AGREEMENT AND PLAN OF MERGER
Dated as of
August 13, 1997
by and among
COMFORCE Corporation
and
COMFORCE Columbus, Inc.
and
Uniforce Services, Inc.
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER
SECTION 1.1. The Offer........................................................2
SECTION 1.2. Company Action...................................................3
SECTION 1.3. Directors........................................................5
ARTICLE II
THE MERGER
SECTION 2.1. The Merger.......................................................5
SECTION 2.2. Effective Time of the Merger.....................................5
ARTICLE III
THE SURVIVING AND PARENT CORPORATIONS
SECTION 3.1. Certificate of Incorporation.....................................6
SECTION 3.2. By-Laws..........................................................6
SECTION 3.3. Directors........................................................6
SECTION 3.4. Officers.........................................................6
ARTICLE IV
CONVERSION OF SHARES
SECTION 4.1. Conversion of Company Shares in the Merger.......................6
SECTION 4.2. Conversion of Subsidiary Shares..................................7
SECTION 4.3. Exchange of Certificates.........................................7
SECTION 4.4. Appraisal Rights Shares..........................................8
SECTION 4.5. Closing..........................................................9
SECTION 4.6. Closing of the Company's Transfer Books..........................9
SECTION 4.7. No Fractional Securities.........................................9
SECTION 4.8. Treatment of Employee Stock Options..............................9
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBSIDIARY
SECTION 5.1. Organization and Qualification..................................10
SECTION 5.2. Capitalization..................................................10
SECTION 5.3. Authority; Non-Contravention; Approvals.........................10
SECTION 5.4. Reports and Financial Statements................................12
SECTION 5.5. Absence of Certain Changes or Events............................12
SECTION 5.6. Litigation......................................................12
SECTION 5.7. Registration Statement and Proxy Statement......................13
SECTION 5.8. Voting Requirements.............................................13
SECTION 5.9. Financing.......................................................13
SECTION 5.10 Absence of Disclosed Liabilities................................13
SECTION 5.11 No Violation of Law.............................................13
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 6.1. Organization and Qualification.................................14
SECTION 6.2. Capitalization.................................................14
SECTION 6.3. Subsidiaries...................................................15
SECTION 6.4. Authority; Non-Contravention; Approvals........................15
SECTION 6.5. Reports and Financial Statements...............................16
SECTION 6.6. Absence of Undisclosed Liabilities.............................17
SECTION 6.7. Absence of Certain Changes or Events...........................17
SECTION 6.8. Litigation.....................................................17
SECTION 6.9. Registration Statement and Proxy Statement.....................18
SECTION 6.10. No Violation of Law............................................18
SECTION 6.11. Compliance with Agreements.....................................18
SECTION 6.12. Taxes..........................................................19
SECTION 6.13. Employee Benefit Plans; ERISA..................................19
SECTION 6.14. Labor Controversies............................................21
SECTION 6.15. Environmental Matters..........................................21
SECTION 6.16. Intellectual Property..........................................22
SECTION 6.17. Title to Assets................................................23
SECTION 6.18. Assets Relationship to Business of the Company.................24
SECTION 6.19. Certain Relationships; Transactions with Management............24
SECTION 6.20. Improper Payments..............................................24
SECTION 6.21. Agreements with Licensees......................................25
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 7.1. Conduct of Business by the Company Pending the Merger...........25
SECTION 7.2. Control of the Company's Operations.............................26
SECTION 7.3. Acquisition Transactions........................................26
ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.1. Access to Information...........................................27
SECTION 8.2. Registration Statement and Proxy Statement......................28
SECTION 8.3. Stockholders' Approvals.........................................29
SECTION 8.4. Expenses and Fees...............................................29
SECTION 8.5. Agreement to Cooperate..........................................30
SECTION 8.6. Public Statements...............................................31
SECTION 8.7. Notification of Certain Matters.................................31
SECTION 8.8. Directors' and Officers' Indemnification........................31
SECTION 8.9. Corrections to the Registration Statement and Proxy Statement...32
SECTION 8.10. Amendment of Employment Contracts...............................32
SECTION 8.11. Fairness Opinion................................................33
SECTION 8.12. Financing.......................................................33
SECTION 8.13. Payments to Certain Executives..................................33
ARTICLE IX
CONDITIONS
SECTION 9.1. Conditions to Each Party's Obligation to Effect the Merger......33
SECTION 9.2. Conditions to Obligation of the Company to Effect the Merger....34
SECTION 9.3. Conditions to Obligations of Parent and Subsidiary to Effect
the Merger....................................................34
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.1. Termination....................................................35
SECTION 10.2. Effect of Termination..........................................36
SECTION 10.3. Amendment......................................................37
SECTION 10.4. Waiver.........................................................37
ARTICLE XI
GENERAL PROVISION
SECTION 11.1. Non-Survival of Representations and Warranties.................37
SECTION 11.2. Brokers........................................................37
SECTION 11.3. Notices........................................................37
SECTION 11.4. Interpretation.................................................38
SECTION 11.5. Miscellaneous..................................................38
SECTION 11.6. Governing Law..................................................38
SECTION 11.7. Counterparts...................................................39
SECTION 11.8. Parties in Interest............................................39
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 13, 1997, (the
"Agreement"), by and among COMFORCE Corporation, a Delaware corporation
("Parent"), COMFORCE Columbus, Inc., a New York corporation and a wholly-owned
subsidiary of Parent ("Subsidiary"), and Uniforce Services, Inc., a New York
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Subsidiary and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent, through Subsidiary, to acquire the Company upon the
terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that
Subsidiary shall make a tender offer (the "Offer") to acquire all the issued and
outstanding shares of common stock, par value $0.01 per share, of the Company
(the "Company Common Stock"; shares of Company Common Stock being hereinafter
collectively referred to as the "Shares") for $28.00 per Share in cash plus that
number of shares of common stock, par value $0.01 per share, of Parent (the
"Parent Common Stock") for each Share equal to a fraction the numerator of which
shall be $4.00 and the denominator of which shall be the average closing price
of a share of Parent Common Stock on the American Stock Exchange for the three
(3) trading days immediately preceding the date of the public announcement of
the Offer in accordance with Section 1.1(b) hereof and for the three (3) trading
days immediately after the date of such public announcement (such average
closing price being hereinafter referred to as the "Average Price" and such
consideration in the amount of cash and Parent Common Stock, or any greater
amount, per Share paid pursuant to the Offer, being hereinafter referred to as
the "Per Share Amount") net to the seller, without interest thereon, upon the
terms and subject to the conditions of this Agreement and the Offer; and
WHEREAS, the Board of Directors of Parent and Subsidiary have
unanimously approved the making of the Offer and the transactions related
thereto; and
WHEREAS, the Board of Directors of the Company (the "Board") has
unanimously approved the making of the Offer and resolved and agreed, subject to
the terms and conditions contained herein, to recommend that holders of Shares
tender their Shares pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Subsidiary and the Company have each approved the merger
(the "Merger") of Subsidiary with and into the Company upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, agree as follows:
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ARTICLE I
THE OFFER
SECTION 1.1. The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 10.1 and none of the events set forth in Exhibit A
attached hereto and made a part hereof shall have occurred or be existing
(unless such event shall have been waived by Parent), Parent shall cause
Subsidiary to commence, and Subsidiary shall commence, the Offer at the Per
Share Amount. The obligation of Subsidiary to accept for payment and pay for
Shares tendered pursuant to the Offer shall be subject only to (i) the condition
(the "Minimum Condition") that at least the number of Shares that, when combined
with the Shares already owned by Subsidiary and its direct or indirect
subsidiaries, constitute at least sixty-six and 2/3rds percent (66.66%) of the
then outstanding Shares on a fully diluted basis, including, without limitation,
all Shares issuable upon the conversion of any convertible securities or upon
the exercise of any options, warrants or rights shall have been validly tendered
and not withdrawn prior to the expiration of the Offer and (ii) the satisfaction
or waiver of the other conditions set forth in Exhibit A hereto. Subsidiary
expressly reserves the right to waive any such condition (other than the Minimum
Condition), to increase the Per Share Amount payable in the Offer, and to make
any other changes in the terms and conditions of the Offer (notwithstanding
Section 10.3); provided, however, that no change may be made which (i) decreases
the Per Share Amount payable in the Offer, (ii) reduces the maximum number of
Shares to be purchased in the Offer, (iii) imposes conditions to the Offer in
addition to those set forth in Exhibit A hereto, (iv) amends or changes the
terms and conditions of the Offer in any manner materially adverse to the
holders of Shares (other than Parent and its subsidiaries) or (v) changes or
waives the Minimum Condition. The Per Share Amount shall, subject to applicable
withholding of taxes, be net to the seller, without interest thereon, upon the
terms and subject to the conditions of the Offer. Subject to the terms and
conditions of the Offer (including, without limitation, the Minimum Condition),
Subsidiary shall accept for payment and pay, as promptly as practicable after
expiration of the Offer, for all Shares validly tendered and not withdrawn.
(b) Upon the execution and delivery of this Agreement, the Parent and
Subsidiary shall make a public announcement disclosing only the information
pertaining to the Offer permitted by Rule 135(a)(4) promulgated by the
Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of
1933, as amended (the "Securities Act"). Promptly after such public
announcement, Parent and Subsidiary shall file a Registration Statement on Form
S-4 (the "Registration Statement") with the SEC for purposes of registering the
Parent Common Stock pursuant to the Securities Act. Parent and Subsidiary shall
take all reasonable efforts to cause the Registration Statement to be declared
effective by the SEC as soon as possible after filing.
(c) As soon as reasonably practicable after the Registration Statement
is declared effective by the SEC, Subsidiary shall file with the SEC and
disseminate to holders of Shares to the extent required by law a Tender Offer
Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer. The Schedule 14D-1
shall contain or shall incorporate by reference an offer to purchase the Shares,
which may be comprised
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of the prospectus contained in the Registration Statement, (the "Offer to
Purchase") and forms of the related letter of transmittal and any related
summary advertisement (the Schedule 14D-1, the Offer to Purchase and such other
documents, together with all supplements and amendments thereto, being referred
to herein collectively as the "Offer Documents"). Parent, Subsidiary and the
Company agree to correct promptly any information provided by any of them for
use in the Registration Statement or Offer Documents which shall have become
false or misleading, and Parent and Subsidiary further agree to take all steps
necessary to cause the Registration Statement and Schedule 14D-1 as so corrected
to be filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Registration Statement and
Offer Documents and any amendments thereto prior to the filing thereof with the
SEC. Parent and Subsidiary will provide the Company and its counsel with a copy
of any written comments or telephonic notification of any oral comments Parent
or Subsidiary may receive from the SEC or its staff with respect to the
Registration Statement or Offer Documents promptly after the receipt thereof and
will provide the Company and its counsel with a copy of any written responses
and telephonic notification of any oral response of Parent, Subsidiary or their
counsel. In the event that the Offer is terminated or withdrawn by Subsidiary,
Parent and Subsidiary shall cause all tendered Shares to be returned promptly
(and to full extent within their power, within five (5) business days) to the
registered holders of the Shares represented by the certificate or certificates
surrendered to the paying agent designated in the Offer Documents.
SECTION 1.2. Company Action.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board, at a meetings duly called and duly held on August 1,
1997 and August 13, 1997, has (A) determined that this Agreement and the
transactions contemplated hereby, including, without limitation, each of the
Offer and the Merger (the "Transactions"), are fair to and in the best interests
of the holders of Shares other than Parent and its subsidiaries, (B) approved
and adopted this Agreement and the Transactions (which approval expressly
included the approval of the foregoing for the purposes of Section 912 of the
New York Business Corporation Law, as amended [the "BCL"]) and (C) resolved to
recommend, subject to the conditions set forth herein, that the stockholders of
the Company accept the Offer and approve and adopt this Agreement and the
Transactions. Subject to the fiduciary duties of the Board under applicable law
as advised by outside counsel, the Company hereby consents to the inclusion in
the Registration Statement and Offer Documents of the recommendation of the
Board described above. ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Limited Partners L.P., a Georgia
limited partnership (the "Stockholders"), who are the owners of in excess of 59%
of the outstanding Shares, have executed and delivered to the Parent and
Subsidiary a Stockholders Agreement of even date herewith.
(b) As soon as reasonably practicable after the date of commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing, subject only to the fiduciary duties
of the Board under applicable law as advised in writing by outside counsel, the
recommendation of the Board described in Section 1.2(a) and shall disseminate
the
3
Schedule 14D-9 to the extent required by Rule 14D-9 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any other
applicable federal securities laws. The Company, Parent and Subsidiary agree to
correct promptly any information provided by any of them for use in the Schedule
14D-9 that shall have become false or misleading, and the Company further agrees
to take all steps necessary to cause the Schedule 14D-9 as so corrected to be
filed with the SEC and disseminated to holders of Shares, in each case as and to
the extent required by applicable federal securities laws. Parent, Subsidiary
and their counsel shall be given a reasonable opportunity to review and comment
on the Schedule 14D-9 and any amendments thereto prior to the filing thereof
with the SEC. The Company will provide Parent and Subsidiary and their counsel
with a copy of any written comments or telephonic notification of any oral
comments the Company may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt thereof and will provide Parent and
Subsidiary and their counsel with a copy of any written responses and telephonic
notification of any oral response of the Company or its counsel.
(c) The Company shall promptly after the execution and delivery of this
Agreement furnish Subsidiary with mailing labels containing the names and
addresses of all record holders of Shares and with security position listing of
Shares held in stock depositories, each as of the most recent date reasonably
practicable, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
non-objecting beneficial owners of Shares as of the most recent date reasonably
practicable. The Company shall furnish Subsidiary with such additional
information, including, without limitation, updated listings and computer files
of stockholders, mailing labels and security position, and such other assistance
as Parent, Subsidiary and their agents may reasonably request. Subject to the
requirements of applicable law and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer or the Merger, Parent and Subsidiary shall hold in confidence the
information contained in such labels, listings and files, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement shall be terminated in accordance with Section 10.1, shall deliver
promptly to the Company all copies of such information then in their possession
and shall certify in writing to the Company its compliance with this Section
1.2(c).
(d) In the event that the Offer is completed as contemplated by this
Article I, the Merger shall be consummated as soon as practicable thereafter in
accordance with the provisions of Article II hereof; provided, however, that in
the event the Offer is completed and Subsidiary receives at least 90% of the
outstanding Shares as a result of the Offer, the Company shall not be required
to distribute the Proxy Statement (as defined in Section 8.2) or hold the
Stockholders Meeting (as defined in Section 8.3).
(e) In the event that the Offer is not completed because the conditions
to the Offer shall not have been satisfied, and provided this Agreement has not
been and is not terminated pursuant to Section 10.1 hereof, at the option of
Parent, exercised by written notice given to the Company within fifteen (15)
days after expiration of the Offer, the Company shall submit this Agreement and
the transactions contemplated hereby to its stockholders pursuant to Section 8.3
hereof and, if the Merger is as a result thereof approved, the Merger shall be
consummated in accordance with the provisions of Article II hereof as soon as
practicable in accordance with Section 4.5.
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SECTION 1.3. Directors.
(a) Promptly upon the purchase by Parent or any of its subsidiaries of
such number of Shares of Company Common Stock that represents at least 51% of
the outstanding Shares of Company Common Stock (on a fully diluted basis), and
from time to time thereafter, Parent shall be entitled to designate such number
of directors, rounded up to the next whole number (but in no event more than one
less than the total number of directors on the Board) as will give Parent,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Board equal to the product of (x) the number of directors on the Board
(giving effect to any increase in the number of directors pursuant to this
Section 1.3) and (y) the percentage that such number of Shares so purchased
bears to the aggregate number of Shares outstanding (such number being the
"Board Percentage"), and the Company shall, upon request by Parent, promptly
satisfy the Board Percentage by (i) increasing the size of the Board or (ii)
using its best efforts to secure the resignations of such number of directors as
is necessary to enable Parent's designees to be elected to the Board and shall
cause Parent's designees promptly to be so elected, provided that no such action
shall be taken which would result in there being, prior to the consummation of
the Merger, less than one director of the Company that is not affiliated with
Parent. At the request of Parent, the Company shall take, at the Company's
expense, all lawful action necessary to effect any such election, including
without limitation, mailing to its stockholders the information required by
Section 14(f) of the Exchange Act and Rule 14(f)-1 promulgated thereunder,
unless such information has previously been provided to the Company's
stockholders in Schedule 14D-9.
(b) Following the election or appointment of Parent's designees
pursuant to this Section 1.3 and prior to the Effective Time (as defined in
Section 2.2) of the Merger, any amendment or termination of this Agreement,
extension for the performance or waiver of the obligations or other acts of
Parent or Subsidiary or waiver of the Company's rights thereunder shall require
the concurrence of a majority of directors of the Company then in office who are
"Continuing Directors". The term "Continuing Director" shall mean (i) each
member of the Board on the date hereof who voted to approve this Agreement and
(ii) any successor to any Continuing Director that was recommended to succeed
such Continuing Director by a majority of the Continuing Directors then on the
Board.
ARTICLE II
THE MERGER
SECTION 2.1. The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined in Section 2.2) in
accordance with the BCL, Subsidiary shall be merged with and into the Company
and the separate existence of Subsidiary shall thereupon cease. The Company
shall be the surviving corporation in the Merger and is hereinafter sometimes
referred to as the "Surviving Corporation."
SECTION 2.2. Effective Time of the Merger. The Merger shall become
effective at such time (the "Effective Time") as shall be stated in the
Certificate of Merger, in the form attached hereto and made a part hereof as
Exhibit "B", to be filed with the Secretary of State of the
5
State of New York in accordance with the BCL (the "Merger Filing"). The Merger
shall be made simultaneously with or as soon as practicable after the closing of
the transactions contemplated by this Agreement in accordance with Section 4.5.
The parties acknowledge that it is their mutual desire and intent to consummate
the Merger as soon as practicable after the date hereof. Accordingly, the
parties shall use all reasonable efforts to consummate, as soon as practicable,
the transactions contemplated by this Agreement.
ARTICLE III
THE SURVIVING AND PARENT CORPORATIONS
SECTION 3.1. Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation shall be amended and restated at and
as of the Effective Time to be identical to the Certificate of Incorporation of
Subsidiary as in effect immediately prior to the Effective Time (except that the
name of the Surviving Corporation will remain unchanged), and thereafter may be
amended in accordance with its terms and as provided in the BCL.
SECTION 3.2. By-Laws. The By-laws of the Surviving Corporation shall be
amended at and as of the Effective Time to be identical to the By-laws of
Subsidiary as in effect immediately prior to the Effective Time, and thereafter
may be amended in accordance with their terms and as provided by the Certificate
of Incorporation of the Surviving Corporation and the BCL.
SECTION 3.3. Directors. The directors of Subsidiary immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation.
SECTION 3.4. Officers. Except as otherwise agreed, the officers of the
Subsidiary in office immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, to serve in accordance with the By-laws
of the Surviving Corporation until their respective successors are duly elected
or appointed and qualified.
ARTICLE IV
CONVERSION OF SHARES
SECTION 4. 1. Conversion of Company Shares in the Merger. At the
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any capital stock of the Company:
(a) each Share issued and outstanding immediately prior to the
Effective Time, subject to Sections 4.3 and 4.4, shall be automatically canceled
and extinguished and converted automatically into the right to receive an amount
equal to the Per Share Amount (the "Merger Consideration") payable, without
interest, to the holder of such Share, upon surrender, in the manner provided in
Section 4.3, of the certificate that formerly evidenced such Share; and
6
(b) each share of capital stock of the Company, if any, owned by Parent
or any subsidiary of Parent or held in treasury by the Company or any subsidiary
of the Company immediately prior to the Effective Time shall be canceled and
shall cease to exist from and after the Effective Time.
SECTION 4.2. Conversion of Subsidiary Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent as the sole
stockholder of Subsidiary, each issued and outstanding share of common stock,
par value $0.01 per share, of Subsidiary ("Subsidiary Common Stock") shall be
converted into one share of common stock, par value $0.01 per share, of the
Surviving Corporation.
SECTION 4.3. Exchange of Certificates.
(a) From and after the Effective Time, each holder of an outstanding
certificate that immediately prior to the Effective Time represented Shares
shall be entitled to receive in exchange therefor, upon surrender thereof to
▇▇▇▇▇ ▇▇▇▇▇▇ Shareholder Services, ▇▇▇▇▇▇ Bank, or such other exchange agent as
is reasonably satisfactory to Parent and the Company (the "Exchange Agent"), the
Merger Consideration to which such holder is entitled pursuant to Section
4.1(a). Notwithstanding any other provision of this Agreement, without regard to
when such certificates representing Shares are surrendered for exchange as
provided herein, no interest shall be paid on any payment of the Merger
Consideration.
(b) If any Merger Consideration is to be issued in a name other than
that in which the certificate for Shares surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the person requesting
such exchange shall pay any transfer or other taxes required by reason of the
issuance of such Merger Consideration in a name other than that of the
registered holder of the certificate surrendered, or shall establish to the
satisfaction of Parent that such tax has been paid or is not applicable.
(c) Promptly at the Effective Time, Parent shall make available to the
Exchange Agent the cash in immediately available United States funds and Parent
Common Stock necessary for payment of all the Merger Consideration.
(d) Promptly after the Effective Time, the Exchange Agent shall mail to
each holder of record of a certificate or certificates that immediately prior to
the Effective Time represented outstanding Shares (the "Company Certificates")
(i) a form letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Company Certificates shall pass,
only upon actual delivery of the Company Certificates to the Exchange Agent) and
(ii) instructions for use in effecting the surrender of the Company Certificates
in exchange for the applicable Merger Consideration. Upon surrender of Company
Certificates for cancellation to the Exchange Agent, together with a duly
executed letter of transmittal and such other documents as the Exchange Agent
shall reasonably require, the holder of such Company Certificates shall be
entitled to receive in exchange therefor the applicable Merger Consideration
into which the Shares theretofore represented by the Company Certificates so
surrendered shall have been converted pursuant to the provisions of Section
4.1(a), and the Company Certificates so surrendered shall forthwith be canceled.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be
7
liable to a holder of Shares for Merger Consideration delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(e) Promptly following the date which is nine months after the
Effective Date, the Exchange Agent shall deliver to Parent all cash,
certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Company Certificate may surrender such Company
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor the Merger
Consideration, without any interest thereon. Notwithstanding the foregoing, none
of the Exchange Agent, Parent, Subsidiary, the Company or the Surviving
Corporation shall be liable to a holder of Company Common Stock for any Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
(f) In the event any Company Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Company Certificate to be lost, stolen or destroyed, the Surviving
Corporation shall issue in exchange for such lost, stolen or destroyed Company
Certificate the Merger Consideration deliverable in respect thereof determined
in accordance with this Article IV. When authorizing such payment in exchange
therefor, the Board of Directors of the Surviving Corporation may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Company Certificate to give the
Surviving Corporation such indemnity as it may reasonably direct as protection
against any that may be made against the Surviving Corporation with respect to
the Company Certificate alleged to have been lost, stolen or destroyed.
SECTION 4.4. Appraisal Rights Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
any Shares held by a holder who has demanded and perfected his right for payment
of the fair value of such Shares in accordance with the BCL and who, as of the
Effective Time, has not effectively withdrawn or lost such right to payment,
shall not be converted into or represent a right to receive the Merger
Consideration pursuant to Section 4.1, but the holder thereof shall only be
entitled to such rights as are granted by the BCL.
(b) Notwithstanding the provisions of subsection (a), if any holder of
Shares who demands payment of the fair value of such Shares under the BCL shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to payment, then, as of the later of Effective Time or the occurrence of such
event, such holder's Shares shall automatically be converted into and represent
only the right to receive the Merger Consideration as provided in Section 4.1,
without interest thereon, upon surrender of the certificate or certificates
representing such Shares.
(c) The Company shall give Parent (i) prompt notice of any written
notice of dissent, written demands for payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to the
BCL and received by the Company and (ii) the opportunity to participate in all
negotiations and proceedings with respect to demands for payment of the fair
8
value under the BCL. The Company shall not, except with the prior written
consent of Parent, voluntarily make any payment with respect to any demands for
payment of the fair value of any Shares or offer to settle any such demands.
SECTION 4.5. Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at a location mutually agreeable
to Parent and the Company on the first business day immediately following the
date on which the last of the conditions set forth in Article IX is fulfilled or
waived, or at such other time and place as Parent and the Company shall agree
(the date on which the Closing occurs is referred to in this Agreement as the
"Closing Date").
SECTION 4.6. Closing of the Company's Transfer Books. At and after the
Effective Time, holders of Shares shall cease to have any rights as stockholders
of the Company, except for the right to receive the applicable Merger
Consideration pursuant to Section 4.3. At the Effective Time, the stock transfer
books of the Company shall be closed and no transfer of Shares which were
outstanding immediately prior to the Effective Time shall thereafter be made.
SECTION 4.7. No Fractional Securities. Notwithstanding any other
provision of this Agreement, no certificates or scrip for fractional shares of
Parent Common Stock shall be issued in the Merger or the Offer and no Parent
Common Stock dividend, stock split or interest shall relate to any fractional
security, and such fractional interests shall not entitle the owner thereof to
vote or to any other rights of a security holder. In lieu of any such fractional
shares, each holder of Company Common Stock who would otherwise have been
entitled to receive a fraction of a share of Parent Common Stock upon surrender
of Company Certificates for exchange pursuant to the Offer or the Merger shall
be entitled to receive from the Exchange Agent a cash payment equal to such
fraction multiplied by the Average Price.
SECTION 4.8. Treatment of Employee Stock Options.
(a) Unless the Parent has provided the written notice contemplated by
Section 4.8(b) following, the Company shall cause, immediately prior to the
Effective Time, each then outstanding option to purchase Shares theretofore
granted under any stock option plan or agreement in effect with respect to
Company Common Stock to either be exercised (whether or not such option is
vested or immediately exercisable) or to be extinguished by virtue of the Merger
if it has not been exercised prior to the Merger. The Company may provide for
the "cashless" exercise of options by advancing the funds necessary for the
exercise to be repaid out of the Merger Consideration.
(b) Notwithstanding the provisions of Section 4.8(a) above, if within
thirty (30) days of the date hereof, the Parent provides the Company with
written notice that it desires to have employee stock options treated in
accordance with the provisions of this Section 4.8(b), the Company shall take
such action, if any, as may be necessary to cause, at or prior to the Effective
Time, each then outstanding option to purchase Shares theretofore granted under
any stock option plan or agreement in effect with respect to the Company Common
Stock which has not been exercised and remains outstanding at the time of the
Company's action (whether or not such option is vested or immediately
exercisable) to be extinguished and converted to the right to receive a cash
payment from the Company in an amount equal to the product of (i) the difference
between the cash value of
9
the Merger Consideration ($32.00 per Share) and the per Share exercise price of
such option and (ii) the total number of Shares which the holder of such option
is entitled to purchase under such option, subject to any required withholding
taxes, whereupon such options to purchase Shares and the stock appreciation
rights appurtenant thereto, if any, shall be canceled.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBSIDIARY
Parent and Subsidiary each represent and warrant to the Company as
follows:
SECTION 5.1. Organization and Qualification. Each of Parent and
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware and has the requisite power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Each of Parent and Subsidiary is
qualified to do business and is in good standing in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing will not, when taken together with all
other such failures, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Parent and its subsidiaries, taken as a whole, or Subsidiary. True,
accurate and complete copies of each of Parent's and Subsidiary's Certificates
of Incorporation and By-laws, in each case as in effect on the date hereof,
including all amendments thereto, have heretofore been delivered to the Company.
SECTION 5.2. Capitalization.
(a) The authorized capital stock of Parent consists of (i) 100,000,000
shares of Parent Common Stock of which 13,688,962 shares were outstanding as of
July 22, 1997 with options and warrants outstanding to acquire an additional
3,953,824 shares of Parent Common Stock as of July 22, 1997, and (ii) 10,000
shares of Series F preferred stock, par value $0.01 per share, 500 of which were
issued and outstanding as of July 22, 1997; and
(b) The authorized capital stock of Subsidiary consists of 200 shares
of Subsidiary Common Stock, all of which are issued and outstanding and are
owned beneficially and of record by Parent.
SECTION 5.3. Authority; Non-Contravention; Approvals.
(a) Parent and Subsidiary each have full corporate power and authority
to enter into this Agreement and, subject to the Parent Required Statutory
Approvals (as defined in Section 5.3(c)), to consummate the transactions
contemplated hereby. This Agreement has been approved by the Boards of Directors
of Parent and Subsidiary, and no other corporate proceedings on the part of
Parent or Subsidiary are necessary to authorize the execution and delivery of
this Agreement or the
10
consummation by Parent and Subsidiary of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by each of Parent and
Subsidiary, and, assuming the due authorization, execution and delivery hereof
by the Company, constitutes a valid and legally binding agreement of each of
Parent and Subsidiary enforceable against each of them in accordance with its
terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles.
(b) The execution and delivery of this Agreement by each of Parent and
Subsidiary do not violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Parent or any of
its subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or By-laws of Parent or any of its subsidiaries, (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to
Parent or any of its subsidiaries or any of their respective properties or
assets or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Parent or any of its subsidiaries is now a
party or by which Parent or any of its subsidiaries or any of their respective
properties or assets may be bound or affected. The consummation by Parent and
Subsidiary of the transactions contemplated hereby will not result in any
violation, conflict, breach, termination, acceleration or creation of liens
under any of the terms, conditions or provisions described in clauses (i)
through (iii) of the preceding sentence, subject (x), in the case of the terms,
conditions or provisions described in clause (ii) above, to obtaining (prior to
the Effective Time) the Parent Required Statutory Approvals and (y) in the case
of the terms, conditions or provisions described in clause (iii) above, to
obtaining (prior to the Effective Time) consents required from commercial
lenders, lessors or other third parties each as listed in Section 5.3 of the
Parent Schedule that has been provided by Parent to the Company on or prior to
the date hereof that expressly relates to this Agreement (the "Parent
Schedule"). Excluded from the foregoing sentences of this paragraph (b), insofar
as they apply to the terms, conditions or provisions described in clauses (ii)
and (iii) of the first sentence this paragraph (b), are such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens, security interests, charges or encumbrances that would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or otherwise) or results of operations
of the Parent and its subsidiaries taken as a whole.
(c) Except for (i) the filings by Parent and the Company required by
the ▇▇▇▇-▇▇▇▇▇- ▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act") (ii) the making of the Merger Filing with the Secretary of State of the
State of New York in connection with the Merger and (iii) the filing of the
Registration Statement and the Schedule 14D-1 with the SEC (the filings and
approvals referred to in clauses (i), (ii) and (iii) are collectively referred
to as the "Parent Required Statutory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary
11
for the execution and delivery of this Agreement by Parent or Subsidiary or the
consummation by Parent or Subsidiary of the transactions contemplated hereby.
SECTION 5.4. Reports and Financial Statements. Since December 31, 1995,
Parent has filed with the SEC all forms, statements, reports and documents
(including all exhibits, amendments and supplements thereto) required to be
filed by it under each of the Securities Act, the Exchange Act and the
respective rules and regulations thereunder, all of which, as amended if
applicable, complied in all material respects with an applicable requirements of
the appropriate act and the rules and regulations thereunder. Parent has
previously delivered to the Company copies of its (a) Annual Reports on Form
10-K for each of the two immediately preceding fiscal years, as filed with the
SEC, (b) proxy and information statements relating to (i) all meetings of its
stockholders (whether annual or special) and (ii) actions by written consent in
lieu of a stockholders' meeting from December 31, 1995, until the date hereof,
and (c) all other reports, including quarterly reports, or registration
statements filed by Parent with the SEC since December 31, 1995 (other than
Registration Statements recorded on Form S-8) (collectively, the "Parent SEC
Reports"). As of their respective dates, the Parent SEC Reports did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim consolidated
financial statements of Parent included in such reports (collectively, the
"Parent Financial Statements") have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly present in all material
respects the financial position of Parent and its subsidiaries as of the dates
thereof and the results of their operations and changes in financial position
for the periods then ended, subject, in the case of the unaudited interim
financial statements, to normal year-end audit adjustments and any other
adjustments described therein.
SECTION 5.5. Absence of Certain Changes or Events. Since the date of
the most recent Parent SEC Report, there has not been any material adverse
change in the business, operations, properties, liabilities, condition
(financial or other), results of operations or prospects of Parent and its
subsidiaries, taken as a whole or of Subsidiary.
SECTION 5.6. Litigation. Except as disclosed in the Parent SEC Reports
or in Section 5.6 of the Parent Schedule, there are no claims, suits, actions or
proceedings pending or, to the knowledge of Parent, threatened against, relating
to or affecting Parent or any of its subsidiaries, before any court,
governmental department, commission, agency, instrumentality or authority, or
any arbitrator that seek to restrain or enjoin the consummation of the Merger or
which could reasonably be expected, either alone or in the aggregate with all
such claims, actions or proceedings, to materially and adversely affect the
business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Parent and its subsidiaries, taken as a
whole, or of Subsidiary. Except as set forth in the Parent SEC Reports, neither
Parent nor any of its subsidiaries is subject to any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby or would have
any material adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects of Parent and
its subsidiaries, taken as a whole, or of Subsidiary.
12
SECTION 5.7. Registration Statement and Proxy Statement. None of the
information to be supplied by Parent or its subsidiaries for inclusion in either
the Proxy Statement (as defined in Section 8.2) or the Registration Statement
will, in the case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy Statement and any
amendments or supplements thereto, and at the time of the Stockholders Meeting
(as defined in Section 8.3), or, in the case of the Registration Statement, as
amended or supplemented, at the time it becomes effective and throughout the
duration of the Offer, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. No representation is made by the Parent or the
Subsidiary with respect to information supplied by the Company for inclusion in
either the Registration Statement or the Proxy Statement.
SECTION 5.8. Voting Requirements. No action by the stockholders of
Parent is required to approve this Agreement and the transactions contemplated
hereby. Parent, as the sole stockholder of Subsidiary, has approved this
Agreement and the Merger.
SECTION 5.9. Financing. Parent and Subsidiary have delivered to the
Company true and complete copies of "highly confident" letters obtained by
Parent and Subsidiary from financially responsible third parties in respect of
the debt financing for the transactions contemplated hereby.
SECTION 5.10. Absence of Undisclosed Liabilities. Except as disclosed
in the Parent SEC Reports, neither the Parent nor any of its subsidiaries had at
March 31, 1997, or has incurred since that date, any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of any nature, except (a)
liabilities, obligations or contingencies (i) which are accrued or reserved
against in the Parent Financial Statements or reflected in the notes thereto or
(ii) which were incurred after March 31, 1997, and were incurred in the ordinary
course of business and consistent with past practices, (b) liabilities,
obligations or contingencies which (i) would not, in the aggregate, have a
material adverse effect on the business, operations, properties, assets,
financial condition or results of operations of the Parent and its subsidiaries,
taken as a whole, or (ii) have been discharged or paid in full prior to the date
hereof, and (c) liabilities which are of a nature not required to be reflected
in the consolidated financial statements of the Parent and its subsidiaries
prepared in accordance with generally accepted accounting principles
consistently applied and which were incurred in the normal course of business.
SECTION 5.11 No Violation of Law. Except as disclosed in the Parent SEC
Reports, neither the Parent nor any of its subsidiaries is in violation of or
has been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in the aggregate,
could not reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or otherwise) or
results of operations of the Parent and its subsidiaries, taken as a whole.
Except as disclosed in the Parent SEC Reports, as of the date of this Agreement,
to the knowledge of the Parent, no investigation or review by any governmental
or regulatory body or authority is pending or threatened, nor has any
governmental or regulatory body or authority indicated an intention to conduct
the same. The Parent and its subsidiaries have all permits, licenses,
13
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct their businesses as presently
conducted (collectively, the "Parent Permits"). The Parent and its subsidiaries
are not in violation of the terms of any Parent Permit, except for delays in
filing reports or violations which, alone or in the aggregate, would not have a
material adverse effect on the business, operations, properties, assets,
condition (financial or otherwise) or results of operations of the Parent and
its subsidiaries, taken as a whole.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Subsidiary as
follows:
SECTION 6.1. Organization and Qualification. The Company is a
corporation duly organized, validly existing and presently subsisting under the
laws of the State of New York and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. The Company is qualified to do
business and is in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
and in good standing will not, when taken together with all other such failures,
have a material adverse effect on the business, operations, properties, assets,
condition (financial or other), or results of operations of the Company and its
subsidiaries, taken as a whole. True, accurate and complete copies of the
Company's Certificate of Incorporation and By-laws, in each case as in effect on
the date hereof, including all amendments thereto, have heretofore been
delivered to Parent.
SECTION 6.2. Capitalization.
(a) The authorized capital stock of the Company consists of (i)
10,000,000 Shares and (ii) 2,000,000 shares of Preferred Stock, $0.01 per share
(the "Preferred Shares"). As of May 2, 1997, 3,033,543 Shares were issued and
outstanding, 2,085,245 Shares were held in treasury and no Preferred Shares were
issued or outstanding. All of such are validly issued and are fully paid,
nonassessable and free of preemptive rights. No subsidiary of the Company holds
any Shares.
(b) Except as set forth in Section 6.2 of the Disclosure Schedule that
has been provided by the Company to the Parent on or prior to the date hereof
that expressly relates to this Agreement (the "Disclosure Schedule") as of the
date hereof there were no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement and also including any rights plan or other
anti-takeover agreement, obligating the Company or any subsidiary of the Company
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of the Company or obligating the Company or any
subsidiary of the Company to grant, extend or enter into any such agreement or
commitment. Except as set forth in Section 6.2 of the Disclosure Schedule, there
are no voting trusts, proxies or other agreements or understandings to which the
Company or any subsidiary of the Company is a party or is bound with respect to
the voting of any shares of capital stock of the Company.
14
SECTION 6.3. Subsidiaries. Except as set forth in Section 6.3 of the
Disclosure Schedule, each direct and indirect corporate subsidiary of the
Company is duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has the requisite power and authority
to own, lease and operate its and properties and to carry on its business as it
is now being conducted. Each subsidiary of the Company is qualified to do
business, and is in good standing, in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
and in good standing will not, when taken together with all such other failures,
have a material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole. All of the outstanding shares of capital stock
of each corporate subsidiary of the Company are validly issued, fully paid,
nonassessable and free of preemptive rights and are owned directly or indirectly
by the Company free and clear of any liens, claims, encumbrances, security
interests, equities, charges and options of any nature whatsoever except as set
forth in Section 6.3 of the Disclosure Schedule. There are no subscriptions,
options, warrants, rights, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions or arrangements relating to the
issuance, sale, voting, transfer, ownership or other rights with respect to any
shares of capital stock of any corporate subsidiary of the Company, including
any right of conversion or exchange under any outstanding security, instrument
or agreement.
SECTION 6.4. Authority; Non-Contravention; Approvals.
(a) The Company has full corporate power and authority to enter into
this Agreement and, subject to the Company Stockholders' Approval (as defined in
Section 8.3) and the Company Required Statutory Approvals (as defined in Section
6.4(c)), to consummate the transactions contemplated hereby. This Agreement has
been approved by the Board of Directors of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement or, except for the Company Stockholders'
Approval, the consummation by the Company of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company, and,
assuming the due authorization, execution and delivery hereof by Parent and
Subsidiary, constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (b) general equitable principles.
(b) The execution and delivery of this Agreement by the Company do not
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any of its
subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or By-laws of the Company or any of its subsidiaries, (ii)
any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to the Company or any of its subsidiaries or any of their
15
respective properties or assets, or (iii) any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Company or any of
its subsidiaries is now a party or by which the Company or any of its
subsidiaries or any of their respective properties or assets may be bound or
affected. The consummation by the Company of the transactions contemplated
hereby will not result in any violation, conflict, breach, termination,
acceleration or creation of liens under any of the terms, conditions or
provisions described in clauses (i) through (iii) of the preceding sentence,
subject (x) in the case of the terms, conditions or provisions described in
clause (ii) above, to obtaining (prior to the Effective Time) the Company
Required Statutory Approvals and the Company Stockholder's Approval and (y) in
the case of the terms, conditions or provisions described in clause (iii) above,
to obtaining (prior to the Effective Time) consents required from commercial
lenders, lessors or other third parties each as listed in Section 6.4 of the
Disclosure Schedule. Excluded from the foregoing sentences of this paragraph
(b), insofar as they apply to the terms, conditions or provisions described in
clauses (ii) and (iii) of the first sentence of this paragraph (b), are such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances that would not,
in the aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole.
(c) Except for (i) the filings by Parent and the Company required by
the HSR Act, (ii) the filing of the Proxy Statement and the Schedule 14D-9 with
the SEC pursuant to the Exchange Act and any filings required to be made under
Section 14(f) of the Exchange Act, and (iii) the making of the Merger Filing
with the Secretary of State of the State of New York in connection with the
Merger (the filings and approvals referred to in clauses (i), (ii) and (iii) are
collectively referred to as the "Company Required Statutory Approvals"), no
declaration, recording or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole.
SECTION 6.5. Reports and Financial Statements. Except as set forth in
Section 6.5 of the Disclosure Schedule, since December 31, 1995, the Company has
filed with the SEC all material forms, statements, reports and documents
(including all exhibits, amendments and supplements thereto) required to be
filed by it under each of the Securities Act, the Exchange Act and the
respective rules and regulations thereunder, all of which, as amended if
applicable, complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder. The Company has
previously made available to Parent copies of its (a) Annual Reports on Form
10-K for each of the two immediately preceding fiscal years, as filed with the
SEC, (b) proxy and information statements relating to (i) any meetings of its
stockholders (whether annual or special) and (ii) actions by written consent in
lieu of a stockholders' meeting from December 31, 1995 until the date hereof,
and (c) all other reports, including quarterly reports, or registration
statements filed by the Company with the SEC since December 31, 1995 (other than
16
Registration Statements filed on Form S-8) and (the documents referred to in
clauses (a), (b) and (c) are collectively referred to as the "Company SEC
Reports"). At the time of filing, the Company SEC Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements of the Company included in the Company SEC Reports (collectively, the
"Company Financial Statements") have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly present in all material
respects the financial position of the Company and its subsidiaries as of the
dates thereof and the results of their operations and changes in financial
position for the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments and any other
adjustments described therein.
SECTION 6.6. Absence of Undisclosed Liabilities. Except as disclosed in
the Company SEC Reports or as set forth in Section 6.6 of the Disclosure
Schedule, neither the Company nor any of its subsidiaries had at March 31, 1997,
or has incurred since that date, any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of any nature, except (a)
liabilities, obligations or contingencies (i) which are accrued or reserved
against in the Company Financial Statements or reflected in the notes thereto or
(ii) which were incurred after March 31, 1997, and were incurred in the ordinary
course of business and consistent with past practices, (b) liabilities,
obligations or contingencies which (i) would not, in the aggregate, have a
material adverse effect on the business, operations, properties, assets,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, or (ii) have been discharged or paid in full
prior to the date hereof, and (c) liabilities and obligations which are of a
nature not required to be reflected in the consolidated financial statements of
the Company and its subsidiaries prepared in accordance with generally accepted
accounting principles consistently applied and which were incurred in the normal
course of business.
SECTION 6.7. Absence of Certain Changes or Events. Except as set forth
in Section 6.7 of the Disclosure Schedule, since the date of the most recent
Company SEC Report, there has not been any material adverse change in the
business, operations, properties, assets, liabilities, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
SECTION 6.8. Litigation. Except as referred to in the Company SEC
Reports or in Section 6.8 of the Disclosure Schedule, there are no claims,
suits, actions or proceedings pending or, to the knowledge of the Company,
threatened against, relating to or affecting the Company or any of its
subsidiaries, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seek to restrain the
consummation of the Merger or which could reasonably be expected, either alone
or in the aggregate with all such claims, actions or proceedings, to materially
and adversely affect the business, operations, properties, assets, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole. Except as referred to in the Company SEC Reports or in Section 6.8 of
the Disclosure Schedule, neither the Company nor any of its subsidiaries is
subject to any judgment, decree, injunction, rule
17
or order of any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator which prohibits or restricts the
consummation of the transactions contemplated hereby or would have any material
adverse effect on the business, operations, properties, assets, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole.
SECTION 6.9. Registration Statement and Proxy Statement. None of the
information to be supplied by the Company or its subsidiaries for inclusion in
either the Proxy Statement (as defined in Section 8.2) or the Registration
Statement will, in the case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy Statement and any
amendments or supplements thereto, and at the time of the Stockholders Meeting
(as defined in Section 8.3), or, in the case of the Registration Statement, as
amended or supplemented, at the time it becomes effective and throughout the
duration of the Offer, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. No representation is made by the Company with respect
to information supplied by the either the Parent or the Subsidiary for inclusion
in either the Registration Statement or the Proxy Statement.
SECTION 6.10. No Violation of Law. Except as disclosed in the Company
SEC Reports or in Section 6.10 of the Disclosure Schedule, neither the Company
nor any of its subsidiaries is in violation of or has been given notice or been
charged with any violation of, any law, statute, order, rule, regulation,
ordinance or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any governmental or regulatory
body or authority, except for violations which, in the aggregate, could not
reasonably be expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, taken as a whole. Except as
disclosed in the Company SEC Reports, as of the date of this Agreement, to the
knowledge of the Company, no investigation or review by any governmental or
regulatory body or authority is pending or threatened, nor has any governmental
or regulatory body or authority indicated an intention to conduct the same. The
Company and its subsidiaries have all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to conduct their businesses as presently conducted (collectively, the
"Company Permits"). The Company and its subsidiaries are not in violation of the
terms of any Company Permit, except for delays in filing reports or violations
which, alone or in the aggregate, would not have a material adverse effect on
the business, operations, properties, assets, condition (financial or otherwise)
or results of operations of the Company and its subsidiaries, taken as a whole.
Any matter scheduled on Section 6.10 of the Disclosure Schedule shall not, alone
or in the aggregate, have a material adverse effect upon the Company and its
subsidiaries, taken as a whole.
SECTION 6.11. Compliance with Agreements. Except as disclosed in the
Company SEC Reports and Section 6.11 of the Disclosure Schedule, the Company and
each of its subsidiaries are not in breach or violation of or in default in the
performance or observance of any term or provision of, and no event has occurred
which, with lapse of time or action by a third party, could result in a default
under, (a) the respective charters, By-laws or similar organizational
instruments of the Company or any of its subsidiaries or (b) any contract,
commitment, agreement, indenture,
18
mortgage, loan agreement, note, lease, bond, license, approval or other
instrument to which the Company or any of its subsidiaries is a party or by
which any of them is bound or to which any of their property is subject, which
breaches, violations and defaults, in the case of clause (b) of this Section
6.11, would have, in the aggregate, a material adverse effect on the business,
operations, properties, assets, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, taken as a whole.
SECTION 6.12. Taxes. Except as disclosed in Section 6.12 of the
Disclosure Schedule, the Company and its subsidiaries have (i) duly filed with
the appropriate governmental authorities all tax returns required to be filed by
them for all periods ending on or prior to the Effective Time, other than those
tax returns that are on extension (which extensions are disclosed in Section
6.12 of the Disclosure Schedule), and (ii) duly paid in full or made adequate
provision for the payment of all taxes for all periods ending at or prior to the
date hereof (including, without limitation, all withholding and other employee
related taxes), except in the case of both clauses (i) and (ii), for failures
that would not have a material adverse effect on the business, operations,
properties, assets, condition (financial or otherwise) or results of operations
of the Company and its subsidiaries, taken as a whole. All such tax returns are
true, correct and complete in all material respects The liabilities and reserves
for taxes reflected in the Company balance sheet included in the latest Company
SEC Report are adequate to cover all taxes for all periods ending at or prior to
the date hereof and there are no material liens for taxes upon any property or
asset of the Company or any subsidiary thereof, except for liens for taxes not
yet due. There are no unresolved issues of law or fact arising out of a notice
of deficiency, proposed deficiency or assessment from the Internal Revenue
Service or any other governmental taxing authority with respect to taxes of the
Company or any of its subsidiaries which, if decided adversely, singly or in the
aggregate, would have a material adverse effect on the business, operations,
properties, assets, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole. Neither the Company nor any of its
subsidiaries is a party to any agreement providing for the allocation or sharing
of taxes with any entity that is not, directly or indirectly, a wholly-owned
corporate subsidiary of the Company. Neither the Company nor any of its
corporate subsidiaries has, with regard to any assets or property held, acquired
or to be acquired by any of them, filed a consent to the application of Section
341(f) of the Internal Revenue Code of 1986, as amended, and any successor
statute thereto, and the rules and regulations promulgated thereunder (the
"Code").
SECTION 6.13. Employee Benefit Plan; ERISA.
(a) Section 6.13 of the Disclosure Schedule, taken together with the
Company's SEC Reports, identifies any material employee benefit plans as defined
in Section 3(3) of the Employee Retirement Security Act of 1974, as amended, and
any successor statute thereto, and the rules and regulations promulgated
thereunder ("ERISA"), that (i) is subject to any provision of ERISA, (ii) is
maintained, administered, or contributed to by the Company or any subsidiary
which, together with the Company, is treated as a single employer under Section
414 of the Code ("ERISA Affiliate") or (iii) covers any employee or former
employee of the Company or any subsidiary ("Employee Plan"). Section 6.13 of the
Disclosure Schedule lists all Multi-Employer Plans within the meaning of Section
3(37) of ERISA or a Multiple Employer Plan within the meaning of Section 413(c)
of the Code. Section 6.13 of the Disclosure Schedule, taken together with the
Company SEC Reports,
19
identifies any material employment, severance or similar contract, arrangement
or policy, or any plan or arrangement (whether or not written) providing for
severance benefits, insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement options, stock appreciation
rights or other forms of incentive benefits that (a) is not an Employee Plan,
(b) is entered into or maintained by the Company or any subsidiary and (c)
covers any United States employee or former employee of the Company or any
subsidiary (any of the foregoing a "Benefit Arrangement"). Copies of Employee
Plans and Benefit Arrangements have been furnished or made available to the
Parent (together with the most recent annual report prepared in connection with
any Employee Plan). Except as disclosed in Section 6.13 of the Disclosure
Schedule, each Employee Plan and Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations, including but not limited
to ERISA and the Code, that are applicable to such Employee Plan or Benefit
Arrangement. Any non-compliance scheduled on Section 6.13 of the Disclosure
Schedule shall not, alone or in the aggregate, have a material adverse effect
upon the Company and its subsidiaries, taken as a whole.
(b) Except as disclosed in the Company SEC Reports, (i) there have been
no prohibited transactions within the meaning of Section 406 or 407 of ERISA or
Section 4975 of the Code with respect to any of the Benefit Arrangements or
Employee Plans that could result in penalties, taxes or liabilities which,
singly or in the aggregate, could have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) results
of operations or prospects of the Company and its subsidiaries, taken as a
whole, (ii) except for premiums due, there is no outstanding material liability,
whether measured alone or in the aggregate, under Title IV of ERISA with respect
to any of the Benefit Arrangements or Employee Plans, (iii) neither the Pension
Benefit Guaranty Corporation nor any plan administrator has instituted
proceedings to terminate any of the Benefit Arrangements or Employee Plans
subject to Title IV of ERISA other than in a "standard termination" described in
Section 404(b) of ERISA, (iv) none of the Benefit Arrangements or Employee Plans
has incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each of the Benefit Arrangements or Employee
Plans ended prior to the date of this Agreement, (v) the current present value
of all projected benefit obligations under each of the Benefit Arrangements or
Employee Plans which is subject to Title IV of ERISA did not, as of its latest
valuation date, exceed the then current value of the assets of such plan
allocable to such benefit liabilities by more than the amount, if any, disclosed
in the Company SEC Reports as of March 31, 1997, based upon reasonable actuarial
assumptions currently utilized for such Benefit Arrangements or Employee Plans,
(vi) each of the Benefit Arrangements and Employee Plans has been operated and
administered in all material respects in accordance with applicable laws during
the period of time covered by the applicable statute of limitations, (vii) each
of the Benefit Arrangements and Employee Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified and such determination has
not been modified, revoked or limited by failure to satisfy any condition
thereof or by a subsequent amendment thereto or a failure to amend, except that
it may be necessary to make additional amendments retroactively to maintain the
"qualified" status of such Benefit Arrangements or Employee Plans, and the
period for making any such necessary retroactive amendments has not expired,
(viii) with respect to Multi-Employer Plans, neither the Company nor any of its
subsidiaries
20
has, made or suffered a "complete withdrawal" or a "partial withdrawal", as such
terms are respectively defined in Sections 4203, 4204 and 4205 of ERISA and, to
the best knowledge of the Company and its subsidiaries, no event has occurred or
is expected to occur which presents a material risk of a complete or partial
withdrawal under said Sections 4203, 4204 and 4205, (ix) to the best knowledge
of the Company and its subsidiaries, there are no material pending, threatened
or anticipated claims involving any of the Benefit Arrangements or Employee
Plans other than claims for benefits in the ordinary course, and (x) the Company
and its subsidiaries have no current material liability, whether measured alone
or in the aggregate, for plan termination or withdrawal (complete or partial)
under Title IV of ERISA based on any plan to which any entity that would be
deemed one employer with the Company and its subsidiaries under Section 4001 of
ERISA or Section 414 of the Code contributed during the period of time covered
by the applicable statute of limitations (the "Company Controlled Group Plans"),
and the Company and its subsidiaries do not reasonably anticipate that any such
liability will be asserted against the Company or any of its subsidiaries. None
of the Company Controlled Group Plans has an "accumulated funding deficiency"
(as defined in Section 302 of ERISA and 412 of the Code).
(c) Schedule 6.13 of the Disclosure Schedule contains a true and
complete summary or list of or otherwise describe all material employment
contracts and other employee benefit arrangements with "change of control" or
similar provisions and all severance agreements with executive officers.
SECTION 6.14. Labor Controversies. Except as set forth in the Company
SEC Reports, (a) there are no significant controversies pending or, to the
knowledge of the Company, threatened between the Company or its subsidiaries and
any representatives of any of their employees, (b) to the knowledge of the
Company, there are no organizational efforts presently being made involving any
of the presently unorganized employees of the Company or any of its
subsidiaries, (c) the Company and its subsidiaries have, to the knowledge of the
Company, complied with respect to all employees, including without limitation,
staff employees and those chargeable to others, with all laws relating to the
employment of labor, including, without limitation, any provisions thereof
relating to wages, hours, collective bargaining, and the payment of social
security and similar taxes except for failures to comply which, alone or in the
aggregate, would not have a material adverse effect on the business, operations,
properties, assets, condition (financial or otherwise) or results of operations
of the Company and its subsidiaries, taken as a whole, and (d) no person has, to
the knowledge of the Company, asserted that the Company or any of its
subsidiaries is liable in any material amount for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing. Except as
set forth in Section 6.14 of the Disclosure Schedule, there are no proceedings
now pending or threatened against the Company before the National Labor
Relations Board, any state department of labor, any state commission on human
rights, the Equal Employment Opportunity Commission or any other local, state or
federal agencies having jurisdiction over employee rights nor have there been
any such proceedings since January 1, 1995.
SECTION 6.15. Environmental Matters.
(a) Except as set forth in the Company SEC Reports, (i) the Company and
its subsidiaries have conducted their respective businesses in compliance with
all applicable Environmental Laws
21
(as hereinafter defined), including, without limitation, having all permits,
licenses and other approvals and authorizations necessary for the operation of
their respective businesses as presently conducted, (ii) neither the Company nor
any of its subsidiaries has received any notices, demand letters or requests for
information from any federal, state, local or foreign governmental entity or
third party indicating that the Company or any of its subsidiaries may be in
violation of, or liable under, any Environmental Law in connection with the
ownership or operation of their businesses, (iii) there are no civil, criminal
or administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or to Company's knowledge threatened, against the Company or
any of its subsidiaries relating to any violation, or alleged violation, of any
Environmental Law, (iv) no reports have been filed, or are required to be filed,
by the Company or any of its subsidiaries concerning the release of any
Hazardous Substance (as hereinafter deemed), taken as a whole, or the threatened
or actual violation of any Environmental Law, (v) there have been no
environmental assessments or tests which are in the possession of the Company or
any of its subsidiaries relating to the activities of the Company or its
subsidiaries which have not been delivered to Parent prior to the date hereof,
and (vi) neither the Company, its subsidiaries nor any of their respective
properties are subject to any material liabilities or expenditures relating to
any suit, settlement, court order, administrative order, regulatory requirement,
judgment or claim asserted or arising under any Environmental Law, except for
such matters covered in foregoing clauses (i) through (vi) that, singly or in
the aggregate, would not reasonably be expected to have a material adverse
effect on the business, operations, properties, assets, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries
considered as one enterprise.
(b) As used herein, "Environmental Law" means any federal, state, local
or foreign law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction,
requirement or agreement with any governmental entity relating to (i) the
protection, preservation or restoration of the environment (including, without
limitation, air, surface water, groundwater, surface land, subsurface land, or
to human health or safety or (ii) the exposure to, or the use, storage,
treatment, generation, transportation, processing, handling, release or disposal
of Hazardous Substances, in each case as amended and as in effect on the date
hereof.
(c) As used herein, "Hazardous Substance" means any substance presently
listed, deemed, designated or classified as hazardous, toxic, radioactive,
caustic or otherwise hazardous including petroleum, its derivatives, byproducts
and other hydrocarbons regulated under any Environmental Law.
SECTION 6.16. Intellectual Property.
(a) Section 6.16(a) of the Disclosure Schedule sets forth a true and
complete list and a brief description, including a complete identification of
each patent and patent application and each trademark or copyright registration
or application for registration thereof, of all Intellectual Property (as herein
defined) owned or licensed by the Company and its subsidiaries. Except as
otherwise described in Section 6.16(a) of the Disclosure Schedule, in each case
where a registration or patent or application for registration or patent listed
in Section 6.16(a) of the Disclosure Schedule is held by assignment, the
assignment has been duly recorded with the United States Patent Office,
Trademark Office or Copyright Office or state trademark office from which the
original patent or
22
registration issued or before which the application for trademark or copyright
registration is pending. Except as disclosed in Section 6.16(a) of the
Disclosure Schedule, to the knowledge of the Company, the rights of the Company
or any subsidiary, as the case may be, in or to such Intellectual Property do
not conflict with or infringe on the rights of any other person, and neither the
Company nor any subsidiary has received any claim or written notice from any
person, to such effect.
(b) Except as disclosed in Section 6.16(b) of the Disclosure Schedule:
(i) all the Intellectual Property that is owned by the Company and its
subsidiaries is free and clear of any mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever and (ii) no actions have been made or
asserted or are pending (nor, to the best knowledge of the Company, has any such
action been threatened) against the Company or any subsidiary either (A) based
upon or challenging or seeking to deny or restrict the use by the Company or any
subsidiary of any of Intellectual Property or (B) alleging that any services
provided, or products manufactured or sold by the Company or any subsidiary are
being provided, manufactured or sold in violation of any patents or trademarks,
or any other rights of any person. To the best knowledge of the Company and
except as disclosed in Section 6.16(b) of the Disclosure Schedule, no person is
using any patents, copyrights, trademarks, service marks, or trade names owned
by the Company and its subsidiaries or that infringe upon the Intellectual
Property or upon the rights of the Company or any subsidiary therein. Except as
disclosed in Section 6.16(b) of the Disclosure Schedule, neither the Company nor
any subsidiary has granted any license or other right to any other person with
respect to the Intellectual Property owned by the Company and its subsidiaries.
The consummation of the transactions contemplated by this Agreement will not
result in the termination or impairment of any of the intellectual property
owned by the Company and its subsidiaries.
(c) For purposes hereof, the term "Intellectual Property" shall mean
all computer software, patent and registrations for trademarks, trade names,
service marks and copyrights which are unexpired as of the date of this
Agreement and which are used in connection with the operation of the Company's
and its subsidiaries' businesses, as well as all applications pending on said
date for patents or for trademarks, trade name, service ▇▇▇▇ or copyright
registrations.
SECTION 6.17. Title to Assets. Except as set forth in Section 6.17 of
the Disclosure Schedule, the Company and each of its subsidiaries has good and
marketable title in fee simple to all its real property and good title to all
its leasehold interests and other properties, as reflected in the most recent
balance sheet included in the Company Financial Statements, except for
properties and assets that have been disposed of in the ordinary course of
business since the date of such balance sheet, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any nature whatsoever, except (a) the
lien of current taxes, payments of which are not yet delinquent, (b) such
imperfections in title and 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 (in the manner presently carried on by the Company), (c) as disclosed
in the Company SEC Reports, or (d) for such matters which, singly or in the
aggregate, could not reasonably be expected to materially and adversely affect
the business, operations, properties, assets, condition (financial or otherwise)
or results of operations of the Company and its subsidiaries, taken as a whole.
All leases under which the Company or any of its subsidiaries leases any real or
personal
23
property have been delivered to Parent and are in good standing, valid and
effective in accordance with their respective terms, and, to the knowledge of
the Company, there is not, under any of such leases, any existing default or
event which with notice or lapse of time or both would become a default other
than defaults under such leases which in the aggregate will not materially and
adversely affect the condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole.
SECTION 6.18. Assets Relationship to Business of the Company. The
assets owned or leased by the Company constitute all of the properties and
assets used or useful in or necessary to the conduct of the business and affairs
of the Company.
SECTION 6.19. Certain Relationships; Transactions with Management.
(a) Section 6.19 of the Disclosure Schedule, taken together with the
Company SEC Reports, accurately describe all relationships among the directors,
the officers and the significant shareholders of the Company.
(b) Except as described in Section 6.19 of the Disclosure Schedule, or
in the Company SEC Reports, the Company is not a party to any contract, lease or
commitment with any officer, director or shareholder (or any affiliate of any
such officer, director or shareholder) of the Company, nor are there any loans
outstanding to any of such persons (or any affiliate of any such person) from
the Company. The Company has concurrently with the execution of this Agreement
entered into Employment Agreements with ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ in forms approved by Parent and such officers continue to be
employed by the Company on a full-time basis. In addition, the Company has
concurrently with the execution of this Agreement entered into a Noncompetition
Agreement with ▇▇▇▇ ▇▇▇▇▇▇▇ and Parent in form approved by Parent.
(c) Neither the Company nor any of the directors, officers or
significant shareholders of the Company (and/or any member of their respective
families) has a financial interest (direct or indirect) in any competitor,
supplier or customer of the Company.
SECTION 6.20. Improper Payments. Neither the Company (including any
present or former officers, directors, employees or agents or other third party
acting on behalf of the Company) have: (i) directly or indirectly, made or
authorized to be made, any bribes, kickbacks or other payments of a similar
nature, whether lawful or not, to any person or entity, public or private,
regardless of the form thereof, whether in money, property or services, to
obtain favorable treatment in securing business, to obtain special concessions
to pay for favorable treatment for business secured or for special concessions
already obtained or to otherwise attempt to influence any such person or entity
to take or refrain from taking any action relating to the Company; (ii) paid,
donated, leased or made available funds or property of any kind, directly or
indirectly, for the benefit of, or for the purpose of opposing, any government
or subdivision thereof, political party, candidate or committee, either domestic
or foreign; (iii) made any loans, donations, or other disbursements, directly or
indirectly, to officers or employees of the Company, so that contributions,
donations, loans or payments could be made, directly or indirectly, for the
benefit of, or for the purpose of opposing, any government or subdivision
thereof, political party, candidate or committee, either domestic or foreign; or
(iv) maintained a bank account or other account of any kind, whether
24
domestic or foreign, which account was not reflected in the corporate books and
records or which account was not listed, titled or identified in the name of the
Company.
SECTION 6.21. Agreements with Licensees. Section 6.21 of the Disclosure
Schedule lists all agreements with licensees or franchisees pursuant to which
the Company has granted any right to the other party thereto to operate an
office using the Company name or otherwise. Except as set forth in Section 6.21
of the Disclosure Schedule, upon the consummation of the transactions
contemplated by this Agreement, none of such agreements will restrict Parent or
any of its subsidiaries from operating in the ordinary course of business within
any specified territory.
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 7.1. Conduct of Business by the Company Pending the Merger.
Except as otherwise contemplated by this Agreement, after the date hereof and
prior to the Closing Date or earlier termination of this Agreement, unless
Parent shall otherwise agree in writing, the Company shall, and shall cause its
subsidiaries, to:
(a) conduct its business in the ordinary and usual course of business
and consistent with past practice;
(b) not (i) amend or propose to amend its charter or by-laws, (ii)
split, combine or reclassify its outstanding capital stock or (iii) declare, set
aside or pay any dividend or distribution payable in cash, stock, property or
otherwise, except for the payment of dividends or distributions by a
wholly-owned subsidiary of the Company and the payment of a quarterly cash
dividend by the Company in accordance with its prior practices in an amount not
in excess of $0.03 per share;
(c) not issue, sell or pledge, or agree to issue, sell or pledge any
additional shares of, or any options, warrants or rights of any kind to acquire
any shares of its capital stock of any class or any debt or equity securities
convertible into or exchangeable for such capital stock;
(d) use all reasonable efforts to preserve intact its business
organizations and goodwill, keep available the services of its officers and key
employees, and preserve the goodwill and business relationships with customers
and others having business relationships with the Company and not engage in any
action, directly or indirectly, with the intent to adversely impact the
transactions contemplated by this Agreement;
(e) confer on a regular and frequent basis with one or more designated
representatives of Parent to report operational matters of materiality and the
general status of ongoing operations;
(f) except as contemplated in Section 7.1 of the Disclosure Schedule,
not enter into or amend any employment, severance, special pay arrangement with
respect to termination of
25
employment or other similar arrangements or agreements with any directors,
officers or key employees, except in the ordinary course and consistent with
past practice; and
(g) not adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation, health
care, employment or other employee benefit plan, agreement, trust, fund or
arrangement for the benefit or welfare of any employee or retiree, except as
required to comply with changes in applicable law.
SECTION 7.2. Control of the Company's Operations. Unless and until the
Parent has availed itself of its right to Board representation pursuant to
Section 1.3 hereof, nothing contained in this Agreement shall give to Parent,
directly or indirectly, rights to control or direct the Company's operations
prior to the Effective Time. Prior to the Effective Time, the Company shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision of its operations.
SECTION 7.3. Acquisition Transactions.
(a) After the date hereof and prior to the Effective Time or earlier
termination of this Agreement, the Company shall not, and shall not permit any
of its subsidiaries to, initiate, solicit, negotiate, encourage or provide
confidential information to facilitate, and the Company shall, and shall cause
its subsidiaries to, (i) cause any officer, director or employee of, or any
attorney, accountant or other agent retained by it and (ii) use its reasonable
best efforts to cause any financial advisor or investment banker retained by it,
not to initiate, solicit, negotiate, encourage or provide non-public or
confidential information to facilitate, any proposal or offer to acquire all or
any substantial part of the business and properties of the Company or any
capital stock of the Company, whether by merger, purchase of, tender offer or
otherwise, whether for cash, securities or any other consideration or
combination thereof (any such transactions being referred to herein as
"Acquisition Transactions").
(b) Notwithstanding the provisions of paragraph (a) above, the Company
may, in response to an unsolicited written proposal with respect to an
Acquisition Transaction furnish (subject to a confidentiality agreement
reasonably acceptable to the Company) confidential or non-public information
concerning its business, properties or assets to a financially capable
corporation, partnership, person or other entity or group (a "Potential
Acquirer") or negotiate with such Potential Acquirer if (i) it has in connection
therewith complied with subsection (c) of this Section, and (ii) based upon
advice of outside legal counsel to the special committee of the Board (the
"Special Committee") established to review and evaluate the transactions
contemplated by this Agreement, the Special Committee and the Board determines
in good faith that there is a risk that the failure to provide such confidential
or non-public information to such Potential Acquirer would constitute a breach
of its fiduciary duty to its shareholders.
(c) In the event the Company shall determine to provide any information
or negotiate as described in paragraph (b) above, or shall receive any offer of
the type referred to in paragraph (b) above, it shall promptly (and in any
event, at least prior to providing information or commencing negotiations)
inform Parent that information is to be provided, that negotiations are to take
place or
26
that an offer has been received and shall furnish to Parent the identity of the
person receiving such information or the proponent of such offer, if applicable,
and, if an offer has been received, a description of the material terms thereof.
(d) The Company may enter into a definitive agreement for an
Acquisition Transaction which meets the requirements set forth above with a
Potential Acquirer with which it is permitted to negotiate pursuant to paragraph
(b) above, but only if (i) the Board shall have duly determined that such
Acquisition Transaction would yield a higher value to the Company's shareholders
than the aggregate Merger Consideration and that the execution of such
definitive agreement is in the best interests of the Company's shareholders,
(ii) at least five (5) business days prior to the execution of such definitive
agreement, the Company shall have furnished the Parent with a copy of such
definitive agreement, and (iii) the Parent shall have failed within such five
(5) business day period to offer to amend the terms of this Agreement in order
that the Merger would yield a value to the Company's shareholders at least equal
in the good faith judgment of the Board to the Acquisition Transaction.
(e) The Company (i) acknowledges that a breach of any of its covenants
contained in this Section 7.3 will result in irreparable harm to the other party
which will not be compensable in money damage and (ii) agrees that such covenant
shall be specifically enforceable and that specific performance and injunctive
relief shall be a remedy properly available to the Parent for a breach of such
covenant.
ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.1. Access to Information.
(a) The Company and its subsidiaries shall afford to Parent and
Subsidiary and, on a need to know basis, their respective accountants, counsel,
financial advisors and other representatives (the "Parent Representatives") full
access during normal business hours throughout the period prior to the Effective
Time to all of their respective properties, books, contracts, commitments and
records (including, but not limited to, tax returns) and, during such period,
shall furnish promptly to the Parent or Parent Representatives (i) a copy of
each report, schedule and other document filed by any of them with the SEC in
connection with the transactions contemplated by this Agreement or which may
have a material effect on their respective businesses, properties or personnel
and (ii) such other information concerning the Company's business as Parent or
Subsidiary shall reasonably request including, without limitation, access to
customers of the Company; provided that no investigation pursuant to this
Section 8.1 shall amend or modify any representations or warranties made herein
or the conditions to the obligations of the respective parties to consummate the
Merger. Parent and its subsidiaries shall hold and shall use their reasonable
best efforts to cause the Parent Representatives to hold in strict confidence
all non-public documents and information furnished to Parent and Subsidiary in
connection with the transactions contemplated by this Agreement, except that (i)
Parent and Subsidiary may disclose such information as may be necessary in
connection with
27
seeking the Parent Required Statutory Approvals and (ii) each of Parent and
Subsidiary may disclose any information that it is required by law or judicial
or administrative order to disclose.
(b) The Parent and Subsidiary shall afford to the Company and its
subsidiaries and, on a need to know basis, their respective accountants,
counsel, financial advisors and other representatives (the "Company
Representatives") full access during normal business hours throughout the period
prior to the Effective Time to all of their respective properties, books,
contracts, commitments and records (including, but not limited to, tax returns)
and, during such period, shall furnish promptly to the Company and its
subsidiaries or the Company Representatives (i) a copy of each report, schedule
and other document filed by any of them with the SEC in connection with the
transactions contemplated by this Agreement or which may have a material effect
on their respective businesses, properties or personnel and (ii) such other
information concerning the Parent's and/or Subsidiary's business as the Company
or its subsidiaries shall reasonably request; provided that no investigation
pursuant to this Section 8.1 shall amend or modify any representations or
warranties made herein or the conditions to the obligations of the respective
parties to consummate the Merger. The Company and its subsidiaries shall hold
and shall use their reasonable best efforts to cause the Company Representatives
to hold in strict confidence all non-public documents and information furnished
to the Company and its subsidiaries in connection with the transactions
contemplated by this Agreement, except that (i) the Company and its subsidiaries
may disclose such information as may be necessary in connection with seeking the
Company Required Statutory Approvals and (ii) the Company may disclose any
information that it is required by law or judicial or administrative order to
disclose.
(c) In the event that this Agreement is terminated in accordance with
its terms, each party shall promptly redeliver to the other all non-public
written material provided by the other pursuant to this Section 8.1 and shall
not retain any copies, extracts or other reproductions in whole or in part of
such written material. In such event, all documents, memoranda, notes and other
writings prepared by Parent or Parent Representatives or the Company or Company
Representatives based on the information in such material shall be destroyed
(and Parent and Parent Representatives and Company and Company Representatives
shall use their best efforts to cause their advisors and representatives to
similarly destroy their documents, memoranda and notes), and such destruction
(and best efforts) shall be certified in writing by an authorized officer
supervising such destruction.
SECTION 8.2. Registration Statement and Proxy Statement.
(a) The Parent and Subsidiary shall file with the SEC promptly after
the public announcement of the offer complying with Rule 135(a)(4) the
Registration Statement. The Company shall promptly furnish to the Parent and the
Subsidiary all information, and take such other actions, as may reasonably be
requested in connection with any action by the Parent or the Subsidiary in
connection with the preceding sentence. The information provided and to be
provided by Company and the Parent or the Subsidiary, respectively, for use in
the Registration Statement shall be true and correct in all material respects
without omission of any material fact which is required to make such information
not false or misleading as of the date thereof and in light of the circumstances
under which given or made.
28
(b) The Company shall file with the SEC as soon as is reasonably
practicable after the date hereof a proxy statement to be distributed in
connection with the Stockholders Meeting (as defined in Section 8.3), which, if
requested by the Parent, will be combined in the prospectus contained in the
Registration Statement (the "Proxy Statement"). The Company will take all
reasonable efforts to aid the Parent to include the Proxy Statement in the
Registration Statement if the Parent so requests. Parent shall promptly furnish
to the Company all information, and take such other actions, as may reasonably
be requested in connection with any action by the Company in connection with the
preceding sentence. The information provided and to be provided by Parent and
the Company, respectively, for use in the Proxy Statement shall be true and
correct in all material respects without omission of any material fact which is
required to make such information not false or misleading as of the date thereof
and in light of the circumstances under which given or made.
SECTION 8.3. Stockholders' Approvals. The Company shall, as promptly as
practicable, submit this Agreement and the transactions contemplated hereby for
the approval of its stockholders at a meeting of stockholders (the "Stockholders
Meeting") and, subject to the fiduciary duties of the Board of Directors of the
Company under applicable law, shall use its reasonable best efforts to obtain
stockholder approval and adoption (the "Stockholders' Approval") of this
Agreement and the transactions contemplated hereby. The Stockholders Meeting
shall be held as soon as practicable following the date upon which the Company
has cleared all comments, if any, from the SEC with respect to the Proxy
Statement. Subject to the fiduciary duties of the Board of Directors of the
Company under applicable law, the Company shall, through its Board of Directors,
recommend to its stockholders approval of this Agreement and the transactions
contemplated by this Agreement.
SECTION 8.4. Expenses and Fees.
(a) Except as provided in Section 8.4(b), all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
(b) The Company agrees to pay to Parent a fee equal to $6,600,000
(i) if the Company terminates this Agreement pursuant to
clause (iv) or (v) of Section 10.1(a);
(ii) if (A) Parent terminates this Agreement pursuant to
clause (iv) of Section 10.1(b) and (B) one or more of the
following events shall occur prior to nine months after such
termination:
(1) the Company is acquired by merger or
otherwise by another person under the terms
which provide for the Company and/or its
stockholders to receive consideration having
a fair value on the date of the first public
announcement of such merger or other
acquisition transaction equal to or greater
than the Merger Consideration;
29
(2) the Company enters into a merger or other
agreement which contemplates the acquisition
of the Company by another person under terms
which provide for the Company and/or its
stockholders to receive consideration having
a fair value on the date of the first public
announcement of such merger or other
agreement equal to or greater than the
Merger Consideration;
(3) another person acquires or becomes the
beneficial owner of more than 50% of the
outstanding shares of the Company Common
Stock for consideration having a fair value
on the date of such acquisition greater than
the Merger Consideration;
(4) another person acquires all or any
substantial portion of the Company's assets
under terms which provide for the Company
and/or its stockholders to receive
consideration having a fair value on the
date of the first public announcement of
such acquisition transaction equal to or
greater than the Merger Consideration;
(5) the Company adopts a plan of liquidation
relating to all or a substantial portion of
its assets or declares a distribution to its
stockholders of all or a substantial portion
of its assets and in connection therewith
the stockholders receive consideration
having a fair value on the date of the first
public announcement of such plan of
liquidation or dividend declaration equal to
or greater than the Merger Consideration.
(c) The Parent agrees to reimburse the Company for the reasonable
out-of-pocket expenses incurred by the Company in connection with this Agreement
and the transactions contemplated hereby if Parent terminates this Offer because
the debt financing source contemplated by Section 5.9 of this Agreement shall
not have provided to the Parent and to the Subsidiary the applicable debt
financing in an amount sufficient to pay the aggregate Per Share Amount for all
outstanding Shares, provided Parent shall not be obligated to make any payment
to the Company pursuant to this Section 8.4(c) in the event that Parent
reasonably determines that the Company has breached in any material respects any
of its representations, warranties or covenants contained herein.
SECTION 8.5. Agreement to Cooperate.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto shall use all reasonable efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using its reasonable
efforts to obtain all necessary or appropriate waivers, consents and approvals
to effect all necessary filings and submissions, and including, if appropriate,
agreeing to amend any specific provisions of
30
this Agreement if the parties agree that such amendment would be beneficial to
the parties and not adversely affect the economic terms hereof.
(b) Without limitation of the foregoing, each of Parent and the Company
undertakes and agrees to file as soon as practicable after the date hereof a
Notification and Report Form under the HSR Act with the Federal Trade Commission
(the "FTC") and the Antitrust Division of the Department of justice (the
"Antitrust Division"). Each of Parent and the Company shall (i) use its best
efforts to comply as expeditiously as possible with all lawful requests of the
FTC or the Antitrust Division for additional information and documents and (ii)
not extend any waiting period under the HSR Act or enter into any agreement with
the FTC or the Antitrust Division not to consummate the transactions
contemplated by this Agreement, except with the prior consent of the other
parties hereto.
SECTION 8.6. Public Statements. The parties shall use reasonable
efforts to consult with each other prior to issuing any press release or any
written public statement with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such press release or written public
statement prior to such reasonable efforts.
SECTION 8.7. Notification of Certain Matters. Each of the Company,
Parent and Subsidiary agrees to give prompt notice to each other of, and to use
their respective reasonable best efforts to prevent or promptly remedy, (a) the
occurrence or failure to occur or the impending or threatened occurrence or
failure to occur, of any event which occurrence or failure to occur would be
likely to cause any of its representations or warranties in this Agreement to be
untrue or inaccurate in any material respect at the date hereof or the Effective
Time and (b) any material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 8.7 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
SECTION 8.8. Directors' and Officers' Indemnification.
(a) After the Effective Time, Parent and the Surviving Corporation
shall, to the fullest extent permitted under applicable law, jointly and
severally indemnify and hold harmless, each present and former director,
officer, employee and agent of the Company or any of its subsidiaries (each,
together with such person's heirs, executors or administrators, an "Indemnified
Party" and collectively, the "Indemnified Parties") against any costs or
expenses (including attorneys fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of, relating to or in connection with any action or
omission occurring prior to the Effective Time (including, without limitation,
acts or omissions in connection with such persons serving as an officer,
director or other fiduciary in any entity if such service was at the request or
for the benefit of the Company) or arising out of or pertaining to the
transactions contemplated by this Agreement. In furtherance of the foregoing
agreement, the Surviving Corporation hereby affirms its obligations as the
surviving corporation of the Merger after the Effective Time under the
Indemnification Agreements between the Company and its officers and
31
directors which are identified in Schedule 8.8 of the Disclosure Schedule, true,
correct and complete copies of which have been made available to the Parent or
its counsel. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Parent
and the Surviving Corporation shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to Parent and the Surviving Corporation, promptly after statements
therefor are received, (ii) Parent and the Surviving Corporation will cooperate
in the defense of any such matter, and (iii) any determination required to be
made with respect to whether an Indemnified Party's conduct complies with the
standards set forth under the BCL shall be made by outside legal counsel
acceptable to the Parent, the Surviving Corporation and the Indemnified Party;
provided, however, that neither Parent nor the Surviving Corporation shall be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld).
(b) For a period of three (3) years following the Effective Date,
Parent and the Surviving Corporation shall maintain in full force and effect a
policy of directors and officers liability insurance in an amount which is not
less than the coverage presently maintained by the Company and covering each
individual who served as an officer or director of the Company prior to the
Effective Time; provided, however, that Parent and the Surviving Corporation
shall not be required to pay annual premiums for such insurance in excess of Two
Hundred Percent (200%) of the amount currently paid by the Company for the
coverage presently maintained and, as a result, Parent may reduce the amount of
coverage provided under this subsection so its cost for such coverage is Two
Hundred Percent (200%) of the amount currently paid by the Company for the
coverage presently maintained.
(c) In the event the Surviving Corporation or Parent or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation or Parent shall assume the obligations set forth in this Section
8.8.
SECTION 8.9. Corrections to the Registration Statement and the Proxy
Statement. Prior to the date of approval of the Merger by the shareholders of
the Company, each of the Company, Parent and Subsidiary shall correct promptly
any information provided by it to be used in either the Registration Statement
or the Proxy Statement that shall have become false or misleading in any
material respect and shall take all steps necessary to file with the SEC and
have cleared by the SEC and delivered to the shareholders of the Company, as
necessary, any amendment or supplement to the Registration Statement or Proxy
Statement, as the case may be, so as to correct the same and to cause the Offer
to Purchase contained in the Registration Statement or Proxy Statement, as the
case may be, as so corrected to be disseminated to the stockholders of the
Company to the extent required by applicable law.
SECTION 8.10. Pension Plan Termination. The Company shall upon the
request of the Parent terminate its Employee Plans immediately prior to the time
the Company is to become a part of the Parent's control group.
32
SECTION 8.11. Fairness Opinion. The Company will make all reasonable
efforts to receive a written opinion from a nationally recognized investment
banking firm as to the fairness from a financial point of view of the
consideration to be received by the holders of Shares (other than Parent and its
subsidiaries) pursuant to each of the Offer and the Merger.
SECTION 8.12. Financing. Parent and Subsidiary shall use their best
efforts to obtain the debt financing contemplated by Section 5.9. In connection
therewith, neither Parent nor Subsidiary shall engage in any conduct or actions
intended to forestall or impede the financing nor will they assert failure to
satisfy the condition to the Offer set forth in clause (iii) of Exhibit A as the
reason for failing to consummate the Offer unless they shall have been advised
in writing by a debt financing source contemplated by Section 5.9 hereof, when
and after they have selected to arrange such financing, that such financing will
not be provided.
SECTION 8.13. Payments to Certain Executives. At the Effective Time,
the Company shall pay to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ the amounts due
to them under their respective letter agreements with the Company dated January
11, 1996 as amended by letter agreement dated August 13, 1997.
ARTICLE IX
CONDITIONS
SECTION 9.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) this Agreement and the transactions contemplated hereby shall have
been approved and adopted by the requisite vote of the stockholders of the
Company under applicable law and applicable listing requirements;
(b) the waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated;
(c) no preliminary or permanent injunction or other order or decree by
any federal or state court which prevents the consummation of the Merger shall
have been issued and remain in effect (each party agreeing to use its reasonable
efforts to have any such injunction, order or decree lifted);
(d) no action shall have been taken, and no statute, rule or regulation
shall have been enacted, by any state or federal government or governmental
agency in the United States which would prevent the consummation of the Merger
or make the consummation of the Merger illegal; and
(e) all material governmental waivers, consents, orders and approvals
required for the consummation of the Merger and the transactions contemplated
hereby, and all material consents
33
from lenders required to consummate the Merger, shall have been obtained and be
in effect at the Effective Time.
SECTION 9.2. Conditions to Obligation of the Company to Effect the
Merger. Unless waived by the Company, the obligation of the Company to effect
the Merger shall be subject to the fulfillment at or prior to the Closing Date
of the following additional conditions:
(a) Parent and Subsidiary shall have performed in all material respects
their agreements contained in this Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of Parent and
Subsidiary contained in this Agreement shall be true and correct in all material
respects on and as of the date made and on and as of the Closing Date as if made
at and as of such date, and the Company shall have received a certificate of an
officer of Parent and of Subsidiary to that effect;
(b) the Company shall have received an opinion from Doepken Keevican &
▇▇▇▇▇ Professional Corporation, counsel to Parent and Subsidiary, dated the
Closing Date, reasonably satisfactory to the Company and covering the due
incorporation of Parent and Subsidiary, the binding nature of this Agreement and
the effectiveness of the Merger; and
SECTION 9.3. Conditions to Obligations of Parent and Subsidiary to
Effect the Merger. Unless waived by Parent and Subsidiary, the obligations of
Parent and Subsidiary to effect the Merger shall be subject to the fulfillment
at or prior to the Effective Time of the additional following conditions:
(a) the Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date and the representations and warranties of the Company contained
in this Agreement shall be true and correct in all material respects on and as
of the date made and on and as of the Closing Date as if made at and as of such
date, and Parent shall have received a Certificate from an officer of the
Company to that effect; and
(b) Parent shall have received an opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome &
▇▇▇▇▇▇▇▇▇▇ LLP, counsel to the Company, dated the Closing Date, reasonably
satisfactory to the Parent and covering the due incorporation of the Company,
the binding nature of the Agreement, the lack of contravention of the Merger
with the constituent documents and material contracts of the Company, the
effectiveness of the Merger and due approval of this Agreement and the
Transactions (expressly including approval of the foregoing for purposes of
Section 912 of the BCL).
(c) all material governmental waivers, consents, orders and approvals
required for the consummation of the Merger and the transactions contemplated
hereby, and all material consents from lenders and other third parties required
to consummate the Merger, shall have been obtained and be in effect at the
Effective Time.
(d) Parent shall have completed the debt financing contemplated by
Section 5.9 hereof and received the funds therefrom in amounts sufficient to pay
the Merger Consideration for all Shares outstanding.
34
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval by the stockholders
of the Company or Parent, by mutual consent or as follows:
(a) The Company shall have the right to terminate this
Agreement:
(i) if the Company's Board of Directors:
(A) reasonably determines that the
representations and warranties of Parent and
Subsidiary contained in this Agreement are
not true and correct in any material respect
on and as of the date made and on and as of
the date of the Board's determination;
(B) reasonably determines that the condition set
forth in Section 9.1(e) above cannot be
satisfied in all material respects on or
prior to the Closing Date;
(ii) if the Merger is not completed by December 31, 1997
otherwise than on account of delay or default on the part of the
Company or the Stockholder or any of their affiliates or associates;
(iii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of the Company or
the Stockholder or any of their affiliates or associates;
(iv) if (A) the Company receives an offer from any third party
(excluding any affiliate of the Company or any group of which any
affiliate of the Company is a member) with respect to a merger, sale of
substantial assets or other business combination involving the Company,
(B) the Company's Board of Directors determines, in good faith and
after consultation with an independent financial advisor, that such
offer would yield a higher value to the Company or its stockholders
than the Merger and (C) Parent fails, within five (5) business days
after Parent is notified of such determination and of the terms and
conditions of such offer, to make an offer which is substantially
equivalent to, or more favorable than, such offer;
(v) if (A) a tender/exchange offer is commenced by a third
party (excluding any affiliate of the Company or any group of which any
affiliate of the Company is a member) for all outstanding shares of
Company Common Stock, (B) the Company's Board of Directors determines,
in good faith and after consultation with an independent financial
advisor, that such offer would yield a higher value to the Company or
its stockholders than the Merger and (C) Parent fails, within five (5)
business days after Parent is notified of such
35
determination, to make an offer which is substantially equivalent to,
or more favorable than, such tender/exchange offer; or
(vi) if Parent (A) fails to perform in any material respect
any of its material covenants in this Agreement and (B) does not cure
such default in all material respects within thirty (30) days after
notice of such default is given to Parent by the Company.
(b) Parent shall have the right to terminate this Agreement;
(i) if Parent's Board of Directors:
(A) reasonably determines that the
representations and warranties of Company
contained in this Agreement are not true and
correct in any material respect on and as of
the date made and on and as of the date of
the Board's determination;
(B) reasonably determines that the conditions
set forth in Section 9.1(e) above cannot be
satisfied in all material respects on or
prior to the Closing Date;
(ii) if the Merger is not completed by December 31, 1997
otherwise than account of delay or default on the part of the Parent or
any of its affiliates or associates;
(iii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of the Parent or
any of its affiliates or associates;
(iv) if the Company (A) fails to perform in any material
respect any of its material covenants in this Agreement and (B) does
not cure such default in all material respects within 30 days after
notice of such default is given to the Company by Parent.
(c) As used in this Section 10.1, (i) "affiliate" has the meaning set
forth in Rule 144 promulgated by the SEC pursuant to the Securities Act (ii)
"associate" has the meaning set forth in Rule 12b-2 promulgated by the SEC
pursuant to the Exchange Act and (iii) "group" has the meaning set forth in
Section 13(d) of the Exchange Act and the rules and regulations thereunder.
SECTION 10.2. Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company, as provided in Section 10.1,
this Agreement shall forthwith become void and there shall be no further
obligation on the part of the Company, Parent, Subsidiary or their respective
officers or directors (except as set forth in this Section 10.2 and in Sections
8.1(b), 8.4 and 8.6 all of which shall survive the termination). Nothing in this
Section 10.2 shall relieve any party from liability for any breach of this
Agreement.
SECTION 10.3. Amendment. This Agreement may not be amended except by
action taken by the respective Boards of Directors of each of the parties hereto
or duly authorized
36
committee thereof and then only by an instrument in writing signed on behalf of
each of the parties hereto and in compliance with applicable law.
SECTION 10.4. Waiver. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.1. Non-Survival of Representations and Warranties. All
representations and warranties in this Agreement shall not survive the Merger,
and after the Effective Time of the Merger neither the Company, Parent,
Subsidiary or their respective officers or directors shall have any further
obligation with respect thereto. Notwithstanding the immediately preceding
sentence, the Surviving Corporation's obligations set forth in Section 8.8 shall
continue in full force and effect following the Effective Time.
SECTION 11.2. Brokers. The Company represents and warrants that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company. Parent and Subsidiary jointly and severally represent and warrant
they shall pay any fee required to be paid to any broker, finder or investment
banker that may be entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or
Subsidiary.
SECTION 11.3. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via overnight
courier or facsimile to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to Parent or Subsidiary to:
COMFORCE Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone No. (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
37
with a copy to:
Doepken Keevican & ▇▇▇▇▇ Professional Corporation
58th Floor, USX Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone No. (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
(b) If to the Company, to:
Uniforce Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone No. (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone No. (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
SECTION 11.4. Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In this Agreement, unless a contrary intention
appears, (a) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision and (b) reference to any Article or
Section means such Article or Section hereof. No provision of this Agreement
shall be interpreted or construed against any party hereto solely because such
party or its legal representative drafted such provision.
SECTION 11.5. Miscellaneous. This Agreement (including the documents
and instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
SECTION 11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND
38
EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS AND TO BE
EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
SECTION 11.7. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 11.8. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and except for the rights
of indemnified Parties under Section 8.8, nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
IN WITNESS WHEREOF, Parent, Subsidiary and the Company have caused this
Agreement to be signed by their respective officers as of the date first written
above.
COMFORCE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
COMFORCE COLUMBUS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
UNIFORCE SERVICES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
39
EXHIBIT A TO THE
AGREEMENT AND PLAN OF MERGER
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Subsidiary shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied, or (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer
after 30 days from the commencement of the Offer., (iii) the debt financing
source contemplated by Section 5.9 of this Agreement shall not have provided to
the Parent and the Subsidiary the applicable debt financing in an amount
sufficient to pay the aggregate Per Share Amount for all outstanding Shares,
(iv) at any time on or after the date of this Agreement, and prior to the
acceptance for payment of Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any action or
proceeding brought by any governmental, administrative or regulatory authority
or agency, domestic or foreign, before any court or governmental, administrative
or regulatory authority or agency, domestic or foreign, (i) challenging or
seeking to make illegal, materially delay or otherwise directly or indirectly
restrain or prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Parent, Subsidiary or
any other affiliate of Parent pursuant to the Offer or the consummation of any
other Transaction, or seeking to obtain material damages in connection with any
Transaction; (ii) seeking to prohibit or limit materially the ownership or
operation by the Company, Parent or any of their subsidiaries of all or any
material portion of the business or assets of the Company, Parent or any of
their subsidiaries, or to compel the Company, Parent or any of their
subsidiaries to dispose of or hold separate all or any material portion of the
business or assets of the Company, Parent or any of their subsidiaries, as a
result of the Transactions; (iii) seeking to impose or confirm limitations on
the ability of Parent, Subsidiary or any other affiliate of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Subsidiary pursuant to the
Offer, or otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption of this
Agreement and the transactions contemplated hereby; or (iv) seeking to require
divestiture by Parent, Subsidiary or any other affiliate of Parent of any
Shares;
(b) there shall have been issued any injunction, order or decree by any
court or governmental, administrative or regulatory authority or agency,
domestic or foreign, resulting from any action or proceeding brought by any
person other than any governmental, administrative or regulatory authority or
agency, domestic or foreign, which (i) restrains or prohibits the making of the
Offer or the consummation of any other Transaction; (ii) prohibits or limits
ownership or operation by the Company, Parent or Subsidiary of all or any
material portion of the business or assets of the Company, Parent or any of
their subsidiaries, in each case as a result of the Transactions; (iii) imposes
limitations on the ability of Parent or Subsidiary to exercise effectively full
rights of ownership of any Shares, including, without limitation, the right to
vote any Shares
1
acquired by Subsidiary pursuant to the Offer, or otherwise on all matters
properly presented to the Company's stockholders, including, without limitation,
the approval and adoption of this Agreement and the Transactions; (iv) requires
divestiture by Parent or Subsidiary of any Shares;
(c) there shall have been any action taken, or any statute, rule,
regulation, order or injunction enacted, entered, enforced, promulgated,
amended, issued or deemed applicable to (i) Parent, the Company or any
subsidiary or affiliate of Parent or the Company or (ii) any Transaction, by any
legislative body, court, government or governmental, administrative or
regulatory authority or agency, domestic or foreign, in the case of both (i) and
(ii) other than the routine application of the waiting period provisions of the
HSR Act to the Offer Merger, which results in any of the consequences referred
to in clauses (i) through (iv) of paragraph (b) above;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities of the Company on the American
Stock Exchange, (ii) any decline, measured from the date hereof, in the Standard
& Poor's 500 Index or FTSE 100 Index by an amount in excess of 20%, (iii) a
currency moratorium on the exchange markets in New York City, (iv) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States, (v) any limitation (whether or not mandatory) by any government
or governmental, administrative or regulatory authority or agency, domestic or
foreign, on the extension of credit by banks or other lending institutions which
is likely to have a material adverse effect upon any financing arranged by
Parent or Subsidiary in respect of the Offer, (vi) a commencement of a war or
armed hostilities or other national or international calamity directly or
indirectly involving the United States or (vii) in the case of any of the
foregoing existing on the date hereof, a material acceleration or worsening
thereof;
(e) (i) it shall have been publicly disclosed or Subsidiary shall have
otherwise learned that beneficial ownership (determined for the purposes of his
paragraph set forth in Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of the then outstanding Shares has been acquired by any person, other than
Parent or any of its affiliates or (ii) (A) the Board shall have withdrawn or
modified in a manner adverse to Parent or Subsidiary the approval or
recommendation of the Offer, the Merger or this Agreement or approved or
recommended any takeover proposal or any other acquisition of Shares other than
the Offer and the Merger or (B) the Board shall have resolved to do any of the
foregoing;
(f) the Company shall have failed to perform in any material respect
any material 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;
(g) this Agreement shall have been terminated in accordance with its
terms; or
(h) Parent, Subsidiary and the Company shall have agreed that
Subsidiary shall terminate the Offer or postpone the acceptance for payment of
or payment for Shares thereunder.
The foregoing conditions are for the sole benefit of Subsidiary and
Parent and may be asserted by Subsidiary or Parent regardless of the
circumstances giving rise to any such condition
2
or may be waived by Subsidiary or Parent in whole or in part at any time and
from time to time in their sole discretion. The failure by Parent or Subsidiary
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.
3
EXHIBIT B TO THE
AGREEMENT AND PLAN OF MERGER
ARTICLES OF MERGER
CERTIFICATE OF MERGER
OF
COMFORCE COLUMBUS, INC.
INTO
UNIFORCE SERVICES, INC.
(Under Section 904 of the Business Corporation Law)
It is hereby certified, upon behalf of each of the constituent
corporations herein named, as follows:
FIRST: The Board of Directors of each of the constituent corporations
has duly adopted a plan of merger setting forth the terms and conditions of the
merger of said corporations.
SECOND: The name of the domestic constituent corporation, which is to
be the surviving corporation, and which is hereinafter sometimes referred to as
the "surviving constituent corporation," is Uniforce Services, Inc. The date
upon which its certificate of incorporation was filed by the Department of State
is January 11, 1984 under the name of UTPI Corp.
THIRD: The name of the domestic constituent corporation, which is being
merged into the surviving constituent corporation, and which is hereinafter
sometimes referred to as the "merged constituent corporation," is COMFORCE
Columbus, Inc. The date upon which its certificate of incorporation was filed by
the Department of State is August 13, 1997.
FOURTH: As to each constituent corporation, the plan of merger sets
forth the designation and number of outstanding shares of each class and series,
the specification of the classes and series entitled to vote on the plan of
merger, and the specification of each class and series entitled to vote as a
class on the plan of merger, as follows:
Uniforce Services, Inc. has authorized (i) 10,000,000 shares of Common
Stock, $0.01 par value per share, all of which are entitled to vote, and of
which 3,033,543 shares are issued and outstanding and 2,065,248 shares were held
in treasury by Uniforce Services, Inc. and (ii) 2,000,000 shares of Preferred
Stock, $0.01 par value per share, none of which is entitled to vote, and none of
which is outstanding.
COMFORCE Columbus, Inc. has authorized 200 shares of Common Stock,
$0.01 par value per share, all of which are entitled to vote and of which 200
shares are issued and outstanding.
FIFTH: The merger herein certified was authorized in respect of the
surviving constituent corporation by vote of the holders of at least two-thirds
of all outstanding shares of the corporation entitled to vote on the plan of
merger.
SIXTH: The merger herein certified was authorized in respect of the
merged constituent corporation by the unanimous written consent of its sole
shareholder.
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SEVENTH: The following is a statement of any amendments or changes in
the certificate of incorporation of the surviving constituent corporation to be
effected by the merger:
Paragraph "FOURTH" shall be amended to read as follows:
"FOURTH: The aggregate number of shares which the
Corporation shall have the authority to issue is 1,000 shares,
$0.01 par value per share, all of which are of the same class
and all of which are designated as common shares (the "Common
Stock")."
Paragraph "SEVENTH" shall be amended to read as follows:
"SEVENTH: The Secretary of the State of New York is
designated as the agent of the Corporation upon whom process
in any action or proceeding against the Corporation may be
served. The post office address to which the Secretary of
State shall mail a copy of any process against the Corporation
served upon him as agent of this Corporation is: Doepken
Keevican & ▇▇▇▇▇, Professional Corporation, 58th Floor, USX
Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esquire."
IN WITNESS WHEREOF, we have subscribed this document on the date set
opposite each of our names below and do hereby affirm, under the penalties of
perjury, that the statements contained therein have been examined by us and are
true and correct.
Dated: ________________, 1997
COMFORCE COLUMBUS, INC.
By:_________________________________
Title:_______________________________
Dated: _______________, 1997
UNIFORCE SERVICES, INC.
By:_________________________________
Title:_______________________________
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