Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
by and among
WESCO FINANCIAL CORPORATION
WESCO HOLDINGS MIDWEST, INC.
C ACQUISITION CORP.
and
CORT BUSINESS SERVICES CORPORATION
JANUARY 14, 2000
TABLE OF CONTENTS
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Page
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ARTICLE I
THE OFFER AND MERGER..................................................... 2
Section 1.1 The Offer............................................ 2
Section 1.2 Company Actions...................................... 4
Section 1.3 Directors............................................ 5
Section 1.4 The Merger........................................... 7
Section 1.5 Effective Time....................................... 7
Section 1.6 Closing.............................................. 7
Section 1.7 Directors and Officers of the Surviving Corporation.. 7
Section 1.8 Stockholders' Meeting................................ 8
Section 1.9 Merger Without Meeting of Stockholders............... 8
ARTICLE II
CONVERSION OF SECURITIES................................................. 9
Section 2.1 Conversion of Capital Stock.......................... 9
Section 2.2 Exchange of Certificates............................. 9
Section 2.3 Dissenting Shares.................................... 11
Section 2.4 Company Option Plans................................. 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................ 12
Section 3.1 Corporate Organization............................... 12
Section 3.2 Capitalization....................................... 13
Section 3.3 Authority............................................ 14
Section 3.4 Consents and Approvals; No Violations................ 14
Section 3.5 SEC Documents; Undisclosed Liabilities............... 15
Section 3.6 Broker's Fees........................................ 16
Section 3.7 Absence of Certain Changes or Events................. 16
Section 3.8 Legal Proceedings.................................... 16
Section 3.9 Compliance with Applicable Law....................... 17
Section 3.10 Company Information.................................. 17
Section 3.11 Opinion of Financial Advisor......................... 17
Section 3.12 Employee Matters..................................... 17
Section 3.13 Environmental Matters................................ 18
Section 3.14 Takeover Statutes.................................... 19
Section 3.15 Properties........................................... 19
Section 3.16 Tax Returns and Tax Payments......................... 19
Section 3.17 Intellectual Property................................ 20
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ULTIMATE PARENT, PARENT AND PURCHASER.. 21
Section 4.1 Corporate Organization............................... 21
Section 4.2 Authority............................................ 21
Section 4.3 Consents and Approvals: No Violation................. 21
Section 4.4 Broker's Fees........................................ 22
Section 4.5 Purchaser's Operation................................ 22
Section 4.6 Ultimate Parent, Parent or Purchaser Information..... 22
Section 4.7 Financing............................................ 23
Section 4.8 Stock Ownership...................................... 23
Section 4.9 Purchaser Capitalization............................. 23
ARTICLE V
COVENANTS................................................................ 23
Section 5.1 Conduct of Businesses Prior to the Effective Time.... 23
Section 5.2 No Solicitation...................................... 25
Section 5.3 Financing............................................ 27
Section 5.4 Publicity............................................ 27
Section 5.5 Notification of Certain Matters...................... 28
Section 5.6 Access to Information................................ 28
Section 5.7 Further Assurances................................... 29
Section 5.8 Employee Benefit Plans............................... 29
Section 5.9 Indemnification...................................... 29
Section 5.10 Additional Agreements................................ 31
Section 5.11 Acquisition of Shares................................ 31
Section 5.12 Obligations of Ultimate Parent....................... 31
Section 5.13 Notification......................................... 31
ARTICLE VI
CONDITIONS............................................................... 31
Section 6.1 Conditions to Each Party's Obligation To Effect
the Merger.......................................... 31
Section 6.2 Conditions of Obligations of Parent and Purchaser to
Effect the Merger................................... 32
ARTICLE VII
TERMINATION.............................................................. 32
Section 7.1 Termination.......................................... 32
Section 7.2 Effect of Termination................................ 35
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Section 7.3 Termination Fee; Expenses............................ 35
ARTICLE VIII
MISCELLANEOUS........................... ................................ 35
Section 8.1 Amendment and Modification.......................... 35
Section 8.2 Extension; Waiver.................................... 36
Section 8.3 Nonsurvival of Representations and Warranties........ 36
Section 8.4 Notices.............................................. 36
Section 8.5 Counterparts......................................... 37
Section 8.6 Entire Agreement; Third Party Beneficiaries.......... 37
Section 8.7 Severability......................................... 37
Section 8.8 Governing Law........................................ 37
Section 8.9 Assignment........................................... 37
Section 8.10 Headings............................................. 38
Section 8.11 Enforcement.......................................... 38
ANNEX A CONDITIONS TO THE OFFER ..................................... A1
EXHIBIT A Stockholder Agreement
EXHIBIT B Voting Agreement
EXHIBIT C Restated Charter
SCHEDULES
Section 3.2 Capitalization
Section 3.4 Consents and Approvals; No Violations
Section 3.6 Broker's Fees
SEction 3.7 Absence of Certain Changes or Events
Section 3.8 Legal Proceedings
Section 3.9 Compliance with Applicable Laws
Section 3.12 Employee Matters
Section 3.16 Tax Returns and Tax Payments
Section 5.1 Conduct of Businesses Prior to the Effective Time
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January
14, 2000, by and among Wesco Financial Corporation, a Delaware corporation
("Ultimate Parent"), Wesco Holdings Midwest, Inc., a Nebraska corporation and a
wholly owned subsidiary of Ultimate Parent ("Parent"), C Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent (the "Purchaser"),
and Cort Business Services Corporation, a Delaware corporation (the "Company").
WHEREAS, the Board of Directors of Parent, the Board of Directors and
sole stockholder of Purchaser, and the Board of Directors of the Company, have
approved, and determined that it is in the best interests of their respective
companies and stockholders to consummate, the transactions provided for herein;
and
WHEREAS, Parent and the Purchaser have proposed acquiring all of the
outstanding Common Stock, par value $.01 per share, of the Company and, if any,
all of the outstanding Class B Common Stock, par value $.01 per share, of the
Company (collectively, the "Shares" or "Company Common Stock") at a price of
$28.00 per Share in cash; and
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer (as defined herein) and the Merger (as defined herein); and
WHEREAS, Ultimate Parent desires to make certain agreements in
connection with the Offer; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition to Ultimate Parent's, Parent's and Purchaser's
willingness to enter into this Agreement, Parent and Purchaser have entered into
(i) a Stockholder Agreement, dated as of the date hereof, the form of which is
attached as Exhibit A hereto (the "Stockholder Agreement"), with the stockholder
named therein (the "Stockholder") pursuant to which the Stockholder has (x)
agreed, among other things, to tender all Shares (as defined herein) owned by
the Stockholder pursuant to the Offer (as defined herein) and (y) granted to
Parent an option to purchase all of the Shares owned by the Stockholder, in each
case subject to the terms and on the conditions set forth therein, and (ii) a
Voting Agreement, dated as of the date hereof and the form of which is attached
as Exhibit B hereto (the "Voting Agreement") with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (the
"Trustee") as trustee under that certain Amended and Restated Voting Trust
Agreement, dated as of November 15, 1999, by and between Stockholder and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
pursuant to which the Trustee has agreed, among other things, to vote all Shares
subject to such Amended and Restated Voting Trust Agreement in favor of the
Merger and this
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Agreement and against any Takeover Proposal (as defined herein), subject to and
on the conditions set forth therein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer. (a) Provided this Agreement shall not have
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been terminated in accordance with Section 7.1, as promptly as practicable (but
in no event later than five (5) business days after the public announcement of
the execution hereof), the Purchaser shall, and Parent shall cause Purchaser to,
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act") ) an offer (the "Offer") to purchase for
cash all shares of the issued and outstanding Company Common Stock at a price of
$28.00 per Share, net to the seller in cash (such price, or such higher price
per Share as may be paid in the Offer, being referred to herein as the "Offer
Price"), subject only to the conditions set forth in Annex A hereto; provided,
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however, that Parent may designate another wholly owned, direct or indirect
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subsidiary of Parent as the bidder (within the meaning of Rule 14d-1(c) under
the Exchange Act) in the Offer, in which case reference herein to Purchaser
shall be deemed to apply to such subsidiary, as appropriate. The Company shall
not tender Shares held by it or by any of its subsidiaries pursuant to the
Offer. The Purchaser shall, and Parent shall cause the Purchaser to, on the
terms and subject to the prior satisfaction or waiver of the conditions of the
Offer, accept for payment and pay for Shares tendered as soon as it is legally
permitted to do so under applicable law. The obligations of the Purchaser to
consummate the Offer and to accept for payment and to pay for any Shares validly
tendered on or prior to the expiration of the Offer and not withdrawn shall be
subject only to the conditions set forth in Annex A hereto.
(b) The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") containing the terms set forth in this Agreement and the
conditions set forth in Annex A hereto and providing for an initial expiration
date (the "Expiration Date") of twenty (20) business days (as defined in Rule
14D-1 under the Exchange Act) from the date of commencement. The Purchaser
shall not, and Parent shall cause the Purchaser not to, decrease the Offer Price
or decrease the number of Shares sought, amend the conditions to the Offer set
forth in Annex A or impose conditions to the Offer in addition to those set
forth in Annex A, without the prior written consent of the Company.
Notwithstanding the foregoing, the Purchaser shall be entitled to and shall, and
Parent shall cause the Purchaser to, extend the Offer at any time for the
shortest time periods which it reasonably believes are necessary, but in no
event more than forty (40) days in the aggregate, in one or more periods of not
more than ten (10) business days, if at the initial Expiration Date, or any
extension thereof, any condition to the Offer is not satisfied or waived;
provided however, that the Purchaser shall
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not be required to extend the Offer as provided in this sentence unless (i) each
such condition is reasonably capable of being satisfied and (ii) the Company is
in material compliance with all of its covenants under this Agreement after the
Purchaser shall have given the Company ten (10) business days prior written
notice of any non-compliance. In addition, without limiting the foregoing, the
Purchaser may, without the consent of the Company, (A) extend the Offer for the
shortest time periods which it reasonably believes are necessary, but in no
event more than an additional forty (40) days, in one or more periods of not
more than ten (10) business days, if Parent and the Purchaser are not in
material breach of this Agreement and if any condition to the Offer is not
satisfied or waived and such condition is reasonably capable of being satisfied
and (B) if, on the Expiration Date, the Shares validly tendered and not
withdrawn pursuant to the Offer equal at least seventy-five percent (75%) of the
outstanding Shares but less than ninety percent (90%) of the outstanding Shares
(on a fully-diluted basis, as such term is defined in Annex A), extend the Offer
on one occasion for up to ten (10) business days notwithstanding that all the
conditions to the Offer have been satisfied so long as (i) Purchaser irrevocably
waives the satisfaction of any of the conditions to the Offer (other than in the
case of paragraph (a) of Annex A hereto the occurrence of any statute, rule,
regulation, judgment, order or preliminary or permanent injunction making
illegal or prohibiting the consummation of the Offer) that subsequently may not
be satisfied during any such extension of the Offer. In addition, the Offer
Price may be increased and the Offer may be extended to the extent required by
law or the Commission in connection with such increase in each case without the
consent of the Company.
(c) On the date the Offer is commenced, Parent and the Purchaser shall
file with the United States Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer (together
with all amendments and supplements thereto and including the exhibits thereto,
the "Schedule 14D-1"). The Schedule 14D-1 shall contain or shall incorporate by
reference the Offer to Purchase and a form of letter of transmittal and summary
advertisement (the Schedule 14D-1, the Offer to Purchase and related letter of
transmittal and related summary advertisement, together with any amendments and
supplements thereto, collectively the "Offer Documents"). The Offer Documents
shall comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not 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 misleading, except
that no representation is made by Parent or the Purchaser with respect to
information supplied by the Company for inclusion in the Offer Documents. Each
of Parent and the Purchaser shall further take all steps necessary to cause the
Offer Documents to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. Each of Parent and the Purchaser, on the one hand, and the
Company, on the other hand, shall promptly correct any information provided by
it for use in the Offer Documents if and to the extent that it shall have become
false and misleading in any material respect and the Purchaser further shall
take all steps necessary to cause the Offer Documents as so corrected to be
filed with the SEC and to be
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disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
an opportunity to review and comment upon the Schedule 14D-1 (and shall provide
any comments thereon as soon as practicable) prior to the filing thereof with
the SEC. In addition, Parent shall, and shall cause the Purchaser to, provide
the Company and its counsel in writing with any comments that Parent, Purchaser
or their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after receipt of such comments and with copies of any written
responses and telephonic notification of any verbal responses by Parent,
Purchaser or their counsel.
(d) Parent shall provide or cause to be provided to Purchaser all of
the funds necessary to purchase any shares of Company Common Stock that
Purchaser becomes obligated to purchase pursuant to the Offer.
Section 1.2 Company Actions.
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(a) The Company hereby approves of and consents to the Offer and
represents that its Board of Directors, at a meeting duly called and held, has
(i) approved this Agreement (including all terms and conditions set forth
herein) and the transactions contemplated hereby, including the Offer and the
Merger (as defined in Section 1.4) (collectively, the "Transactions"),
determining that the Merger is advisable and that the terms of the Offer and the
Merger are fair to, and in the best interests of, the Company's stockholders and
recommending that the Company's stockholders accept the Offer and approve the
Merger and this Agreement and (ii) resolved to recommend that the stockholders
of the Company accept the Offer, tender their Shares thereunder to the Purchaser
and approve and adopt this Agreement and the Merger; provided, that such
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recommendation may be withdrawn, modified or amended if the Company's Board of
Directors determines in good faith, after considering applicable provisions of
state law and after consultation with outside counsel, that the failure to do so
could reasonably be expected to constitute a breach by the Board of Directors of
its fiduciary duties to its stockholders under applicable law. The Company
represents that Section 203 of the Delaware General Corporation Law (the "DGCL")
is inapplicable to the transactions contemplated by this Agreement. The Company
hereby consents to the inclusion in the Offer Documents of the recommendation of
its Board of Directors described in clause (ii) of the immediately preceding
sentence.
(b) Concurrently with the commencement of the Offer or as promptly
thereafter as practicable, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-9") which shall contain the recommendation referred to in clause
(ii) of Section 1.2 (a) hereof unless such recommendation has been withdrawn, or
as such recommendation has been modified or amended, in each case in accordance
with the provisions of this Agreement. The Schedule 14D-9 shall comply in all
material respects with the provisions of applicable federal securities laws and,
on the date filed with the SEC and on the date first published, sent or given to
the
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Company's stockholders, shall not 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 misleading, except that no representation is
made by the Company with respect to information supplied by Parent or the
Purchaser for inclusion in the Schedule 14D-9. The Company further shall take
all steps necessary to cause the Schedule 14D-9 to be filed with the SEC and to
be disseminated to holders of Shares, in each case as and to the extent required
by applicable federal securities laws, and shall mail such Schedule 14D-9 to the
stockholders of the Company promptly after commencement of the Offer, together
with the initial mailing of the Offer to Purchase. Each of the Company, on the
one hand, and Parent and the Purchaser, on the other hand, shall promptly
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false and misleading in any material
respect and the Company further shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of the Shares, in each case as and to the extent required by
applicable federal securities laws. Parent, the Purchaser and their counsel
shall be given an opportunity to review and comment upon the Schedule 14D-9 (and
shall provide any comments thereon as soon as practicable) prior to the filing
thereof with the SEC. In addition, the Company shall provide Parent, the
Purchaser and their counsel in writing with any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after receipt of such comments and with copies of any written responses
and telephonic notification of any verbal responses by the Company or its
counsel.
(c) In connection with the Offer, the Company shall promptly furnish
or cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
promptly furnish Parent with such additional information, including updated
lists of stockholders, mailing labels and security position listings, and such
other information and assistance as the Purchaser or its agents may reasonably
request in communicating the Offer to the stockholders of the Company. Except
for such steps as are necessary to disseminate the Offer Documents and subject
to the requirements of applicable law, Parent shall, and shall cause the
Purchaser and each of their affiliates, associates, employees, agents and
advisors to, hold in confidence the information contained in any of such labels
and lists and the additional information referred to in the preceding sentence,
shall use such information only in connection with the Offer and Merger, and, if
this Agreement is terminated, shall upon request of the Company deliver or cause
to be delivered to the Company all copies of such information then in its
possession or control or the possession or control of its agents or
representatives.
Section 1.3 Directors. Promptly upon the purchase by Purchaser of
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Shares pursuant to the Offer, and from time to time thereafter as Shares are
acquired by Purchaser, Parent or their affiliates, Purchaser shall be entitled
to designate such number of directors, rounded up to the next whole number, on
the Board of Directors of the Company as will give Purchaser, subject to
compliance with Section 14(f) of the Securities Exchange Act,
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representation on the Board of Directors of the Company equal to that number of
directors which equals the product of the total number of directors on the Board
of Directors of the Company (giving effect to the directors appointed or elected
pursuant to this sentence and including current directors serving as officers of
the Company) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Parent, Purchaser or any of their affiliates (including
for purposes of this Section 1.3 such Shares as are accepted for payment
pursuant to the Offer, but excluding Shares held by the Company or any of its
subsidiaries) bears to the total number of shares of Company Common Stock then
issued and outstanding. At such times, if requested by Purchaser, the Company
will use its best efforts to cause each committee of the Board of Directors of
the Company and the Board of Directors of each subsidiary of the Company to
include persons designated by Purchaser constituting the same percentage of each
such committee and the Board of Directors of each subsidiary of the Company as
Purchaser's designees are of the Board of Directors of the Company. The Company
shall, upon request by Purchaser, promptly increase the size of the Board of
Directors of the Company as is necessary to enable Purchaser's designees to be
elected to the Board of Directors of the Company in accordance with the terms of
this Section 1.3 and shall cause Purchaser's designees to be so elected;
provided, however, that, if Purchaser's designees are appointed or elected to
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the Board of Directors of the Company, until the Effective Time (as hereinafter
defined) the Board of Directors of the Company shall have at least two (2)
directors who are directors on the date hereof and who are neither officers of
the Company nor designees, stockholders, affiliates or associates (within the
meaning of the federal securities laws) of Parent (one or more of such
directors, the "Independent Directors"); provided further, that if less than two
(2) Independent Directors remain, the remaining Independent Directors (if any)
or if no Independent Directors remain, the other directors shall designate
persons to fill the vacancies who shall not be either officers of the Company or
designees, shareholders, affiliates or associates of Parent, and such persons
shall be deemed to be Independent Directors for purposes of this Agreement.
Subject to applicable Law, the Company shall promptly take all action necessary
pursuant to Section 14(f) of the Securities Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.3 and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if Purchaser has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.3. Parent and Purchaser will supply the
Company and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1. Notwithstanding anything in this Agreement to the contrary, during
the period after the election of directors designated by Purchaser pursuant to
this Section 1.3 but prior to the Effective Time, the Board of Directors of the
Company shall delegate to a committee of the Board of Directors of the Company
comprised solely of the Independent Directors (the "Committee"), the sole
responsibility for (i) the amendment or termination of this Agreement (in either
case in accordance with this Agreement) on behalf of the Company, but excluding
a termination pursuant to Section 7.1(c)(ii) hereof, which is not delegated,
(ii) the waiver of any of the Company's rights or remedies hereunder, (iii) the
extension of the time for performance
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of Parent's or Purchaser's obligations hereunder, or (iv) the assertion or
enforcement of the Company's rights under this Agreement to (a) object to a
failure to consummate the Merger for a failure of the condition set forth in
Section 6.2 to be satisfied or (b) a termination of this Agreement under Section
7.1(d)(iii).
Section 1.4 The Merger. Subject to the terms and conditions of
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this Agreement and the provisions of the DGCL, at the Effective Time, the
Company and the Purchaser shall consummate a merger (the "Merger") pursuant to
which (a) the Purchaser shall be merged with and into the Company and the
separate corporate existence of the Purchaser shall thereupon cease, (b) the
Company shall be the successor or surviving corporation in the Merger (the
"Surviving Corporation") under the name Cort Business Services Corporation and
shall continue to be governed by the laws of the State of Delaware, and (c) the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger. At
the Effective Time, (x) the Restated Charter shall be amended so as to read in
its entirety as set forth in Exhibit C to this Agreement and as so amended shall
become the certificate of incorporation of the Surviving Corporation, (y) the
By-laws of the Purchaser, as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, the Certificate of Incorporation and such By-laws. The Merger
shall have the effects set forth in the DGCL.
Section 1.5 Effective Time. Parent shall, and shall cause the
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Purchaser to, and the Company shall cause an appropriate Certificate of Merger
(the "Certificate of Merger") to be executed and filed on the date of the
Closing (as defined in Section 1.6) (or on such other date as Parent and the
Company may agree) with the Secretary of State of the State of Delaware (the
"Secretary of State") as provided in the DGCL. The Merger shall become effective
on the date on which the Certificate of Merger has been duly filed with the
Secretary of State or such later time as is agreed upon by the parties and
specified in the Certificate of Merger, and such time is hereinafter referred to
as the "Effective Time."
Section 1.6 Closing. The closing of the Merger (the "Closing")
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shall take place at 10:00 a.m., on a date to be specified by the parties, which
shall be as soon as practicable, but in no event later than the second business
day, after satisfaction or waiver of all of the conditions set forth in Article
VI hereof (the "Closing Date"), at the offices of Dechert, Price & ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, unless another date or place is
agreed to in writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving Corporation.
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The directors of the Purchaser and the officers of the Company immediately prior
to the Effective Time shall, from and after the Effective Time, be the directors
and officers, respectively, of the Surviving Corporation until their successors
shall have been duly elected or appointed or qualified or until their earlier
death, resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and By-laws.
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Section 1.8 Stockholders' Meeting.
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(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as soon as
practicable following the acceptance for payment and purchase of
Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and
use its reasonable efforts (x) to obtain and furnish the information
required to be included by the federal securities laws (and the rules
and regulations thereunder) in the Proxy Statement (as hereinafter
defined) and, after consultation with Parent, to respond promptly to
any comments made by the SEC with respect to the preliminary proxy or
information statement and cause a definitive proxy or information
statement (the "Proxy Statement") to be mailed to its stockholders and
(y) to obtain the necessary approvals of the Merger and this Agreement
by its stockholders; and
(iii) include in the Proxy Statement the recommendation of
the Board that stockholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement, unless such
recommendation has been withdrawn, or as such recommendation has been
modified or amended, in each case in accordance with the provisions of
this Agreement.
(b) Parent shall provide the Company with the information concerning
Parent and Purchaser required to be included in the Proxy Statement. Parent
shall vote, or cause to be voted, all of the Shares then owned by it, the
Purchaser or any of its other subsidiaries and affiliates in favor of the
approval of the Merger and the approval and adoption of this Agreement.
Section 1.9 Merger Without Meeting of Stockholders. In the event
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that Parent, the Purchaser or any other Subsidiary of Parent, shall acquire at
least ninety percent (90%) of the then-outstanding shares of Company Common
Stock pursuant to the Offer or otherwise, each of the parties hereto shall take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without a meeting of stockholders of
the Company, in accordance with Section 253 (in lieu of Section 251) of the
DGCL.
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ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
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Time, by virtue of the Merger and without any action on the part of the holders
of any shares of Company Common Stock or common stock, par value $.0l per share,
of the Purchaser (the "Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share of the
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Purchaser Common Stock shall be converted into and become one validly issued,
fully paid and nonassessable share of common stock, $.0l par value per share, of
the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares
-----------------------------------------------------
of Company Common Stock that are owned by the Company as treasury stock, all
shares of Company Common Stock owned by any subsidiary of the Company and any
shares of Company Common Stock owned by Parent, the Purchaser or any other
wholly owned subsidiary of Parent shall be canceled and retired and shall cease
to exist and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Each issued and outstanding share of
--------------------
Company Common Stock (other than Shares to be canceled in accordance with
Section 2.1(b) hereof and any Dissenting Shares (as defined in Section 2.3
hereof)), shall be converted into the right to receive the Offer Price payable
to the holder thereof, without interest (the "Merger Consideration"), upon
surrender of the certificate formerly representing such share of Company Common
Stock in the manner provided in Section 2.2 hereof. All such shares of Company
Common Stock, when so converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section 2.2
hereof, without interest.
Section 2.2 Exchange of Certificates.
------------------------
(a) Paying Agent. Parent shall designate a bank or trust company (the
------------
"Paying Agent") reasonably acceptable to the Company to make the payments of the
funds to which holders of shares of Company Common Stock shall become entitled
pursuant to Section 2.1(c) hereof. When and as needed, Parent shall make
available to the Paying Agent such funds for timely payment hereunder. Such
funds shall be invested by the Paying Agent as directed by Parent or the
Surviving Corporation. Any net profit resulting from, or interest or income
produced by, such investments will be payable to Purchaser or Parent, as Parent
directs.
9
(b) Exchange Procedures. Promptly after the Effective Time but in no
-------------------
event more than three (3) business days thereafter, Parent shall cause the
Paying Agent to mail to each holder of record of a certificate or certificates,
which immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates"), whose shares were converted pursuant
to Section 2.1 hereto into the right to receive the Merger Consideration, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent and the Surviving Corporation may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for payment of the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration (subject to subsection
(e), below) for each share of Company Common Stock formerly represented by such
Certificate and the Certificate so surrendered shall forthwith be canceled. If
payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable. Until surrendered as contemplated by this Section 2.2,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration in cash as
contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in Company Common
-------------------------------------------------------------
Stock. At the Effective Time, the stock transfer books of the Company shall be
-----
closed and thereafter there shall be no further registration of transfers of
shares of Company Common Stock on the records of the Company. From and after
the Effective Time, the holders of Certificates evidencing ownership of shares
of Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following 180
---------------------------------
calendar days after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look only to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) as
general creditors thereof with respect to the payment of any Merger
Consideration that may be payable upon surrender of any Certificates such
stockholder holds, as determined pursuant to
10
this Agreement, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e) Withholding Taxes. If so specified in the Offer Documents,
-----------------
Parent, the Purchaser, the Surviving Corporation and the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable to a
holder of Shares pursuant to the Offer or Merger such amounts as Parent, the
Purchaser, the Surviving Corporation or the Paying Agent is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code") or any provision of state, local
or foreign tax law. To the extent amounts are so withheld by Parent, the
Purchaser, the Surviving Corporation or the Paying Agent, the withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the deduction and withholding was made.
Section 2.3 Dissenting Shares. Notwithstanding any provision of
-----------------
this Agreement to the contrary, if and to the extent required by the DGCL,
shares of Company Common Stock which are issued and outstanding immediately
prior to the Effective Time and which are held by holders of such shares of
Company Common Stock who have properly exercised appraisal rights with respect
thereto (the "Dissenting Common Stock") in accordance with Section 262 of the
DGCL, shall not be exchangeable for the right to receive the Merger
Consideration, and holders of such shares of Dissenting Common Stock shall be
entitled to receive payment of the appraised value of such shares of Dissenting
Common Stock in accordance with the provisions of Section 262 of the DGCL unless
and until such holders fail to perfect or effectively withdraw or otherwise lose
their rights to appraisal and payment under the DGCL. If, after the Effective
Time, any such holder fails to perfect or effectively withdraws or loses such
right, such shares of Dissenting Common Stock shall thereupon be treated as if
they had been converted into and to have become exchangeable for, at the
Effective Time, the right to receive the Merger Consideration, without any
interest thereon. Notwithstanding anything to the contrary contained in this
Section 2.3, if (i) the Merger is rescinded or abandoned or (ii) the
stockholders of the Company revoke the authority to effect the Merger, then the
right of any stockholder to be paid the fair value of such stockholder's
Dissenting Common Stock pursuant to Section 262 of the DGCL shall cease. The
Company shall give Parent prompt notice of any demands received by the Company
for appraisals of shares of Dissenting Common Stock. The Company shall not,
except with the prior written consent of Parent, make any payment with respect
to any demands for appraisals or offer to settle or settle any such demands.
Section 2.4 Company Option Plans. Parent and the Company shall
--------------------
take all actions necessary to provide that no later than the Effective Time, (i)
each outstanding employee stock option to purchase Shares ("Option") granted
under the Company's New Cort Holdings Corporation and Subsidiaries Employee
Stock Option and Stock Purchase Plan, 1995 Stock-Based Incentive Compensation
Plan, Amended and Restated 1995 Directors Stock
11
Option Plan and 1997 Directors Stock Option Plan (the "Stock Plans"), whether
or not then exercisable or vested, shall be canceled and (ii) in consideration
of such cancellation, the Company (or, at Parent's option, so long as it does
not affect the treatment under Section 16 of the Exchange Act, the Purchaser)
shall pay to such holders of Options an amount in cash in respect thereof equal
to the product of (A) the excess, if any, of the Offer Price over the exercise
price of each such Option and (B) the number of Shares subject thereto (such
payment, if any, to be net of applicable withholding taxes). As of the Effective
Time, the Stock Plans shall terminate and all rights under any provision of any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of the Company or any Subsidiary
of the Company shall be canceled. The Company shall take all actions necessary
to ensure that, after the Effective Time, no person shall have any right under
the Stock Plans or any other plan, program or arrangement with respect to equity
securities of the Company, or any direct or indirect Subsidiary of the Company.
The Company shall take all such steps as may be required to cause the
transactions contemplated by this Section 2.4 and any other dispositions of
Company equity securities (including derivative securities) in connection with
this Agreement by each individual who is a director or officer of the Company,
to be exempt under Rule 16b-3 promulgated under the Exchange Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as follows:
Section 3.1 Corporate Organization. Each of the Company and its
----------------------
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has the
requisite corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted. Each of
the Company and its Significant Subsidiaries (as defined below) is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not reasonably be
expected to have, when aggregated with all other such failures, a Material
Adverse Effect (as defined below) on the Company ("Company Material Adverse
Effect"). As used in this Agreement, the term "Material Adverse Effect" means, a
material adverse effect on the business, operations or financial condition of
such party and its subsidiaries taken as a whole or a material adverse effect on
the party's ability to consummate the transactions contemplated hereby;
provided, however, that a "Material Adverse Effect" shall not include any of the
-------- -------
following or any combination of the following: any change or effect resulting
from or attributable to (A) general national, international or regional economic
or financial conditions, (B) other developments which are not unique to the
Company and its subsidiaries, but also affect other persons who engage in the
lines of business in which the Company or its subsidiaries are engaged, (C) the
announcement or pendency of this
12
Agreement or the transactions contemplated hereby (including, if resulting
therefrom, employee attrition and delay, reduction or cancellation or change in
the terms of orders or purchases from or other transactions with the Company or
its subsidiaries), and (D) any change in the market price of the Company Common
Stock. As used in this Agreement, (i) the word "subsidiary" when used with
respect to any party means any corporation, partnership or other organization,
whether incorporated or unincorporated, of which at least a majority of the
securities or other interests having by their terms voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
beneficially owned or controlled by such party or by any one or more of its
subsidiaries, or by such party and one or more of its subsidiaries, and (ii)
"Significant Subsidiary" has the meaning given such term in Rule 405 of the
Securities Act of 1933, as amended (the "Securities Act"). The copies of the
Certificate of Incorporation and Bylaws (or similar organizational documents) of
the Company, most recently filed with the Company's SEC Documents (as
hereinafter defined), are true, complete and correct copies of such documents as
in effect as of the date of this Agreement.
Section 3.2 Capitalization. (a) The authorized capital stock of the
--------------
Company consists of 20,000,000 shares of Common Stock, $.01 par value ("Voting
Stock") and 20,000,000 shares of Class B Common Stock, $.01 par value ("Class B
Common Stock"). At the close of business on January 13, 2000, there were
13,105,901 Shares issued and outstanding and no shares of Class B Common Stock
issued and outstanding. As of January 13, 2000, there were 1,327,223 Shares
issuable upon the exercise of outstanding Company Options pursuant to the Stock
Plans. Except as set forth in Section 3.2(a) of the disclosure schedule of the
Company delivered to Parent concurrently herewith (the "Company Disclosure
Schedule"), all of the issued and outstanding Shares have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights. Except as set forth in Section 3.2(a) of the Company Disclosure
Schedule, since September 30, 1999, the Company has not issued any shares of its
capital stock or any securities convertible into or exercisable for any shares
of its capital stock, other than pursuant to the exercise of stock options
referred to above, upon conversion from Voting Stock to Class B Common Stock,
upon conversion from Class B Common Stock to Voting Stock, and as disclosed in
Section 3.2(a) of the Company Disclosure Schedule. Except as set forth above or
in Section 3.2(a) of the Company Disclosure Schedule or as otherwise
contemplated or permitted by Section 5.1(a) hereof, as of the date of this
Agreement there are not and, as of the Effective Time there will not be, any
shares of capital stock issued and outstanding or any subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any securities of the Company, including any securities
representing the right to purchase or otherwise receive any Voting Stock or
Class B Common Stock (other than the conversion rights of the Voting Stock and
Class B Common Stock set forth in the Company's Certificate of Incorporation).
(b) Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, the Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of its Significant Subsidiaries,
free and clear of any liens, charges,
13
encumbrances, adverse rights or claims and security interests whatsoever
("Liens") which would reasonably be expected to have, in the aggregate, a
Company Material Adverse Effect, and all of such shares are duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights.
None of the Company's Significant Subsidiaries has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any security of such
Significant Subsidiary, including any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of such Significant Subsidiary.
Section 3.3 Authority. (a) The Company has all necessary
---------
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, subject to obtaining the
approval of holders of a majority of the Shares of Voting Stock prior to the
consummation of the Merger in accordance with Section 251 of the DGCL, if so
required. The execution, delivery and performance by the Company of this
Agreement, and the consummation by it of the transactions contemplated hereby,
have been duly authorized by its Board of Directors and, except for obtaining
the approval of its stockholders as contemplated by Section 1.8 hereof and as
required by the DGCL, no other corporate action on the part of the Company is
necessary to authorize the execution and delivery by the Company of this
Agreement and the consummation by it of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and, assuming
due and valid authorization, execution and delivery hereof by the other parties
thereto, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
(b) The Board of Directors of the Company has approved and taken all
corporate action required to be taken by the Board of Directors for the
consummation of the transactions contemplated by this Agreement by the Company.
Section 3.4 Consents and Approvals; No Violations. (a) Except
-------------------------------------
for (i) the consents and approvals set forth in Section 3.4(a) of the Company
Disclosure Schedule, (ii) the filing with the Securities and Exchange Commission
(the "SEC") of the Offer Documents and, if necessary, of a proxy statement in
definitive form relating to the meeting of the Company's stockholders to be held
in connection with this Agreement and the transactions contemplated hereby (the
"Proxy Statement"), (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware pursuant to the DGCL, (iv) if
necessary, the adoption of this Agreement by the requisite votes of the
stockholders of the Company and (v) filings, permits, authorizations, consents
and approvals as may be required under, and other applicable requirements of,
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), no consents or approvals of, or filings, declarations or registrations
with, any federal, state or local court, administrative or regulatory agency or
commission or other governmental authority or instrumentality, domestic or
foreign (each a "Governmental Entity"), are
14
necessary for the consummation by the Company of the transactions contemplated
hereby, other than such other consents, approvals, filings, declarations or
registrations that, if not obtained, made or given, would not reasonably be
expected to have, in the aggregate, a Company Material Adverse Effect.
(b) Except as set forth in Section 3.4(b) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated hereby, nor
compliance by the Company with any of the terms or provisions hereof, will (i)
conflict with or violate any provision of the Certificate of Incorporation or
Bylaws of the Company or any of the similar organizational documents of any of
its Significant Subsidiaries or (ii) assuming that the authorizations, consents
and approvals referred to in Section 3.4(a) and the authorization hereof by the
Company's stockholders are duly obtained in accordance with the DGCL, (x)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to the Company or any of its subsidiaries or any
of their respective properties or assets, or (y) violate, conflict with, result
in the loss of any material benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of the Company or any of its
subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company or any of its subsidiaries is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except, in the case of clause (ii) above, for such
violations, conflicts, breaches, defaults, losses, terminations of rights
thereof, accelerations or Lien creations which, in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
Section 3.5 SEC Documents; Undisclosed Liabilities. The Company has filed
--------------------------------------
all required reports, schedules, forms and registration statements with the SEC
since January 1, 1996 (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents
(including any and all financial statements included therein) as of such dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in the
SEC Documents (the "SEC Financial Statements") comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of the SEC) applied
on a
15
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments). Since December 31, 1998,
neither the Company nor any of its subsidiaries, has incurred any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required, if known, to be reflected or reserved against on a consolidated
balance sheet of the Company prepared in accordance with GAAP except (i) as and
to the extent set forth on the audited balance sheet of the Company and its
subsidiaries as of December 31, 1998 (including the notes thereto), (ii) as
incurred in connection with the transactions contemplated by this Agreement,
(iii) as incurred after December 31, 1998 in the ordinary course of business and
consistent with past practice, (iv) as described in the SEC Documents filed
since December 31, 1998 (the "Recent SEC Documents"), or (v) as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Section 3.6 Broker's Fees. Except as set forth in Section 3.6 of the
-------------
Company Disclosure Schedule, neither the Company nor any subsidiary of the
Company nor any of their respective officers or directors on behalf of the
Company or such subsidiaries has employed any financial advisor, broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with any of the transactions contemplated hereby.
Section 3.7 Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
the SEC Documents filed or press releases of the Company (the "Company
Releases") issued prior to the date hereof or as set forth in Section 3.7 of the
Company Disclosure Schedule, since September 30, 1999, (a) no events have
occurred which would reasonably be expected to have, in the aggregate, a Company
Material Adverse Effect and (b) the Company and its subsidiaries have carried on
and operated their respective businesses in all material respects in the
ordinary course of business consistent with past practice, except for such
deviations of the Company's business from the ordinary course of business which
would not reasonably be expected to have, in the aggregate, a Company Material
Adverse Effect.
Section 3.8 Legal Proceedings.
-----------------
(a) Except as disclosed in the SEC Documents, the Company Releases or
in Section 3.8 of the Company Disclosure Schedule, neither the Company nor any
of its subsidiaries is a party to any, and there are no pending legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against the Company or any of its
subsidiaries or challenging the validity or propriety of the transactions
contemplated hereby which proceedings, claims, actions, or investigations, in
the aggregate, would reasonably be expected to have a Company Material Adverse
Effect.
16
(b) Except as set forth in the SEC Documents, the Company Releases or
in Section 3.8 of the Company Disclosure Schedule, there is no injunction,
order, judgment, decree or regulatory restriction imposed upon the Company, any
of its subsidiaries or the assets of the Company or any of its subsidiaries
which, when aggregated with all other such injunctions, orders, judgments,
decrees and restrictions, would reasonably be expected to have a Company
Material Adverse Effect.
Section 3.9 Compliance with Applicable Law. Except as disclosed in
------------------------------
Section 3.9 of the Company Disclosure Schedule, the Company and each of its
subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses as presently
conducted except where the failure to hold such license, franchise, permit or
authorization or such noncompliance or default would not, when aggregated with
all other such failures, reasonably be expected to have a Company Material
Adverse Effect, and neither the Company nor any of its subsidiaries knows of, or
has received notice of, any material violations of any applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to the Company or any of its subsidiaries, which, in the aggregate,
would reasonably be expected to have a Company Material Adverse Effect.
Section 3.10 Company Information. The information relating to the Company
-------------------
and its subsidiaries to be provided by the Company to be contained in the Proxy
Statement, if any, or the Offer Documents, or in any other document filed with
any other Governmental Entity in connection herewith at the respective times
filed with the SEC or such other Governmental Entity and first published, sent
or given to stockholders of the Company and, in addition, in the case of the
Proxy Statement, at the date it or any amendment or supplement is mailed to
holders of the Shares, at the time of the Special Meeting and at the Effective
Time, will not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The Schedule 14D-9 (except
that no representation is made by the Company to such portions thereof that
relate only to Ultimate Parent, Parent or any of their subsidiaries or to
statements made therein based on information supplied by Ultimate Parent, Parent
or the Purchaser for inclusion therein) will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
Section 3.11 Opinion of Financial Advisor. The Company's Board of
----------------------------
Directors has received the opinion of SunTrust Equitable Securities Corporation,
financial advisor to the Company's Board of Directors, to the effect that, as of
the date of such opinion, the consideration to be received in the Offer and the
Merger by the holders of Shares is fair to the holders of Shares, other than
affiliates of Parent, from a financial point of view.
Section 3.12 Employee Matters. The Company has delivered or made
----------------
available to Parent full and complete copies or descriptions of each material
employment, severance, bonus, profit sharing, compensation, termination, stock
option, stock appreciation right, restricted stock, phantom stock, performance
unit, pension, retirement, deferred
17
compensation, welfare or other employee benefit agreement, trust fund or other
arrangement and any union, guild or collective bargaining agreement maintained
or contributed to or required to be contributed to by the Company or any of its
ERISA Affiliates, for the benefit or welfare of any director, officer, employee
or former employee of the Company or any of its ERISA Affiliates (such plans and
arrangements being collectively the "Company Benefit Plans"). Each of the
Company Benefit Plans is in material compliance with all applicable laws
including ERISA and the Code except where such noncompliance would not
reasonably be expected to have a Company Material Adverse Effect. The Internal
Revenue Service has determined that each Company Benefit Plan that is intended
to be a qualified plan under Section 401(a) of the Code is so qualified and the
Company is aware of no event occurring after the date of such determination that
would adversely affect such determination. The liabilities accrued under each
such plan are reflected on the latest balance sheet of the Company included in
the Recent SEC Reports in accordance with generally accepted accounting
principles applied on a consistent basis. No condition exists that is reasonably
likely to subject the Company or any of its subsidiaries to any direct or
indirect liability under Title IV of ERISA or to a civil penalty under Section
502(j) of ERISA or liability under Section 4069 of ERISA or 4975, 4976, or 4980B
of the Code or the loss of a federal tax deduction under Section 280G of the
Code or other liability with respect to the Company Benefit Plans that would
have a Company Material Adverse Effect and that is not reflected on such balance
sheet. There are no pending or to the Company's knowledge, threatened, claims
(other than routine claims for benefits or immaterial claims) by, on behalf of
or against any of the Company Benefit Plans or any trusts related thereto except
where such claims would not reasonably be expected to have a Company Material
Adverse Effect. "ERISA Affiliate" means, with respect to any person, any trade
or business, whether or not incorporated, that together with such person would
be deemed a "single employer" within the meaning of Section 4001(a)(15) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Section 3.13 Environmental Matters. There are no legal, administrative,
---------------------
arbitral or other proceedings, claims, actions, causes of action, required
environmental remediation activities or, to the knowledge of the Company,
governmental investigations of any nature seeking to impose, or that reasonably
could be expected to result in the imposition, on the Company or any of its
subsidiaries of any liability or obligations arising under common law standards
relating to environmental protection, human health or safety, or under any
local, state, federal, national or supernational environmental statute,
regulation or ordinance, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (collectively, "Environmental
Laws"), pending or, to the knowledge of the Company, threatened, against the
Company or any of its subsidiaries, which liability or obligation would have or
would reasonably be expected to have a Company Material Adverse Effect. To the
knowledge of the Company, during or prior to the period of (i) its or any of its
subsidiaries' ownership or operation of any of their respective current
properties, (ii) its or any of its subsidiaries' participation in the management
of any property, or (iii) its or any of its subsidiaries' holding of a security
interest or other interest in any property, there was no release or threatened
release of hazardous, toxic, radioactive or dangerous materials or other
18
materials regulated under Environmental Laws in, on, under or affecting any such
property which would reasonably be expected to have a Company Material Adverse
Effect. Neither the Company nor any of its subsidiaries is subject to any
agreement, order, judgment, decree, letter or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any material
liability or obligations pursuant to or under any Environmental Law that would
have or would reasonably be expected to have a Company Material Adverse Effect.
Section 3.14 Takeover Statutes. The Company has taken all actions
-----------------
necessary such that no restrictive provision of any "fair price," "moratorium,"
"control share acquisition," "interested shareholder" or other similar anti-
takeover statute or regulation (including, without limitation, Section 203 of
the DGCL) (each a "Takeover Statute") or restrictive provision of any applicable
anti-takeover provision in the governing documents of the Company is, or at the
Effective Time will be, applicable to the Company, Parent, the Purchaser, the
Shares, the Tender Offer, the Merger or any other transaction contemplated by
this Agreement.
Section 3.15 Properties. Except as disclosed in the Recent SEC Documents
----------
and for any of the following which would not have a Company Material Adverse
Effect, each of the Company and its subsidiaries (i) has good and marketable
title to all the properties and assets reflected on the latest audited balance
sheet included in such Recent SEC Documents as being owned by the Company or one
of its subsidiaries or acquired after the date thereof which are, individually
or in the aggregate, material to the Company's business on a consolidated basis
(except properties sold or otherwise disposed of since the date thereof in the
ordinary course of business), free and clear of (A) all Liens except (1)
statutory liens securing payments not yet due and (2) such imperfections or
irregularities of title or other Liens (other than real property mortgages or
deeds of trust) as do not materially affect the use of the properties or assets
subject thereto or affected thereby or otherwise materially impair business
operations at such properties, and (B) all real property mortgages and deeds of
trust except that secured indebtedness that is properly reflected in the latest
audited balance sheet included in such Recent SEC Documents, and (ii) is the
lessee of all leasehold estates reflected in the latest audited financial
statements included in such Recent SEC Documents or acquired after the date
thereof which are material to its business on a consolidated basis and is in
possession of the properties purported to be leased thereunder, and each such
lease is valid without material default thereunder by the lessee or, to the
Company's knowledge, the lessor.
Section 3.16 Tax Returns and Tax Payments. The Company and its
----------------------------
subsidiaries have timely filed (or, as to subsidiaries, the Company has filed on
behalf of such subsidiaries) all material Tax Returns (as defined below)
required to be filed by it, except for such failure that would not result in a
Company Material Adverse Effect. The Company and its subsidiaries have paid (or,
as to subsidiaries, the Company has paid on behalf of such subsidiaries) all
Taxes (as defined below) shown to be due on such Tax Returns or has provided
(or, as to Subsidiaries, the Company has made provision on behalf of such
Subsidiaries) reserves in its financial statements for any Taxes that have not
been paid, whether or not shown as being due on any Tax Returns, except for such
Taxes which, if
19
unpaid or unreserved, would not result in a Company Material Adverse Effect.
Neither the Company nor any of its subsidiaries has made any request for waivers
of the time to assess any Taxes that are pending or outstanding. No claim for
unpaid Taxes has been asserted against the Company or any of its Subsidiaries in
writing by a Tax authority which, if resolved in a manner unfavorable to the
Company or any of its Subsidiaries, as the case may be, would result,
individually or in the aggregate in a Company Material Adverse Effect. There are
no Liens for Taxes upon the assets of the Company or any Subsidiary except for
Liens for Taxes not yet due and payable or for Taxes that are being disputed in
good faith by appropriate proceedings and with respect to which adequate
reserves have been taken that could result in a Company Material Adverse Effect.
Except as discussed in Section 3.16 of the Company Disclosure Schedule, no audit
of any Material Tax Return of the Company or any of its Subsidiaries is being
conducted by a Tax authority. None of the Company or any of its subsidiaries has
made an election under Section 341(f) of the Code. Except as disclosed in
Section 3.16 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries has any liability for Taxes of any person (other than the
Company and its subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
comparable provision of state, local or foreign law that could result in a
Company Material Adverse Effect). As used herein, "Taxes" shall mean all taxes
of any kind, including, without limitation, those on or measured by or referred
to as income, gross receipts, sales, use, ad valorem, franchise, profits,
license, value added, property or windfall profits taxes, customs, duties or
similar fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any governmental authority, domestic or foreign. As used herein, "Tax Return"
shall mean any return, report or statement required to be filed with any
governmental authority with respect to Taxes. As used herein, "Code" shall mean
the Internal Revenue Code of 1986, as amended and the Treasury Regulations
promulgated thereunder.
Section 3.17 Intellectual Property. The Company or its subsidiaries own,
---------------------
or are licensed or otherwise possess legally enforceable rights to use all
patents, trademarks, trade names, service marks, copyrights and any applications
therefor, technology, know-how, trade secrets, computer software programs or
applications, domain names and tangible or intangible proprietary information or
materials that are used in the respective businesses of the Company and its
subsidiaries as currently conducted, except for any such failures to own, be
licensed or possess that, individually or in the aggregate, has not had and is
not reasonably likely in the future to have a Company Material Adverse Effect.
All patents, registered trademarks and service marks and registered copyrights
held by the Company or its subsidiaries are subsisting and in force except where
failure to be subsisting and in force would not likely cause a Company Material
Adverse Effect.
20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ULTIMATE PARENT,
PARENT AND PURCHASER
Ultimate Parent, Parent and the Purchaser jointly and severally represent
and warrant to the Company as follows:
Section 4.1 Corporate Organization. Each of Ultimate Parent, Parent,
----------------------
Purchaser and their subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has the requisite corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted. Each of Ultimate Parent, Parent and its Significant Subsidiaries is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not reasonably be expected to have, when aggregated with all other such
failures, a Material Adverse Effect on the Parent (a "Parent Material Adverse
Effect). The copies of the Restated Certificate of Incorporation and Bylaws (or
similar organizational documents) of Parent and Purchaser, which have previously
been made available to the Company, are true, complete and correct copies of
such documents as in effect as of the date of this Agreement.
Section 4.2 Authority. Each of Ultimate Parent, Parent and the
---------
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance by Ultimate Parent, Parent and the Purchaser
of this Agreement, and the consummation of the transactions contemplated hereby,
have been duly authorized and approved by their Boards of Directors and by
Parent as the sole stockholder of Purchaser and no other corporate action on the
part of Ultimate Parent, Parent and the Purchaser is necessary to authorize the
execution and delivery by Ultimate Parent, Parent and the Purchaser of this
Agreement and the consummation by them of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Ultimate Parent, Parent
and the Purchaser, and, assuming due and valid authorization, execution and
delivery hereof by the Company, is a valid and binding obligation of each of
Ultimate Parent, Parent and the Purchaser, enforceable against each of them in
accordance with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
Section 4.3 Consents and Approvals: No Violation. (1) Except for (i)
------------------------------------
the filing with the SEC of the Offer Documents, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
pursuant to the DGCL, and (iii) filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of, the
Exchange Act, the HSR Act and the Securities Act, no consents or
21
approvals of, or filings, declarations or registrations with, any Governmental
Entity are necessary for the consummation by Parent and the Purchaser of the
transactions contemplated hereby, other than such other consents, approvals,
filings, declarations or registrations that, if not obtained, made or given,
would not reasonably be expected to have, in the aggregate, a Parent Material
Adverse Effect.
(b) Neither the execution and delivery of this Agreement by Ultimate
Parent, Parent or the Purchaser, nor the consummation by Parent or the Purchaser
of the transactions contemplated hereby, nor compliance by Ultimate Parent,
Parent or the Purchaser with any of the terms or provisions hereof, will (i)
conflict with or violate any provision of the Restated Certificate of
Incorporation or Bylaws of Ultimate Parent, Parent or any of the similar
organizational documents of Purchaser of any of Ultimate Parent's, Parent's or
Purchaser's Significant Subsidiaries or (ii) assuming that the authorizations,
consents and approvals referred to in Section 4.3(a) are obtained, (x) violate
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Ultimate Parent, Parent or any of its subsidiaries or
any of their respective properties or assets, or (y) violate, conflict with,
result in the loss of any material benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination or cancellation
under, accelerate the performance required by, or result in the creation of any
Lien upon any of the respective properties or assets of Ultimate Parent, Parent
or Purchaser or any of its subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Ultimate Parent,
Parent, Purchaser or any of their subsidiaries is a party, or by which they or
any of their respective properties or assets may be bound or affected, except,
in the case of clause (ii) above, for such violations, conflicts, breaches,
defaults, losses, terminations of rights thereof, accelerations or Lien
creations which, in the aggregate, would not reasonably be expected to have a
Parent Material Adverse Effect.
Section 4.4 Broker's Fees. Neither Ultimate Parent, Parent nor any
-------------
subsidiary of Parent nor any of their respective officers or directors on behalf
of Ultimate Parent, Parent or such subsidiaries has employed any financial
advisor, broker or finder in a manner that would result in any liability of the
Company for any broker's fees, commissions or finder's fees in connection with
any of the transactions contemplated hereby.
Section 4.5 Purchaser's Operation. The Purchaser was formed solely for
---------------------
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
Section 4.6 Ultimate Parent, Parent or Purchaser Information. The
------------------------------------------------
information relating to Ultimate Parent, Parent and its subsidiaries to be
provided by Parent to be contained in the Offer Documents and the Proxy
Statement, if any, or in any other document filed with any other Governmental
Entity in connection herewith, at the respective
22
time filed with the SEC or such other Governmental Entity and, in addition, in
the case of the Proxy Statement, at the date it or any amendment or supplement
is mailed to holders of the Shares, at the time of the Special Meeting and at
the Effective Time, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The Offer Documents
and the Proxy Statement, if any (except that no representation is made as to
such portions thereof that relate only to the Company or any of its subsidiaries
or to statements made therein based on information supplied by the Company for
inclusion therein) will comply in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder and the Securities Act
and the rules and regulations thereunder, respectively.
Section 4.7 Financing. Parent and the Purchaser collectively have
---------
and will have at the Expiration Date of the Offer and at the Effective Time, and
Parent will make available to the Purchaser, sufficient funds to enable the
Purchaser to pay for all outstanding Shares purchased pursuant to the Offer or
converted into cash pursuant to the Merger, to perform Parent's and the
Purchaser's obligations under this Agreement and to pay all fees and expenses
related to the transactions contemplated by this Agreement payable by them.
Section 4.8 Stock Ownership. As of the date hereof, neither
---------------
Ultimate Parent, Parent nor the Purchaser beneficially owns any Shares.
Section 4.9 Purchaser Capitalization. The authorized capital
------------------------
stock of the Purchaser consists of 100 shares of common stock, par value $.01
per share, all of which shares have been validly issued, are fully paid and
nonassessable and are owned by Parent free and clear of any liens.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Businesses Prior to the Effective Time.
-------------------------------------------------
Except as set forth in Section 5.1 of the Company Disclosure Schedule, as
expressly contemplated or permitted by this Agreement, or as required by
applicable law, rule or regulation, during the period from the date of this
Agreement to the Effective Time, unless Parent otherwise agrees in writing, the
Company shall, and shall cause its subsidiaries to, in all material respects,
(i) conduct its business in the usual, regular and ordinary course consistent
with past practice and (ii) use all reasonable efforts to maintain and preserve
intact its business organization and the good will of those having business
relationships with it and retain the services of its present officers and key
employees. Without limiting the generality of the foregoing, and except as set
forth in Section 5.1 of the Company Disclosure Schedule, as expressly
contemplated or permitted by this Agreement, or as required by applicable law,
rule or regulation, during the period from the date of this Agreement to the
Effective Time, the Company shall not, and shall not permit any of its
subsidiaries to, without the prior written consent of Parent:
23
(a) (i) issue, sell, grant, dispose of, pledge or otherwise
encumber, or authorize or propose the issuance, sale, disposition or pledge or
other encumbrance of (A) any additional shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the right
to subscribe for any shares of its capital stock, or any rights, warrants,
option, calls, commitments or any other agreements of any character to purchase
or acquire any shares of its capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for,
any shares of its capital stock or (B) any other securities in respect of, in
lieu of, or in substitution for, any shares of its capital stock outstanding on
the date hereof other than pursuant to (x) the exercise of stock options or
warrants or conversion rights outstanding as of the date hereof and (y)
acquisitions and investments permitted by paragraph (d) hereof; (ii) redeem,
purchase or otherwise acquire, or propose to redeem, purchase or otherwise
acquire, any of its outstanding shares of capital stock; or (iii) split,
combine, subdivide or reclassify any shares of its capital stock or declare, set
aside for payment or pay any dividend, or make any other actual, constructive or
deemed distribution in respect of any shares of its capital stock or otherwise
make any payments to its stockholders in their capacity as such;
(b) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
investments in, any other person other than the Company or its subsidiaries;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of
its properties or assets with a minimum value in excess of $10 million to any
individual, corporation or other entity other than a direct or indirect wholly
owned subsidiary, or cancel, release or assign any indebtedness in excess of $1
million to any such person or any claims held by any such person, in each case
that is material to the Company and its subsidiaries, taken as a whole, except
(i) in the ordinary course of business consistent with past practice, (ii)
pursuant to contracts or agreements in force at the date of this Agreement or
(iii) pursuant to plans disclosed in writing prior to the execution of this
Agreement to the other party;
(d) except for transactions in the ordinary course of business
consistent with past practice, make any material acquisition or investment
either by purchase of stock or securities, merger or consolidation,
contributions to capital, property transfers, or purchases of any property or
assets of any other individual, corporation or other entity other than a wholly
owned subsidiary thereof;
(e) increase in any manner the compensation of any of its directors,
officers or employees or enter into, establish, amend or terminate any
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other welfare,
stock option or other equity, pension, retirement, vacation, severance, deferred
compensation or other compensation or benefit plan, policy, agreement, trust,
fund or arrangement with, for or in respect of, any stockholder, officer,
director, other employee, agent, consultant or affiliate other than (i) as
required pursuant to the
24
terms of agreements in effect on the date of this Agreement, and (ii) increases
in salaries, wages and benefits of employees who are not directors or officers
of the Company made in the ordinary course of business and in a manner
consistent with past practice;
(f) amend its certificate of incorporation, bylaws or similar
governing documents; or
(g) make any commitment to take any of the actions prohibited by
this Section 5.1.
Section 5.2 No Solicitation.
---------------
(a) The Company shall immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to a Takeover
Proposal (as hereinafter defined). Without limiting the foregoing, it is agreed
that any violation of the restrictions set forth in the preceding sentence by
any executive officer of the Company or any of its subsidiaries or any
affiliate, director or investment banker, attorney or other advisor or
representative of the Company or any of its subsidiaries, shall be deemed to be
a breach of this Section 5.2(a) by the Company. From the date hereof until the
Expiration Date, the Company shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its officers, directors
or employees or any affiliate, investment banker, financial advisor, attorney,
accountant or other representative retained by it or any of its subsidiaries to,
directly or indirectly, (i) solicit, initiate or knowingly encourage (including
by way of furnishing information which has not been previously publicly
disseminated), or take any other action designed to facilitate any inquiries or
the making of any proposal which constitutes, or may reasonably be expected to
lead to, any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal; provided, however, that if, prior
-------- -------
to the Expiration Date and following the receipt of a Superior Proposal (as
hereinafter defined) or a proposal which is reasonably expected to lead to a
Superior Proposal that was unsolicited and made in circumstances not otherwise
involving a breach of this Agreement, the Board of Directors of the Company
determines in good faith, after considering applicable provisions of state law
and after consultation with outside counsel, that a failure to do so could
reasonably be expected to constitute a breach by it of its fiduciary duties to
its shareholders under applicable law, the Company may, in response to such
Takeover Proposal and subject to compliance with Section 5.2(c), (x) furnish
information with respect to the Company to the party making such Takeover
Proposal pursuant to a customary confidentiality agreement, provided that (i)
such confidentiality agreement must include a provision prohibiting solicitation
of key employees of the Company or its subsidiaries, such provision lasting at
least one year, and may not include any provision calling for an exclusive right
to negotiate with the Company and (ii) the Company advises Parent of all such
nonpublic information delivered to such person concurrently with its delivery to
the requesting party, and (y) participate in negotiations with such party
regarding such Takeover Proposal.
25
(b) Except as expressly permitted in this Section 5.2, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval, determination of advisability, or recommendation by such
Board of Directors or such committee of the Transactions, (ii) approve,
determine to be advisable, or recommend, or propose publicly to approve,
determine to be advisable, or recommend, any Takeover Proposal or (iii) cause
the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal. Notwithstanding the foregoing, in
the event that prior to the Expiration Date the Board of Directors of the
Company determines in good faith, in response to a Superior Proposal that was
unsolicited and made in circumstances not otherwise involving a breach of this
Agreement, and after consideration of applicable provisions of state law and
after consultation with outside counsel, that the failure to do so could
reasonably be expected to constitute a breach of its fiduciary duties to the
Company's stockholders under applicable law, the Board of Directors of the
Company may (subject to this and the following sentences and to compliance with
Section 5.2(a)) (x) withdraw or modify its approval, determination, or
recommendation of the Transactions or (y) approve, determine to be advisable, or
recommend a Superior Proposal, provided, however, that any actions described in
-------- -------
clause (y) may be taken only at a time that is after the second business day
following Parent's receipt of written notice from the Company advising Parent
that the Board of Directors of the Company has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal,
identifying the person making such Superior Proposal and providing notice of the
determination of the Board of Directors of the Company of what action referred
to in clause (y) the Board of Directors of the Company has determined to take.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.2, the Company shall promptly advise
Parent orally and in writing of any request for information or of any Takeover
Proposal, the material terms and conditions of such request or the Takeover
Proposal and the identity of the person making such request or Takeover Proposal
and shall keep Parent reasonably informed of the status and details of any such
request or Takeover Proposal.
(d) Nothing contained in this Section 5.2 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Securities Exchange Act or from making any
disclosure to the Company's stockholders; provided, however, neither the Company
--------- -------
nor its Board of Directors nor any committee thereof shall, except as in
accordance with Section 5.2(b), withdraw or modify, or propose publicly to
withdraw or modify, its approval, determination or recommendation with respect
to the Transactions or approve, determine to be advisable, or recommend, or
propose publicly to approve, determine to be advisable, or recommend, a Takeover
Proposal.
26
(e) For purposes of this Agreement:
(i) "Takeover Proposal" means any inquiry, proposal or offer from
any person (other than Parent and its subsidiaries, affiliates, and
representatives) relating to any direct or indirect acquisition or purchase of
15% or more of the assets of the Company and its subsidiaries or 15% or more of
any class of equity securities of the Company or any of its Significant
Subsidiaries, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 15% or more of any class of equity
securities of the Company or any of its Significant Subsidiaries, or any merger,
consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its Significant Subsidiaries, other than the transactions contemplated by this
Agreement.
(ii) For purposes of this Agreement, a "Superior Proposal" means
a bona fide written offer from any person (other than Parent and its
subsidiaries, affiliates and representatives) for a direct or indirect
acquisition or purchase of 50% or more of the assets of the Company or any of
its Significant Subsidiaries or 50% or more of any class of equity securities of
the Company or any of its Significant Subsidiaries, any tender offer or exchange
offer that if consummated would result in any person beneficially owning 50% or
more of any class of equity securities of the Company or any of its Significant
Subsidiaries, or any merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Significant Subsidiaries, other than the
transactions contemplated by this Agreement, (A) which provides for
consideration on a per share basis to the stockholders of the Company with a
value exceeding the Offer and, considering all relevant factors, is more
favorable to the Company and its stockholders than the Offer and the Merger, and
(B) for which the third party has demonstrated that financing is reasonably
likely to be obtained, in each case as determined by the Board of Directors in
its good faith judgment (based on the advice of independent financial advisors).
Any Superior Proposal is a Takeover Proposal.
Section 5.3 Financing. At the consummation of the Offer, Parent
---------
and the Purchaser shall have sufficient funds available (through cash on hand
and existing credit arrangements or otherwise) to purchase all of the Shares
outstanding on a fully diluted basis and to pay all fees and expenses related to
the transactions contemplated by this Agreement.
Section 5.4 Publicity. The initial press release with respect to
---------
the execution of this Agreement shall be a joint press release reasonably
acceptable to Parent and the Company. Thereafter, so long as this Agreement is
in effect, neither the Company, Parent nor any of their respective affiliates
shall issue or cause the publication of any press release or other announcement
with respect to the Merger, this Agreement or the other transactions
contemplated hereby without the prior consultation of the other party, except as
may be required by law or by any listing agreement with a national securities
exchange as determined in the good faith judgment of the party wanting to make
such release.
27
Section 5.5 Notification of Certain Matters. The Company shall
-------------------------------
give prompt notice to Parent and Parent shall give prompt notice to the Company,
of (i) the occurrence, or non-occurrence of any event the occurrence, or non-
occurrence of which would cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to the
Effective Time and (ii) any material failure of the Company or Parent, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
-------- -------
delivery of any notice pursuant to this Section 5.5 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
Section 5.6 Access to Information. (a) Upon reasonable notice and
---------------------
subject to applicable laws relating to the exchange of information, the Company
shall, and shall cause each of its subsidiaries to, afford to the officers,
employees, accountants, counsel and other representatives of the Parent, during
normal business hours during the period prior to the Effective Time, reasonable
access to all its properties, books, contracts, commitments and records, and to
its officers, employees, accountants, counsel and other representatives and,
during such period, the Company shall, and shall cause its subsidiaries to, make
available to the Parent (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of Federal securities laws (other than reports or documents
which Parent or the Company, as the case may be, is not permitted to disclose
under applicable law) and (ii) all other information concerning its business,
properties and personnel as such other party may reasonably request. Neither
the Company nor any of its subsidiaries shall be required to provide access to
or to disclose information where such access or disclosure would violate or
prejudice the rights of its customers, jeopardize the work product privilege of
the institution in possession or control of such information or contravene any
law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(b) No investigation by any of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
(c) The information provided pursuant to Section 5.6(a) will be
used solely for the purpose of the transactions contemplated hereby, and unless
and until the Merger is consummated, such information will be kept secret and
confidential by Parent and the Purchaser, except that the information provided
pursuant to Section 5.6(a) or portions thereof may be disclosed to those of
Parent and the Purchaser's or their affiliates' directors, officers, employees,
agents and advisors (collectively, the "Representatives") who (a) need to know
such information for the purpose of the transactions contemplated hereby, (b)
shall be advised by Parent or the Purchaser, as the case may be, of this
provision, (c) agree to hold the information provided pursuant to Section 5.6(a)
as secret and confidential and (d) agree with
28
Parent and the Purchaser to be bound by the provisions hereof. Parent and the
Purchaser jointly agree to be responsible for any breach of this section by any
of their Representatives.
Section 5.7 Further Assurances. (a) Subject to the terms and
------------------
conditions of this Agreement, each of Parent and the Company shall, and shall
cause its subsidiaries to, use all reasonable efforts (i) to take, or cause to
be taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its subsidiaries with
respect to the Merger and, subject to the conditions set forth in Article VI
hereof, to consummate the transactions contemplated by this Agreement as
promptly as practicable and (ii) to obtain (and to cooperate with the other
party to obtain) any consent, authorization, order or approval of, or any
exemption by, any Governmental Entity and any other third party which is
required to be obtained by the Company or Parent or any of their respective
subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement, and to comply with the terms and conditions of
any such consent, authorization, order or approval.
(b) Subject to the terms and conditions of this Agreement, each
of Parent and the Company shall use all reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective, as soon as practicable
after the date of this Agreement, the transactions contemplated hereby,
including, without limitation, using all reasonable efforts to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby and
using all reasonable efforts to defend any litigation seeking to enjoin, prevent
or delay the consummation of the transactions contemplated hereby or seeking
material damages.
Section 5.8 Employee Benefit Plans. For purposes of all employee
----------------------
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and other employment agreements,
arrangements and policies of Parent under which an employee's benefit depends,
in whole or in part, on length of service, credit will be given to current
employees of the Company for service with the Company prior to the Effective
Time, provided that such crediting of service does not result in duplication of
benefits. Parent shall, and shall cause the Company to, honor in accordance
with their terms all employee benefit plans (as defined in Section 3(3) of
ERISA) and other employment, consulting, benefit, compensation or severance
agreements, arrangements and policies of the Company (collectively, the "Company
Plans"); provided, however, that Parent or the Company may amend, modify or
-------- -------
terminate any individual Company Plans in accordance with the terms of such
Plans and applicable law (including obtaining the consent of the other parties
to and beneficiaries of such Company Plans to the extent required thereunder).
Section 5.9 Indemnification. From and after the Effective Time,
---------------
Parent and Purchaser shall, and shall cause the Surviving Corporation to,
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date of this Agreement or who becomes such prior to the
Effective Time, an officer, director, agent, fiduciary or
29
employee of the Company or any of its subsidiaries (the "Indemnified Parties")
against (i) any and all losses, claims, damages, costs, expenses, fines,
liabilities or judgments or amounts that are paid in settlement with the
approval of the indemnifying party (which approval shall not be unreasonably
withheld) of or in connection with any claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director, officer, agent, fiduciary or
employee of the Company or any of its subsidiaries whether pertaining to any
action or omission existing or occurring at or prior to the Effective Time and
whether asserted or claimed prior to, or at or after, the Effective Time
("Indemnified Liabilities"), and (ii) all Indemnified Liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining to this
Agreement or the transactions contemplated hereby; provided, however, that, in
-------- -------
the case of the Purchaser and the Surviving Corporation such indemnification
shall only be to the fullest extent a corporation is permitted under the DGCL to
indemnify its own directors, officers, agents, fiduciaries and employees, and in
the case of Parent, such indemnification shall not be limited by the DGCL but
such indemnification shall not be applicable to any claims made against the
Indemnified Parties if a judgment or other final adjudication established that
(A) their acts or omissions were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause of action so
deliberated or (B) arising out of, based upon or attributable to the gaining in
fact of any financial profit or other advantage to which they were not legally
entitled. Parent, Purchaser, and the Surviving Corporation, as the case may be,
will pay all expenses of each Indemnified Party in advance of the final
disposition of any such action or proceeding, in the case of the Purchaser and
the Surviving Corporation only to the fullest extent permitted by law upon
receipt of any undertaking contemplated by Section 145(e) of the DGCL. Without
limiting the foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising before
or after the Effective Time), (i) the Indemnified Parties may retain counsel
satisfactory to them and Parent and the Purchaser, (ii) Parent shall, and shall
cause the Surviving Corporation to, pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received, and (iii) Parent shall, and shall cause the Surviving Corporation to,
use all reasonable efforts to assist in the vigorous defense of any such matter,
provided that none of Parent, Purchaser or the Surviving Corporation shall be
liable for any settlement of any claim effected without its written consent,
which consent, however, shall not be unreasonably withheld. Any Indemnified
Party wishing to claim indemnification under this Section 5.9, upon learning of
any such claim, action, suit, proceeding or investigation, shall notify Parent,
Purchaser or the Surviving Corporation (but the failure so to notify an
indemnifying party shall not relieve it from any liability which it may have
under this Section 5.9 except to the extent such failure materially prejudices
such party), and shall deliver to the Purchaser and the Surviving Corporation
the undertaking contemplated by Section 145(e) of the DGCL. The Indemnified
Parties as a group may retain only one law firm to represent them with respect
to each such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two or
more Indemnified Parties.
30
Section 5.10 Additional Agreements. In case at any time after the
---------------------
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of any
of the parties to the merger, the proper officers and directors of each party to
this Agreement and their respective subsidiaries shall take all such necessary
action as may be reasonably requested by, and at the sole expense of, Parent.
Section 5.11 Acquisition of Shares. Neither Parent nor any of its
---------------------
affiliates, for a period of two years from the date hereof, will acquire,
directly or indirectly, any Shares held by Stockholder or any of its affiliates
except in connection with the Offer or the Merger (including the acquisition of
Shares held by shareholders who dissent in connection with the Merger) or
pursuant to the Stockholder Agreement in substantially the same form as such
Stockholder Agreement is attached as Exhibit A hereto.
Section 5.12 Obligations of Ultimate Parent. Ultimate Parent
------------------------------
agrees to be responsible, to the same extent as Parent, for all obligations,
agreements and covenants of Parent under Sections 2.2(a) and 5.9 of this
Agreement, and Ultimate Parent guarantees the performance by Parent of all of
its other obligations under this Agreement.
Section 5.13 Notification. Between the date of this Agreement and
------------
the Expiration Date, the Company will promptly notify Parent and the Purchaser,
and Parent and the Purchaser will promptly notify the Company, in writing, if
either the Company, on the one hand, or Parent or the Purchaser, on the other
hand, becomes aware of any fact or condition that causes or constitutes a breach
of any party's representations and warranties contained in this Agreement as of
the date of this Agreement, or of the occurrence of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the
---------------------------------------------------
Merger. The respective obligation of each party to effect the Merger shall be
------
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been duly
--------------------
approved and adopted by the requisite vote of the holders of Company Common
Stock, if required by applicable law and the Certificate of Incorporation, in
order to consummate the Merger;
(b) Statutes; Consents. No statute, rule, order, decree or
------------------
regulation shall have been enacted or promulgated by any Governmental Entity or
authority of competent
31
jurisdiction which prohibits the consummation of the Merger and all foreign or
domestic governmental consents, orders and approvals required for the
consummation of the Merger and the transactions contemplated hereby shall have
been obtained and shall be in effect at the Effective Time;
(c) Injunctions. There shall be no order or injunction of any
-----------
Governmental Entity of competent jurisdiction in effect precluding, restraining,
enjoining or prohibiting consummation of the Merger; provided, however, that
-------- -------
each of the parties hereto shall have used its reasonable best efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered; and
(d) Purchase of Shares in Offer. Parent, the Purchaser or their
---------------------------
affiliates shall have purchased shares of Company Common Stock pursuant to the
Offer, provided that this condition shall be deemed satisfied with respect to
Parent and the Purchaser if the Purchaser shall have failed to purchase Shares
pursuant to the Offer in breach of its obligations under this Agreement.
Section 6.2 Conditions of Obligations of Parent and Purchaser to
----------------------------------------------------
Effect the Merger. The obligations of Parent and Purchaser to effect the
-----------------
Merger are subject to the satisfaction of the further condition (which may be
waived in whole or in part by Parent) that the Company shall have performed in
all material respects all material obligations required to be performed by it
under this Agreement on or before the earlier of (i) such time as Parent's or
Purchaser's designees shall constitute at least a majority of the Company's
Board of Directors pursuant to Section 1.3 of this Agreement and (ii) the
Closing Date; provided, however, that no failure by the Company to have so
--------- -------
performed any such material obligation shall constitute a failure of
satisfaction of the foregoing condition where the Company's failure of
performance was caused by Parent or occurred and was actually known to Parent at
or prior to the time Purchaser accepted for payment any Shares pursuant to the
Offer.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere to the
-----------
contrary notwithstanding, this Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after stockholder approval thereof:
(a) By the mutual consent of the Parent and the Company.
(b) By either of the Company or Parent:
32
(i) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action in each case permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final
and non-appealable; provided that the party seeking to terminate this Agreement
--------
shall have used all reasonable efforts to challenge such order, decree, ruling
or other action;
(ii) if the Offer shall have expired, terminated or been
withdrawn pursuant to its terms without any Shares being purchased therein,
provided, however, that the right to terminate this Agreement under this Section
-------- -------
7.1(b)(ii) 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 Purchaser to purchase Shares in the Offer; or
(iii) if the Offer shall not have been consummated on or
before the 120th calendar day after the date hereof (the "Outside Date"),
provided that a party may not terminate the Agreement pursuant to this Section
if its failure to perform any of its obligations under this Agreement results in
the failure of the Offer to be so consummated by such time, provided, however,
-------- -------
that the passage of such period shall be tolled for any part thereof during
which any party shall be subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the consummation of the Offer
and the Outside Date shall be extended day-by-day for each day tolled,
provided further, however, that the Outside Date shall not be extended past June
-------- -------
30, 2000;
(c) By the Company:
(i) if Parent, the Purchaser or any of their affiliates
shall have failed to commence the Offer on or prior to five (5) business days
following the date of the initial public announcement of the Offer; provided,
--------
that the Company may not terminate this Agreement pursuant to this
Section 7.1(c)(i) if the Company is in material breach of this Agreement;
(ii) if concurrently it enters into a definitive agreement
providing for a Superior Proposal entered into in accordance with Section 5.2,
provided that prior thereto or simultaneously therewith the Company has paid the
Termination Fee to Parent in accordance with Section 7.3; or
(iii) if the representations and warranties of Ultimate
Parent, Parent or the Purchaser set forth in this Agreement shall not be true
and correct in any respect as of the date of this Agreement and as of the
Expiration Date as if made on such date, disregarding for this purpose any
standard of materiality contained in any
33
such representation or warranty, or either Ultimate Parent, Parent or the
Purchaser shall have breached or failed in any material respect to perform or
comply with any material obligation, agreement or covenant required by this
Agreement to be performed or complied with by it, which inaccuracy or breach
cannot be cured or has not been cured within one business day prior to the
Expiration Date, except, in the case of the failure of any representation or
warranty, (a) for changes specifically permitted by this Agreement, and (b)(1)
those representations and warranties that address matters only as of a
particular date which are true and correct as of such date or (2) where the
failure of such representations and warranties to be true and correct, do not,
individually or in the aggregate, have a Parent Material Adverse Effect.
(d) By Parent:
(i) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex A hereto, Parent, the Purchaser, or any of
their affiliates shall have failed to commence the Offer on or prior to
five (5) business days following the date of the initial public
announcement of the Offer; provided, that Parent may not terminate this
--------
Agreement pursuant to this Section 7.1(d)(i) if Parent is in material
breach of this Agreement;
(ii) if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified, or proposed publicly to
withdraw or modify, in a manner adverse to Parent its approval or
recommendation of the Transactions, or failed to reconfirm its
recommendation within four (4) business days after a written request to do
so, or approved or recommended, or proposed publicly to approve or
recommend, any Takeover Proposal, or (ii) the Board of Directors of the
Company or any committee thereof shall have resolved to take any of the
foregoing actions; or
(iii) if the representations and warranties of the Company
set forth in this Agreement shall not be true and correct in any respect as
of the date of this Agreement and as of the Expiration Date as if made on
such date, disregarding for this purpose any standard of materiality
contained in any such representation or warranty, or the Company shall have
breached or failed in any material respect to perform or comply with any
material obligation, agreement or covenant required by this Agreement to be
performed or complied with by it, which inaccuracy or breach cannot be
cured or has not been cured within one business day prior to the Expiration
Date, except, in the case of the failure of any representation or warranty,
(a) for changes specifically permitted by this Agreement, and (b)(1) those
representations and warranties that address matters only as of a particular
date which are true and correct as of such date or (2) where the failure of
such representations and warranties to be
34
true and correct, do not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 7.2 Effect of Termination. In the event of the termination
---------------------
of this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision hereof
pursuant to which such termination is made, and this Agreement (other than
Sections 7.2, 7.3, 8.4, 8.6, 8.7, 8.8 and 8.9 hereof) shall forthwith become
null and void, and there shall be no liability on the part of the Parent or the
Company, except as provided in Section 7.3.
Section 7.3 Termination Fee; Expenses. Except as provided in this
-------------------------
Section 7.3, all fees and expenses incurred by the parties hereto shall be borne
solely and entirely by the party which has incurred such fees and expenses. In
the event that (A) a Takeover Proposal shall have been made known to the Company
or shall have been made directly to its stockholders generally or any person
shall have publicly announced an intention (whether or not conditional) to make
a Takeover Proposal and thereafter this Agreement is terminated by the Company
pursuant to Section 7.1(b)(iii) hereof or, if the Offer has remained open for at
least 20 business days and the Minimum Condition has not been satisfied (and
none of the events described in paragraphs (a), (b), (d) and (e) of Annex A
shall have occurred so as to result in a condition to the Offer not being
satisfied), pursuant to Section 7.1(b)(ii) hereof, and in either such event such
Takeover Proposal is consummated within one (1) year of such termination or (B)
this Agreement (i) is terminated by Parent pursuant to Section 7.1(d)(ii), or
(ii) is terminated by the Company pursuant to Section 7.1(c)(ii), then the
Company shall pay to Parent (in the case of a termination pursuant to Section
7.1(c)(ii), prior to or simultaneously with the termination, or in the case of a
termination pursuant to Section 7.1(d)(ii), not later than one (1) business day
after such termination, or in the case of a termination pursuant to Section
7.1(b)(ii) or 7.1(b)(iii), upon the consummation of such Takeover Proposal) a
termination fee equal to $15 million in cash. The fee arrangement contemplated
hereby is the sole remedy hereunder and shall be paid pursuant to this Section
7.3 regardless of any alleged breach, other than a willful or intentional
breach, by Parent of its obligations hereunder, provided that no payment made by
the Company pursuant to this Section 7.3 shall operate or be construed as a
waiver by the Company of any breach of this Agreement by Parent or Purchaser or
of any rights of the Company in respect thereof.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification. Subject to applicable law,
---------------------------
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that no amendment, modification or supplement of this
-------- -------
Agreement shall be made which adversely effects such holders after the
consummation of
35
the Offer or requires by law or the organizational documents of the Company the
further approval of the stockholders, unless approved by the Independent
Directors.
Section 8.2 Extension; Waiver. At any time prior to the Effective
-----------------
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.1, waive compliance with any of the agreements or conditions contained
in this Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
Section 8.3 Nonsurvival of Representations and Warranties. None of
---------------------------------------------
the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 8.4 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Ultimate Parent, Parent or the Purchaser, to:
Wesco Holdings Midwest, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Hamburg
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
36
(b) if to the Company, to:
Cort Business Services Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: G. ▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.5 Counterparts. This Agreement may be executed in two or
------------
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 8.6 Entire Agreement; Third Party Beneficiaries. This
-------------------------------------------
Agreement (including the documents and the instruments referred to herein): (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Sections 1.3, 2.4, 5.8 and
5.9, is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
Section 8.7 Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.8 Governing Law. This Agreement shall be governed and
-------------
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof or of any other
jurisdiction.
Section 8.9 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except
37
that the Purchaser may assign, in its sole discretion, any or all of its rights,
interests and obligations hereunder to Parent or to any direct or indirect
wholly owned Subsidiary of Parent. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 8.10 Headings. The descriptive headings used herein are
--------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. "Include,"
"includes," and "including" shall be deemed to be followed by "without
limitation" whether or not they are in fact followed by such words or words of
like import.
Section 8.11 Enforcement. The parties agree that irreparable
-----------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
State of Delaware or of the United States located in the State of Delaware in
the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, and each party will not attempt to deny or
defeat personal jurisdiction or venue in any such court by motion or other
request for leave from any such court.
38
IN WITNESS WHEREOF, Ultimate Parent, Parent, the Purchaser and the
Company have caused this Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written above.
Wesco Financial Corporation
By: /s/ ▇▇▇▇ ▇. Hamburg
---------------------------------------------------
Name: ▇▇▇▇ ▇. Hamburg
Title: Assistant Secretary
Wesco Holdings Midwest, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
C Acquisition Corp.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
Cort Business Services Corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer and President
39
ANNEX A
-------
CONDITIONS TO THE OFFER
-----------------------
Notwithstanding any other provision of the Offer (subject to the provisions
of the Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule 14e-
l(c) under the Exchange Act (relating to the Purchaser's obligation to pay for
or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer and not accept for payment any tendered shares if (i) there
shall not have been validly tendered and not withdrawn prior to the expiration
of the Offer such number of Shares which would constitute at least a majority of
the Shares outstanding on a fully-diluted basis on the date of purchase (on a
"fully-diluted basis" meaning the number of Shares outstanding, together with
the Shares which the Company may be required to issue pursuant to options or
obligations outstanding at that date and which do not terminate upon
consummation of the Offer under employee stock or similar benefit plans or
otherwise, whether or not vested or then exercisable), when aggregated with any
Shares owned by Parent, the Purchaser or an affiliate of Parent or the Purchaser
(the "Minimum Condition"), (ii) any applicable waiting period under the HSR Act
has not expired or terminated prior to the expiration of the Offer, or (iii) at
any time on or after the date of the Agreement, and before the time of
acceptance of Shares for payment pursuant to the Offer, any of the following
events shall occur and be continuing:
(a) there shall be any statute, rule, regulation, judgment, order or
injunction promulgated, entered, enforced, enacted, issued or applicable to the
Offer or the Merger by any domestic or foreign federal or state governmental
regulatory or administrative agency or authority or court or legislative body or
commission which (1) prohibits, or imposes any material limitations on, Parent's
or the Purchaser's ownership or operation of all or a material portion of the
Company's and its subsidiaries' businesses and assets taken as a whole, (2)
prohibits, or makes illegal the acceptance for payment, payment for or purchase
of Shares or the consummation of the Offer or the Merger, (3) renders the
Purchaser unable to accept for payment, pay for or purchase some or all of the
Shares, or (4) imposes material limitations on the ability of the Purchaser or
Parent effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it on
all matters properly presented to the Company's stockholders, provided that
--------
Parent shall have used all reasonable efforts to cause any such judgment, order
or injunction to be vacated or lifted;
(b) there shall be any action or proceeding instituted and pending by
any domestic or foreign federal or state governmental regulatory or
administrative agency or authority which (1) seeks to prohibit, or impose any
material limitation on, Parent's or the Purchaser's ownership or operation of
all or a material portion of the Company's and its subsidiaries' businesses and
assets taken as a whole, (2) seeks to prohibit or make illegal the acceptance
for payment, payment for or purchase of Shares or the consummation of the Offer
A-1
or the Merger, (3) is reasonably likely to result in a material delay in or
seeks to restrict the ability of the Purchaser, or render the Purchaser unable
to accept for payment, pay for or purchase some or all of the Shares, or (4)
seeks to impose material limitations on the ability of the Purchaser or Parent
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's stockholders; provided that the Parent shall
--------
have used all reasonable efforts to cause any such action or proceeding to be
dismissed;
(c) the representations and warranties of the Company set forth in the
Agreement shall not be true and correct in any respect, disregarding for this
purpose any standard of materiality contained in any such representation or
warranty, as of the date of consummation of the Offer as though made on or as of
such date or the Company shall have breached or failed in any material respect
to perform or comply with any material obligation, agreement or covenant
required by the Agreement to be performed or complied with by it (including
without limitation if the Company shall have entered into any definitive
agreement or any agreement in principle with any person with respect to a
Takeover Proposal or similar business combination with the Company in violation
of Section 5.2), except, in the case of the failure of any representation or
warranty, (i) for changes specifically permitted by the Agreement, and (ii)(A)
those representations and warranties that address matters only as of a
particular date which are true and correct as of such date or (B) where the
failure of such representations and warranties to be true and correct, do not,
individually or in the aggregate, have a Company Material Adverse Effect;
(d) (1) any general suspension of trading in securities on any
national securities exchange or in the over-the-counter market, (2) the
declaration of a banking moratorium or any suspension of payments in respect of
banks by a United States Governmental Entity, or (3) any mandatory limitation by
a United States Governmental Entity that materially and adversely effects the
extension of credit by banks or other financial institutions; or
(e) the Agreement shall have been terminated in accordance with its
terms;
which in the reasonable judgment of Parent or the Purchaser, in any such case,
and regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer or with such acceptance for payment or
payments.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by either of them or may be waived by Parent or the
Purchaser, in whole or in part at any time and from time to time in the sole
discretion of Parent or the Purchaser; provided, however, that Parent and the
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Purchaser agree that, if they waive the Minimum Condition, they shall
subsequently exercise the Company Securities Option (as defined in the
Stockholder Agreement), unless all of the Shares subject thereto have been
accepted for payment in the Offer.
A-2