have the meaning set forth in
Section 2.3(c).
"Plans" shall have the meaning set forth in Section
4.13(a).
"Preferred Stock" shall have the meaning set forth
in Section 4.5.
"Qualified Plans" shall have the meaning set forth
in Section 4.5.
"Schedule 14D-9" shall have the meaning set forth
in Section 1.2(d).
"SEC" shall have the meaning set forth in Sec tion
1.1(b).
"Secretary of State" shall have the meaning set
forth in Section 2.1(b).
"Securities Act" shall have the meaning set forth
in Section 4.7.
"Shares" shall have the meaning set forth in
Introduction.
"single employer" shall have the meaning set forth
in Section 4.13(a).
"Solvent" shall mean, with respect to any Per son,
that (a) the fair saleable value of the property of such Person is, on the date
of determination, greater than the total amount of liabilities (including contin
gent and unliquidated liabilities) of such Person as of such date, (b) as of
such date, such Person is able to pay all of its liabilities as such liabilities
mature, (c) such Person does not have unreasonably small capital for conducting
the business theretofore or proposed to be conducted by such Person and its
Subsidiaries, and (d) such Person has not incurred nor does it plan to incur
debts beyond its ability to pay as they mature. The amount of any contingent or
unliquidated liability at any time will be computed as the amount which, in
light of all the facts and circumstances existing at such time, can reasonably
be expected to become an actual or matured liability.
"Subsidiary" shall have the meaning set forth in
Section 4.6.
"Superior Proposal" shall have the meaning set
forth in Section 6.4.
"Surviving Corporation" shall have the meaning set
forth in Section 2.1(a).
"Tax Return" shall have the meaning set forth in
Section 4.12(b)(i).
"Taxes" shall have the meaning set forth in Section
4.12(b)(i).
"The 1995 Plan" shall have the meaning set forth in
Section 4.5.
"The 1996 Plan" shall have the meaning set forth in
Section 4.5.
"Year 2000 Compliant" shall have the meaning set
forth in Section 4.22.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Notices. All notices, requests and
other communications to any party hereunder shall be in writing (including
telecopy or similar writing) and shall be given,
if to Buyer or Merger Subsidiary, to:
CUSTOMERONE HOLDING CORPORATION
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company, to:
LCS Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with copies to:
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
and:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or such other address or telecopy number as such party may hereafter specify for
the purpose of giving notice to the other parties hereto. Each such notice,
request or other communication shall be effective (i) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified in this Section
12.1 and the appropriate telecopy confirmation is received or (ii) if given by
any other means, when delivered at the address specified in this Sec tion 12.1.
SECTION 12.2 Nonsurvivial of Representations and
Warranties. The representations and warranties contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement. All covenants and
agreements contained herein which by their terms are to be performed in whole or
in part subsequent to the Effective Time shall survive the Merger in accordance
with their terms. Nothing contained in this Section 12.2 shall relieve any party
from liability for any willful breach of this Agreement.
SECTION 12.3 Amendments; No Waivers. (a) Except as
may otherwise be provided herein, any provision of this Agreement may be amended
or waived prior to the Effective Time if, and only if, such amendment or waiver
is in writing and signed, in the case of an amendment, by the Company, Buyer and
Merger Subsidiary or in the case of a waiver, by the party against whom the
waiver is to be effective; pro vided that after the adoption of this Agreement
by the stockholders of the Company, no such amendment or waiver shall, without
the further approval of such stockholders: (i) reduce the Offer Price; (ii)
alter or change the Merger Consideration to be received in exchange for the
Shares, or (iii) alter or change any of the terms or conditions of this
Agreement if such alteration or change could adversely af fect the holders of
any shares of capital stock of the Company.
(b) No failure or delay by any party in exercis ing
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 12.4 Expenses. All costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.
SECTION 12.5 Successors and Assigns. The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective suc cessors and assigns, provided that no party may
assign, delegate or otherwise transfer any of its rights or obliga tions under
this Agreement without the consent of the other parties hereto except that Buyer
may transfer or assign, in whole or from time to time in part, to one or more of
its direct or indirect wholly-owned Subsidiaries, the right to purchase Shares
pursuant to the Offer, but any such transfer or assignment will not relieve
Buyer of its obligations under the Offer or prejudice the rights of tendering
stock holders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
SECTION 12.6 Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the State of Delaware
without regard to conflicts of laws.
SECTION 12.7 Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein is not
affected in any manner materially adverse to any party hereto. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually accept able manner.
SECTION 12.8 Third Party Beneficiaries. No
provision of this Agreement other than Section 7.3 and Section 8.6 hereof is
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
SECTION 12.9 Entire Agreement. This Agreement,
including any exhibits, annexes or schedules hereto and the Confidentiality
Agreement constitutes the entire agreement among the parties hereto with respect
to the subject matter hereof and supersede all other prior agreements or
undertak ing with respect thereto, both written and oral.
SECTION 12.10 Counterparts; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instru ment. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective au thorized officers as
of the day and year first above writ ten.
LCS INDUSTRIES, INC.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
President and Chief Executive
Officer
CUSTOMERONE HOLDING CORPORATION
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
CATALOG ACQUISITION CO.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer
or this Agreement, Merger Subsidiary shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to Merger Subsidiary's obligation to
pay for or return tendered Shares promptly after termina tion or withdrawal of
the Offer), to pay for and may delay the acceptance for payment of or, subject
to the restriction referred to above, the payments for, any Shares validly
tendered pursuant to the Offer and may terminate the Offer and not accept for
payment any tendered Shares, unless, (i) there shall have been validly tendered
and not withdrawn such number of Shares which would constitute a majority of the
outstanding Shares determined on a fully diluted basis (or, at the option of
Buyer, a lesser number equaling a majority of the Shares on an issued and
outstanding basis) (the "Minimum Condition") and (ii) any waiting period under
the HSR Act applicable to the purchase of Shares pursuant to the Offer shall
have expired or been terminated. Further more, notwithstanding any other term of
the Offer or this Agreement, Merger Subsidiary shall not be required to accept
for payment or, subject as aforesaid, to pay for any Shares not theretofore
accepted for payment or paid for, and may terminate the Offer if, at any time on
or after the date of this Agreement and before the acceptance of such Shares for
payment or the payment therefor, any of the following condi tions exists (other
than as a result of any action or inac tion of Buyer, Merger Subsidiary or any
of their respective Subsidiaries which constitutes a breach of this Agreement):
(a) there shall be instituted and pending by any
Governmental Entity any action or proceeding which seeks to (i) prohibit, or
materially limit Buyer's or Merger Sub sidiary's ownership or operation of all
or a material por tion of the businesses or assets of the Company and its
Subsidiaries, taken as a whole, or compel Buyer or Merger Subsidiary to dispose
of or hold separate all or any mate rial portion of the business or assets of
the Company and its Subsidiaries, taken as a whole, (ii) materially re strict,
prevent or prohibit consummation of the Offer, the Merger or any transaction
contemplated by the Agreement, (iii) impose material limitations on the ability
of Merger Subsidiary or Buyer to exercise full rights of ownership of
the Shares, including without limitation, the right to vote the Shares purchased
by Merger Subsidiary pursuant to the Offer on all matters properly presented to
the Company's stockholders, or (iv) require material divestitures by Buyer or
Merger Subsidiary; provided that Buyer shall have used its commercially
reasonable best efforts to cause any such decree, judgment, injunction or other
order to be vacated or lifted;
(b) there shall be any statute, rule, regu lation,
judgment, order or injunction promulgated, entered, enforced, enacted, issued or
applicable to the Offer or the Merger by any Governmental Entity that results in
any of the consequences referred to in clauses (i) through (iv) of paragraph (a)
above;
(c) the representations and warranties of the
Company set forth in the Agreement shall not be true and correct as of the date
of consummation of the Offer as though made on or as of such date where the
failure of such representations and warranties to be true and correct have, and
could reasonably be expected to have, a Material Adverse Effect on the Company
or on the ability of Merger Subsidiary to consummate the Offer or the Merger;
(d) the Company shall have failed to perform in any
material respect any obligation or to comply in any material respect with any
material agreement or covenant of the Company to be performed or complied with
by it under this Agreement where the failure to so comply could reason ably be
expected to have, a Material Adverse Effect on the Company or on the ability of
Merger Subsidiary to consummate the Offer or the Merger;
(e) the Agreement shall have been terminated in
accordance with its terms;
(f) any person, entity or "group" (as de fined in
Section 13(d)(3) of the Exchange Act), shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of more
than 25% of any class or series of capital stock of the Company (in cluding the
Shares), through the acquisition of stock, the formation of a group or
otherwise, or the Company shall have entered into a definitive agreement or
agreement in princi ple with any person with respect to an Acquisition Proposal
or similar business combination with the Company;
(g) the Company's Board of Directors shall have
withdrawn, or modified or changed in a manner adverse to Buyer or Merger
Subsidiary (including by amendment of the Schedule 14D-9) its recommendation of
the Offer, the Agree ment, or the Merger, or recommended an Acquisition
Proposal, or shall have resolved to do any of the foregoing; or
(h) there shall have occurred a Material Adverse
Effect.
The foregoing conditions are for the sole benefit
of Merger Subsidiary and Buyer and may be waived by Buyer or Merger Subsidiary
(except for the Minimum Condition), in whole or in part at any time and from
time to time in the sole discretion of Buyer or Merger Subsidiary. The failure
by Buyer at any time to exercise any of the foregoing rights shall not be deemed
a waiver of any such right; the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
LIST OF OMITTED EXHIBITS
Exhibit A Outstanding Options under the 1983 and 1993 LCS Industries,
Inc. Incentive Stock Option Plans as of June 30, 1998
Exhibit B Outstanding Options under the 1993 Non-Employee Directors Stock
Option Plan as of June 30, 1998
Exhibit C Outstanding Options under the 1996 Non-Employee Directors Stock
Option Plan as of June 30, 1998
Exhibit D Outstanding Options
Exhibit E % Ownership of Subsidiaries
Exhibit F Deferred Compensation Plan Authorizations
Exhibit G Deferred Compensation Plan Authorizations
Exhibit H ▇▇▇▇▇ ▇▇▇▇▇▇▇ Employment Arrangement
Exhibit I ▇▇▇ ▇▇▇▇▇ Employment Arrangement
Exhibit J Trademark Challenge Communications
Exhibit K Trademark Challenge Communications
Exhibit L Trademark Challenge Communications
Exhibit M Trademark Challenge Communications
Exhibit N ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Employment Arrangement
Exhibit O 401K ERISA Compliance Summary
Exhibit P Insurance Policies