EXHIBIT (d)(1)
AGREEMENT AND PLAN OF MERGER
Among
MOHAWK CORP.,
MOHAWK ACQUISITION CORPORATION
and
PSC INC.
Dated as of June 5, 2000
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions......................................................2
ARTICLE II
THE OFFER
Section 2.01. The Offer........................................................7
Section 2.02. Company Action...................................................9
ARTICLE III
THE MERGER
Section 3.01. The Merger......................................................10
Section 3.02. Effective Time..................................................10
Section 3.03. Effect of the Merger............................................10
Section 3.04. Certificate of Incorporation; By-laws...........................10
Section 3.05. Directors and Officers..........................................11
Section 3.06. Conversion of Securities........................................11
Section 3.07. Employee Stock Options..........................................12
Section 3.08. Appraisal Rights................................................13
Section 3.09. Surrender of Securities; Stock Transfer Books; Exchange Fund....13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01. Organization and Qualification; Subsidiaries....................15
Section 4.02. Certificate of Incorporation and By-laws........................16
Section 4.03. Capitalization..................................................16
Section 4.04. Authority Relative to This Agreement............................17
Section 4.05. No Conflict; Required Filings and Consents......................17
Section 4.06. Permits; Compliance.............................................18
Section 4.07. SEC Filings; Financial Statements...............................18
Section 4.08. Absence of Certain Changes or Events............................19
Section 4.09. Absence of Litigation...........................................19
Section 4.10. Employee Benefit Plans..........................................20
Section 4.11. Labor and Employment Matters....................................21
Section 4.12. Offer Documents; Schedule 14D-9; Proxy Statement................22
Section 4.13. Property and Leases.............................................23
Section 4.14. Intellectual Property...........................................24
Section 4.15. Year 2000 Compliance............................................24
Section 4.16. Taxes...........................................................25
Section 4.17. Environmental Matters...........................................25
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Section 4.18. Amendment to Rights Agreement...................................25
Section 4.19. Material Contracts..............................................26
Section 4.20. Insurance.......................................................27
Section 4.21. Brokers.........................................................28
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Section 5.01. Corporate Organization..........................................28
Section 5.02. Authority Relative to This Agreement............................28
Section 5.03. No Conflict; Required Filings and Consents......................28
Section 5.04. Financing.......................................................29
Section 5.05. Offer Documents; Proxy Statement................................29
Section 5.06. Brokers.........................................................29
Section 5.07. Purchaser.......................................................30
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.01. Conduct of Business by the Company Pending the Merger...........30
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01. Stockholders' Meeting...........................................32
Section 7.02. Proxy Statement.................................................33
Section 7.03. Company Board Representation; Section 14(f).....................33
Section 7.04. Access to Information; Confidentiality..........................34
Section 7.05. No Solicitation of Transactions.................................35
Section 7.06. Employee Benefits Matters.......................................36
Section 7.07. Directors' and Officers' Indemnification and Insurance..........37
Section 7.08. Notification of Certain Matters.................................38
Section 7.09. Further Action; Reasonable Efforts..............................38
Section 7.10. Public Announcements............................................39
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.01. Conditions to the Merger........................................39
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01. Termination.....................................................40
Section 9.02. Effect of Termination...........................................41
Section 9.03. Fees and Expenses...............................................41
Section 9.04. Amendment.......................................................42
Section 9.05. Waiver..........................................................42
ARTICLE X
GENERAL PROVISIONS
Section 10.01. Notices........................................................43
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Section 10.02. Severability...................................................44
Section 10.03. Entire Agreement; Assignment...................................44
Section 10.04. Parties in Interest............................................44
Section 10.05. Specific Performance...........................................44
Section 10.06. Governing Law..................................................44
Section 10.07. Waiver of Jury Trial...........................................45
Section 10.08. Headings.......................................................45
Section 10.09. Counterparts...................................................45
ANNEX A -- Conditions to the Offer
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AGREEMENT AND PLAN OF MERGER, dated as of June 5, 2000 (this
"Agreement"), among MOHAWK CORP., a Delaware corporation ("Parent"), MOHAWK
ACQUISITION CORP., a New York corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and PSC INC., a New York corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Purchaser and the
Company have each determined that it is in the best interests of their
respective stockholders for Parent to acquire the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance of such acquisition, it is proposed
that Purchaser shall make a cash tender offer (the "Offer") to acquire (i) all
the shares of common stock, par value $.01 per share, of the Company ("Company
Common Stock") (including the associated rights ("Rights") issued pursuant to
the Rights Agreement, dated as of December 30, 1997 (the "Rights Agreement"),
between the Company and ChaseMellon Shareholder Services, L.L.C., as rights
agent), that are issued and outstanding for $8.45 per share of Common Stock
(such amount, or any greater amount per share of Common Stock paid pursuant to
the Offer, being the "Per Share Amount"), (ii) all the Warrants (as defined
below) that are issued and outstanding for an amount in cash per Warrant equal
to the product of the Per Share Amount less the exercise price of such Warrant
multiplied by the number of shares of Company Common Stock issuable upon
exercise of such Warrant, and (iii) all the shares of Series A Convertible
Preferred Stock, par value $.01 per share, of the Company ("Company Series A
Preferred Stock"), that are issued and outstanding for an amount in cash per
share of Company Series A Preferred Stock equal to the product of the Per Share
Amount multiplied by the number of shares of Company Common Stock issuable upon
conversion of such share of Company Series A Preferred Stock, in each case, net
to the seller in cash, upon the terms and subject to the conditions of this
Agreement and the Offer (shares of Company Common Stock and Company Series A
Preferred Stock and Warrants being hereinafter referred to as "Securities");
WHEREAS, the Board of Directors of the Company (the "Board")
has approved the making of the Offer and resolved to recommend that holders of
Securities tender their Securities pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the Boards
of Directors of Parent, Purchaser and the Company have each adopted this
Agreement and have approved the merger (the "Merger") of Purchaser with and into
the Company in accordance with New York Business Corporation Law ("New York
Law"), following the consummation of the Offer and upon the terms and subject to
the conditions set forth herein; and
WHEREAS, Parent, Purchaser and certain stockholders of the
Company (the "Stockholders") have entered into a Stockholders Agreement, dated
as of the date hereof (the "Stockholders Agreement"), providing that, among
other things, the Stockholders will (i) tender their shares of Company Common
Stock into the Offer and (ii) vote their shares of Company Common Stock in favor
of the Merger, if applicable, in each case subject to the conditions set forth
therein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. (a) For purposes of this Agreement:
"Acquisition Proposal" means (i) any proposal or offer from
any person relating to any direct or indirect acquisition of (A) all or a
substantial part of the assets of the Company and the Subsidiaries, taken as a
whole; or (B) securities constituting over 20% of the outstanding shares of
Company Common Stock on a Fully Diluted Basis; (ii) any tender offer or exchange
offer, as defined pursuant to the Exchange Act, that, if consummated, would
result in any person beneficially owning securities constituting over 20% of the
outstanding shares of Company Common Stock on a Fully Diluted Basis; or (iii)
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any Subsidiary and
any other person other than the Company or any Subsidiary, other than the
Transactions.
"affiliate" of a specified person means a person who, directly
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified person.
"beneficial owner", with respect to any Securities, has the
meaning ascribed to such term under Rule 13d-3(a) of the Exchange Act.
"business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings; or, in the case of
determining a date when any payment is due, any day (other than a Saturday or
Sunday) on which banks are not required or authorized to close in The City of
New York.
"Company Directors" means all members of the Board of
Directors of the Company other than the Preferred Director.
"Company Systems" means all computer hardware, software,
systems, and equipment (including embedded microcontrollers in non-computer
equipment) embedded within or required to operate the current products of the
Company and the Subsidiaries, other than the computer hardware, software,
systems or equipment of any person, other than the Company or any Subsidiary, in
which a product of the Company or any Subsidiary is embedded or which is
embedded in a product of the Company or any Subsidiary.
"control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, or as
trustee or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
securities, as trustee or executor, by contract or credit arrangement or
otherwise;
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"Environmental Laws" means any United States federal, state,
local or non-United States laws relating to (i) releases or threatened releases
of Hazardous Substances or materials containing Hazardous Substances; (ii) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances; or (iii)
pollution or protection of the environment or natural resources.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company or any Subsidiary and which,
together with the Company or any Subsidiary, is treated as a single employer
within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Expenses" of a party means all out-of-pocket expenses and
fees (including, without limitation, fees and expenses payable to all banks,
investment banking firms, other financial institutions, and other persons and
their respective agents and counsel, for arranging, committing to provide or
providing any financing for the Transactions or negotiating or structuring the
Transactions, and all fees of counsel, accountants, experts and consultants of
such party, and all printing and advertising expenses and filing fees) actually
incurred or accrued by such party or on its behalf in connection with the
Transactions, including, without limitation, the financing thereof, and actually
incurred by banks, investment banking firms, other financial institutions and
other Persons, and for which such party is liable in connection with the
negotiation, preparation, execution and performance of this Agreement, the
structuring and financing of the Transactions and any financing commitments or
agreements relating thereto.
"Fully Diluted Basis" means after taking into account all
shares of Company Common Stock issuable upon the conversion of any convertible
securities (including, without limitation, the Company Series A Preferred Stock)
or upon the exercise of any options, warrants (including, without limitation,
the Warrants) or rights (other than the Rights).
"Hazardous Substances" means (i) those substances defined in
or regulated under the following United States federal statutes and their state
counterparts, as each may be amended from time to time, and all regulations
thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide
Act and the Clean Air Act; (ii) petroleum and petroleum products, including
crude oil and any fractions thereof; (iii) natural gas, synthetic gas, and any
mixtures thereof; (iv) polychlorinated biphenyls, asbestos and radon; (v) any
other contaminant; and (vi) any substance, material or waste regulated by any
Governmental Authority pursuant to any Environmental Law.
"Intellectual Property" means (i) United States, non-United
States, and international patents, patent applications and statutory invention
registrations, (ii) trademarks, service marks, trade dress, logos, trade names,
corporate names and other source identifiers, and registrations and applications
for registration thereof, (iii) copyrightable works, copyrights, and
registrations and applications for registration thereof, and (iv) confidential
and proprietary information, including trade secrets and know-how.
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"knowledge of the Company" or the "Company's knowledge" or any
similar term means the actual knowledge of the Chairman of the Board, the
President and Chief Executive Officer, the Chief Financial Officer, the
Corporate Counsel or, with respect to Section 4.16, the Tax Manager, of the
Company or the knowledge that any such individual would obtain after the
exercise of reasonable investigation.
"Material Adverse Effect" means any event, circumstance,
change or effect that, when taken together with all other events, circumstances,
changes and effects, materially adversely affects the current or prospective
business, financial condition or results of operations of the Company and the
Subsidiaries, taken as a whole; provided, however, that there shall be excluded
from any determination of Material Adverse Effect any filing, submission,
judgment, ruling or other development in, or arising out of the subject matter
of, any of the litigation specifically listed in Section 4.09 of the Disclosure
Schedule.
"person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the Exchange
Act), trust, association or entity or government, political subdivision, agency
or instrumentality of a government.
"Preferred Director" means the member of the Board of
Directors of the Company elected by the holder of the Company Series A Preferred
Stock voting separately as a class.
"Reimbursable Expenses" means: (i) all Expenses of Parent and
Purchaser in respect of commitment fees payable in connection with obtaining the
senior debt financing for the acquisition of the Company, provided that the
aggregate amount of all such commitment fees shall not exceed an amount equal to
1.75% of the aggregate principal amount of such committed senior debt financing,
and provided, further, that, in the event that such acquisition does not occur
and the Company shall be required, in accordance with the terms and provisions
of this Agreement, to reimburse Parent and Purchaser for all Reimbursable
Expenses, Parent and Purchaser shall use their reasonable efforts to reduce the
amount of such commitment fees and shall permit the Company to participate in
their efforts to effect such reduction; (ii) all other Expenses of the senior
debt financing referred to in the immediately preceding clause (i) payable by
Parent and Purchaser (provided that the Expenses under the immediately preceding
clause (i) and this clause (ii) shall in no event cumulatively exceed 2% of the
aggregate principal amount of the aforementioned committed senior debt
financing) and (iii) all Expenses of Parent and Purchaser, other than in respect
of the senior debt financing referred to in the immediately preceding clauses
(i) and (ii), to the extent that the aggregate amount of all such other Expenses
does not exceed $750,000.
"subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled by such
person, directly or indirectly, through one or more intermediaries.
"Superior Proposal" means any Acquisition Proposal which the
Board determines, in its good faith judgment (after having received the advice
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. or another financial advisor of recognized
reputation), to be more favorable to the
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Company's stockholders than the Offer and the Merger and for which financing, to
the extent required, is then committed, subject to customary financing
conditions.
"Taxes" shall mean any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority or taxing authority,
including, without limitation: taxes or other charges on or with respect to
income, franchise, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; and customers' duties, tariffs and
similar charges.
"Warrants" shall mean the outstanding warrants of the Company
to purchase Company Common Stock issued to (i) Hydra Investissements S.A.
pursuant to a Stock and Warrant Purchase Agreement dated September 4, 1997 by
and between the Company and Hydra Investissements S.A. and (ii) ▇▇▇▇ ▇▇▇▇▇▇▇
Mutual Life Insurance Company, ▇▇▇▇ ▇▇▇▇▇▇▇ Variable Life Insurance Company, The
Lincoln National Life Insurance Company, Lincoln National Income Fund Inc.,
Security Connecticut Life Insurance Company, Security Connecticut Corporation
and The Equitable Life Assurance Society of the United States pursuant to
Securities Purchase Agreements, each dated July 12, 1996, between each such
party and the Company.
"Year 2000 Compliant" means that the Company Systems provide
uninterrupted millennium functionality in that the Company Systems will record,
store, process and present calendar dates falling on or after January 1, 2000,
in the same manner and with the same functionality as the Company Systems
record, store, process, and present calendar dates falling on or before December
31, 1999.
(b) The following terms have the meaning set forth in the
Sections set forth below:
Defined Term Location of Definition
------------ ----------------------
Action ss. 4.09
Agreement Preamble
Blue Sky Laws ss. 4.05(b)
Board Recitals
Certificate of Merger ss. 3.02
Certificates ss. 3.09(b)
Code ss. 4.10(a)
Common Stock Merger Consideration ss. 3.06(a)
Company Preamble
Company Common Stock Recitals
Company Licensed Intellectual Property ss. 4.14(b)
Company Owned Intellectual Property ss. 4.14(c)
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Defined Term Location of Definition
------------ ----------------------
Company Preferred Stock ss. 4.03
Company Series A Preferred Stock Recitals
Company Stock Option ss. 3.07
Company Stock Plans ss. 3.07
Confidentiality Agreements ss. 7.04(b)
Continuing Directors ss. 7.03(c)
Disclosure Schedule ss. 4.01(b)
Dissenting Shares ss. 3.08
Effective Time ss. 3.02
Environmental Permits ss. 4.17
ERISA ss. 4.10(a)
Exchange Act ss. 2.01(a)
Exchange Fund ss. 3.09
Fee ss. 9.03(a)
GAAP ss. 4.07(b)
Governmental Authority ss. 4.05(b)
HSR Act ss. 4.05(b)
Indemnified Party ss. 7.07(b)
IRS ss. 4.10(a)
Law ss. 4.05(a)
Liens ss. 4.13(b)
Material Contracts ss. 4.19(a)
Merger Recitals
Minimum Condition ss. 2.01(a)
Multiemployer Plan ss. 4.10(b)
Multiple Employer Plan ss. 4.10(b)
New York Law Recitals
Offer Recitals
Offer Documents ss. 2.01(b)
Offer to Purchase ss. 2.01(b)
Parent Preamble
Paying Agent ss. 3.09(a)
Permits ss. 4.06
Permitted Liens ss. 4.13(b)
Per Share Amount Recitals
Plans ss. 4.10(a)
Preferred Stock Merger Consideration ss. 3.06(b)
Proxy Statement ss. 4.12
Purchaser Preamble
Q-1 2000 Balance Sheet ss. 4.07(c)
Rights Recitals
Rights Agreement Recitals
Schedule 14D-9 ss. 2.02(b)
Schedule TO ss. 2.01(b)
SEC ss. 2.01(a)
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SEC Reports ss. 4.07(a)
Securities Act ss. 4.07(a)
Securities Recitals
Stockholders Agreement Recitals
Stockholders Recitals
Stockholders' Meeting ss. 7.01(a)
Subsidiary ss. 4.01(a)
Surviving Corporation ss. 3.01
Transactions ss. 2.02(a)
ARTICLE II
THE OFFER
Section 2.01. The Offer. (a) Provided that none of the events
set forth in Annex A hereto shall have occurred and be continuing, Purchaser
shall, and Parent shall cause Purchaser to, commence the Offer as promptly as
reasonably practicable after the date hereof (but in no event later than ten
(10) business days after the date of this Agreement). The obligation of
Purchaser to accept for payment Securities tendered pursuant to the Offer shall
be subject only to (i) the condition (the "Minimum Condition") that there shall
have been validly tendered and not withdrawn prior to the expiration of the
Offer at least the number of shares of Company Common Stock, shares of Company
Series A Preferred Stock and Warrants (determined as if shares of Company Series
A Preferred Stock and Warrants have been converted into or exercised for shares
of Company Common Stock) that, when added to Securities already owned by Parent,
Purchaser and their subsidiaries, shall constitute two-thirds of the then
outstanding shares of Company Common Stock on a Fully Diluted Basis and (ii) the
satisfaction or waiver of each of the other conditions set forth in Annex A
hereto. Purchaser expressly reserves the right to waive any such condition, to
increase the Per Share Amount, and to make any other changes in the terms and
conditions of the Offer; provided, however, that no change may be made which
decreases the Per Share Amount or which reduces the maximum number of Securities
to be purchased in the Offer or which modifies in any manner adverse to the
holders of Securities or adds conditions to the Offer in addition to those set
forth in Annex A hereto and that Purchaser shall not, without the consent of the
Company, waive or change the Minimum Condition, change the scheduled expiration
date of the Offer (except as provided in the next sentence) or change the form
of consideration payable in the Offer. Notwithstanding the foregoing, Purchaser
may, without the consent of the Company: (i) extend the Offer in increments of
no more than five (5) business days each beyond the scheduled expiration date,
which shall initially be 20 business days following the commencement of the
Offer, if, at the scheduled expiration of the Offer, any of the conditions to
Purchaser's obligation to accept Securities for payment shall not be satisfied
or waived, provided that the Purchaser may not extend the Offer pursuant to this
clause (i) for more than 10 business days in total if all of the conditions set
forth in Annex A hereto other than the Financing Condition have been satisfied
or waived, (ii) extend the Offer for any period required by any rule, regulation
or interpretation of
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the Securities and Exchange Commission (the "SEC"), or the staff thereof,
applicable to the Offer; or (iii) extend the Offer for an aggregate period of
not more than 10 business days beyond the latest applicable date that would
otherwise be permitted under clause (i) or (ii) of this sentence, if, as of such
date, all of the conditions to Purchaser's obligations to accept Securities for
payment are satisfied or waived, but the number of Securities validly tendered
and not withdrawn pursuant to the Offer equals two-thirds or more of the
outstanding shares of Company Common Stock on a Fully Diluted Basis, but less
than 90% of the outstanding shares of Company Common Stock or 90% of the
outstanding shares of Company Series A Preferred Stock; provided, however, that
if Purchaser extends the Offer pursuant to this clause (iii), notwithstanding
anything to the contrary in this Agreement, Purchaser's obligation to accept
Securities for payment shall thereafter be conditioned only upon the
satisfaction or waiver of (x) the Minimum Condition and (y) the conditions set
forth in clauses (b) (to the extent the applicable Law is enacted, promulgated,
amended, issued or deemed applicable on or after the date of such extension),
(g) and (h) of Annex A hereto. The Per Share Amount shall, subject to applicable
withholding of taxes, be net to the seller in cash, upon the terms and subject
to the conditions of the Offer. Purchaser shall pay for all Securities validly
tendered and not withdrawn promptly following the acceptance of Securities for
payment pursuant to the Offer. Notwithstanding the immediately preceding
sentence and subject to the applicable rules of the SEC and the terms and
conditions of the Offer, Purchaser expressly reserves the right to delay payment
for Securities in order to comply in whole or in part with applicable laws. Any
such delay shall be effected in compliance with Rule 14e-1(c) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). If the payment
for tendered Securities is to be made to a person other than the person in whose
name the surrendered certificate formerly evidencing such Securities is
registered on the stock transfer books of the Company, it shall be a condition
of payment that the certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the person requesting such
payment shall have paid all transfer and other taxes required by reason of the
payment of the purchase price therefor to a person other than the registered
holder of the certificate surrendered, or shall have established to the
satisfaction of Purchaser that such taxes either have been paid or are not
applicable.
(b) On the date of commencement of the Offer, Purchaser shall,
and Parent shall cause Purchaser to, file with the SEC a Tender Offer Statement
on Schedule TO (together with all amendments and supplements thereto, the
"Schedule TO") with respect to the Offer. The Schedule TO shall contain or shall
incorporate by reference an offer to purchase (the "Offer to Purchase") and
forms of the related letter of transmittal and any related summary advertisement
(the Schedule TO, the Offer to Purchase and such other documents, together with
all supplements and amendments thereto, being referred to herein collectively as
the "Offer Documents"). Each of Parent, Purchaser and the Company agrees to
correct promptly any information provided by it for use in the Offer Documents
that shall have become false or misleading in any material respect, and Parent
and Purchaser further agree to take all steps necessary to cause the Schedule
TO, as so corrected, to be filed with the SEC, and the other Offer Documents, as
so corrected, to be disseminated to holders of Securities, in each case as and
to the extent required by applicable federal securities laws. Parent and
Purchaser shall give the Company and its counsel a reasonable opportunity to
review and comment on the Offer Documents prior to their being filed with the
SEC or disseminated to holders of Securities. Parent and Purchaser shall provide
the Company and its counsel in writing with any comments
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Parent, Purchaser or their counsel may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments and
shall provide the Company and its counsel with a reasonable opportunity to
participate in the response of Parent or Purchaser to such comments.
(c) Prior to or within one business day following the
expiration of the Offer, Parent shall provide or cause to be provided to
Purchaser the funds necessary to purchase any Securities that Purchaser becomes
obligated to purchase pursuant to the Offer.
Section 2.02. Company Action. (a) Subject to the rights set
forth in Section 7.05(b), the Company hereby approves of and consents to the
Offer and represents that (i) the Board, at a meeting duly called and held on
June 5, 2000, has (A) determined that, as of such date, this Agreement and the
transactions contemplated hereby, including each of the Offer and the Merger
(collectively with the transactions contemplated by the Stockholders Agreement,
the "Transactions"), are fair to, and in the best interests of, the holders of
Securities, (B) approved, adopted and declared advisable this Agreement and the
Transactions (such approval and adoption having been made in accordance with New
York Law, including, without limitation, Section 902 thereof) and (C) resolved,
as of such date, to recommend that the holders of Securities accept the Offer
and tender their Securities pursuant to the Offer, and approve and adopt this
Agreement and the Transactions, and (ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. has
delivered to the Board a written opinion that the consideration to be received
by the holders of Securities pursuant to each of the Offer and the Merger is, as
of the date of such letter, fair to the holders of Securities from a financial
point of view, subject to the assumptions and qualifications stated in such
letter. The Company hereby consents to the inclusion in the Offer Documents of
the recommendation of the Board described in the immediately preceding sentence,
and the Company shall not withdraw or modify such recommendation in any manner
adverse to Purchaser or Parent except as provided in Section 7.05(b).
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 containing, except as provided in Section 7.05(b), the
recommendation of the Board described in Section 2.02(a), including an
information statement (together with all amendments and supplements thereto, the
"Schedule 14D-9"), and shall disseminate the Schedule 14D-9 to the extent
required by Rule 14d-9 promulgated under the Exchange Act, and any other
applicable federal securities laws. Each of the Company, Parent and Purchaser
agrees to correct promptly any information provided by it for use in the
Schedule 14D-9 which shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated to
holders of Securities, in each case as and to the extent required by applicable
federal securities laws.
(c) The Company shall as promptly as reasonably practicable
but, in any event, within three business days after the date hereof, furnish
Purchaser with mailing labels containing the names and addresses of all record
holders of Securities and with security position listings of Securities held in
stock depositories, each as of a recent date, together with all other available
listings and computer files containing names, addresses and security position
listings of record holders and beneficial owners of Securities. The Company
shall promptly furnish Purchaser
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with such additional information, including, without limitation, updated
listings and computer files of stockholders, mailing labels and security
position listings, and such other assistance in disseminating the Offer
Documents to holders of Securities as Parent or Purchaser 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 Purchaser
shall hold in confidence pursuant to the Confidentiality Agreements the
information contained in such labels, listings and files, shall use such
information only for the purpose of consummating the Transactions, and, if this
Agreement shall be terminated in accordance with Section 9.01, shall deliver to
the Company all copies of such information then in their possession.
ARTICLE III
THE MERGER
Section 3.01. The Merger. Upon the terms and subject to the
satisfaction or waiver of the conditions set forth in Article VIII, and in
accordance with New York Law, Purchaser shall be merged with and into the
Company.
Section 3.02. Effective Time. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VIII, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of merger or certificate of ownership and
merger with the Secretary of State of the State of New York (collectively, the
"Certificate of Merger"), in such form as is required by, and executed in
accordance with, the relevant provisions of New York Law (the date and time of
such filing being the "Effective Time"). Prior to such filing, a closing shall
be held at the offices of Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place as the parties shall agree, for the purpose
of confirming the satisfaction or waiver, as the case may be, of the conditions
set forth in Article VIII.
Section 3.03. Effect of the Merger. As a result of the Merger,
the separate corporate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation of the Merger (the "Surviving
Corporation"). At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of New York Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and Purchaser
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
Section 3.04. Certificate of Incorporation; By-laws. (a) At
the Effective Time, the Certificate of Incorporation of Purchaser, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation.
(b) Unless otherwise determined by Parent prior to the
Effective Time, and subject to Section 7.07(a), the By-laws of Purchaser, as in
effect immediately prior to the
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Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter amended as provided by law, by the Certificate of Incorporation of
the Surviving Corporation and by such By-laws.
Section 3.05. Directors and Officers. The directors of
Purchaser 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, and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal.
Section 3.06. Conversion of Securities. (a) At the Effective
Time, by virtue of the Merger and without any action on the part of Purchaser,
the Company or the holders of any of the following securities:
(i) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of
Company Common Stock to be canceled pursuant to Section 3.06(a)(iii)
and any Dissenting Shares (as hereinafter defined)) shall be canceled
and shall be converted automatically into the right to receive an
amount equal to the Per Share Amount in cash (the "Common Stock Merger
Consideration") payable, without interest, to the holder of such share
of Company Common Stock, upon surrender, in the manner provided in
Section 3.09, of the certificate that formerly evidenced such share of
Company Common Stock;
(ii) Each share of Company Series A Preferred Stock issued and
outstanding immediately prior to the Effective Time (other than any
shares of Company Preferred Stock to be canceled pursuant to Section
3.06(a)(iii) and any Dissenting Shares) shall be canceled and shall be
converted automatically into the right to receive an amount in cash
equal to the product of (x) the Common Stock Merger Consideration
multiplied by (y) the number of shares of Company Common Stock into
which such share of Company Preferred Stock are convertible immediately
prior to the Effective Time (the "Preferred Stock Merger
Consideration"), payable, without interest, to the holder of such share
of Company Preferred Stock, upon surrender, in the manner provided in
Section 3.09, of the certificate that formerly evidenced such share of
Company Preferred Stock;
(iii) Each share of Company Common Stock and Company Series A
Preferred Stock held in the treasury of the Company and each share of
Company Common Stock and Company Series A Preferred Stock owned by
Purchaser, Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company immediately prior to the Effective Time shall
be canceled without any conversion thereof and no payment or
distribution shall be made with respect thereto; and
(iv) Each share of common stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
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(b) Any Warrants outstanding as of the Effective Time shall
remain outstanding until the earlier of their exercise or expiration pursuant to
the terms thereof. After the Effective Time, each holder of a Warrant shall be
entitled to receive upon the presentation for surrender thereof, an amount in
cash equal to the product of (x) the Common Stock Merger Consideration less the
exercise price of such Warrant multiplied by (y) the number of shares of Company
Common Stock for which such Warrant was exercisable immediately prior to the
Effective Time.
Section 3.07. Employee Stock Options. Effective as of the
Effective Time, the Company shall take all necessary action, including obtaining
the consent of the individual option holders, if necessary, to (i) terminate the
Company's 1995 Employee Stock Purchase Plan, 1994 Stock Option Plan and 1987
Stock Option Plan, each as amended through the date of this Agreement
(collectively, the "Company Stock Plans"), and (ii) cancel, at the Effective
Time, each outstanding option to purchase shares of Company Common Stock,
whether granted under the Company Stock Plans or otherwise (each, a "Company
Stock Option") that is outstanding, vested and unexercised as of such date.
Notwithstanding such termination and cancellation, each holder of a vested
Company Stock Option that is outstanding and unexercised at the Effective Time
shall be entitled to receive from the Surviving Corporation immediately after
the Effective Time, in exchange for the cancellation of such Company Stock
Option, an amount in cash equal to the excess, if any, of (x) the Per Share
Amount over (y) the per share exercise price of such vested Company Stock
Option, multiplied by the number of shares of Company Common Stock subject to
such vested Company Stock Option as of the Effective Time. Any such payment
shall be subject to all applicable federal, state and local tax withholding
requirements or proof of eligibility or exemption therefrom. Company Stock
Options that are not vested as of the Effective Time shall be cashed out at the
price described in the preceding sentence, immediately after the date or dates
on which such options become vested after the Effective Time, pursuant to the
vesting schedule of the otherwise applicable Company Stock Plan or option
agreement (or in the case of performance vesting, pursuant to separate
agreements to be entered into between the Company and the affected optionee);
provided, however, that if the employment of the former option holder is
terminated after the Effective Time and prior to such vesting date by the
Company without Cause or by the individual for Good Reason, the cashout shall be
made immediately after such termination date at the price described above as
though the individual were 100% vested under the relevant plan's vesting
schedule. The Company shall take all necessary action to approve the disposition
of the Company Stock Options in connection with the transactions contemplated by
this Agreement to the extent necessary to exempt such dispositions and
acquisitions under Rule 16b-3 of the Exchange Act.
For purposes of this Section 3.07, with respect to employees who are parties to
a "Change in Control/Severance Agreement" with the Company, the terms "Cause"
and "Good Reason" shall have the meanings given to them under the Change in
Control/Severance Agreement entered into between the Company and the applicable
employee. With respect to employees who are not parties to a Change in
Control/Severance Agreement with the Company:
"Cause" means (i) the employee has failed or refused to
perform such services as may reasonably be delegated or assigned to the employee
consistent with the employee's position by the Chief Executive Officer or by the
Board of Directors of the Company or has violated an express policy of the
Company, (ii) the employee has been grossly negligent in
12
connection with the performance of the employee's duties, (iii) the employee has
committed acts involving dishonesty, willful misconduct, breach of fiduciary
duty, fraud, or any similar offense which materially affects the employee's
ability to perform the employee's duties for the Company or may materially
adversely affect the Company, (iv) the employee has violated a law material to
the business of the Company or has caused the Company to violate such a law, or
(v) the employee has been convicted of a felony; and
"Good Reason" means (i) the employee's annual rate of salary
is reduced from the annual rate then currently in effect or the employee's other
employee benefits are in the aggregate materially reduced from those then
currently in effect (unless such reduction of employee benefits applies to
employees of the Company generally), or (ii) the employee's place of employment
is moved more than 25 miles from its then current location, or (iii) the
employee is assigned duties that are demeaning or are otherwise materially
inconsistent with the duties then currently performed by the employee, except,
however, notwithstanding that the employee may be assigned duties that are
materially inconsistent with the duties then currently performed by the
employee, Good Reason shall not be deemed to exist if the employee is reassigned
to a position of equivalent scope and responsibilities. An employee may be
considered to have a position of equivalent scope and responsibilities even if
such a position involves a change in title.
Section 3.08. Appraisal Rights. Notwithstanding any provision
of this Agreement to the contrary, shares of Company Common Stock and Company
Series A Preferred Stock outstanding immediately prior to the Effective Time and
held by a holder who has the right to receive payment of the fair value of his
shares pursuant to Section 910 of New York Law and has complied with the
provisions of Section 623 of New York Law ("Dissenting Shares") shall not be
converted into a right to receive the Common Stock Merger Consideration or
Preferred Stock Merger Consideration, as applicable, unless such holder fails to
perfect or withdraws or otherwise loses his right to appraisal. If after the
Effective Time such holder fails to perfect or withdraws or loses his right to
appraisal, such shares shall be treated as if they had been converted as of the
Effective Time into a right to receive the Common Stock Merger Consideration or
Preferred Stock Merger Consideration, as applicable. The Company shall give
Parent prompt notice of any demands received by the Company for appraisal of
shares of Company Common Stock and Company Series A Preferred Stock, and Parent
shall have the right to participate in and to control all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands.
Section 3.09. Surrender of Securities; Stock Transfer Books;
Exchange Fund. (a) Prior to the Effective Time, Purchaser shall designate a bank
or trust company to act as agent (the "Paying Agent") for the holders of
Securities to receive the funds to which holders of Securities shall become
entitled pursuant to Section 3.06. Prior to or within one business day following
the Effective Time, Parent shall take all steps necessary to cause the Paying
Agent to receive the funds to which holders of Securities become entitled
pursuant to Section 3.06 (such cash being hereinafter referred to as the
"Exchange Fund"). The Exchange Fund shall be invested by the Paying Agent as
directed by the Surviving Corporation in direct obligations of the United States
of America, obligations for which the full faith and credit of the United States
of America is pledged to provide for the payment of all principal and interest,
commercial paper
13
obligations receiving the highest rating from either ▇▇▇▇▇'▇ Investors Services,
Inc. or Standard & Poor's Corporation, or certificates of deposit, bank
repurchase agreements or banker's acceptances of commercial banks with capital
exceeding $10,000,000,000, in each case with less than 180 day periods to
maturity. If for any reason (including losses) the Exchange Fund is inadequate
to pay the amounts to which holders of Securities shall become entitled pursuant
to Section 3.06, Parent shall take all steps necessary to enable or cause the
Surviving Corporation promptly to deposit in trust additional cash with the
Paying Agent sufficient to make all payments required under this Agreement, and
the Surviving Corporation shall in any event be liable for payment thereof. The
Exchange Fund shall not be used for any purpose except as expressly provided in
this Agreement. The Surviving Corporation shall pay all charges and expenses of
the Paying Agent in connection with the exchange of cash for Securities.
(b) Promptly (and in no event more than five (5) business
days) after the Effective Time, the Surviving Corporation shall cause to be
mailed to each person who was, at the Effective Time, a holder of record of (i)
shares of Company Common Stock entitled to receive the Common Stock Merger
Consideration pursuant to Section 3.06(a)(i), (ii) shares of Company Series A
Preferred Stock entitled to receive the Preferred Stock Merger Consideration
pursuant to Section 3.06(a)(ii), and (iii) Warrants entitled to receive payment
therefor pursuant to Section 3.06(b), a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates evidencing such Securities (the "Certificates") shall pass, only
upon proper delivery of the Certificates to the Paying Agent) and instructions
for use in effecting the surrender of the Certificates pursuant to such letter
of transmittal. Upon surrender to the Paying Agent of a Certificate, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
reasonably required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor the Common Stock
Merger Consideration for each share of Company Common Stock formerly evidenced
by such Certificate, the Preferred Stock Merger Consideration for each share of
Company Series A Preferred Stock formerly evidenced by such Certificate, or the
consideration to be paid pursuant to Section 3.06(b) for the Warrants formerly
evidenced by such Certificate, as applicable, and such Certificate shall then be
canceled. No interest shall accrue or be paid on the Common Stock Merger
Consideration, Preferred Stock Merger Consideration or amounts payable pursuant
to Section 3.06(b) payable upon the surrender of any Certificate for the benefit
of the holder of such Certificate. If the payment equal to the Common Stock
Merger Consideration, the Preferred Stock Merger Consideration or amounts
payable pursuant to Section 3.06(b), as applicable, is to be made to a person
other than the person in whose name the surrendered certificate formerly
evidencing Securities is registered on the stock transfer books of the Company,
it shall be a condition of payment that the Certificate so surrendered shall be
endorsed properly or otherwise be in proper form for transfer and that the
person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Common Stock Merger Consideration, the
Preferred Stock Merger Consideration or the amounts payable pursuant to Section
3.06(b), as applicable, to a person other than the registered holder of the
Certificate surrendered, or shall have established to the satisfaction of
Purchaser that such taxes either have been paid or are not applicable. If any
holder of Securities shall be unable to surrender such holder's Certificates
because such Certificates have been lost, mutilated or destroyed, such holder
may deliver in lieu thereof an
14
affidavit and indemnity bond (if reasonably required by the Surviving
Corporation) in form and substance and with surety reasonably satisfactory to
the Surviving Corporation.
(c) At any time following the ninth month after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Securities or Company Stock Options (including,
without limitation, all interest and other income received by the Paying Agent
in respect of all funds made available to it), and, thereafter, such holders
shall be entitled to look to the Surviving Corporation (subject to abandoned
property, escheat and other similar laws) only as general creditors thereof with
respect to any Common Stock Merger Consideration, Preferred Stock Merger
Consideration or amounts payable pursuant to Sections 3.06(b), as applicable,
that may be payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Security for any Common Stock Merger
Consideration, Preferred Stock Merger Consideration or amounts payable pursuant
to Section 3.06(b), as applicable, delivered in respect of such Security to a
public official pursuant to any abandoned property, escheat or other similar
law.
(d) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers of Securities on the records of
the Company. From and after the Effective Time, the holders of Securities and
Company Stock Options outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Securities and Company Stock
Options except as otherwise provided herein or by applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Purchaser to enter into this
Agreement, the Company hereby represents and warrants to Parent and Purchaser
that, except as disclosed in the SEC Reports (as defined below) filed prior to
the date of this Agreement:
Section 4.01. Organization and Qualification; Subsidiaries.
(a) Each of the Company and each subsidiary of the Company ("Subsidiary") is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted. The Company and each material Subsidiary
is duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, expect where the failure to be so qualified or licensed
or in good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) A true and complete list of all the Subsidiaries, together
with the jurisdiction of incorporation of each Subsidiary and the percentage of
the outstanding capital stock of each Subsidiary owned by the Company and each
other Subsidiary, is set forth in Section 4.01(b) of
15
the Disclosure Schedule, which has been prepared by the Company and delivered by
the Company to Parent and Purchaser prior to the execution and delivery of this
Agreement (the "Disclosure Schedule"). Except as disclosed in Section 4.01(b) of
the Disclosure Schedule, as of the date hereof, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
Section 4.02. Certificate of Incorporation and By-laws. The
Company has heretofore furnished to Parent a complete and correct copy of the
Certificate of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company and each Subsidiary. Such
Certificates of Incorporation, By-laws or equivalent organizational documents
are in full force and effect. Neither the Company nor any Subsidiary is in
violation of any of the provisions of its Certificate of Incorporation, By-laws
or equivalent organizational documents.
Section 4.03. Capitalization. The authorized capital stock of
the Company consists of 40,000,000 shares of Company Common Stock and 10,000,000
shares of preferred stock, par value $0.01 per share ("Company Preferred
Stock"). As of June 2, 2000, (a) 12,034,866 shares of Company Common Stock were
issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (b) 179,500 shares of Company Common Stock are held in the
treasury of the Company, (c) an aggregate of 3,907,166 shares of Company Common
Stock were reserved for future issuance pursuant to, or upon exercise of awards
granted under, the Company Stock Plans and the Directors Compensation Plan, (d)
1,375,000 shares of Company Common Stock were reserved for issuance upon
conversion of the Company Series A Preferred Stock, and (e) 1,155,000 shares of
Company Common Stock were reserved for issuance upon exercise of Warrants. As of
the date hereof, 110,000 shares of Company Preferred Stock are issued and
outstanding and designated as Company Series A Preferred Stock, all of which are
validly issued, fully paid and nonassessable and are owned of record by Hydra
Investissements S.A. Except as set forth in this Section 4.03, and except for
the Stockholders Agreement and the Rights, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character to which
the Company or any Subsidiary is a party or of which the Company has knowledge
relating to the issued or unissued capital stock of the Company or any
Subsidiary or obligating the Company or any Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in, the Company or any
Subsidiary. All shares of Company Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid
and nonassessable. Except as set forth in Section 4.03 of the Disclosure
Schedule, there are no outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any capital stock of the
Company or any Subsidiary or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Subsidiary or any
other person, other than any such obligations by the Company or a Subsidiary to
the Company or another Subsidiary. Except as set forth in Section 4.03 of the
Disclosure Schedule, each outstanding share of capital stock of each Subsidiary
is duly authorized, validly issued, fully paid and nonassessable, and each such
share is owned by the Company or another Subsidiary free and clear of all
security interests, liens,
16
claims, pledges, options, rights of first refusal, agreements, limitations on
the Company's or any Subsidiary's voting rights, charges and other encumbrances
of any nature whatsoever.
Section 4.04. Authority Relative to This Agreement. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and (subject to approval
and adoption of this Agreement by the Company's stockholders to the extent
required by applicable law) to consummate the Transactions. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the Transactions have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the Transactions
(other than, with respect to the Merger, the approval and adoption of this
Agreement by the holders of two-thirds of the then-outstanding Securities
entitled to vote thereon, if and to the extent required by applicable law, and
the filing and recordation of appropriate merger documents as required by New
York Law). This Agreement has been duly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by Parent and
Purchaser, constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of general
applicability relating to or affecting the enforcement of creditors' rights and
by the effect of the principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law). At a meeting duly called and
held on June 5, 2000, the Board approved this Agreement and the Transactions and
such approvals are sufficient so that the restrictions on business combinations
set forth in Section 912 of New York Law shall not apply to the Merger.
Section 4.05. No Conflict; Required Filings and Consents.
Except as set forth in Section 4.05 of the Disclosure Schedule:
(a) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
(i) violate the Certificate of Incorporation or By-laws or equivalent
organizational documents of the Company or any Subsidiary, (ii) assuming that
all consents, approvals, authorizations and other actions described in Section
4.05(b) have been obtained and all filings and obligations described in Section
4.05(b) have been made, violate any United States or non-United States national,
state, provincial, municipal, county or local statute, law, ordinance,
regulation, rule, code, executive order, injunction, judgment, decree or other
order ("Law") applicable to the Company or any Subsidiary or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) result in any breach of or constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give to
others any right of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of the Company or any Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clauses (ii) and (iii), for
any such conflicts, violations, breaches, defaults or other occurrences which
would not prevent or materially delay consummation of the Offer or the Merger or
otherwise prevent or materially delay the Company
17
from performing its obligations under this Agreement and would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any United States federal, state, provincial, municipal, county
or local or non-United States government, governmental, regulatory or
administrative authority, agency, instrumentality or commission or any court,
tribunal, or judicial or arbitral body (a "Governmental Authority"), except (i)
for applicable requirements, if any, of the Exchange Act, state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws, (ii) the pre-merger
notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (iii) filing and recordation of appropriate
merger documents as required by New York Law, and (iv) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or materially delay consummation of
the Offer or the Merger, or otherwise prevent or materially delay the Company
from performing its obligations under this Agreement, and would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 4.06. Permits; Compliance. Each of the Company and the
Subsidiaries is in possession of all material franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Authority necessary for
each of the Company or the Subsidiaries to own, lease and operate its properties
or to carry on its business as it is now being conducted or as presently
contemplated to be conducted, in each case except where the failure to possess,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect (the "Permits"). No suspension or cancellation of any of
the Permits is pending or, to the knowledge of the Company, threatened. Neither
the Company nor any Subsidiary is in material default, breach or violation of,
(a) any Law applicable to the Company or any Subsidiary or by which any property
or asset of the Company or any Subsidiary is bound or affected, or (b) except as
disclosed in Section 4.06 of the Disclosure Schedule, any note, bond, mortgage,
indenture, contract, agreement, lease, license, Permit, franchise or other
instrument or obligation to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary or any property or asset of the Company or
any Subsidiary is bound, in each case except as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Section 4.07. SEC Filings; Financial Statements. (a) The
Company has filed all forms, reports and documents required to be filed by it
with the SEC since December 31, 1996, including (i) its Annual Reports on Form
10-K for the fiscal years ended December 31, 1997, 1998, and 1999, respectively,
(ii) all proxy statements relating to the Company's meetings of stockholders
(whether annual or special) held since December 31, 1996 and (iii) all other
forms, reports and other registration statements filed by the Company with the
SEC since December 31, 1996 (the forms, reports and other documents referred to
in clauses (i), (ii) and (iii) above being, collectively, the "SEC Reports").
The SEC Reports (i) were prepared in accordance with either the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act, as the case may be, and the rules and regulations
18
promulgated thereunder, and (ii) did not, at the time they were filed, or, if
amended, as of the date of such amendment, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. No Subsidiary is
required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the SEC Reports was prepared in
accordance with United States generally accepted accounting principles ("GAAP")
(except, in the case of unaudited quarterly statements, as permitted by Form
10-Q of the Exchange Act and subject to normal year-end audit adjustments)
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presents, in all material
respects, the consolidated financial position, results of operations and cash
flows of the Company and its consolidated Subsidiaries as at the respective
dates thereof and for the respective periods indicated therein (except as
otherwise noted therein).
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries as at March 31,
2000, including the notes thereto (the "Q-1 2000 Balance Sheet"), neither the
Company nor any Subsidiary has any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be set
forth therein, except for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since March 31, 2000 and except
for those liabilities or obligations that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(d) The Company has heretofore furnished to Parent complete
and correct copies of all amendments and modifications that have not been filed
by the Company with the SEC to all agreements, documents and other instruments
that previously had been filed by the Company with the SEC and are currently in
effect.
Section 4.08. Absence of Certain Changes or Events. Since
March 31, 2000 through the date of this Agreement, except as set forth in
Section 4.08 of the Disclosure Schedule, or as expressly contemplated by this
Agreement, (a) the Company and the Subsidiaries have in all material respects
conducted their businesses only in the ordinary course and in a manner
consistent with past practice, (b) there has not been any Material Adverse
Effect and (c) none of the Company nor any Subsidiary has taken any action that,
if taken after the date of this Agreement, would constitute a breach of any of
the covenants set forth in Section 6.01.
Section 4.09. Absence of Litigation. Except as set forth in
Section 4.09 of the Disclosure Schedule, as of the date of this Agreement, there
is no litigation, suit, claim, action, proceeding or investigation (an "Action")
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary, or any property or asset of the Company or any Subsidiary,
before any Governmental Authority that (a) could, individually or in the
aggregate, have a Material Adverse Effect or (b) seeks to materially delay or
prevent the consummation of any Transaction. Except as set forth in Section 4.09
of the Disclosure Schedule, as of the date of this Agreement, neither the
Company nor any Subsidiary nor any
19
property or asset of the Company or any Subsidiary is subject to any continuing
order of, consent decree, settlement agreement or similar written agreement
with, or, to the knowledge of the Company, continuing investigation by, any
Governmental Authority, or any order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority that would prevent or
materially delay consummation of the Offer or the Merger or otherwise prevent or
materially delay the Company from performing its obligations under this
Agreement or would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
Section 4.10. Employee Benefit Plans. (a) Section 4.10(a) of
the Disclosure Schedule lists, as of the date hereof, (i) all employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance or other benefit plans, programs
or arrangements, and all employment, termination, severance or other contracts
or agreements, to which the Company or any Subsidiary is a party, with respect
to which the Company or any Subsidiary has any obligation or which are
maintained, contributed to or sponsored by the Company or any Subsidiary for the
benefit of any current or former employee, officer or director of the Company or
any Subsidiary, (ii) each employee benefit plan for which the Company or any
Subsidiary could incur liability under Section 4069 of ERISA in the event such
plan has been or were to be terminated, (iii) any plan in respect of which the
Company or any Subsidiary could incur liability under Section 4212(c) of ERISA,
and (iv) any contracts, arrangements or understandings between the Company or
any Subsidiary and any employee of the Company or any Subsidiary including,
without limitation, any contracts, arrangements or understandings relating in
any way to a sale of the Company or any Subsidiary (collectively, the "Plans").
The Company has made available to Purchaser a true and complete copy or summary
written description of each Plan and each material document, if any, prepared in
connection with each such Plan, together with (i) a copy of each trust or other
funding arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed Internal Revenue Service ("IRS")
Form 5500, (iv) the most recently received IRS determination letter for each
such Plan, and (v) the most recently prepared actuarial report and financial
statement in connection with each such Plan. Neither the Company nor any
Subsidiary has any express or implied commitment (i) to create, incur liability
with respect to or cause to exist any other employee benefit plan, program or
arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Plan, other than with respect to a modification, change or
termination required by ERISA or the Internal Revenue Code of 1986, as amended
(the "Code"), and other than, in the case of clauses (i) and (ii), with respect
to the creation of at-will employment relationships with new hires in the
ordinary course of business.
(b) None of the Plans is a multiemployer plan (within the
meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a
single employer pension plan (within the meaning of Section 4001(a)(15) of
ERISA) for which the Company or any Subsidiary could incur liability under
Section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). Except as described
in Section 4.10(b) of the Disclosure Schedule, none of the Plans (i) provides
for the payment of separation, severance, termination or similar-type benefits
to any person, (ii) obligates the Company or any Subsidiary to pay separation,
severance, termination or
20
similar-type benefits solely or partially as a result of any transaction
contemplated by this Agreement, or (iii) obligates the Company or any Subsidiary
to make any material payment or provide any benefit as a result of a "change in
control", within the meaning of such term under Section 280G of the Code. None
of the Plans provides for or promises retiree medical, disability or life
insurance benefits to any current or former employee, officer or director of the
Company or any Subsidiary.
(c) Each Plan is now and always has been operated in all
material respects in accordance with its terms and the requirements of all
applicable Laws including, without limitation, ERISA and the Code. Except as
described in Section 4.10(c) of the Disclosure Schedule, as of the date of this
Agreement, no Action is pending or, to the knowledge of the Company, threatened
with respect to any Plan (other than claims for benefits in the ordinary
course).
(d) Each Plan that is intended to be qualified under Section
401(a) of the Code or Section 401(k) of the Code has timely received a favorable
determination letter from the IRS covering all of the provisions applicable to
the Plan for which determination letters are currently available that the Plan
is so qualified. No fact or event has occurred since the date of such
determination letter or letters from the IRS to adversely affect the qualified
status of any such Plan or the exempt status of any such trust.
(e) There has not been any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Plan. Neither the Company nor any Subsidiary has incurred any liability under,
arising out of or by operation of Title IV of ERISA (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the ordinary
course), including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer
Plan.
(f) All material contributions, premiums or payments required
to be made with respect to any Plan have been made on or before their due dates,
and all material contributions to the Plans intended to be qualified pursuant to
Section 401(a) of the Code have been or will be fully deductible.
(g) It is the policy of the Company to obtain from all
employees of the Company and the Subsidiaries written obligation to the Company
and the Subsidiaries to maintain in confidence all confidential or proprietary
information acquired by them in the course of their employment and to assign to
the Company and the Subsidiaries all inventions made by them within the scope of
their employment during such employment and for a reasonable period thereafter.
All officers of the Company have entered into such obligations.
Section 4.11. Labor and Employment Matters. (a) Except as set
forth in Section 4.11 of the Disclosure Schedule, (i) as of the date hereof,
there are no controversies pending or, to the knowledge of the Company,
threatened between the Company or any Subsidiary and any of their respective
employees other than immaterial controversies arising in the ordinary course of
business; (ii) neither the Company nor any Subsidiary is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by
21
the Company or any Subsidiary, nor, to the knowledge of the Company, are there
any activities or proceedings of any labor union to organize any such employees
as of the date hereof; (iii) neither the Company nor any Subsidiary has breached
or otherwise failed to comply in any material respect with any provision of any
such agreement or contract, and there are no material grievances outstanding as
of the date hereof against the Company or any Subsidiary under any such
agreement or contract; (iv) there are no material unfair labor practice
complaints pending against the Company or any Subsidiary as of the date hereof
before the National Labor Relations Board or any current union representation
questions involving employees of the Company or any Subsidiary; and (v) there is
no strike, slowdown, work stoppage or lockout, or, to the knowledge of the
Company, threat thereof, by or with respect to any employees of the Company or
any Subsidiary.
(b) Except as set forth in Section 4.11 of the Disclosure
Schedule, the Company and the Subsidiaries are in material compliance with all
applicable laws relating to the employment of labor, including those related to
wages, hours, collective bargaining and the payment and withholding of taxes and
other sums as required by the appropriate Governmental Authority and have
withheld and paid to the appropriate Governmental Authority or are holding for
payment not yet due to such Governmental Authority all material amounts required
to be withheld from employees of the Company or any Subsidiary and are not
liable for any material arrears of wages, taxes, penalties or other sums for
failure to comply with any of the foregoing. The Company and the Subsidiaries
have paid in full to all employees or adequately accrued for in accordance with
GAAP consistently applied all material wages, salaries, commissions, bonuses,
benefits and other compensation due to or on behalf of such employees and there
is no claim with respect to payment of any material amounts of wages, salary or
overtime pay that has been asserted or is now pending or threatened before any
Governmental Authority with respect to any persons currently or formerly
employed by the Company or any Subsidiary. Neither the Company nor any
Subsidiary is a party to, or otherwise bound by, any consent decree with, or
citation by, any Governmental Authority relating to employees or employment
practices. Except as set forth in Section 4.11 of the Disclosure Schedule, there
is no charge or proceeding with respect to a material violation of any
occupational safety or health standards that has been asserted or is now pending
or threatened with respect to the Company. There is no material charge of
discrimination in employment or employment practices, for any reason, including,
without limitation, age, gender, race, religion or other legally protected
category, which has been asserted or is now pending or threatened before the
United States Equal Employment Opportunity Commission, or any other Governmental
Authority in any jurisdiction in which the Company or any Subsidiary have
employed or employ any person.
Section 4.12. Offer Documents; Schedule 14D-9; Proxy
Statement. Neither the Schedule 14D-9 nor any information supplied in writing by
the Company for inclusion in the Offer Documents shall, at the times the
Schedule 14D-9, the Offer Documents or any amendments or supplements thereto are
filed with the SEC or are first published, sent or given to stockholders of the
Company, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. Neither the proxy statement to be sent to the
stockholders of the Company in connection with the Stockholders' Meeting (as
hereinafter defined) or the information statement
22
to be sent to such stockholders, as appropriate (such proxy statement or
information statement, as amended or supplemented, being referred to herein as
the "Proxy Statement"), shall, at the date the Proxy Statement (or any amendment
or supplement thereto) is first mailed to stockholders of the Company, at the
time of the Stockholders' Meeting and at the Effective Time, contain any
statement which, at the time and in light of the circumstances under which it
was made, is false or misleading with respect to any material fact, or which
omits to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Stockholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by Parent, Purchaser or any of Parent's
or Purchaser's representatives for inclusion in the foregoing documents. The
Schedule 14D-9 and the Proxy Statement shall comply in all material respects as
to form with the requirements of the Exchange Act and the rules and regulations
thereunder.
Section 4.13. Property and Leases. Except as described in
Section 4.13 of the Disclosure Schedule:
(a) The Company and the Subsidiaries have sufficient title to
all their properties and assets to conduct their respective businesses as
currently conducted or as contemplated to be conducted, with only such
exceptions as would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Each material parcel of real property owned or leased by
the Company or any Subsidiary (i) is owned or leased free and clear of all
mortgages, pledges, liens, security interests, conditional and installment sale
agreements, encumbrances, charges or other claims of third parties of any kind,
including, without limitation, any easement, right of way or other encumbrance
to title, or any option, right of first refusal, or right of first offer
(collectively, "Liens"), other than (A) Liens for current Taxes and assessments
not yet past due, (B) inchoate mechanics' and materialmen's Liens for
construction in progress, (C) workmen's, repairmen's, warehousemen's and
carriers' Liens arising in the ordinary course of business, or otherwise in
connection with improvements of the Company or such Subsidiary, and (D) all
matters of record, Liens and other imperfections of title and encumbrances that,
individually or in the aggregate, would not, individually or in the aggregate,
have a Material Adverse Effect (collectively, "Permitted Liens"), and (ii) is
neither subject to any governmental decree or order to be sold nor is being
condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the knowledge of the Company,
has any such condemnation, expropriation or taking been proposed.
(c) All material leases of real property leased for the use or
benefit of the Company or any Subsidiary to which the Company or any Subsidiary
is a party, and all amendments and modifications thereto, are in full force and
effect and have not been modified or amended, and there exists no default under
any such lease by the Company or any Subsidiary, nor any event which, with
notice or lapse of time or both, would constitute a default thereunder by the
Company or any Subsidiary, except as would not prevent or materially delay
consummation of the Offer or the Merger or otherwise prevent or materially delay
the Company
23
from performing its obligations under this Agreement and would not,
individually or in the aggregate, have a Material Adverse Effect.
(d) There are no contractual or legal restrictions that
preclude or restrict the ability to use any real property owned or leased by the
Company or any Subsidiary for the purposes for which it is currently being used,
or material latent defects or material adverse physical conditions affecting the
real property, and improvements thereon, owned or leased by the Company or any
Subsidiary, in each case other than those that would not prevent or materially
delay consummation of the Offer or the Merger or otherwise prevent or materially
delay the Company from performing its obligations under this Agreement and would
not, individually or in the aggregate, have a Material Adverse Effect.
Section 4.14. Intellectual Property. To the knowledge of the
Company, except as described in Section 4.14 of the Disclosure Schedule, the
conduct of the business of the Company and the Subsidiaries as currently
conducted does not infringe upon or misappropriate the Intellectual Property
rights of any third party. Except as described in Section 4.14 of the Disclosure
Schedule: (a) as of the date of this Agreement, no claim has been asserted that
the conduct of the business of the Company and the Subsidiaries as currently
conducted infringes upon or may infringe upon or misappropriates the
Intellectual Property rights of any third party; (b) with respect to each item
of Intellectual Property owned by the Company or a Subsidiary and material to
the business, financial condition or results of operations of the Company and
the Subsidiaries taken as a whole ("Company Owned Intellectual Property"), the
Company or a Subsidiary is the owner of the entire right, title and interest in
and to such Company Owned Intellectual Property and to the knowledge of the
Company, is entitled to use such Company Owned Intellectual Property in the
continued operation of its respective business; (c) with respect to each item of
Intellectual Property licensed to the Company or a Subsidiary that is material
to the business of the Company and the Subsidiaries as currently conducted
("Company Licensed Intellectual Property"), to the knowledge of the Company, the
Company or a Subsidiary has the right to use such Company Licensed Intellectual
Property in the continued operation of its respective business in accordance
with the terms of the license agreement governing such Company Licensed
Intellectual Property; (d) the Company Owned Intellectual Property has not been
adjudged invalid or unenforceable in whole or in part and, to the knowledge of
the Company, is valid and enforceable; (e) as of the date hereof, to the
knowledge of the Company, no person is engaging in any activity that infringes
upon the Company Owned Intellectual Property; (f) each license of the Company
Licensed Intellectual Property is valid and enforceable, is binding on all
parties to such license, and is in full force and effect; (g) to the knowledge
of the Company, as of the date hereof, no party to any license of the Company
Licensed Intellectual Property is in breach thereof or default thereunder; and
(h) neither the execution of this Agreement nor the consummation of any
Transaction shall adversely affect any of the Company's rights with respect to
the Company Owned Intellectual Property or the Company Licensed Intellectual
Property.
Section 4.15. Year 2000 Compliance. Except as disclosed in
Section 4.15 of the Disclosure Schedule, all Company Systems are Year 2000
Compliant.
24
Section 4.16. Taxes. The Company and the Subsidiaries have
filed all United States federal, state, local and non-United States Tax returns
and reports required to be filed by them and have paid and discharged all Taxes
required to be paid or discharged, other than (a) such payments as are being
contested in good faith by appropriate proceedings and (b) such filings,
payments or other occurrences that would not, individually or in the aggregate,
have a Material Adverse Effect. Except as set forth in Section 4.16 of the
Disclosure Schedule, neither the IRS nor any other United States or non-United
States taxing authority or agency is now asserting or, to the knowledge of the
Company, threatening to assert against the Company or any Subsidiary any
deficiency or claim for any Taxes or interest thereon or penalties in connection
therewith. Except as set forth in Section 4.16 of the Disclosure Schedule,
neither the Company nor any Subsidiary has granted any waiver of any statute of
limitations with respect to or any extension of a period for the assessment of
any Tax. The accruals and reserves for Taxes reflected in the Q-1 2000 Balance
Sheet are adequate to cover all Taxes accruable through such date (including
interest and penalties, if any, thereon) in accordance with GAAP. Neither the
Company nor any Subsidiary has made an election under Section 341(f) of the
Code. There are no Tax liens upon any property or assets of the Company or any
of the Subsidiaries except liens for current Taxes not yet due. Neither the
Company nor any of the Subsidiaries has been required to include in income any
adjustment pursuant to Section 481 of the Code by reason of a voluntary change
in accounting method initiated by the Company or any of the Subsidiaries, and
the IRS has not initiated or proposed any such adjustment or change in
accounting method, in either case which adjustment or change would have a
Material Adverse Effect. Except as set forth in the financial statements
described in Section 4.07, neither the Company nor any of the Subsidiaries has
entered into a transaction which is being accounted for under the installment
method of Section 453 of the Code, which would reasonably be expected to have a
Material Adverse Effect.
Section 4.17. Environmental Matters. Except as described in
Section 4.17 of the Disclosure Schedule or as would not prevent or materially
delay consummation of the Offer or the Merger or otherwise prevent or materially
delay the Company from performing its obligations under this Agreement and would
not, individually or in the aggregate, have a Material Adverse Effect, (a) the
Company has not violated and is not in violation of any Environmental Law; (b)
none of the properties currently or formerly owned, leased or operated by the
Company (including, without limitation, soils and surface and ground waters) are
contaminated with any Hazardous Substance; (c) the Company is not actually,
potentially or allegedly liable for any off-site contamination by Hazardous
Substances; (d) the Company is not actually, potentially or allegedly liable
under any Environmental Law (including, without limitation, pending or
threatened liens); (e) the Company has all Permits required under any
Environmental Law ("Environmental Permits"); and (f) the Company has always been
and is in compliance with its Environmental Permits.
Section 4.18. Amendment to Rights Agreement. The Company has
irrevocably amended, and the Board has taken all necessary action to irrevocably
amend, the Rights Agreement so that (a) none of the execution or delivery of
this Agreement or the Stockholders Agreement, the making of the Offer, the
acceptance for payment of Securities by Purchaser pursuant to the Offer, the
consummation of the Merger or the consummation of any Transaction will result in
(i) the occurrence of the "flip-in event" described under Section
25
11(a)(ii) of the Rights Agreement, (ii) the occurrence of the "flip-over event"
described in Section 13 of the Rights Agreement, (iii) the Rights becoming
evidenced by, and transferable pursuant to, certificates separate from the
certificates representing Securities, or (iv) any other consequence under the
Rights or the Rights Agreement that would make materially more costly the making
of the Offer, the acceptance for payment of Securities by Purchaser pursuant to
the Offer, the consummation of the Merger or the consummation of any Transaction
or that would prohibit or limit the ownership of any Securities by Purchaser or
limit the ability of Parent or Purchaser to exercise effectively full rights of
ownership of any Securities, and (b) the Rights will expire pursuant to the
terms of the Rights Agreement at the Effective Time.
Section 4.19. Material Contracts. (a) Subsections (i) through
(vii) of Section 4.19 of the Disclosure Schedule contain a list of the following
types of contracts and agreements to which the Company or any Subsidiary is a
party as of the date hereof (such contracts, agreements and arrangements as are
required to be set forth in Section 4.19(a) of the Disclosure Schedule, together
with all contracts and agreements providing for benefits under any Plan and all
contracts for employment required to be listed in Section 4.10 of the Disclosure
Schedule, being the "Material Contracts"):
(i) each contract and agreement which (A) is likely to
involve consideration of more than $500,000, in the
aggregate, during the calendar year ending December
31, 2000, (B) is likely to involve consideration of
more than $1,000,000, in the aggregate, over the
remaining term of such contract, including in each
case, all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion,
market research, marketing consulting and advertising
contracts and agreements and contracts and agreements
with any Governmental Authority to which the Company
or any Subsidiary is a party that satisfy the dollar
minimums specified above;
(ii) all management contracts (excluding contracts for
employment) and contracts with other consultants,
including any contracts involving the payment of
royalties or other amounts calculated based upon the
revenues or income of the Company or any Subsidiary
or income or revenues related to any product of the
Company or any Subsidiary to which the Company or any
Subsidiary is a party;
(iii) all contracts and agreements evidencing indebtedness
in excess of $500,000;
(iv) all contracts and agreements that limit, or purport
to limit, the ability of the Company or any
Subsidiary to compete in any line of business or with
any person or entity or in any geographic area or
during any period of time;
(v) all contracts pursuant to which the Company or any
Subsidiary obtains from any third party any rights to
use Company Licensed Intellectual
26
Property or the right to manufacture, distribute or
sell any product of the Company or such third party;
(vi) all contracts pursuant to which the Company grants to
any third party any rights to use Company Owned
Intellectual Property or the right to manufacture,
distribute or sell any product of the Company or such
third party; and
(vii) all other contracts and agreements, whether or not
made in the ordinary course of business, which are
material to the Company and the Subsidiaries, taken
as a whole, or the conduct of their respective
businesses, or the absence of which would prevent or
materially delay consummation of the Offer or the
Merger or otherwise prevent or materially delay the
Company from performing its obligations under this
Agreement or would, individually or in the aggregate,
have a Material Adverse Effect.
(b) Except as would not prevent or materially delay
consummation of the Offer or the Merger or otherwise prevent or materially delay
the Company from performing its obligations under this Agreement and would not,
individually or in the aggregate, have a Material Adverse Effect, and except as
set forth in Section 4.19(b) of the Disclosure Schedule: (i) each Material
Contract is a legal, valid and binding agreement, and none of the Material
Contracts is in default by its terms or has been canceled by the other party;
(ii) to the Company's knowledge, no other party is in material breach or
violation of, or material default under, any Material Contract; (iii) the
Company and the Subsidiaries are not in receipt of any claim of default under
any such agreement; and (iv) neither the execution of this Agreement nor the
consummation of any Transaction shall constitute default, give rise to
cancellation rights, or otherwise adversely affect any of the Company's rights
under any Material Contract. The Company has furnished or made available to
Parent true and complete copies of all Material Contracts, including any
amendments thereto.
Section 4.20. Insurance. (a) The Company and its Subsidiaries
maintain policies of insurance on terms, and in amounts, that are adequate for
the conduct of their respective businesses, in each case as such business is
currently conducted and consistent with customary practices and standards of
companies engaged in businesses similar to that of the Company and the
Subsidiaries, and with insurers reasonably believed by the Company to be
responsible.
(b) With respect to each material insurance policy: (i) the
policy is legal, valid, binding and enforceable in accordance with its terms
and, except for policies that have expired under their terms in the ordinary
course, is in full force and effect; (ii) neither the Company nor any Subsidiary
is in material breach or default (including any such breach or default with
respect to the payment of premiums or the giving of notice), and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination or modification, under the policy; and (iii)
to the knowledge of the Company, no insurer on the policy has been declared
insolvent or placed in receivership, conservatorship or liquidation.
27
Section 4.21. Brokers. No broker, finder or investment banker
(other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.) is entitled to any brokerage,
finder's or other fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. pursuant to which such
firm would be entitled to any payment relating to the Transactions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
As an inducement to the Company to enter into this Agreement,
Parent and Purchaser hereby, jointly and severally, represent and warrant to the
Company that:
Section 5.01. Corporate Organization. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and New York, respectively.
Section 5.02. Authority Relative to This Agreement. Each of
Parent and Purchaser has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Purchaser and the consummation by Parent and Purchaser of the
Transactions have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Parent or Purchaser
are necessary to authorize this Agreement or to consummate the Transactions
(other than, with respect to the Merger, the filing and recordation of
appropriate merger documents as required by New York Law). This Agreement has
been duly and validly executed and delivered by Parent and Purchaser and,
assuming due authorization, execution and delivery by the Company, constitutes a
legal, valid and binding obligation of each of Parent and Purchaser enforceable
against each of Parent and Purchaser in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of general
applicability relating to or affecting the enforcement of creditors' rights and
by the effect of the principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law).
Section 5.03. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Parent and Purchaser do not, and
the performance of this Agreement by Parent and Purchaser will not, (i) violate
the Certificate of Incorporation or By-laws of Parent or Purchaser or any of
their subsidiaries, (ii) assuming that all consents, approvals, authorizations
and other actions described in Section 5.03(b) have been obtained and all
filings and obligations described in Section 5.03(b) have been made, violate any
Law applicable to Parent or Purchaser or any of their subsidiaries or by which
any property or asset of any of them is bound or affected, or (iii) result in
any breach of, or constitute a default (or an event which, with notice or lapse
of time or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Parent or
Purchaser or any of
28
their subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Purchaser or any of their subsidiaries is a party or by which
Parent or Purchaser or any of their subsidiaries or any property or asset of any
of them is bound or affected, except, with respect to clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults or other occurrences
which would not prevent or materially delay consummation of the Offer or the
Merger or otherwise prevent Parent and Purchaser from performing their
obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with, or notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
laws, (ii) the pre-merger notification requirements of the HSR Act, (iii) filing
and recordation of appropriate merger documents as required by New York Law, and
(iv) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or
materially delay consummation of the Offer or Merger, or otherwise prevent
Parent or Purchaser from performing their material obligations under this
Agreement.
Section 5.04. Financing. Parent and Purchaser have a
reasonable belief that the financing required to enable Purchaser to consummate
all the Transactions will be available to it as of the expiration of the Offer
and the Effective Time.
Section 5.05. Offer Documents; Proxy Statement. The Offer
Documents shall not, at the time the Offer Documents are filed with the SEC or
are first published, sent or given to stockholders of the Company, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. The information supplied by Parent for inclusion in the
Proxy Statement shall not, at the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company, at the time
of the Stockholders' Meeting or at the Effective Time, 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 were made, not false or misleading, or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, Parent and Purchaser
make no representation or warranty with respect to any information supplied by
the Company or any of its representatives for inclusion in any of the foregoing
documents or the Offer Documents. The Offer Documents shall comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations thereunder.
Section 5.06. Brokers. No broker, finder or investment banker
(other than Chase Securities Inc., the fees and expenses of which will be paid
by Parent), is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
Parent or Purchaser.
29
Section 5.07. Purchaser. Purchaser was incorporated solely for
the purpose of consummating the Transactions. Since the date of its
incorporation, Purchaser has not carried on any business or conducted any
operations other than the execution of this Agreement and the Stockholders
Agreement, the performance of its obligations hereunder and thereunder and
matters ancillary thereto. Notwithstanding the foregoing, this representation
shall not be breached by the contribution to the Purchaser of the capital stock
of ▇▇▇▇▇ ▇▇▇▇▇ Data Collection, Inc. subsequent to the date hereof. Purchaser is
a wholly owned subsidiary of Parent.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.01. Conduct of Business by the Company Pending the
Merger. The Company agrees that, between the date of this Agreement and the
earliest to occur of (i) the date of termination of this Agreement, (ii) the
date directors designated by Parent or Purchaser have been elected to and
constitute a majority of the Board or (iii) the Effective Time, except as
contemplated by Section 6.01 of the Disclosure Schedule or unless Parent shall
otherwise agree in writing, the businesses of the Company and the Subsidiaries
taken as a whole shall be conducted only in, and the Company and the
Subsidiaries shall not take any material action except in, the ordinary course
of business and in a manner consistent with past practice; and the Company shall
use all reasonable efforts to preserve substantially intact the business
organization of the Company and the Subsidiaries, to keep available the services
of the current officers, employees and consultants of the Company and the
Subsidiaries and to preserve the current relationships of the Company and the
Subsidiaries with customers, suppliers and other persons with which the Company
or any Subsidiary has significant business relations. By way of amplification
and not limitation, except as expressly contemplated by this Agreement and
Section 6.01 of the Disclosure Schedule, neither the Company nor any Subsidiary
shall, between the date of this Agreement and the earliest to occur of the (i)
date of termination of this Agreement, (ii) the date directors designated by
Parent or Purchaser have been elected to and constitute a majority of the Board
or (iii) the Effective Time, directly or indirectly, do, or propose to do, any
of the following without the prior written consent of Parent (which consent
shall not be unreasonably withheld):
(i) amend or otherwise change its Certificate of Incorporation
or By-laws or equivalent organizational documents;
(ii) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, (i) any shares of any class of capital stock of the Company or any
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary (except for (A) the
issuance of shares of Company Common Stock pursuant to the 1995
Employee Stock Purchase Plan and the Directors Compensation Plan, (B)
the issuance of up to 4,809,693 shares of Company Common Stock upon
exercise of stock options and warrants outstanding on the date hereof,
(C) the issuance of stock options to employees hired subsequent to the
date of this Agreement exercisable for
30
up to 50,000 shares of Company Common Stock under the Company's 1994
Stock Option Plan, (D) the issuance of up to 1,375,000 shares of
Company Common Stock upon the conversion of the Company Series A
Preferred Stock) and (E) transactions between the Company and any
Subsidiary or between Subsidiaries), or (ii) any assets of the Company
or any Subsidiary, except in the ordinary course of business and in a
manner consistent with past practice;
(iii) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except that wholly-owned
Subsidiaries of the Company may declare, set aside, make and pay
dividends and other distributions on their capital stock;
(iv) reclassify, combine, split, subdivide or redeem, or
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(v) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization
or any division thereof or any significant amount of assets, except for
purchases of inventory in the ordinary course of business consistent
with past practice and except in the fulfillment of contracts in
existence on the date hereof and, if Material Contracts, disclosed in
Section 4.19 of the Disclosure Schedule, or entered into after the date
hereof without violation of any other provision of this Agreement; (ii)
incur any indebtedness for borrowed money or issue any debt securities
or assume, guarantee or endorse, or otherwise become responsible for,
the obligations of any person, or make any loans or advances, or grant
any security interest in any of its assets except in the ordinary
course of business and consistent with past practice; (iii) enter into
any contract or agreement other than in the ordinary course of business
and consistent with past practice; (iv) authorize, or make any
commitment with respect to, any single capital expenditure which is in
excess of $500,000 or capital expenditures which are, in the aggregate,
in excess of $2,000,000 for the Company and the Subsidiaries taken as a
whole; or (v) enter into or amend in any material respect any contract,
agreement, commitment or arrangement with respect to any matter set
forth in this Section 6.01(e);
(vi) increase the compensation payable or to become payable or
the benefits provided to its directors, officers or employees (except
for increases in the ordinary course of business and consistent with
past practice in salaries or wages of employees of the Company or any
Subsidiary who are not directors or officers or key employees of the
Company or any Subsidiary or increases required under the employment
agreements in effect as of the date of this Agreement and set forth in
Section 4.10(a) of the Disclosure Schedule), or grant any severance or
termination pay to (except to the extent required under agreements in
effect as of the date of this Agreement and set forth in Section 4.10
(a) of the Disclosure Schedule), or enter into any employment or
severance agreement with, any director, officer or other employee of
the Company or of any Subsidiary, or establish, adopt, enter into or
amend any collective bargaining, bonus, profit-sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred
31
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee, except in each such case in the ordinary
course of business and consistent with past practices with respect to
employees who are not directors, officers or key employees of the
Company or any Subsidiary;
(vii) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures;
(viii) make any material tax election or settle or compromise
any material United States federal, state, local or non-United States
income tax liability;
(ix) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the Q-1 2000 Balance Sheet
or subsequently incurred in the ordinary course of business and
consistent with past practice and except as permitted by clause (k)
below;
(x) amend, modify or consent to the termination of any
Material Contract, or amend, waive, modify or consent to the
termination of the Company's or any Subsidiary's material rights
thereunder;
(xi) commence or settle any material Action, except such
material Actions as are specifically listed in Section 4.09 of the
Disclosure Schedule; or
(xii) announce an intention, enter into any formal or informal
agreement or
otherwise make a commitment, to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01. Stockholders' Meeting. (a) If required by
applicable law in order to consummate the Merger, the Company, acting through
the Board, shall, in accordance with applicable law and the Company's
Certificate of Incorporation and By-laws, (i) duly call, give notice of, convene
and hold an annual or special meeting of its stockholders as promptly as
practicable following the acceptance for payment of Securities pursuant to the
Offer for the purpose of considering and taking action on this Agreement and the
Transactions (the "Stockholders' Meeting") and (ii) subject to Section 7.05 (b),
(A) include in the Proxy Statement, and not subsequently withdraw or modify in
any manner adverse to Purchaser or Parent, the recommendation of the Board that
the stockholders of the Company approve and adopt this Agreement and the
Transactions and (B) use its reasonable efforts to obtain such approval and
adoption. At the Stockholders' Meeting, Parent and Purchaser shall cause all
Securities then owned by them and their subsidiaries to be voted in favor of the
approval and adoption of this Agreement and the Transactions.
32
(b) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the then outstanding shares of Company Common
Stock and 90% of the then outstanding shares of Company Series A Preferred
Stock, the parties shall take all necessary and appropriate action to cause the
Merger to become effective, in accordance with Section 905 of New York Law, as
promptly as reasonably practicable after such acquisition, without a meeting of
the stockholders of the Company.
Section 7.02. Proxy Statement. If approval of the Company's
shareholders is required by applicable law to consummate the Merger, as promptly
as practicable following the acceptance for payment of Securities pursuant to
the Offer, the Company shall file the Proxy Statement with the SEC under the
Exchange Act, and each of the Company, Parent and Purchaser shall use its
reasonable efforts to have the Proxy Statement cleared by the SEC as promptly as
practicable. Parent, Purchaser and the Company shall cooperate with each other
in the preparation of the Proxy Statement, and the Company shall notify Parent
of the receipt of any comments of the SEC with respect to the Proxy Statement
and of any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the Company and the
SEC with respect thereto. The Company shall give Parent and its counsel the
opportunity to review the Proxy Statement, including all amendments and
supplements thereto, prior to its being filed with the SEC and shall give Parent
and its counsel the opportunity to review all responses to requests for
additional information and replies to comments prior to their being filed with,
or sent to, the SEC. Each of the Company, Parent and Purchaser agrees to use its
reasonable efforts, after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC and to cause the Proxy
Statement and all required amendments and supplements thereto to be mailed to
the holders of Securities entitled to vote at the Stockholders' Meeting at the
earliest practicable time.
Section 7.03. Company Board Representation; Section 14(f). (a)
Promptly upon the purchase by Purchaser of Securities pursuant to the Offer and
from time to time thereafter, Purchaser shall be entitled to designate up to
such number of directors, rounded to the nearest whole number, on the Board as
shall give Purchaser representation on the Board equal to the product of the
total number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of shares of Company Common Stock beneficially owned by Purchaser or any
affiliate of Purchaser following such purchase bears to the total number of
shares of Company Common Stock then outstanding (provided that such number of
directors shall be reduced in order to accommodate the Continuing Directors
serving pursuant to Section 7.03(c), but not below such number as would
constitute a majority of the whole Board, determined as if there are no
vacancies thereon) and the Company shall, at such time, promptly take all
actions necessary to cause Purchaser's designees to be elected as directors of
the Company, including increasing the size of the Board or securing the
resignations of incumbent directors, or both. At such times, the Company shall
use its reasonable efforts to cause persons designated by Purchaser to
constitute the same percentage as persons designated by Purchaser shall
constitute of the Board of (i) each committee of the Board, (ii) each board of
directors of each Subsidiary, and (iii) each committee of each such board, in
each case only to the extent permitted by applicable law.
33
(b) The Company's obligations with respect to the election of
Purchaser's designees to the Board shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions required pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder to fulfill its obligations under this Section 7.03,
and shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors as is required under Section 14(f) and
Rule 14f-1 to fulfill such obligations. Parent or Purchaser shall supply to the
Company, and be solely responsible for, any information with respect to either
of them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1.
(c) Notwithstanding any other provision of this Section 7.03
and only until the Effective Time, Parent, Purchaser and the Company shall cause
three members of the Board to be persons who were members of the Board as of the
date hereof (or who are nominated by such members), and who shall initially be
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Continuing
Directors") so long as there are at least three such persons who are willing to
serve as Continuing Directors. Parent, Purchaser, and the Company shall cause
the Continuing Directors to constitute the same percentage as they constitute of
the Board of (i) each committee of the Board, (ii) each board of directors of
each Subsidiary, and (iii) each committee of each such board, in each case only
to the extent permitted by applicable law. In the event that any Continuing
Director resigns from the Board or such other committee or board, Parent,
Purchaser and the Company shall cause the election of a successor appointed by
the remaining Continuing Director(s) in his or their reasonable discretion or,
in the event all Continuing Directors resign, shall cause the election of up to
three other persons, if any, who were members of the Board as of the date hereof
and who are willing, upon request, to serve as Continuing Directors. Following
the election of designees of Purchaser pursuant to this Section 7.03, prior to
the Effective Time, any amendment of this Agreement or the Certificate of
Incorporation or By-laws of the Company, any termination of this Agreement by
the Company, any extension by the Company of the time for the performance of any
of the obligations or other acts of Parent or Purchaser, or waiver of any of the
Company's rights hereunder, shall require the concurrence of a majority of the
Continuing Directors or their appointees. If at any time the Continuing
Directors reasonably deem it necessary to consult with independent counsel or
other advisors in connection with their duties as Continuing Directors or
actions to be taken by the Company, the Continuing Directors may retain such
counsel or other advisor for such purpose and the Company will pay the
reasonable fees and expenses incurred in connection therewith.
Section 7.04. Access to Information; Confidentiality. (a) From
the date hereof until the Effective Time, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and the Subsidiaries to, afford the officers, employees and agents of
Parent and Purchaser and persons providing or proposing to provide Parent or
Purchaser with financing for the Transactions access at reasonable times during
normal business hours upon prior notice to the officers, employees, agents,
properties, offices, plants and other facilities, books and records of the
Company and each Subsidiary, and shall furnish Parent and Purchaser and persons
providing or proposing to provide Parent or Purchaser with financing for the
Transactions with such financial, operating and other data and information as
Parent or Purchaser, through its officers, employees or agents, may reasonably
request; provided, however, that the parties shall use reasonable efforts to
limit
34
such access in such a way so as to not unreasonably disrupt the operations of
the business of the Company and the Subsidiaries; and provided, further, that
the Company shall have no obligation under this Section 7.04(a) with respect to
the Preferred Director.
(b) All information obtained by Parent or Purchaser pursuant
to this Section 7.04 shall be kept confidential in accordance with the
confidentiality agreement, dated December 16, 1999, between ▇▇▇▇▇ ▇▇▇▇▇ Data
Collection, Inc. and the Company, and the confidentiality and non-waiver
agreement, dated April 6, 2000, between ▇▇▇▇▇ ▇▇▇▇▇ Data Collection, Inc. and
the Company (the "Confidentiality Agreements").
(c) No investigation pursuant to this Section 7.04 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto or any condition to the
Offer.
Section 7.05. No Solicitation of Transactions. (a) After the
date hereof and prior to the earlier to occur of the date of termination of this
Agreement or the Effective Time, neither the Company nor any Subsidiary shall,
directly or indirectly, through any officer, director, employee, agent or
otherwise, (i) solicit, initiate or knowingly encourage the submission of any
Acquisition Proposal, (ii) participate in any discussions or negotiations
regarding any proposal that constitutes, or may reasonably be expected to lead
to, an Acquisition Proposal, or (iii) furnish to any person, any information
with respect to, or otherwise cooperate in any way with respect to, or assist or
participate in, facilitate or knowingly encourage, any proposal that
constitutes, or may reasonably be expected to lead to, an Acquisition Proposal;
provided, however, that the Company may, to the extent necessary to act in a
manner consistent with the fiduciary duties of the Board, as determined in good
faith by the Board after receiving the advice of outside counsel, in response to
an Acquisition Proposal that was not solicited by the Company and that the Board
determines, in good faith after receiving the advice of outside counsel and a
financial advisor of recognized reputation, is reasonably likely to lead to a
Superior Proposal, and subject to and in compliance with Section 7.05(d), (x)
furnish information with respect to the Company and its Subsidiaries to the
person making such Acquisition Proposal and its officers, employees and agents
and persons providing or proposing to provide it with financing for the
Acquisition Proposal pursuant to a customary confidentiality agreement with
terms no less favorable to the Company than those set forth in the
Confidentiality Agreements and (y) participate in discussions or negotiations
with such persons regarding such Acquisition Proposal; and provided, further,
that the Company shall not be considered to be in breach of this Section 7.05(a)
by virtue of any actions of the Preferred Director contrary to the terms of this
Section 7.05(a), if the Company has informed all directors of their duties under
this Section 7.05(c).
(b) Except as set forth in this Section 7.05(b), neither the
Board nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Board or any such committee of this Agreement, the Offer,
the Merger or any other Transaction, (ii) approve or recommend, or publicly
propose to approve or recommend, any Acquisition Proposal or (iii) enter into
any agreement with respect to any Acquisition Proposal (other than a
confidentiality agreement pursuant to clause(x) of Section 7.05(a)).
Notwithstanding the
35
foregoing, in the event that, prior to the time of acceptance for payment of
Securities pursuant to the Offer, the Board determines in good faith that it is
necessary to act in a manner consistent with its fiduciary duties under
applicable law after receiving the advice of outside legal counsel, the Board
may withdraw or modify its approval or recommendation of the Offer, the Merger
or any other Transaction in order to accept a Superior Proposal.
(c) The Company shall, and shall direct or cause its
directors, officers, employees, representatives and agents to, immediately cease
and cause to be terminated any discussions or negotiations with any parties that
may be ongoing as of the date hereof with respect to any Acquisition Proposal;
provided, however, that the Company shall not be considered to be in breach of
this Section 7.05(c) by virtue of any actions by the Preferred Director contrary
to the terms of this Section 7.05(c), if the Company has informed all directors
of their duties under this Section 7.05(c).
(d) The Company shall advise Parent orally (within one
business day) and in writing (as promptly as practicable thereafter) of: (i) any
Acquisition Proposal or any request for information with respect to any
Acquisition Proposal, the material terms and conditions of such Acquisition
Proposal or request and the identity of the person making such Acquisition
Proposal or request and (ii) any changes in any such Acquisition Proposal or
request.
(e) The Company agrees, except as necessary to act in a manner
consistent with the Board's fiduciary duties under applicable law after having
received the advice of outside legal counsel, not to release any third party
from, or waive any provision of, any confidentiality or standstill agreement to
which the Company is a party.
(f) Nothing contained in this Agreement shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making
any required disclosure to the Company's stockholders.
Section 7.06. Employee Benefits Matters. Parent agrees to
cause the Company and the Subsidiaries and the Surviving Corporation and its
subsidiaries, as the case may be, to maintain from the earlier of the date
directors designated by Parent or Purchaser have been elected to and constitute
a majority of the Board and the Effective Time to the first anniversary of the
Effective Time, the Plans as in effect on the date of this Agreement or to
provide benefits to each current employee of the Company and the Subsidiaries
that are no less favorable in the aggregate to such employees than those in
effect on the date hereof. From and after the earlier of the date directors
designated by Parent or Purchaser have been elected to and constitute a majority
of the Board and the Effective Time, Parent shall cause the Company and the
Subsidiaries and the Surviving Corporation and its Subsidiaries, as the case may
be, to honor in accordance with their terms, all contracts, agreements,
arrangements, policies, plans and commitments of the Company and the
Subsidiaries as in effect as of the date hereof and set forth in Section 4.10(a)
of the Disclosure Schedule, that are applicable to any current or former
employees or directors of the Company or any Subsidiary, including any change of
control provisions. Employees of the Company or any Subsidiary shall receive
credit for purposes of eligibility to participate and vesting (but not for
benefit accruals) under any employee benefit
36
plan, program or arrangement established or maintained by the Surviving
Corporation or any of its subsidiaries for service accrued or deemed accrued
prior to the Effective Time with the Company or any Subsidiary; provided,
however, that such crediting of service shall not operate to duplicate any
benefit or the funding of any such benefit. Parent and the Surviving Corporation
shall, after the Effective Time, have the right to amend or terminate, in a
manner consistent with this Section 7.06, any employee benefit plan or policy
which is maintained by the Company or any Subsidiary immediately prior to the
Effective Time, and nothing herein shall require Parent or the Surviving
Corporation to maintain any equity program for employees of the Company or any
Subsidiary which is comparable to the equity programs maintained for such
employees immediately prior to the Effective Time.
Section 7.07. Directors' and Officers' Indemnification and
Insurance. (a) The By-laws of the Surviving Corporation shall contain provisions
no less favorable with respect to indemnification than are set forth in Article
V of the By-laws of the Company, which provisions shall not be amended, repealed
or otherwise modified for a period of six years from the Effective Time in any
manner that would affect adversely the rights thereunder of individuals who, at
or prior to the Effective Time, were directors, officers, employees, fiduciaries
or agents of the Company, unless such modification shall be required by law.
(b) The Company shall, to the fullest extent permitted under
applicable law or under the Company's Certificate of Incorporation or By-Laws
and regardless of whether the Merger becomes effective, indemnify and hold
harmless, and, after the Effective Time, Parent and the Surviving Corporation
shall, to the fullest extent permitted under applicable law or under the
Company's Certificate of Incorporation or By-Laws as in effect as of the
Effective Time, indemnify and hold harmless, each present and former director,
officer or employee of the Company or any Subsidiary, and each executor or
administrator of any of the foregoing (collectively, the "Indemnified Parties")
against any costs or expenses (including attorney's 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, (i) arising out of or
pertaining to the transactions contemplated by this Agreement or (ii) otherwise
with respect to claims arising from any acts, omissions or events occurring at
or prior to the Effective Time, to the same extent as provided in the Company's
Certificate of Incorporation or By-Laws or any applicable contract or agreement
as in effect on the date hereof, in each case for a period of six years after
the date hereof. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the Effective
Time shall be reasonably satisfactory to Parent and the Surviving Corporation,
(ii) after the Effective Time, Parent or the Surviving Corporation shall pay the
reasonable fees and expenses of such counsel, promptly after statements therefor
are received, and (iii) Parent and the Surviving Corporation will cooperate in
the defense of any such matter; provided, however, that none of the Company,
Parent or the Surviving Corporation shall be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld);
and provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until the
disposition of any and all such claims.
37
(c) The Surviving Corporation shall maintain in effect for six
years from the Effective Time, if available, the current directors' and
officers' liability insurance policies maintained by the Company (provided that
the Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions that are no less favorable) with
respect to matters occurring prior to the Effective Time; provided, however,
that in no event shall the Surviving Corporation be required to expend pursuant
to this Section 7.07(b) more than an amount per year equal to 150% of the
highest annual premium paid in any prior year by the Company or the Surviving
Corporation for such insurance (which annual premium the Company represents to
be $218,750 as of the date hereof); provided, however, that if the premium for
such coverage exceeds such amount, the Surviving Corporation shall purchase a
policy with the greatest coverage available for such amount.
(d) For a period of at least six years after the Effective
Time, Parent shall cause the Certificate of Incorporation of the Surviving
Corporation to continue to include a provision substantially similar to Article
7 of the Restated Certificate of Incorporation of the Company for the benefit of
all directors of the Company prior to the Effective Time.
(e) Parent and the Surviving Corporation shall honor and
fulfill in all respects the obligations of the Company pursuant to
indemnification agreements with the Company's directors and officers existing at
or before the Effective Time and set forth in Section 7.07(e) of the Disclosure
Schedule.
(f) Notwithstanding anything to the contrary in this
Agreement, this Section 7.07 shall survive the Effective Time, is intended to
benefit the Company, the Surviving Corporation and the Indemnified Parties,
shall be binding on all successors and assigns of Parent and the Surviving
Corporation and shall be enforceable by the Indemnified Parties. In the event
the Company or the Surviving Corporation or any of their respective successors
or assigns (i) consolidates with or merges into any other person 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 provision shall be made so
that the successors and assigns of the Company or the Surviving Corporation, as
the case may be, or at Parent's option, Parent, shall assume the obligations set
forth in this Section 7.07.
Section 7.08. Notification of Certain Matters. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which reasonably could be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, (b) any failure of the Company, Parent or
Purchaser, as the case may be, to comply with or satisfy any covenant or
agreement to be complied with or satisfied by it hereunder, and (c) any other
material development relating to the business, prospects, financial condition or
results of operations of the Company and the Subsidiaries; provided, however,
that the delivery of any notice pursuant to this Section 7.08 shall not limit or
otherwise affect the remedies available to any party hereunder.
Section 7.09. Further Action; Reasonable Efforts. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall (i)
make promptly and in any
38
event within five business days after the date hereof, its respective filings,
and thereafter make any other required submissions, under the HSR Act with
respect to the Transactions and (ii) use its reasonable efforts to take, or
cause to be taken, all appropriate 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, including, without limitation,
using its reasonable efforts to obtain all Permits, consents, approvals,
authorizations, qualifications and orders of Governmental Authorities and
parties to contracts with the Company and the Subsidiaries as are necessary for
the consummation of the Transactions and to fulfill the conditions to the Offer
and the Merger; provided that neither Purchaser nor Parent will be required by
this Section 7.09 to take any action, including entering into any consent
decree, hold separate orders or other arrangements, that (A) requires the
divestiture of any assets of any of Purchaser, Parent, the Company or any of
their respective subsidiaries or (B) limits Parent's freedom of action with
respect to, or its ability to retain, the Company and the Subsidiaries or any
portion thereof or any of Parent's or its affiliates' other assets or
businesses. In case, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall use their
reasonable best efforts to take all such action.
(b) Each of the parties hereto agrees to cooperate and use its
reasonable best efforts to vigorously contest and resist any Action, including
administrative or judicial Action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that restricts, prevents or
prohibits consummation of the Transactions, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial appeal.
Section 7.10. Public Announcements. Parent and Purchaser, on
the one hand, and the Company, on the other hand, shall consult with each other
before issuing, and provide each other with reasonable opportunity to review and
comment upon, any press release or announcement concerning the Transactions, the
Offer or the Merger and shall not issue any such press release or announcement
prior to such consultation, except as may be required by Law or the rules or
regulations of any United States securities exchange.
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.01. Conditions to the Merger. The obligations of
each party to effect the Merger shall be subject to the satisfaction or waiver,
at or prior to the Effective Time, of the following conditions:
(i) Stockholder Approval. If and to the extent required by New
York Law, this Agreement and the Transactions shall have been adopted
by the affirmative vote of the stockholders of the Company;
(ii) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated;
39
(iii) No Order. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is then in effect and has the effect of
making the acquisition of Securities by Parent or Purchaser or any
affiliate of either of them illegal or otherwise restricting,
preventing or prohibiting consummation of the Transactions; and
(iv) Offer. Purchaser or its permitted assignee shall have
purchased all Securities validly tendered and not withdrawn pursuant to
the Offer; provided, however, that this condition shall not be
applicable to the obligations of Parent or Purchaser if, in breach of
this Agreement or the terms of the Offer, Purchaser fails to purchase
any Securities validly tendered and not withdrawn pursuant to the
Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01. Termination. This Agreement may be terminated
and the Merger and the other Transactions may be abandoned at any time prior to
the Effective Time, notwithstanding any requisite adoption of this Agreement and
the Transactions by the stockholders of the Company:
(a) By mutual written consent of each of Parent, Purchaser and
the Company duly authorized by the Boards of Directors of Parent, Purchaser and
the Company; or
(b) By either Parent, Purchaser or the Company: (i) if the
Effective Time shall not have occurred on or before December 31, 2000; provided,
however, that the right to terminate this Agreement under this Section 9.01(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date; and provided, further, that this
Agreement may not be terminated pursuant to this clause (i) after Purchaser
accepts Securities for payment pursuant to the Offer; or (ii) if any
Governmental Authority shall have enacted, issued, promulgated, enforced or
entered any injunction, order, decree or ruling (whether temporary, preliminary
or permanent) which has become final and nonappealable and has the effect of
making consummation of the Offer or the Merger illegal or otherwise preventing
or prohibiting consummation of the Offer or the Merger; or
(c) By Parent if (i) due to an occurrence or circumstance that
is continuing and results in a failure to satisfy any condition set forth in
Annex A hereto (but, if Parent shall have extended the Offer pursuant to clause
(iii) of the fourth sentence of Section 2.01(a), due only to the failure to
satisfy any of the conditions set forth in clauses (b) (to the extent the
applicable Law is enacted, promulgated, amended, issued or deemed applicable on
or after the date of such extension), (g) and (h) of Annex A hereto), Purchaser
shall have (A) failed to commence the Offer within 10 business days following
the date of this Agreement, (B) terminated the Offer without having accepted any
Securities for payment thereunder or (C) failed to accept Securities for payment
pursuant to the Offer within 30 business days (plus such number of business days
as the Offer shall have been validly extended pursuant to Section 2.01)
following the commencement of the Offer, unless such action or inaction under
(A), (B) or (C) shall have been
40
caused by or resulted from the failure of Parent or Purchaser to perform, in any
material respect, any of their material covenants or agreements contained in
this Agreement, or the material breach by Parent or Purchaser of any of their
material representations or warranties contained in this Agreement or (ii) prior
to the acceptance for payment of Securities pursuant to the Offer, the Board or
any committee thereof shall have withdrawn or modified in a manner adverse to
Purchaser or Parent its approval or recommendation of this Agreement, the Offer,
the Merger or any other Transaction, or shall have recommended or approved any
Acquisition Proposal, or shall have resolved to do any of the foregoing; or
(d) By the Company, upon approval of the Board, if (i)
Purchaser shall have (A) failed to commence the Offer within 10 business days
following the date of this Agreement, (B) terminated the Offer without having
accepted any Securities for payment thereunder or (C) failed to accept
Securities for payment pursuant to the Offer within 30 business days (plus such
number of business days as the Offer shall have been validly extended pursuant
to Section 2.01) following the commencement of the Offer), unless such action or
inaction under (A), (B) or (C) shall have been caused by or resulted from the
failure of the Company to perform, in any material respect, any of its material
covenants or agreements contained in this Agreement or the material breach by
the Company of any of its material representations or warranties contained in
this Agreement or (ii) prior to the acceptance for payment of Securities
pursuant to the Offer, the Board or any committee thereof shall have withdrawn
or modified in a manner adverse to Purchaser or Parent its approval or
recommendation of this Agreement, the Offer, the Merger or any other
Transaction, or shall have recommended or approved any Acquisition Proposal, or
shall have resolved to do any of the foregoing, in each case in accordance with
Section 7.05(b), (iii) Parent or Purchaser breaches or fails to perform in any
material respect any of its material representations, warranties or covenants
contained in this Agreement, which breach or failure to perform cannot be or has
not been cured within 20 business days after the giving of written notice to
Parent of such breach or (iv) Purchaser shall have failed to obtain a commitment
on customary terms and conditions from a responsible financial institution
within four (4) business days of the date hereof to provide senior debt
financing for the Transactions.
Section 9.02. Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 9.01, this Agreement shall
forthwith become void, and there shall be no liability or obligation on the part
of any party hereto, except (a) as set forth in Section 9.03 and (b) nothing
herein shall relieve any party from liability for any breach hereof prior to the
date of such termination; provided, however, that the Confidentiality Agreements
shall survive any termination of this Agreement.
Section 9.03. Fees and Expenses. (a) In the event that this
Agreement is terminated pursuant to (i) Section 9.01(c)(ii) or 9.01(d)(ii) or
(ii) Section 9.01(b) or 9.01(c)(i), to the extent that termination, the failure
to commence or failure to accept any Securities for payment, as set forth in
Section 9.01(b) or 9.01(c)(i), as the case may be, shall relate to (x) the
intentional failure of the Company to perform, in any material respect, the
covenants contained in Section 6.01, (y) the failure of the Company to perform,
in any material respect, any of its material covenants or agreements contained
in this Agreement other than Section 6.01, or (z) the material intentional
breach by the Company of any of its material representations or warranties
contained in this Agreement, then, in any such event, the Company shall pay
Parent promptly
41
(but in no event later than one business day after termination) a fee of $3
million (the "Fee") and the Company shall reimburse Parent and Purchaser (not
later than one business day after submission of statements therefor) for all
Reimbursable Expenses of Parent and Purchaser, which amount shall be payable in
immediately available funds.
(b) In the event that this Agreement is terminated pursuant to
Section 9.01(b), 9.01(c)(i) or 9.01(d)(i) for any reason other than as set forth
in Section 9.03(a)(ii), and in any such case an Acquisition Proposal has been
made prior to termination and the Minimum Condition has not been satisfied at
the time of termination, then (i) the Company shall reimburse Parent and
Purchaser (not later than one business day after submission of statements
therefor) for all Reimbursable Expenses of Parent and Purchaser, which amount
shall be payable in immediately available funds, and (ii) if an Acquisition
Proposal is consummated within 18 months after the date of termination of this
Agreement, the Company shall pay Parent promptly (but in no event later than one
business day after consummation) the Fee.
(c) Notwithstanding anything to the foregoing in this Section
9.03, no Fee or Reimbursable Expenses shall be payable to Parent or Purchaser in
the event this Agreement is terminated pursuant to (i) Section 9.01(b) or
9.01(d)(i), to the extent that termination, the failure to commence or failure
to accept any Securities for payment, as set forth in Section 9.01(d)(i), shall
relate to the failure of either Parent or Purchaser to perform, in any material
respect, any material covenant or agreement contained in this Agreement or the
material breach by Parent or Purchaser of any of their material representations
or warranties contained in this Agreement, or (ii) Section 9.01(d)(iii).
(d) Except as set forth in this Section 9.03, all costs and
expenses incurred in connection with this Agreement, the Stockholders Agreement
and the Transactions shall be paid by the party incurring such expenses, whether
or not any Transaction is consummated.
(e) In the event that the Company shall fail to pay the Fee or
any Reimbursable Expenses when due, the term "Reimbursable Expenses" shall be
deemed to include the costs and expenses actually incurred or accrued by Parent
and Purchaser (including, without limitation, fees and expenses of counsel) in
connection with the collection under and enforcement of this Section 9.03,
together with interest on such unpaid amounts, commencing on the date that the
respective amounts became due, at a rate equal to the rate of interest publicly
announced by Citibank, N.A., from time to time, in the City of New York, as such
bank's Base Rate plus 2%.
Section 9.04. Amendment. Subject to Section 7.03, this
Agreement may be amended by the parties hereto by action taken by or on behalf
of their respective Boards of Directors at any time prior to the Effective Time.
This Agreement may not be amended except by an instrument in writing signed by
each of the parties hereto.
Section 9.05. Waiver. Subject to Section 7.03, at any time
prior to the Effective Time, any party hereto may (a) extend the time for the
performance of any obligation or other act of any other party hereto, (b) waive
any inaccuracy in the representations and warranties of any other party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any agreement of any other party or any condition to its own
42
obligations contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
ARTICLE X
GENERAL PROVISIONS
Section 10.01. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given by
delivery in person, by overnight courier or by registered or certified mail
(postage prepaid, return receipt requested) (and shall be deemed to have been
given when delivered by hand one (1) business day after sending by overnight
courier, or seven (7) days after mailing by registered or certified mail, as the
case may be), to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 10.01):
if to Parent or Purchaser:
Mohawk Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
if to the Company:
PSC Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
43
Section 10.02. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
Section 10.03. Entire Agreement; Assignment. This Agreement
and the Stockholders Agreement constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede, except as set forth in
Sections 7.04(b), all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
This Agreement shall not be assigned (whether pursuant to a merger, by operation
of law or otherwise), except that Parent and Purchaser may assign all or any of
their rights and obligations hereunder to any affiliate of Parent, provided that
no such assignment shall relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations.
Section 10.04. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Section 7.07 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
Section 10.05. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
Section 10.06. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined exclusively in any New York state court sitting in the
Fifth Judicial District or Seventh Judicial District of the New York Supreme
Court or any federal court sitting in the Northern District of the State of New
York or the Western District of the State of New York. The parties hereto hereby
(a) submit to the exclusive jurisdiction of any New York state court sitting in
the Fifth Judicial District or Seventh Judicial District of the New York Supreme
Court or any federal court sitting in the Northern District of the State of New
York or the Western District of the State of New York for the purpose of any
Action arising out of or relating to this Agreement brought by any party hereto,
and (b) irrevocably waive, and agree not to assert by way of motion, defense, or
otherwise, in any such Action, any claim that it is not subject personally to
the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that the Action is brought in an
inconvenient forum, that
44
the venue of the Action is improper, or that this Agreement or the Transactions
may not be enforced in or by any of the above-named courts.
Section 10.07. Waiver of Jury Trial. Each of the parties
hereto hereby waives to the fullest extent permitted by applicable law any right
it may have to a trial by jury with respect to any litigation directly or
indirectly arising out of, under or in connection with this Agreement or the
Transactions. Each of the parties hereto (a) certifies that no representative,
agent or attorney of any other party has represented, expressly or otherwise,
that such other party would not, in the event of litigation, seek to enforce
that foregoing waiver and (b) acknowledges that it and the other hereto have
been induced to enter into this Agreement and the Transactions, as applicable,
by, among other things, the mutual waivers and certifications in this Section
10.07.
Section 10.08. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
Section 10.09. Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
45
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
MOHAWK CORP.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Title: Chairman
MOHAWK ACQUISITION CORP.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Title: Vice President and Treasurer
PSC INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Title: Chairman
46
ANNEX A
Conditions to the Offer
Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment any Securities tendered pursuant to
the Offer, and, subject to this Agreement, may extend, terminate or amend the
Offer, if (i) immediately prior to the expiration of the Offer, the Minimum
Condition shall not have been satisfied or waived, (ii) any applicable waiting
period under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer, (iii) Purchaser shall not have obtained sufficient
financing immediately prior to the expiration of the Offer to enable it to
purchase the Securities to be purchased by it and to pay fees and expenses of
the Offer and the Merger, including, without limitation, fees and expenses
incurred or to be incurred in connection with the financing thereof (the
"Financing Condition"), or (iv) at any time on or after the date of this
Agreement and prior to the first acceptance for payment of Securities, any of
the following conditions shall exist and shall be continuing:
(a) there shall have been instituted or be pending (x) any
Action by a Governmental Authority or (y) any Action before any
Governmental Authority by a third party which has a reasonable
likelihood of success, in either case, (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 any Securities by Parent,
Purchaser or any other affiliate of Parent, or the consummation of any
other Transaction, or seeking to obtain damages in connection with any
Transaction that are material to the Company and the Subsidiaries,
taken as a whole; (ii) seeking to prohibit or limit 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 and the
Subsidiaries, taken as a whole, or Parent and its subsidiaries, taken
as a whole, or to compel the Company, Parent or any of their
subsidiaries, as a result of the Transactions, to dispose of or to hold
separate all or any material portion of the business or assets of the
Company and the Subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole; (iii) seeking to impose or confirm any
limitation on the ability of Parent, Purchaser or any other affiliate
of Parent to exercise effectively full rights of ownership of any
Securities, including, without limitation, the right to vote any shares
of Company Common Stock or Company Series A Preferred Stock acquired by
Purchaser 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)
seeking to require divestiture by Parent, Purchaser or any other
affiliate of Parent of any Securities; or (v) which otherwise would,
individually or in the aggregate, have a Material Adverse Effect;
(b) there shall have been any Law enacted, 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 United States or non-United States legislative body
or Governmental Authority with appropriate jurisdiction, other than the
routine application of the waiting period provisions of the HSR Act to
the Offer, the
Stockholders Agreement or the Merger, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above;
(c) any Material Adverse Effect shall have occurred after
the date of this Agreement and be continuing;
(d) (i) it shall have been publicly disclosed, or Purchaser
shall have otherwise learned, that beneficial ownership (determined for
the purposes of this paragraph as set forth in Rule 13d-3 promulgated
under the Exchange Act) of Securities constituting 20% or more of the
then-outstanding shares of Company Common Stock (assuming conversion or
exercise of such Securities) has been acquired by any person, other
than Parent or any of its affiliates, or (ii) (A) the Board, or any
committee thereof, shall have withdrawn or modified, in a manner
adverse to Parent or Purchaser, the approval or recommendation of the
Offer, the Merger or this Agreement, or approved or recommended any
Acquisition Proposal or any other acquisition of Securities other than
the Offer and the Merger or (B) the Board, or any committee thereof,
shall have resolved to do any of the foregoing;
(e) (i) any representation or warranty of the Company in this
Agreement that is qualified as to materiality or Material Adverse
Effect shall not be true and correct as of the date of this Agreement
or as of such time or except to the extent such representation or
warranty expressly relates to an earlier date (in which case on and as
of such earlier date), which breach cannot be or has not been cured
within 20 business days after the giving of written notice to the
Company of such breach but in any event prior to the scheduled
expiration date of the Offer; or (ii) any representation or warranty of
the Company that is not so qualified as to materiality or Material
Adverse Effect shall not be true and correct in any material respect as
of the date of this Agreement or as of such time, except to the extent
such representation or warranty expressly relates to an earlier date
(in which case on and as of such earlier date), which breach cannot be
or has not been cured within 20 business days after the giving of
written notice to the Company or such breach but in any event prior to
the scheduled expiration date of the Offer;
(f) the Company shall have failed to perform, in any material
respect, any obligation or to comply, in any material respect, with any
agreement or covenant of the Company to be performed or complied with
by it under the Agreement or the Stockholders shall have failed to
perform in any material respect, any obligation or to comply, in any
material respect, with any agreement or covenant of the Stockholders to
be performed or complied with by them under the Stockholders Agreement,
in each case, which failure cannot be or has not been cured within 20
business days after the giving of written notice to the Company of such
failure but in any event prior to the scheduled expiration date of the
Offer;
(g) the Agreement shall have been terminated in accordance
with its terms; or
(h) Purchaser and the Company shall have agreed that
Purchaser shall terminate the Offer or postpone the acceptance for
payment of Securities thereunder;
A-2
which, in the sole judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or inaction by Parent or any of its
affiliates unless such action or inaction is in violation of this Agreement)
giving rise to any such condition, makes it inadvisable to proceed with such
acceptance for payment.
The foregoing conditions are for the sole benefit of Purchaser
and Parent and subject to Section 2.01(a) may be asserted by Purchaser or Parent
regardless of the circumstances giving rise to any such condition, except to the
extent that the failure of the condition to be satisfied has been caused by or
resulted from an act or omission by Parent or Purchaser in violation of this
Agreement or may be waived by Purchaser or Parent in whole or in part at any
time and from time to time in their sole discretion, subject to the terms of
this Agreement. The failure by Parent or Purchaser 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 so long as, with respect to the
representations and warranties of the Company set forth in Article IV or the
obligations of the Company under Section 6.01, the facts and circumstances
giving rise thereto are continuing (except with respect to breaches that are not
of a continuing nature and are not susceptible of cure).
A-3