SHARE PURCHASE AGREEMENT AND PLAN OF MERGER
BY AND AMONG
OUTSOURCING SOLUTIONS INC.
▇▇▇▇▇▇▇ ACQUISITION CORPORATION
AND
THE UNION CORPORATION
Dated as of December 22, 1997
TABLE OF CONTENTS
PAGE
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ARTICLE I--THE TENDER OFFER................................................................................ 2
SECTION 1.1. The Offer............................................................................ 2
SECTION 1.3. Composition of the Board of Directors................................................ 5
SECTION 1.4. Stock Options and Other Plans........................................................ 5
ARTICLE II--THE MERGER AND RELATED MATTERS................................................................. 6
SECTION 2.1. The Merger........................................................................... 6
SECTION 2.2. Conversion of Stock.................................................................. 7
SECTION 2.3. Dissenting Stock..................................................................... 7
SECTION 2.4. Surrender of Certificates............................................................ 8
SECTION 2.5. Payment.............................................................................. 9
SECTION 2.6. No Further Rights of Transfers....................................................... 10
SECTION 2.7. Certificate of Incorporation of the Surviving Corporation............................ 10
SECTION 2.9. Directors and Officers of the Surviving Corporation.................................. 10
SECTION 2.10. Closing.............................................................................. 11
SECTION 2.11. Proxy Statement, Schedule 14D-9 and Schedule 14D-1................................... 11
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF THE CORPORATION............................................. 12
SECTION 3.1. Corporate Existence and Power........................................................ 12
SECTION 3.2. Corporate Authorization.............................................................. 12
SECTION 3.3. Consents and Approvals; No Violations................................................ 13
SECTION 3.4. Compliance with Laws................................................................. 13
SECTION 3.5. Capitalization....................................................................... 14
SECTION 3.6. Subsidiaries......................................................................... 14
SECTION 3.7. SEC Filings.......................................................................... 15
SECTION 3.8. Financial Statements................................................................. 16
SECTION 3.9. No Undisclosed Liabilities........................................................... 16
SECTION 3.10. Absence of Certain Changes........................................................... 16
SECTION 3.11. Title to Properties; Encumbrances.................................................... 17
SECTION 3.12. Litigation........................................................................... 18
SECTION 3.13. Taxes................................................................................ 18
SECTION 3.14. Employee Benefit Plans............................................................... 20
SECTION 3.15. Brokers.............................................................................. 22
SECTION 3.16. Environmental Matters................................................................ 22
SECTION 3.17. Proprietary Rights................................................................... 24
SECTION 3.18. Material Contracts and Leases........................................................ 25
SECTION 3.19. Insurance............................................................................ 26
SECTION 3.20. Labor Relations...................................................................... 26
SECTION 3.21. Voting Requirements.................................................................. 27
SECTION 3.22. Rights Agreement..................................................................... 27
SECTION 3.23. Customers Relations.................................................................. 27
ARTICLE IV--REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB............................................... 28
SECTION 4.1. Corporate Existence and Power........................................................ 28
SECTION 4.2. Corporate Authorization.............................................................. 28
SECTION 4.3. Consents and Approvals............................................................... 28
SECTION 4.4. No Violation......................................................................... 29
SECTION 4.5. Financial Statements................................................................. 29
SECTION 4.6. Financing............................................................................ 29
SECTION 4.7. Offer Documents; Other Information................................................... 30
SECTION 4.8. Litigation........................................................................... 30
ARTICLE V--CONDUCT OF BUSINESS BY THE CORPORATION PENDING THE
CLOSING....................................................................................... 30
SECTION 5.1. Regular Course of Business........................................................... 30
SECTION 5.2. Charter Documents and Capital Changes................................................ 32
SECTION 5.3. Organization and Good Will........................................................... 33
SECTION 5.4. Insurance............................................................................ 33
SECTION 5.5. Compliance With Laws................................................................. 33
SECTION 5.6. SEC Reports.......................................................................... 33
SECTION 5.7. Proxy Statement...................................................................... 33
SECTION 5.8. Shareholder Approval................................................................. 33
SECTION 5.9. No Solicitation of Other Offers...................................................... 34
SECTION 5.10. Notification of Certain Matters...................................................... 36
SECTION 5.11. Rights Agreement..................................................................... 36
SECTION 5.12. Properties; Material Contracts....................................................... 37
SECTION 5.13. Dividends, Etc....................................................................... 37
SECTION 5.14. Full Access.......................................................................... 37
ARTICLE VI--COVENANTS OF PARTIES........................................................................... 38
SECTION 6.1. Confidentiality...................................................................... 38
SECTION 6.2. Cooperation.......................................................................... 39
SECTION 6.3. Filings; Consents; Removal of Objections............................................. 40
SECTION 6.4. Public Announcements................................................................. 40
SECTION 6.5. Employee Benefits.................................................................... 40
SECTION 6.6. Indemnification and Insurance........................................................ 41
SECTION 6.7. Resignation of Directors............................................................. 42
SECTION 6.8. Confidentiality Agreement............................................................ 42
SECTION 6.9. Certain Actions of Parent and Sub.................................................... 42
ARTICLE VII--CONDITIONS TO CONSUMMATION OF THE MERGER...................................................... 43
SECTION 7.1. Conditions Precedent to Obligations of Parent, Sub and the Corporation............... 43
ARTICLE VIII--TERMINATION AND ABANDONMENT.................................................................. 44
SECTION 8.1. Termination.......................................................................... 44
SECTION 8.2. Effect of Termination................................................................ 45
ARTICLE IX--MISCELLANEOUS.................................................................................. 46
SECTION 9.1. Fees and Expenses.................................................................... 46
SECTION 9.2. Notices.............................................................................. 47
SECTION 9.3. Termination of Representations and Warranties........................................ 48
SECTION 9.4. Amendments........................................................................... 48
SECTION 9.5. Waivers.............................................................................. 48
SECTION 9.6. Successors and Assigns............................................................... 48
SECTION 9.7. Governing Law and Forum.............................................................. 49
SECTION 9.8. Counterparts; Effectiveness.......................................................... 49
SECTION 9.9. Entire Agreement; Schedules and Exhibits............................................. 49
SECTION 9.10. Headings and Table of Contents....................................................... 49
ARTICLE X--DEFINITIONS..................................................................................... 50
ANNEX I to Share Purchase Agreement and Plan of Merger
Conditions to the Share Purchase......................................................................... A-I
SHARE PURCHASE AGREEMENT AND PLAN OF MERGER
This Share Purchase Agreement and Plan of Merger (this "Agreement") dated as
of December 22, 1997 is made by and among Outsourcing Solutions, Inc., a
Delaware corporation ("Parent"), ▇▇▇▇▇▇▇ Acquisition Corporation, a Delaware
corporation and a direct wholly-owned subsidiary of Parent ("Sub"), and The
Union Corporation, a Delaware corporation (the "Corporation"). Capitalized terms
used herein and not otherwise defined in the Preamble or in Articles I through
IX of this Agreement shall have the respective meanings ascribed to such terms
in Article X hereto.
PREAMBLE
WHEREAS, the Boards of Directors of Parent, Sub and the Corporation have
each determined that it is in the best interests of their respective
stockholders for Parent to acquire up to all of the issued and outstanding
Common Stock, par value $.50 per share, of the Corporation (the "Corporation
Stock") (all issued and outstanding shares of Corporation Stock being
hereinafter collectively referred to as the "Shares") upon the terms and subject
to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Sub shall make a cash
tender offer (the "Offer") to acquire all of the issued and outstanding Shares
for $31.50 per share (such amount, or any greater amount per Share paid pursuant
to the Offer, being hereinafter referred to as the "Per Share Amount"), net to
the seller in cash, in accordance with the terms provided herein and in the
Offer; and
WHEREAS, to complete such acquisition, the respective Boards of Directors of
Parent, Sub and the Corporation have approved the merger of Sub with and into
the Corporation (the "Merger"), pursuant to and subject to the terms and
conditions of this Agreement; and h) 0*0*0*-Registered Trademark- -Registered
Trademark- Section(5) WHEREAS, the Directors of the Corporation have unanimously
determined that each of the Offer and the Merger are fair to, and in the best
interests of, the holders of Common Stock, approved the Offer and the Merger and
recommended the acceptance of the Offer and approval and adoption of this
Agreement by the shareholders of the Corporation; and
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties herein set forth, and the mode of carrying the same into effect,
the parties hereto hereby agree as follows:
ARTICLE I--THE TENDER OFFER
SECTION 1.1. THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Article VIII hereof and so long as none of
the events set forth in Annex I hereto (the "Tender Offer Conditions") shall
have occurred and be continuing and shall not have been waived by Parent, Parent
shall cause Sub to commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder) the Offer for all issued and outstanding Shares as
promptly as reasonably practicable after the date hereof, but in no event later
than five (5) business days after the date of this Agreement. The Offer shall
remain open for a period of not less than twenty (20) business days. The
obligation of Sub to accept for payment Shares tendered pursuant to the Offer
shall be subject to the satisfaction of the Tender Offer Conditions. Parent and
Sub expressly reserve the right to waive any such condition, to increase the Per
Share Amount payable in the Offer, and to make any other change in the terms and
conditions of the Offer; provided, however, that, without the written consent of
the Corporation, no change may be made which (A) decreases the Per Share Amount
payable in the Offer, (B) reduces the number of Shares to be purchased in the
Offer, (C) imposes conditions to the Offer in addition to the Tender Offer
Conditions, (D) amends or changes the terms and conditions of the Offer in any
manner materially adverse to the holders of Shares (other than Parent and Sub
and its subsidiaries), (E) changes the consideration payable in the Offer to
anything other than all cash, (F) reduces the time period during which the Offer
shall remain open or (G) except as provided in the next sentence, extends the
time period during which the Offer shall remain open. Notwithstanding the
foregoing, Parent and Sub may, without the consent of the Corporation, (i)
extend the Offer beyond the scheduled expiration date and any subsequent
scheduled expiration date (but not beyond the date referred to in Section 8.1(c)
hereof), if at such date any of the Tender Offer Conditions shall not be
satisfied or waived, until such time as such conditions are satisfied or waived,
and (ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the SEC (but not beyond the date referred to in
Section 8.1(c) hereof). The Per Share Amount shall be net to the seller in cash,
upon the terms and subject to the Tender Offer Conditions. Following the
satisfaction or waiver of the Tender Offer Conditions, Sub shall accept for
payment and pay for (hereinafter referred to as the "Share Purchase"), in
accordance with the terms of the Offer, all Shares validly tendered pursuant to
the Offer and not withdrawn, as soon as it is permitted to do so pursuant to the
Exchange Act or other applicable law or regulation, whichever is later.
(b) As soon as practicable on the date of the commencement of the Offer,
Parent and Sub shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 (together with
all amendments and supplements thereto, the "Schedule 14D-1") with respect to
the Offer. The Schedule 14D-1 will contain an offer to purchase (the "Offer to
Purchase") and form of the related letter of transmittal and any summary
advertisement (which Schedule 14D-1, Offer to Purchase and other documents,
together with any supplements or amendments thereto, are referred to herein
collectively as the "Offer Documents"). The Corporation and its counsel shall be
given the opportunity to review and comment upon the Offer Documents prior to
their filing with the SEC. Parent, Sub and the Corporation agree promptly to
correct any information provided by any of them for use in the Offer Documents
that shall have become false or misleading in any material respect, and Parent
and Sub further agree to take all steps necessary to cause the Schedule 14D-1 as
so corrected to be filed with the SEC and the other Offer Documents as so
corrected to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and Sub each agree
to provide the Corporation and its counsel with any comments either of them, or
their counsel, may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments and shall provide the
Corporation and its counsel an opportunity to participate, including by way of
discussions with the SEC or its staff, in their response to such comments.
SECTION 1.2. CORPORATE ACTION,CFN. (a) The Corporation hereby approves of
and consents to the Offer and the Merger and represents that (i) its Board of
Directors, at a meeting duly called, has unanimously (A) determined that this
Agreement and the transactions contemplated hereby are fair to and in the best
interests of the holders of Shares, (B) approved and adopted this Agreement and
the transactions contemplated hereby and recommends that the stockholders of the
Corporation accept the Offer, and (C) taken all other applicable action
necessary to render, so long as this Agreement remains in effect, (x) Section
203 of the General Corporation Law of the State of Delaware (the "DGCL") and
other state takeover statutes; (y) Article FIFTH of the Corporation's
Certificate of Incorporation (except for the requirement that the Merger be
approved by the holders of not less than two-thirds of the outstanding Shares),
and (z) the Rights Agreement dated as of March 14, 1988, as amended (the "Rights
Agreement"), inapplicable to the Offer and the Merger; and (ii) CIBC ▇▇▇▇▇▇▇▇▇▇▇
Corp. has delivered to the Board of Directors of the Corporation its written
opinion that the consideration to be received by the holders of Shares pursuant
to the Offer and the Merger is fair to the holders of Shares from a financial
point of view and Corporation has delivered to Parent a copy of said opinion.
(b) The Corporation shall file with the SEC as soon as practicable on the
date of the commencement of the Offer a Solicitation/Recommendation Statement on
schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing, subject to the terms of this Agreement, the
recommendation of the Corporation's Board of Directors described in Section
1.2(a) and shall disseminate the Schedule 14D-9 as required by Rule 14d-9
promulgated under the Exchange Act. Parent and Sub and their counsel shall be
given the opportunity to review and comment upon the Schedule 14D-9 prior to its
filing with the SEC. The Corporation, Parent and Sub each agree promptly to
correct any information provided by any of them for use in the Schedule 14D-9
that shall have become false or misleading in any material respect, and the
Corporation further agrees to 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 Shares, in each case as and to the extent required by applicable federal
securities laws. The Corporation agrees to provide Parent and its counsel with
any comments the Corporation or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the receipt of such
comments and shall provide Parent and its counsel an opportunity to participate,
including by way of discussions with the SEC or its staff, in the response of
the Corporation to such comments.
(c) The Corporation has furnished Parent with mailing labels and a list
containing the names and addresses of all record holders of Shares and will,
upon request, furnish Parent with all other available listings or computer files
containing names, addresses and security position listings of any record holders
or beneficial owners of Shares, each as of a recent date. The Corporation shall
furnish Parent with such additional information, including updated lists and
files of stockholders and security position listings, and such other related
assistance Parent or its agents may reasonably request to carry out the
transactions contemplated hereby. Subject to the requirements of applicable law,
and except for such steps as are necessary to disseminate the Offer Documents
and any other documents necessary to consummate the Share Purchase, Parent shall
hold in confidence the information contained in any of such lists and files,
shall use such information only in connection with the Offer (and the Merger)
and, if this Agreement shall be terminated, shall deliver to the Corporation all
copies of such information then in its possession. The Corporation has been
advised that each of its directors and the executive officers intends to tender
pursuant to the Offer all shares of Common Stock owned of record and
beneficially by him or her.
SECTION 1.3. COMPOSITION OF THE BOARD OF DIRECTORS. Promptly upon the Share
Purchase, Sub shall be entitled to designate such number of directors on the
Board of Directors of the Corporation, rounded up to the next whole number, as
will give Sub, subject to compliance with Section 14(f) of the Exchange Act,
representation on such Board of Directors equal to at least that number of
directors which equals the product of the total number of directors on the Board
of Directors (giving effect to the directors elected pursuant to this sentence)
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock so accepted for payment and paid for or otherwise acquired or
owned by Sub or Parent and the denominator of which shall be the number of
shares of Common Stock then outstanding, and the Corporation and its Board of
Directors shall, at such time, take any and all such action needed to cause
Sub's designees to be appointed to the Corporation's Board of Directors
(including to cause directors to resign). Promptly upon the Share Purchase,
Corporation and its Board of Directors shall take such further action as may be
requested by Sub to cause Sub's designees to constitute at least a majority of
the Board of Directors of each direct or indirect Subsidiary of the Corporation
(other than Allied Bond & Collection Agency, Inc.). Subject to applicable law,
the Corporation shall take all action requested by Parent which is reasonably
necessary to effect any such election, including mailing to its shareholders an
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, and the Corporation
agrees to make such mailing with the mailing of the Schedule 14D-9 so long as
Sub shall have provided to the Corporation on a timely basis all information
required to be included in such Information Statement with respect to Sub's
designees. In furtherance thereof, the Corporation will increase the size of the
Corporation's Board of Directors, or use its reasonable efforts to secure the
resignation of directors, or both, as is necessary to permit Sub's designees to
be elected to the Corporation's Board of Directors. Upon the Share Purchase (as
defined in Section 1.1 hereof) all directors of the Corporation, other than
Sub's designees and two directors of Corporation, and, unless otherwise agreed,
all officers of the Corporation shall resign.
SECTION 1.4. STOCK OPTIONS AND OTHER PLANS. (a) As soon as practicable
following the date hereof, the Board of Directors of the Corporation shall adopt
appropriate resolutions and cause the Corporation to take all actions necessary
to obtain the consent of each holder of an outstanding option to purchase Shares
("Options") to the effect that, upon the Share Purchase, each Option, whether or
not then vested or exercisable, shall no longer be exercisable for the purchase
of Shares but shall entitle each holder thereof, in cancellation and settlement
therefor, to a payment in cash (subject to any applicable withholding taxes, the
"Cash Payment"), equal to the product of (x) the total number of shares of
Common Stock subject to such Option as to which such Option could have been
exercised and (y) the excess of the Per Share Amount over the exercise price per
share of Common Stock subject to such Option, each such Cash Payment to be paid
to each holder (or, without duplication, the beneficial owner) of an outstanding
Option on the date of the Share Purchase; and
(b) All stock option plans of the Corporation ("Stock Plans") shall
terminate as of the Effective Time and the provisions in any other Employee
Benefit Plan providing for the issuance, transfer or grant of any capital stock
of the Corporation or any interest in respect of any capital stock of the
Corporation shall be deleted as of the Effective Time, and the Corporation shall
ensure that following the Effective Time no holder of an Option or any
participant in any Stock Plan shall have any right thereunder to acquire any
capital stock of the Corporation, Parent or the Surviving Corporation. The
Corporation will ensure that neither the Corporation nor any of its Subsidiaries
is or will be bound by any Options, other options, warrants, rights or
agreements which would entitle any Person, other than Parent or its affiliates,
to own any capital stock of the Surviving Corporation or any of its Subsidiaries
or to receive any payment in respect thereof. Notwithstanding the foregoing, the
holders of Options who did not receive the Cash Payment on the date of the Share
Purchase shall thereafter be entitled to receive the Cash Payment in
cancellation and settlement of such Options as provided in the preceding
paragraph (a).
ARTICLE II--THE MERGER AND RELATED MATTERS
SECTION 2.1. THE MERGER. (a) Subject to the terms and conditions of this
Agreement, at the time of the Closing (as defined in Section 2.11 hereof), a
certificate of merger (the "Certificate of Merger") shall be duly prepared,
executed and acknowledged by Sub and the Corporation in accordance with the DGCL
and shall be filed on the Closing Date (as defined in Section 2.11 hereof). The
Merger shall become effective upon the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware in accordance with the
provisions and requirements of the DGCL. The date and time when the Merger shall
become effective is hereinafter referred to as the "Effective Time".
(b) At the Effective Time, Sub shall be merged with and into the Corporation
and the separate corporate existence of Sub shall cease, and the Corporation
shall continue as the surviving corporation under the laws of the State of
Delaware under the name of "The Union Corporation" (the "Surviving
Corporation").
(c) From and after the Effective Time, the Merger shall have the effects set
forth in Section 259 of the DGCL.
SECTION 2.2. CONVERSION OF STOCK. At the Effective Time:
(a) Each share of Common Stock then issued and outstanding other than (i)
any shares of Common Stock which are held by any Subsidiary of the Corporation
or in the treasury of the Corporation, or which are held, directly or
indirectly, by Parent or any direct or indirect subsidiary of Parent (including
Sub), all of which shall be cancelled and none of which shall receive any
payment with respect thereto and (ii) shares of Common Stock held by Dissenting
Shareholders (as defined in Section 2.3 hereof) shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into and
represent the right to receive an amount in cash, without interest, equal to the
Per Share Amount (the "Merger Consideration"); and
(b) Each share of common stock, par value $0.01 per share, of Sub then
issued and outstanding shall, by virtue of the Merger and without any action on
the part of the holder thereof, become one fully paid and nonassessable share of
common stock, $0.50 par value, of the Surviving Corporation.
SECTION 2.3. DISSENTING STOCK. Notwithstanding anything in this Agreement
to the contrary but only to the extent required by DGCL, shares of Common Stock
that are issued and outstanding immediately prior to the Effective Time and are
held by holders of Common Stock who comply with all the provisions of Delaware
law concerning the right of holders of Common Stock to dissent from the Merger
and require appraisal of their shares of Common Stock ("Dissenting
Shareholders") shall not be converted into the right to receive the Merger
Consideration but shall become the right to receive such consideration as may be
determined to be due such Dissenting Shareholder pursuant to the laws of the
State of Delaware; PROVIDED, HOWEVER, that (i) if any Dissenting Shareholder
shall subsequently deliver a written withdrawal of his or her demand for
appraisal (with the written approval of the Surviving Corporation, if such
withdrawal is not tendered within 60 days after the Effective Time), or (ii) if
any Dissenting Shareholder fails to establish and perfect his or her entitlement
to appraisal rights as provided by applicable law, then such Dissenting
Shareholder or Shareholders, as the case may be, shall forfeit the right to
appraisal of such shares and such shares shall thereupon be deemed to have been
converted into the right to receive, as of the Effective Time, the Merger
Consideration, without interest. The Corporation shall give Parent and Sub (A)
prompt notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other related instruments received by the Corporation, and (B)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal. The Corporation will not voluntarily make any payment
with respect to any demands for appraisal and will not, except with the prior
written consent of Parent, settle or offer to settle any demand.
SECTION 2.4. SURRENDER OF CERTIFICATES. (a) Concurrently with or prior to
the Effective Time, Parent shall designate a bank or trust company located in
the United States to act as paying agent (the "Paying Agent") for purposes of
making the cash payments contemplated hereby. As soon as practicable after the
Effective Time, Parent shall cause the Paying Agent to mail and/or make
available to each holder of a certificate theretofore evidencing shares of
Common Stock (other than those which were held by any Subsidiary of the
Corporation or in the treasury of the Corporation or which are held directly or
indirectly by Parent or any direct or indirect subsidiary of Parent (including
Sub)) a notice and letter of transmittal advising such holder of the
effectiveness of the Merger and the procedure for surrendering to the Paying
Agent such certificate or certificates which immediately prior to the Effective
Time represented outstanding Common Stock (the "Certificates") in exchange for
the Merger Consideration deliverable in respect thereof pursuant to this Article
II. Upon the surrender for cancellation to the Paying Agent of such
Certificates, together with a letter of transmittal, duly executed and completed
in accordance with the instructions thereon, and any other items specified by
the letter of transmittal, the Paying Agent shall promptly pay to the Person
entitled thereto the Merger Consideration deliverable in respect thereto. Until
so surrendered, each Certificate shall be deemed, for all corporate purposes, to
evidence only the right to receive upon such surrender the Merger Consideration
deliverable in respect thereof to which such Person is entitled pursuant to this
Article II. No interest shall be paid or accrued in respect of such cash
payments.
(b) If the Merger Consideration (or any portion thereof) is to be delivered
to a Person other than the Person in whose name the Certificate surrendered in
exchange therefor are registered, it shall be a condition to the payment of the
Merger Consideration that the Certificates so surrendered shall be properly
endorsed or accompanied by appropriate stock powers and otherwise in proper form
for transfer, that such transfer otherwise be proper and that the Person
requesting such transfer pay to the Paying Agent any transfer or other taxes
payable by reason of the foregoing or establish to the satisfaction of the
Paying Agent that such taxes have been paid or are not required to be paid.
(c) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article II,
provided that, the Person to whom the Merger Consideration is paid shall, as a
condition precedent to the payment thereof, give the Surviving Corporation a
bond in such sum as it may direct or otherwise indemnify the Surviving
Corporation in a manner satisfactory to it against any claim that may be made
against the Surviving Corporation with respect to the Certificate claimed to
have been lost, stolen or destroyed.
SECTION 2.5. PAYMENT. Concurrently with or immediately prior to the
Effective Time, Parent or Sub shall deposit in trust with the Paying Agent cash
in United States dollars in an aggregate amount equal to the product of (i) the
number of shares of Common Stock outstanding immediately prior to the Effective
Time (other than shares of Common Stock which are held by any Subsidiary of the
Corporation or in the treasury of the Corporation or which are held directly or
indirectly by Parent or any direct or indirect subsidiary of Parent (including
Sub) or a Person known at the time of such deposit to be a Dissenting
Shareholder) and (ii) the Merger Consideration (such amount being hereinafter
referred to as the "Payment Fund"). The Payment Fund shall be invested by the
Paying Agent as directed by Parent only in direct obligations of the United
States, obligations for which the full faith and credit of the United States is
pledged to provide for the payment of principal and interest, commercial paper
rated of the highest quality by ▇▇▇▇▇'▇ Investors Services, Inc. or Standard &
Poor's Ratings Group or certificates of deposit, bank repurchase agreements or
bankers' acceptances of a commercial bank having at least $100,000,000 in assets
(collectively, "Permitted Investments") or in money market funds which are
invested in Permitted Investments, and any net earnings with respect thereto
shall be paid to Parent as and when requested by Parent. The Paying Agent shall,
pursuant to irrevocable instructions, make the payments referred to in Section
2.2(a) hereof out of the Payment Fund. The Payment Fund shall not be used for
any other purpose except as otherwise agreed to by Parent. Promptly following
the date which is three months after the Effective Time, the Paying Agent shall
return to Parent all cash, certificates and other instruments in its possession
that constitute any portion of the Payment Fund (other than net earnings on the
Payment Fund which shall be paid to Parent), and the Paying Agent's duties shall
terminate. Thereafter, each holder of a Certificate may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in exchange therefor the Merger
Consideration, without interest, but shall have no greater rights against the
Surviving Corporation or Parent than may be accorded to general creditors of the
Surviving Corporation or Parent under applicable law. Notwithstanding the
foregoing, neither the Paying Agent nor any party hereto shall be liable to a
holder of shares of Common Stock for any Merger Consideration delivered to a
public official pursuant to applicable abandoned property, escheat and similar
laws.
SECTION 2.6. NO FURTHER RIGHTS OF TRANSFERS. At and after the Effective
Time, each holder of a Certificate shall cease to have any rights as a
shareholder of the Corporation, except for, in the case of a holder of a
Certificate (other than shares to be cancelled pursuant to Section 2.2(a) hereof
and other than shares held by Dissenting Shareholders), the right to surrender
his or her Certificate in exchange for payment of the Merger Consideration or,
in the case of a Dissenting Shareholder, to perfect his or her right to receive
payment for his or her shares pursuant to Delaware law if such holder has
validly perfected and not withdrawn his or her right to receive payment for his
or her shares, and no transfer of shares of Common Stock shall be made on the
stock transfer books of the Surviving Corporation. Certificates presented to the
Surviving Corporation after the Effective Time shall be cancelled and exchanged
for cash as provided in this Article II. At the close of business on the day of
the Effective Time the stock ledger of the Corporation with respect to Common
Stock shall be closed.
SECTION 2.7. CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION. The
Certificate of Incorporation of the Corporation, as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation and shall be amended such that it is substantially in the
form of the Amended and Restated Certificate of Incorporation attached hereto as
Exhibit 2.7.
SECTION 2.8. BY-LAWS OF THE SURVIVING CORPORATION. The By-Laws of Sub, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation.
SECTION 2.9. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. At the
Effective Time, the directors of Sub immediately prior to the Effective Time
shall be the directors of the Surviving Corporation, each of such directors to
hold office, subject to the applicable provisions of the Certificate of
Incorporation and By-Laws of the Surviving Corporation, until the next annual
shareholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Corporation immediately prior to the Effective Time
shall, subject to the applicable provisions of the Certificate of Incorporation
and By-Laws of the Surviving Corporation, be the officers of the Surviving
Corporation until their respective successors shall be duly elected or appointed
and qualified.
SECTION 2.10. CLOSING. The closing of the Merger (the "Closing") shall take
place at the offices of White & Case, 1155 Avenue of the Americas, New York, New
York, as soon as practicable after the last of the conditions set forth in
Article VII hereof is fulfilled or waived (subject to applicable law) but in no
event later than the fifth business day thereafter, or at such other time and
place and on such other date as Parent and the Corporation shall mutually agree
(the "Closing Date").
SECTION 2.11. PROXY STATEMENT, SCHEDULE 14D-9 AND SCHEDULE 14D-1. The
definitive proxy statement and related materials, if required, to be furnished
to the holders of Common Stock in connection with the Merger pursuant to Section
5.7 hereof (the "Proxy Statement") will comply in all material respects with the
Exchange Act and the rules and regulations thereunder and any other applicable
laws. If at any time prior to the Effective Time any event occurs which should
be described in an amendment or supplement to the Proxy Statement, the
Corporation will file and disseminate, as required, an amendment or supplement
which complies in all material respects with the Exchange Act and the rules and
regulations thereunder and any other applicable laws. None of the information
supplied by the Corporation for inclusion or incorporation by reference in (i)
the Offer Documents or (ii) the Proxy Statement, will, in the case of the Offer
Documents, at the respective times the Offer Documents are filed with the SEC,
or, in the case of the Proxy Statement, at the date such information is supplied
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made,
in light of the circumstance under which they are made, not misleading. None of
the information in the Schedule 14D-9, at the respective times the Schedule
14D-9 is filed with the SEC, will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which they are made, not misleading.
Notwithstanding the foregoing, no representation or warranty is made by
Corporation with respect to any information with respect to Parent, Sub or their
officers, directors or affiliates provided to the Corporation by Parent or Sub
in writing for inclusion in the Schedule 14D-9. The Schedule 14D-9 will comply
in all material respects with the Exchange Act and the rules and regulations
thereunder and any other applicable laws. If at any time prior to the expiration
or termination of the Offer any event occurs which should be described in an
amendment or supplement to the Schedule 14D-9 or any amendment or supplement
thereto, the Corporation will file and disseminate, as required, an amendment or
supplement which complies in all material respects with the Exchange Act the
rules and regulations thereunder and any other applicable laws. Prior to its
filing with the SEC, the amendment or supplement shall be delivered to Parent
and Sub and their counsel.
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation represents and warrants to Parent and Sub that:
SECTION 3.1. CORPORATE EXISTENCE AND POWER. The Corporation is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all corporate power, authority and legal right to
conduct its business as it is now being conducted and to own the properties and
assets it now owns. Except as shown in Paragraph 3.1 of the Disclosure Letter
("DL") heretofore prepared by the Corporation and delivered to Parent, foreign
corporation and is in good standing in every jurisdiction, both domestic and
foreign, where the character of the property owned or leased by it or the nature
of its activities makes such qualification necessary, except where the continued
failure to be so qualified or licensed is not reasonably likely to have a
Material Adverse Effect on the Corporation. The Corporation has previously
delivered to Purchaser true and correct copies of the Corporation's Certificate
of Incorporation and By-Laws, as currently in effect.
SECTION 3.2. CORPORATE AUTHORIZATION. The Corporation has full corporate
power and authority to enter into this Agreement and, subject to obtaining the
necessary approval of the Merger by its stockholders, to carry out the
transactions contemplated hereby. The Board of Directors of the Corporation has
taken all actions required by applicable law and its Certificate of
Incorporation and By-Laws to authorize the execution and delivery by the
Corporation of this Agreement and, subject to obtaining the approval of the
Merger by the holders of not less than two-thirds of the outstanding shares, the
performance by the Corporation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Corporation
and no other corporate action is necessary in connection therewith (other than
the approval of the Merger by the holders of a two- thirds of the outstanding
shares of Common Stock entitled to vote), and this Agreement (assuming the due
authorization, execution and delivery hereof by Parent and Sub) is a legal,
valid and binding obligation of the Corporation enforceable against it in
accordance with its terms, except to the extent that enforcement may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general equitable principles
(regardless of whether enforcement is sought in equity or at law).
SECTION 3.3. CONSENTS AND APPROVALS; NO VIOLATIONS. Assuming (i) the filings
required under the HSR Act are made and the waiting period thereunder has been
terminated or has expired, (ii) the requirements of the Exchange Act relating to
the Proxy Statement (if required) and the Offer are met, (iii) the filing of the
Certificate of Merger and other appropriate merger documents, if any, as
required by DGCL are made and (iv) approval of the Merger by holders two-thirds
of the outstanding shares of Common Stock entitled to vote, if required by the
DGCL, is received, the execution and delivery of this Agreement by the
Corporation and the consummation by the Corporation of the transactions
contemplated hereby will not: (1) violate any provision of the Certificate of
Incorporation or By-Laws of the Corporation or the comparable governing
documents of any of its Subsidiaries, in each case, as amended; (2) violate any
statue, ordinance, rule, regulation, order or decree of any court or of any
governmental or regulatory body, agency or authority applicable to the
Corporation or any of its Subsidiaries or by which any of their respective
properties or assets may be bound; (3) except as set forth in DL 3.3, require
any filing with, or permit, consent or approval of, or the giving of any notice
to, any governmental or regulatory body, agency or authority; or (4) except as
set forth in DL 3.3, result in a violation or breach of, conflict with,
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, payment or acceleration)
under, or result in the creation of any mortgage, pledge, lien, security
interest, encumbrance or charge of any kind (each an "Encumbrance") upon any of
the properties or assets of the Corporation or any of its Subsidiaries under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, franchise, permit, agreement, lease, franchise agreement or
other instrument or obligation to which the Corporation or any of its
Subsidiaries is a party, or by which it or any of their respective properties or
assets are bound or subject, except for in the case of clauses (3) and (4) above
for any such filing, permit, consent, approval, violation, breach or Encumbrance
which would not reasonably be expected to (a) have a Material Adverse Effect on
the Corporation and its Subsidiaries, taken as a whole, or (b) prevent or
materially delay consummation of the transactions contemplated by this
Agreement.
SECTION 3.4. COMPLIANCE WITH LAWS. Subject to Section 3.16 and except as set
forth in DL 3.4, the Corporation and its Subsidiaries are in compliance with all
applicable laws, regulations, orders, judgements and decrees (including, but not
limited to, the Fair Debt Collection Practices Act and any state or local
counterpart or equivalent) except where the failure to so comply would not be
reasonably likely to (i) have a Material Adverse Effect on the Corporation and
its Subsidiaries taken as a whole or (ii) prevent or materially delay
consummation of the transactions contemplated by this Agreement.
SECTION 3.5. CAPITALIZATION. The authorized capital stock of the Corporation
consists of 15,000,000 shares of common stock, par value $.50 per share, and
500,000 shares of preferred stock, par value $.50 per share. As of December 22,
1997, there were issued and outstanding 5,802,641 shares of such common stock
(not including 2,944,837 shares held in the Corporation's treasury), all of
which are of one class, and no shares of such preferred stock. All issued and
outstanding shares of Corporation Stock have been duly authorized and validly
issued and are fully paid and nonassessable and are not subject to, nor were
they issued in violation of, any preemptive rights. As of December 22, 1997,
728,548 shares of Corporation Stock were issuable upon exercise of Options to
purchase such stock, which Options were issued pursuant to the Stock Plans (as
defined in Section 1.4), which plans are listed in DL 3.5(i). Except as set
forth in this Section, in DL 3.5(i) or in the Rights Agreement, as of the date
hereof there are no, and at the Effective Time there will be no, (i) other
outstanding shares of, (ii) securities of the Corporation convertible into or
exchangeable for, (iii) options or other rights (including any pre-emptive
rights) to acquire from the Corporation, or (iv) other contracts,
understandings, arrangements or obligations (whether or not contingent)
providing for the issuance or sale by the Corporation, directly or indirectly,
of, any capital stock or other equity or debt security of the Corporation. As of
the date hereof, except as set forth in DL 3.5(i) or in connection with the
exercise of any Options, there are no, and at the Effective Time there will be
no, outstanding contractual obligations of the Corporation to repurchase, redeem
or otherwise acquire any outstanding shares of Corporation Stock or other
securities issued by the Corporation.
SECTION 3.6. SUBSIDIARIES. Attached hereto as DL 3.6 is a true and complete
list of each subsidiary of the Corporation (the "Subsidiaries"), and except as
set forth on DL 3.6, each of the Subsidiaries is duly incorporated and validly
existing as a corporation in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now conducted and to own the properties and assets it now owns. Except
as set forth in DL 3.6, each of the Subsidiaries is duly qualified or licensed
to do business as a foreign corporation and is in good standing in every
jurisdiction, both domestic and foreign, where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified or licensed is not
reasonably likely to have a Material Adverse Effect on the Corporation and its
Subsidiaries, taken as a whole. All Subsidiaries are wholly owned, directly or
indirectly, by the Corporation. Except for the Subsidiaries or as set forth in
DL 3.6, the Corporation does not own, directly or indirectly, securities or
other ownership interests in any other entity and except as set forth in DL 3.6,
neither the Corporation nor any of its Subsidiaries is subject to any obligation
or requirement to provide funds for or to make any investment (in the form of a
loan, capital contribution or otherwise) to or in any entity other than a
Subsidiary. All of the shares of capital stock of the Subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable, are not
subject to, nor were they issued in violation of, any preemptive rights, and are
owned, directly or indirectly, by the Corporation free and clear of all
Encumbrances, options or claims whatsoever. No shares of capital stock of any of
the Subsidiaries are reserved for issuance and there are no outstanding or
authorized options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, rights of redemption, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to the
capital stock of any Subsidiary, pursuant to which such Subsidiary is or may
become obligated to issue any shares of capital stock of such Subsidiary or any
securities convertible into, exchangeable for, or evidenced in the right to
subscribe for, any shares of such Subsidiary. Except as set forth in DL 3.6(ii),
there are no restrictions of any kind which prevent the payment of dividends by
any of the Subsidiaries.
SECTION 3.7. SEC FILINGS. (a) The Corporation has previously delivered to
Parent a true, correct and complete copy of the Corporation's Annual Reports on
Form 10-K for the years ended June 30, 1996 and June 30, 1997 (the "Corporation
10-Ks"), the Corporation's proxy statement relating to its annual meeting of
stockholders to be held on November 19, 1997, all other reports or registration
statements filed by the Corporation with the SEC since June 30, 1996, and all
amendments and supplements to the foregoing (the "Corporation Filings"). Each of
the Corporation Filings has been timely filed, subject to any allowable
extensions, and was prepared in all material respects in accordance with the
requirements of the Securities Act or a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Corporation Filings constitute all of the documents required to
be filed by the Corporation with the SEC since June 30, 1996.
(b) None of the information supplied to Parent by the Corporation for
inclusion in the Offer Documents will, at the respective times such Offer
Documents or any amendments or supplements thereto are filed with the SEC or are
first published, sent or given to stockholders, as the case may be, contain any
untrue statement of 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.
SECTION 3.8. FINANCIAL STATEMENTS. The financial statements (including the
notes thereto) (the "Corporation Financial Statements") of the Corporation and
its Subsidiaries included in the Corporation Filings fairly present, in all
material respects, the consolidated financial position of the Corporation and
its Subsidiaries as of the respective dates thereof and the consolidated results
of its operations, cash flows and stockholders' equity for the respective
periods then ended, all in conformity with generally accepted accounting
principles applied on a consistent basis ("GAAP"), except as indicated in the
notes thereto.
SECTION 3.9. NO UNDISCLOSED LIABILITIES. Except as set forth in DL 3.9 (the
"Corporation Disclosed Liabilities"), the Corporation has no liabilities, claims
or other obligations (absolute, accrued, or contingent) (herein referred to as
the "Corporation Liabilities") except (a) Corporation Liabilities which are
accrued or otherwise reflected on the Corporation Financial Statements or
disclosed in the notes thereto, (b) Corporation Liabilities incurred in the
ordinary course of business since June 30, 1997 (the "Balance Sheet Date"), (c)
Corporation Liabilities which are otherwise disclosed in the Corporation
Filings, (d) Corporation Liabilities otherwise permitted by this Agreement, and
(e) Corporation Liabilities which would not reasonably be expected to have a
Material Adverse Effect.
SECTION 3.10. ABSENCE OF CERTAIN CHANGES. Except as set forth in DL 3.10,
since the Balance Sheet Date, neither the Corporation nor any of the
Subsidiaries has:
(a) suffered any Material Adverse Effect;
(b) except for transactions contemplated by this Agreement, made any
declaration, setting aside or payment of any dividend or other distribution with
respect to its capital stock, except dividends from Subsidiaries to Corporation;
(c) made any change in accounting principles except for the adoption of such
accounting principles which have, pursuant to the rules of the Financial
Accounting Standards Board or the SEC, become effective for the Corporation's
fiscal year ending June 30, 1998;
(d) granted any general increase in the compensation of its directors,
officers or employees or any increase in compensation payable to or to be
payable to any such director, officer, or employee, except for increases in the
ordinary course of business and consistent with past practice or as previously
disclosed to Parent;
(e) made any capital expenditures (other than (i) capital expenditures in
the ordinary course of business and consistent with past practice, (ii) as
provided in Section 5.1(b)(iii), and (iii) as otherwise provided in any Material
Contracts listed in DL 3.18);
(f) incurred any material increase in net borrowings outstanding under the
Amended and Restated Credit Agreement by and between the Corporation and The
First National Bank of Boston (now, Bank of Boston Connecticut) dated as of
December 31, 1994, as amended by the Amendment dated October 23, 1996 (the
"Credit Agreement") or incurred any other indebtedness (except in each case in
the ordinary course of business);
(g) taken any action referred to in Sections 5.1, 5.2 and 5.13, except as
permitted thereby; or
(h) agreed, whether in writing or otherwise, to take any action described in
this Section, except as otherwise contemplated herein.
SECTION 3.11. TITLE TO PROPERTIES; ENCUMBRANCES. Except as set forth in DL
3.11:
(a) the Corporation and each of the Subsidiaries have good and marketable
title to their respective material properties and assets reflected on the
Corporation's balance sheet included in the Corporation's Form 10-K, for the
fiscal year ending June 30, 1997 (the "1997 10-K"), except for (i) assets
related to capitalized leases and (ii) properties and assets sold or disposed of
since the Balance Sheet Date in the ordinary course of business;
(b) none of the properties or assets of the Corporation or any of the
Subsidiaries is subject to any mortgage, pledge, lien, security interest,
encumbrance or charge of any kind (collectively referred to herein as "Liens")
except the following (herein called "Permitted Liens"): (i) Liens reflected on
the Corporation Financial Statements (including the notes thereto), (ii) public
or statutory Liens or liens of lessors, carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen or other like Liens arising in the ordinary
course of business, (iii) Liens incurred or deposits made in connection with
workers' compensation, unemployment insurance and other types of social security
benefits, (iv) Liens which individually or in the aggregate do not materially
detract from the value, use or enjoyment of such properties or assets or
otherwise would have a Material Adverse Effect on the business operations of the
Corporation and the Subsidiaries, taken as a whole; and (v) Liens with respect
to taxes, assessments and charges not yet due or the validity of which are being
contested in good faith by appropriate actions.
SECTION 3.12. LITIGATION. Subject to Section 3.16 and except as set forth in
DL 3.12 or as disclosed in the Corporation Filings, there are no actions, suits,
proceedings or investigations pending or, to the knowledge of the Corporation,
threatened against the Corporation or any of the Subsidiaries before any court
or arbitrator or any governmental body, agency or official which (i) are
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect on the Corporation and the Subsidiaries, taken as a whole, (ii) question
or challenge the validity of this Agreement or the transactions contemplated
hereby, or (iii) would be reasonably likely to prevent or materially delay
consummation of the transactions contemplated hereby.
SECTION 3.13. TAXES. Except as set forth in DL 3.13 or where such failure to
duly file or pay would not be reasonably likely to have a Material Adverse
Effect on the Corporation and its Subsidiaries, taken as a whole:
(i) TAX RETURNS. The Corporation and each of its Subsidiaries has timely
filed or caused to be timely filed with the appropriate taxing authorities all
Federal and other returns, statements, forms and reports for Taxes (as
hereinafter defined) ("Returns") that are required to be filed by, or with
respect to, the Corporation and such Subsidiaries. The Returns reflect
accurately all liability for Taxes of the Corporation and such Subsidiaries for
the periods covered thereby. "Taxes" means all taxes, assessments, charges,
duties, fees, levies or other governmental charges, including, without
limitation, all Federal, state, local, foreign, and other income, franchise,
profits, capital gains, capital stock, transfer, sales, use, occupation,
property, excise, severance, windfall profits, stamp, license, payroll,
withholding and other taxes, assessments, charges, duties, fees, levies or other
governmental charges of any kind whatsoever (whether payable directly or by
withholding and whether or not requiring the filing of a Return), all estimated
taxes, deficiency assessments, additions to tax, penalties and interest and
shall include any liability for such amounts as a result either of being a
member of a combined, consolidated, unitary or affiliated group or of a
contractual obligation to indemnify any person or other entity;
(ii) PAYMENT OF TAXES. All Taxes and Tax liabilities of the Corporation and
its Subsidiaries have been timely paid or adequately disclosed and fully
provided for as a liability on the consolidated financial statements of the
Corporation and its Subsidiaries in accordance with GAAP; and
(iii) OTHER TAX MATTERS. (A) DL 3.13(iii)(A) sets forth (1) each taxable
year or other taxable period of the Corporation or any of its Subsidiaries for
which an audit or other examination of Taxes by the appropriate tax authorities
of any nation, state or locality is currently in progress (or, to the knowledge
of the Corporation, scheduled to be conducted) together with the names of the
respective tax authorities conducting (or scheduled to conduct) such audits or
examinations and a description of the subject matter of such audits or
examinations, (2) the most recent taxable year or other taxable period for which
an audit or other examination relating to Federal income taxes of the
Corporation and its Subsidiaries has been finally completed and the disposition
of such audit or examination, (3) the taxable years or other taxable periods of
the Corporation or any of its Subsidiaries which will not be subject to the
normally applicable statute of limitations by reason of the existence of
circumstances that would cause any such statute of limitations for applicable
Taxes to be extended, (4) the amount of any proposed adjustments (and the
principal reason therefor) relating to any Returns for Tax liability of the
Corporation or any of its Subsidiaries which have been proposed or assessed by
any taxing authority and (5) a list of all notices received by the Corporation
or any of its Subsidiaries from any taxing authority relating to any issue which
could affect the Tax liability of the Corporation or any of its Subsidiaries,
which issue has not been finally determined and which, if determined adversely
to the Corporation or any such subsidiaries, could result in a Tax liability.
(B) Except as shown in DL 3.13(iii)(B), neither the Corporation nor any of
its Subsidiaries has been included in any "consolidated," "unitary" or
"combined" Return (other than Returns which include only the Corporation and any
Subsidiaries of the Corporation) provided for under the law of the United
States, any foreign jurisdiction or any state or locality with respect to Taxes
for any taxable period for which the statute of limitations has not expired.
(C) All Taxes which the Corporation or any of its Subsidiaries is (or was)
required by law to withhold or collect have been duly withheld or collected, and
have been timely paid over to the proper authorities to the extent due and
payable.
(D) Except as previously disclosed to Parent, the Corporation is not a party
to any agreement that would require it to make any payment that would constitute
an "excess parachute payment" for purposes of Sections 280G and 4999 of the
Internal Revenue Code of 1986, as amended (the "Code").
(E) There are no tax sharing, allocation, indemnification or similar
agreements or arrangements in effect as between the Corporation, any Subsidiary,
or any predecessor or affiliate thereof and any other party under which Parent,
Sub or the Corporation (or any of its Subsidiaries) could be liable for any
Taxes or other claims of any other party under such agreements or arrangements.
(F) No indebtedness of the Corporation or any of its Subsidiaries consists
of "corporate acquisition indebtedness" within the meaning of Section 279 of the
Code.
(G) Neither the Corporation nor any of its Subsidiaries will be required to
include in income any adjustment pursuant to Section 481 of the Code by reason
of a voluntary change in accounting method initiated by the Corporation or any
of its Subsidiaries after the date hereof and during the period ending at the
time of the Share Purchase, and the Internal Revenue Service has not initiated
or proposed any such adjustment or change in accounting method.
SECTION 3.14. EMPLOYEE BENEFIT PLANS. Set forth in DL 3.14 is an accurate
and complete list of each domestic and foreign employee benefit plan, within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations thereunder ("ERISA"), whether or not
subject to ERISA, and each stock option, stock appreciation right, restricted
stock, incentive, bonus, profit-sharing, savings, deferred compensation, health,
medical, life, disability, accident, supplemental unemployment or retirement,
employment, severance or salary or benefits continuation plan, program,
arrangement or agreement maintained by the Corporation or any of its
Subsidiaries or affiliates (including, for this purpose and for the purpose of
all of the representations in this Section 3.14, any predecessors to the
Corporation or to any such Subsidiaries or affiliates and all employers (whether
or not incorporated) that would be treated together with the Corporation and/or
any of its Subsidiaries as a single employer within the meaning of Section 414
of the Code, or to which the Corporation or any such Subsidiary or affiliate
contributes (or has any obligation to contribute), has any liability or is a
party (collectively, the "Employee Benefit Plans"). Except to the extent that
any breach of the following representations could not reasonably be expected to
have a Material Adverse Effect on the Corporation or as disclosed in DL 3.14,(i)
each Employee Benefit Plan (and each related trust, insurance contract or fund)
is in compliance with applicable law (including, without limitation, ERISA and
the Code) and has been administered and operated in all respects in accordance
with its terms;(ii) except as set forth in DL 3.14, each Employee Benefit Plan
which is intended to be "qualified" within the meaning of Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service, and no event has occurred and no condition exists which could
reasonably be expected to result in the revocation of any such
determination;(iii) no complete or partial termination of any Employee Benefit
Plan covered by Title IV of ERISA has occurred and no proceedings have been
instituted to terminate or appoint a trustee to administer any such Employee
Benefit Plan, and no such Employee Benefit Plan has been the subject of a
"reportable event" (as defined in Section 4043 of ERISA) for which the 30-day
notice requirement has not been waived by the Pension Benefit Guaranty
Corporation (the "PBGC"); (iv)neither the Corporation nor any of its
Subsidiaries has incurred any unsatisfied liability to the PBGC with respect to
any Employee Benefit Plan which is an "employee pension benefit plan" (within
the meaning of Section 3(2) of ERISA), including, without limitation, any
liability under Section 4069 of ERISA or any penalty imposed under Section 4071
of ERISA, or otherwise incurred any liability under Title IV of ERISA or Chapter
43 of the Code with respect to any such Employee Benefit Plan, and no event has
occurred and no condition or circumstance has existed that would give rise to
any such liability;(v) no Employee Benefit Plan subject to Section 412 of the
Code or Section 302 of ERISA has incurred any accumulated funding deficiency
within the meaning of such sections of the Code or ERISA or obtained or applied
for a waiver of any minimum funding standards or an extension of any
amortization period under Section 412 of the Code or Section 303 or 304 of
ERISA;(vi) the actuarial present value of the accumulated plan benefits under
any Employee Benefit Plan that is an "employee pension benefit plan" (within the
meaning of Section 3(2) of ERISA), whether or not vested and determined in
accordance with PBGC actuarial methods, factors and assumptions applicable to
such a plan terminating on the Closing Date, does not exceed the fair value of
the assets allocable thereto;(vii) no Employee Benefit Plan is a "multi-employer
plan" (as defined in the Code or Section 4001(a)(3) of ERISA) or a "multiple
employer plan" (within the meaning of the Code or ERISA) and neither the
Corporation nor any Subsidiary contributes to or has contributed to, or had any
liability or obligation with respect to any multi-employer plan;(viii) full
payment has been timely made of all amounts which the Corporation or any of its
Subsidiaries is required under applicable law or under any Employee Benefit Plan
or related agreement to have paid as of the last day of the most recent fiscal
year, of such Employee Benefit Plan or related agreement ended prior to the date
hereof, and the Corporation and its Subsidiaries have made adequate provisions,
in accordance with GAAP, in their financial statements for all obligations and
liabilities under all Employee Benefit Plans that have accrued but have not been
paid because they are not yet due under the terms of any such Employee Benefit
Plan, related agreement, or applicable law;(ix) neither the Corporation nor any
of its Subsidiaries have any unfunded liabilities pursuant to any Employee
Benefit Plan which is an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) that is not intended to be qualified under Section 401(a)
of the Code; (x) the applicable requirements of Part 6 of Subtitle B of Title I
of ERISA and Section 4980B of the Code have been met with respect to each
Employee Benefit Plan that is a "group health plan" (as such term is defined in
Section 607(1) of ERISA or Section 5000(b)(1) of the Code);(xi) no Employee
Benefit Plan provides for post-employment or retiree health, life insurance or
other welfare benefits which could result in a material liability of the
Corporation or any Subsidiary;(xii) neither the Corporation nor any Subsidiary,
nor any of their respective directors, officers or employees, or, to
Corporation's knowledge, any other "disqualified person" or "party in interest"
(as defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA,
respectively) has engaged in any transaction, act or omission to act in
connection with any Employee Benefit Plan that could reasonably be expected to
result in the imposition of a penalty or fine pursuant to Section 502 of ERISA,
damages pursuant to Section 409 of ERISA or a tax pursuant to Section 4975 of
the Code;(xiii) no plan or agreement to which the Corporation or any Subsidiary
is a party or by which it may be bound will or may, by reason of the execution
of this Agreement and the consummation of the transactions contemplated hereby
(either alone or upon the occurrence of any additional or subsequent event),
result in any payment, "parachute payment" (as such term is defined in Section
280G of the Code), severance, bonus, retirement or job security or similar-type
benefit, or increase any benefits or accelerate the payment or vesting of any
benefits to any employee or former employee or director of the Corporation or
any Subsidiary, and no Employee Benefit Plan provides for the payment of
severance, termination, change in control or similar-type payments or benefits;
and (xiv) no liability, claim, action, audit, examination or litigation is
pending or, to the Corporation's knowledge, threatened with respect to any
Employee Benefit Plan (other than routine claims for benefits payable in the
ordinary course).
SECTION 3.15. BROKERS. There is no investment banker, broker, finder or
other intermediary other than CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. which or who has been
retained by, or is authorized to act for, the Corporation in connection with the
transactions contemplated by this Agreement or is otherwise entitled to payment
of any fee or commission.
SECTION 3.16. ENVIRONMENTAL MATTERS.
(a) PROVISION CONTROLS. Anything elsewhere in this Agreement to the contrary
notwithstanding, this Section 3.16 contains the entire agreement and
understanding of the parties relating to environmental representations and
warranties concerning the Corporation and the Subsidiaries.
(b) ENVIRONMENTAL DISCLOSURES. DL 3.16 sets forth all environmental matters
that are within the scope of the specific categories set forth below which,
individually or in the aggregate, could reasonably be expected to have a
Materially Adverse Effect on the Corporation and the Subsidiaries taken as a
whole:
(1) all permits, licenses and other authorizations possessed by the
Corporation and the Subsidiaries issued under Federal, state or local laws
relating to pollution or protection of worker or public health, safety or
the environment (collectively, the "Environmental Permits"), whether based
on statute, regulation, common law, equity or any other legal theory (the
"Environmental Laws") including, but not limited to, those relating to
emissions, discharges, releases or threatened releases of hazardous
substances, pollutants, contaminants, or hazardous or toxic material or
wastes into ambient air, surface water, groundwater or land ("Releases").
Each of such Releases and violations of an Environmental Law is referred to
herein as an "Environmental Incident";
(2) to the knowledge of the Corporation, all violations by the
Corporation or any Subsidiary of the terms and conditions of any
Environmental Permits or Environmental Laws or of any other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in Environmental Laws;
applicable orders, agreements, variances, injunctions, decrees, writs,
judgments, awards or arbitration awards relating thereto; and all past or
present events, conditions, circumstances, activities, practices, incidents,
actions or plans concerning the business or operations of the Corporation or
any of its Subsidiaries or any entity that was formerly a subsidiary or a
controlled affiliate of the Corporation which may give rise to any legal
liability of the Corporation or any of its Subsidiaries under any
Environmental Law or otherwise from any claim, action, suit, proceeding,
hearing or investigation in connection with any Environmental Incident;
(3) all orders (including, without limitations, decrees, writs,
judgments, awards or notice or demand letters) or agreements issued,
entered, promulgated or approved by any Person under or in connection with
Environmental Laws which bind, restrict, obligate, or otherwise apply to the
Corporation or any of the Subsidiaries or any of their respective properties
or assets, which remain in effect or which were issued or effective during
the five years prior to the date of this Agreement;
(4) all actions, claims, suits, proceedings or investigations under any
Environmental Laws either pending or, to the knowledge of the Corporation,
threatened against the Corporation or any of the Subsidiaries or any of
their respective properties or assets before any court or arbitrator or any
Governmental Authority;
(5) all agreements (including, but not limited to, consent orders and
agreements among potentially responsible parties) to which the Corporation
or any of the Subsidiaries is a party and which relate to benefits
(including, but not limited to, indemnification) or obligations of the
Corporation or any of the Subsidiaries in connection with Environmental Laws
or any Environmental Incident, and any effect that the transactions
contemplated by this Agreement will have on the benefits (including, without
limitation, indemnification) granted to the Corporation or any of the
Subsidiaries under any such agreements including any assignments or
approvals required in connection with such benefits;
(6) any Owned Real Property or Leased Real Property, whether or not set
forth in DL 3.11, that is subject to any applicable law that conditions,
restricts, prohibits, or requires any notification or disclosure in
connection with the transactions contemplated hereby for environmental
reasons ("Environmental Property Transfer or Disclosure Law"). To the extent
an Environmental Property Transfer or Disclosure Law is applicable to any
such Owned Real Property or Leased Real Property in connection with the
transactions contemplated hereby, as and when appropriate the Corporation
will take (or cooperate with Parent in taking), such action as is necessary
to fully comply with the requirements of such laws; and
(7) any proceeding or investigation concerning criminal violations of
any Environmental Law to which the Corporation and its Subsidiaries or any
entity that was formerly a subsidiary or controlled affiliate of the
Corporation, are, or have been, subject at any time during the past 10
years.
(c) CONDUCT OF BUSINESS BY THE CORPORATION PENDING THE EFFECTIVE TIME.
Anything elsewhere in this Agreement to the contrary notwithstanding, the
Corporation retains the right, with prior notice to Parent, to take only the
actions and make only the payouts set forth in DL 3.16A, if required, with
respect to environmental matters.
SECTION 3.17. PROPRIETARY RIGHTS. Except as set forth in DL 3.17, as of the
date hereof the Corporation has received no notice that it or any of its
Subsidiaries has infringed, and to the knowledge of the Corporation neither it
nor any of its Subsidiaries is now infringing, on any patent, trade name,
trademark, service ▇▇▇▇, copyright, trade secret, technology, know-how or
process (collectively, the "Proprietary Rights") belonging to any other person,
which infringement, in the aggregate, would have a Material Adverse Effect on
the Corporation and its Subsidiaries, taken as a whole. Except as set forth in
DL 3.17, (i) the Corporation is not aware of any infringement by any third party
of any Proprietary Rights of the Corporation or any of its Subsidiaries, and
(ii) neither the Corporation nor any of its Subsidiaries is a party to any
material license, agreement or arrangement with respect to any Proprietary
Rights. DL 3.17 lists all the Proprietary Rights owned by the Corporation or any
of the Subsidiaries that are composed of registered patents, trade names,
trademarks, service marks or copyrights that are material to its business and
sets forth, if and as applicable, the registration number, country, application,
registration and expiration dates, and class with respect to such Proprietary
Rights.
SECTION 3.18. MATERIAL CONTRACTS AND LEASES. The list of agreements set
forth in DL 3.18 includes all the Material Contracts (as defined below) that the
Corporation or any of the Subsidiaries is party to, or is bound by. For purposes
of this Agreement, a "Material Contract" shall mean (i) any contract, lease or
other agreement (except for purchase orders entered into in the ordinary course
of business and contracts and agreements cancelable by the Corporation or any of
its Subsidiaries at will or on notice of 30 days or less) to which the
Corporation or any of its Subsidiaries is a party or by which the Corporation or
any of its Subsidiaries is bound, which by its terms calls for the payment by
either party to such contract or agreement of $250,000 or more in any fiscal
year or is material to the business, operations or financial condition of the
Corporation and its subsidiaries, taken as a whole, (ii) any material agreement,
contract or commitment not in the ordinary course of business, (iii) any
agreement, indenture or other instrument which contains restrictions with
respect to payment of dividends or any other distribution in respect of its
capital stock, (iv) any agreement, contract or commitment to be performed
relating to capital expenditures in excess of $100,000 in any calendar year, or
in the aggregate requiring expenditures in excess of $1,000,000, (v) any
material agreement, indenture or instrument relating to indebtedness for
borrowed money or the deferred purchase price of property (excluding trade
payables in the ordinary course of business, intercompany indebtedness,
intercompany transfers, and operating leases), (vi) any loan or advance to
(other than advances to employees in the ordinary course of business in amounts
of $25,000 or less to any individual and $100,000 in the aggregate to all
employees), or investment in (other than investments in Subsidiaries), any
Person, or any agreement, contract or commitment relating to the making of any
such loan, advance or investment or any agreement, contract or commitment
involving a sharing of profits (except for bonus or commission arrangements with
employees entered into in the ordinary course of business consistent with past
practice), (vii) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any Person (other than in the ordinary course of
business and other than with respect to any indebtedness or obligation of the
Corporation or any Subsidiary), (viii) any management service, consulting or any
other similar type of contract (other than contingent fee agreements with
collection attorneys), involving payments of more than $150,000 annually, unless
terminable by the Corporation or Subsidiary on not more than 90 days notice,(ix)
any agreement, contract or commitment limiting the ability of the Corporation or
any of its Subsidiaries to engage in any line of business or to compete with any
Person, (x) any warranty, guaranty or other similar undertaking with respect to
a contractual performance extended by the Corporation or any of its Subsidiaries
other than in the ordinary course of business, or (xi) any agreement, contract
or commitment to employ any of its officers or employees, and (xii) any material
amendment, modification or supplement in respect of any of the foregoing.
Neither the Corporation nor any of its Subsidiaries is in default under any
Material Contract, except for such defaults which will not, individually or in
the aggregate, have a Material Adverse Effect on the Corporation and its
Subsidiaries, taken as a whole. Except as shown in DL 3.18, no approval or
consent of, or notice to, any person is needed in order that each such Material
Contract shall continue in full force and effect in accordance with its terms
without penalty, acceleration or rights of early termination by reason of the
consummation of the transactions contemplated by this Agreement.
SECTION 3.19. INSURANCE. DL 3.19 sets forth a list of all material policies
of insurance maintained on the date hereof by the Corporation and each of its
Subsidiaries with respect to their respective businesses, which policies are
currently in full force and effect. As of the date hereof, except as set forth
in DL 3.19, neither the Corporation nor any of its Subsidiaries has received
notice of cancellation or refusal to renew with respect to any insurance policy
set forth in DL 3.19.
SECTION 3.20. LABOR RELATIONS. Neither the Corporation nor any of its
Subsidiaries is currently party to any collective bargaining agreement with
respect to any of its employees. The Corporation has previously furnished or
made available to Parent a true, complete and correct copy of the handbooks and
administrative policies and practices relating to employees of the Corporation
and its Subsidiaries and any other material agreement regarding its relationship
with the Corporation's employees or those of its Subsidiaries. Except as set
forth in DL 3.20 and except for any violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect,
each of the Corporation and its Subsidiaries is in substantial compliance with
all federal, state or other applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and has not
and is not engaged in any unfair labor practice. Except as disclosed in DL 3.20
or in the Corporation Filings, there exist no employment, consulting, severance,
indemnification agreements or deferred compensation agreements between the
Corporation and any director, officer or employee of the Corporation or any
agreement that would give any Person the right to receive any payment from the
Corporation as a result of the Offer or the Merger.
SECTION 3.21. VOTING REQUIREMENTS. After the Share Purchase, the affirmative
vote of the holders of two-thirds of the outstanding shares of Corporation
Common Stock entitled to be cast approving this Agreement is the only vote of
the holders of any class or series of the Corporation's capital stock necessary
to approve this Agreement and the transactions contemplated by this Agreement.
SECTION 3.22. RIGHTS AGREEMENT. The Corporation and the Board of Directors
of the Corporation have taken and will maintain in effect during the term of
this Agreement all necessary action to (i) render the Rights Agreement
inapplicable with respect to the Offer, the Merger and the other transactions
contemplated by this Agreement, and (ii) ensure that (x) neither Parent, nor
Sub, nor any of their Affiliates, or Associates (each as defined in the Rights
Agreement) is considered to be an Acquiring Person (as defined in the Rights
Agreement) and (y) the provisions of the Rights Agreement, including the
occurrence of a Distribution Date (as defined in the Rights Agreement), are not
and shall not be triggered by reason of the announcement or consummation of the
Offer, the Merger or the other transactions contemplated by this Agreement. The
Corporation has delivered to Parent a complete and correct copy of the Rights
Agreement as amended and supplemented to the date of this Agreement. The Board
of Directors of the Corporation, at a meeting duly called and held, has resolved
that the Rights shall be redeemed immediately prior to, and subject to, the
acceptance for payment and purchase of not less than two-thirds of the
outstanding Shares pursuant to the Offer in accordance with the terms of this
Agreement.
SECTION 3.23. CUSTOMERS RELATIONS. Except as disclosed on DL 3.23, none of
the top twenty customers of the Corporation (based on the Corporation's
consolidated revenues for the fiscal year ended June 30, 1997) has notified the
Corporation or any of its Subsidiaries that it intends to either (i) terminate
or modify in a manner materially adverse to the Corporation or any of its
Subsidiaries its contractual arrangements with the Corporation or any of its
Subsidiaries or (ii) substantially curtail the amount of business it currently
does with the Corporation or any of its Subsidiaries.
SECTION 3.24. OPINION OF FINANCIAL ADVISOR. The Corporation has received the
opinion of CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp., to the effect that, as of the date of this
Agreement, the consideration to be received in the Offer and the Merger by the
Corporation's shareholders is fair to the Corporation's shareholders form a
financial point of view, and a complete and correct signed copy of such opinion
has been, or promptly upon receipt thereof will be, delivered to Parent.
ARTICLE IV--REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub represents and warrants to the Corporation that:
SECTION 4.1. CORPORATE EXISTENCE AND POWER. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware, and each has all corporate power, authority and legal right to
conduct its business as it is now being conducted and to own the properties and
assets it now owns. Parent and Sub have delivered to Corporation true, compete
and correct copies of their respective certificates of incorporation and
by-laws.
SECTION 4.2. CORPORATE AUTHORIZATION. Each of Parent and Sub (a) has full
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby, (b) has taken all action required by
applicable law and its Certificate of Incorporation and By-Laws, including the
authorization of this Agreement and the transactions contemplated hereby by
their respective Boards of Directors and (if required) stockholders, to
authorize the execution and delivery of this Agreement and the performance by
Parent and Sub of the transactions contemplated hereby, (c) has duly and validly
executed and delivered this Agreement and no other corporate action is necessary
in connection therewith. This Agreement (assuming the due authorization,
execution and delivery hereof by the Corporation) is a legal, valid and binding
obligation of each of Parent and Sub enforceable against each of them in
accordance with its terms, except to the extent that enforcement may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by general equitable principles
(regardless of whether enforcement is sought in equity or at law).
SECTION 4.3. CONSENTS AND APPROVALS. Except as contemplated by Section 4.6
hereof and except for the requirements of the federal and state securities laws
and the HSR Act, and assuming the filing of the Certificate of Merger and other
appropriate merger documents, if any, as required by the laws of the State of
Delaware, no consent, approval or authorization of, or declaration, filing or
registration with, any United States or foreign governmental or regulatory
authority or any other person or entity is required to be made or obtained by
Parent or any of its affiliates in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
SECTION 4.4. NO VIOLATION. The execution, delivery and performance of this
Agreement by Parent and Sub and the consummation of the transactions
contemplated hereby (a) will not violate any provision of the respective
Certificates of Incorporation or By-Laws of Parent or Sub or any of their
affiliates, (b) except as set forth in the Disclosure Letter heretofore prepared
by Parent and delivered to the Corporation, will not violate, or be in conflict
with, or constitute a default under any material contract, lease, loan
agreement, license, permit or other agreement to which Parent or any of its
affiliates is a party, or by which Parent or any of its affiliates is bound or
to which it or any of them is subject and (c) will not violate any law,
judgment, decree, order, regulation or rule of any court or governmental
authority by which Parent or any of its affiliates is bound or any of their
respective properties is subject, except in any case where the violation or
default would not materially adversely affect Parent's or Sub's ability to
consummate the transactions contemplated by this Agreement (including, without
limitation, its ability to complete the Share Purchase pursuant to the Offer).
SECTION 4.5. FINANCIAL STATEMENTS. The audited financial statements
(including the notes thereto, the "Parent Audited Financial Statements") of
Parent for its most recently completed fiscal year, a copy of which has
previously been delivered to the Corporation, present fairly, in all material
respects, the consolidated financial position of Parent and its subsidiaries as
of the date thereof and their consolidated results of operations, cash flows and
stockholders' equity for the period then ended, all in conformity with GAAP. The
unaudited financial statements (including the notes thereto) of Parent for the
period ended June 30, 1997, a copy of which has been previously delivered to the
Corporation, were prepared in a manner consistent with the basis of presentation
used in the Parent Audited Financial Statements and in accordance with GAAP, and
fairly present, in all material respects, the consolidated financial position of
Parent and its subsidiaries as at and for the periods indicated, subject to
normal recurring year-end adjustments.
SECTION 4.6. FINANCING. Parent and Sub have obtained letters (copies of
which have been delivered to the Corporation) from responsible financial
institutions providing for, subject to certain conditions set forth therein,
commitments to provide all funds necessary, together with funds available to the
Parent and Sub, to consummate the transactions contemplated hereby.
SECTION 4.7. OFFER DOCUMENTS; OTHER INFORMATION. None of the information
contained in any of the Offer Documents (excluding information described therein
as being supplied by the Corporation with respect to itself) will, at the
respective times such Offer Documents or any amendments or supplements thereto
are filed with the SEC or are first published, sent or given to stockholders, as
the case may be, contain any untrue statement of 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.
SECTION 4.8. LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of Parent or Sub, threatened against
Parent or Sub or any of their affiliates before any court or arbitrator or any
governmental body, agency or official which are reasonably likely, individually
or in the aggregate, to materially adversely affect Parent's or Sub's ability to
consummate the transactions contemplated hereby or which questions or challenges
the validity of this Agreement or the transactions contemplated hereby.
ARTICLE V--CONDUCT OF BUSINESS BY THE CORPORATION PENDING THE CLOSING
From the date hereof until immediately after the Closing (or, if sooner, the
termination of this Agreement), and except as otherwise consented to or approved
by Parent in writing, which consent or approval shall not be unreasonably
withheld or delayed:
SECTION 5.1. REGULAR COURSE OF BUSINESS. (a) The Corporation will, and will
cause its Subsidiaries to, conduct business substantially in the same manner as
heretofore conducted and neither the Corporation nor any of its Subsidiaries
will engage in any transaction or activity, enter into any agreement or make any
commitment (or materially amend any Material Contract existing on the date
hereof), except (i) as set forth on DL 5.1(a), (ii) in the ordinary course of
business and consistent with past practices or pursuant to an agreement to which
the Corporation or any of such Subsidiaries is a party on the date hereof (it
being understood that transactions in the call center outsourcing business shall
be deemed to be within the ordinary course of business of the Corporation and
any Subsidiary which is engaged in such business as of the date hereof), (iii)
as contemplated by this Agreement, or (iv) which would not be reasonably likely
to have a Material Adverse Effect. Except as otherwise permitted by this
Agreement, the Corporation will not, and will cause the Subsidiaries not to,
intentionally take any action that would cause, or intentionally omit to take
any reasonable action that in all likelihood would prevent, any of the
representations and warranties contained in Article III which are qualified as
to materiality to fail to be true and correct in any respect or any
representation or warranty not so qualified to fail to be true and correct in
all material respects, as if such representations and warranties were deemed to
be made at and as of the Closing (except to the extent any such representation
or warranty was expressly made only as of a different date).
(b) Without limiting the generality of subsection (a) of this Section, the
Corporation will not, and will not permit any Subsidiary to, except pursuant to
this Agreement or as otherwise permitted by DL 5.1(b): (i) acquire (by merger,
consolidation or acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof, make any material investment in
any other entity which is not a wholly owned affiliate of the Corporation or
relinquish any material contract rights; (ii) acquire (including by lease) any
material assets or properties or dispose of, mortgage or encumber any of its
material assets or properties (except in each case in the ordinary course of
business and consistent with past practice or pursuant to an agreement to which
the Corporation or any Subsidiary is a party on the date hereof); (iii) make or
commit to make any capital expenditures in excess of $150,000, (iv) make any
change in accounting principles (except as may be required by generally accepted
accounting principles or SEC regulations, in which event, the Corporation will
fully disclose any such change and the reason(s) therefor); (v) sell or pledge
or agree to sell or pledge any stock owned by it in any of its Subsidiaries;
(vi) except to the extent required under existing employee and director benefit
plans, agreements or arrangements as in effect on the date of this Agreement,
increase the compensation or fringe benefits of any of its directors, officers
or employees, except for increases in salary, wages or commissions of employees
of the Corporation or its Subsidiaries who are not officers of the Corporation
in the ordinary course of business in accordance with past practice, or grant
any severance or termination pay not currently required to be paid under
existing severance plans or agreements or enter into any employment, consulting
or severance agreement or arrangement with any present or former director,
officer or other employee of the Corporation or any of its subsidiaries, or
establish, adopt, enter into or amend or terminate any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees; (vii) except for transactions between the
Corporation and Subsidiaries or in the ordinary course of business, transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of, encumber or
subject to any lien, any material assets or incur or modify any indebtedness or
other liability (other than indebtedness incurred under the Amended and Restated
Credit Agreement dated December 31, 1994, between the Corporation and Bank of
Boston, Connecticut (the "Existing Credit Facility"); PROVIDED that there shall
not be any material increase in the amounts outstanding under the Existing
Credit Facility, other than in the ordinary course of business, or otherwise as
an accommodation, except for guarantees by Corporation of obligations of
Subsidiaries or guarantees by Subsidiaries of obligations of Subsidiaries,
become responsible for the obligations of any person or, other than in the
ordinary course of business consistent with past practice, make any loan or
other extension of credit except for intercompany transactions between
Corporation and Subsidiaries and between Subsidiaries; (viii) agree to the
settlement of any material claim or litigation (including, but not limited to,
any claim or litigation in respect of, related to or arising out of any
Environmental Law, Environmental Permit or Pollution Incident); (ix) make any
material tax election or settle or compromise any material tax liability; (x)
permit any insurance policy naming it as beneficiary or a loss payable payee to
be cancelled without notice to Parent, except for the cancellation of insurance
policies required to be maintained by third parties for the benefit of the
Corporation or any Subsidiary of which such cancellation neither the Corporation
nor any Subsidiary has notice; (xi) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of the Corporation or any of its Subsidiaries not
constituting an inactive Subsidiary (other than the Merger); or (xii) agree, in
writing or otherwise, to take any of the foregoing actions.
SECTION 5.2. CHARTER DOCUMENTS AND CAPITAL CHANGES. Except as expressly
authorized by this Agreement or required by Section 1.2, neither the Corporation
nor any of its Subsidiaries will (a) change or amend its Certificate of
Incorporation, By-Laws or the Certificate of Incorporation or By-Laws of any of
its Subsidiaries, (b) issue or sell any shares of its capital stock (other than
shares issuable upon exercise of currently outstanding options), nor issue
options (other than automatic issuances pursuant to the terms of a plan in
effect on the date hereof or pursuant to the terms of any existing employment
agreement), warrants to purchase, or rights to subscribe to, any shares of its
capital stock, or enter into any arrangement or contract with respect thereto,
or (c) make any other material changes in its capital structure, other than
dividends and other intercompany transfers, allocations and transactions in the
ordinary course of business between any wholly-owned Subsidiary and the
Corporation or any other wholly-owned Subsidiary.
SECTION 5.3. ORGANIZATION AND GOOD WILL. Except as set forth in DL 5.3, the
Corporation will use all reasonable efforts to preserve the business, business
organization and good will of the Corporation and each of its Subsidiaries, keep
in place their present executive officers and key employees, and preserve their
present relationships with persons having business dealings with them.
SECTION 5.4. INSURANCE. The Corporation will use all commercially reasonable
efforts to maintain, and cause each of its Subsidiaries to maintain, insurance
substantially at current levels on all property, real, personal and mixed, owned
or leased by them.
SECTION 5.5. COMPLIANCE WITH LAWS. The Corporation will use its best efforts
to duly comply, and cause each of its Subsidiaries to duly comply, in all
material respects with all laws applicable to them and their respective
properties, operations, business and employees, except where the failure to do
so is not reasonably likely to have a Material Adverse Effect on the
Corporation.
SECTION 5.6. SEC REPORTS. The Corporation will duly file all reports
required to be filed by it with the SEC pursuant to the Exchange Act and will
submit copies thereof to Parent simultaneously with the time of filing thereof.
SECTION 5.7. PROXY STATEMENT. If shareholder approval of the Merger is
required by law, as promptly as practicable following the Share Purchase, the
Corporation will prepare and file a preliminary Proxy Statement with the SEC and
will use its best efforts to respond to the comments of the SEC in connection
therewith and to furnish all information required to prepare the definitive
Proxy Statement (including, without limitation, financial statements and
supporting schedules and certificates and reports of independent public
accountants). Promptly following the Share Purchase, if required by the DGCL in
order to consummate the Merger, the Corporation will cause the definitive Proxy
Statement to be mailed to the shareholders of the Corporation and, if necessary,
after the definitive Proxy Statement shall have been so mailed, promptly
circulate amended, supplemental or supplemented proxy material and, if required
in connection therewith, resolicit proxies.
SECTION 5.8. SHAREHOLDER APPROVAL. (a) Promptly following the Share
Purchase, if required by DGCL in order to consummate the Merger, the
Corporation, acting through its Board of Directors, shall, in accordance with
applicable law, duly call, convene and hold a special meeting of the holders of
Common Stock for the purpose of voting upon this Agreement and the Merger and
the Corporation agrees that this Agreement and the Merger shall be submitted at
such special meeting. The Corporation shall use its reasonable best efforts to
solicit from its shareholders proxies, and shall take all other action necessary
and advisable, to secure the vote of shareholders required by applicable law to
obtain the approval for this Agreement and the Merger. Subject to Section 5.9 of
this Agreement, the Corporation agrees that it will include in the Proxy
Statement the recommendation of its Board of Directors that holders of Common
Stock approve and adopt this Agreement and approve the Merger. Parent will cause
all shares of Common Stock owned by Parent and its subsidiaries to be voted in
favor of the Merger.
(b) Notwithstanding the foregoing, in the event that Sub shall acquire at
least 90% of the outstanding Corporation Common Stock, the Corporation agrees,
subject to Article VII, to take all necessary and appropriate action to cause
the Merger to become effective as soon as reasonably practicable after such
acquisition, without a meeting of the Corporation's shareholders, in accordance
with Section 253 of the DGCL.
SECTION 5.9. NO SOLICITATION OF OTHER OFFERS. (a) The Corporation and its
affiliates and each of their respective officers, directors, employees,
representatives and agents shall immediately cease any discussions or
negotiations with any other parties that may be ongoing with respect to any
Acquisition Proposal (as defined below). Neither the Corporation nor any of its
affiliates, shall, directly or indirectly, take (and the Corporation shall not
authorize or permit its or its affiliates, officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants or
other agents or affiliates, to so take) any action to (i) encourage, solicit or
initiate the making of any Acquisition Proposal, (ii) enter into any agreement
with respect to any Acquisition Proposal or (iii) participate in any way in
discussions or negotiations with, or furnish or disclose any information to, any
Person (other than Parent or Sub or their representatives) in connection with,
or take any other action to facilitate any inquiries or the making of any
proposal (including without limitation by taking any action (except as required
by Section 1.2) that would make the Rights Agreement, Section 203 of the DGCL or
the provisions of Article FIFTH of the Corporation's Certificate of
Incorporation inapplicable to an Acquisition Proposal) that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal, PROVIDED, HOWEVER,
that the Corporation, in response to an unsolicited Acquisition Proposal and in
compliance with its obligations under Section 5.9(b) hereof, may participate in
discussions or negotiations with or furnish information to any third party which
proposes a transaction which the Board of Directors of the Corporation
reasonably determines will result in a Superior Proposal if the Board of
Directors believes (and has been advised in writing by independent outside
counsel) that failing to take such action would constitute a breach of its
fiduciary duties under applicable law. In addition, neither the Board of
Directors of the Corporation nor any Committee thereof shall (x) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or Sub
the approval and recommendation of the Offer and this Agreement or (y) approve
or recommend, or propose to approve or recommend, any Acquisition Proposal,
provided that the Corporation may recommend to its shareholders an Acquisition
Proposal and in connection therewith withdraw or modify its approval or
recommendation of the Offer or the Merger if (i) the Board of Directors of the
Corporation has determined that the Acquisition Proposal is a Superior Proposal,
(ii) all the conditions to the Corporation's right to terminate this Agreement
in accordance with Section 8.1(e) have been satisfied (including the expiration
of the three day period described therein and the payment of all amounts
required pursuant to Section 9.1), (iii) simultaneously with such withdrawal,
modification or recommendation, this Agreement is terminated in accordance with
Section 8.1(e) and (iv) the Acquisition Proposal does not provide for any
breakup fee or other inducement to the acquiror other than reimbursement of out
of pocket expenses incurred in connection with such Acquisition Proposal. Any
actions permitted under, and taken in compliance with, this Section 5.9 shall
not be deemed a breach of any other covenant or agreement contained in this
Agreement.
"Acquisition Proposal" shall mean any inquiry, proposal or offer from any
Person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Corporation or any of its Subsidiaries or of
over 10% of any class of equity securities of the Corporation or any of its
Subsidiaries, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 10% or more of any class of equity
securities of the Corporation or any of its Subsidiaries, any merger,
consolidation, business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Corporation or any of its Subsidiaries, other than the transactions contemplated
by this Agreement, or any other transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially delay
the Offer or the Merger or which would reasonably be expected to dilute
materially the benefits to Parent of the transactions contemplated hereby.
"Superior Proposal" shall mean a BONA FIDE proposal made by a third party to
acquire all of the outstanding shares of the Corporation pursuant to a tender
offer, a merger or a sale of all of the assets of the Corporation (x) on terms
which a majority of the members of the Board of Directors of the Corporation
determines in its good faith reasonable judgement (based on the advice of
independent outside financial and legal advisors) to be more favorable to the
Corporation and its shareholders than the transactions contemplated hereby, (y)
for which in the good faith reasonable judgement of the Board of Directors
adequate financing or other consideration is then available and (z) which does
not provide for any breakup fee or other inducement to the acquiror other than
reimbursement of documented out-of-pocket expenses incurred in connection with
the Superior Proposal.
(b) In addition to the obligations of the Corporation set forth in paragraph
(a), on the date of receipt thereof, the Corporation shall advise Parent of any
request for information or any Acquisition Proposal, or any inquiry or proposal
with respect to any Acquisition Proposal, and the material terms and conditions
of such request or takeover proposal.
(c) Immediately following the Share Purchase, the Corporation will request
each person who has heretofore executed a confidentiality agreement in
connection with its consideration of acquiring the Corporation or any portion
thereof (the "Confidentiality Agreements") to return all confidential
information heretofore furnished to such person by or on behalf of the
Corporation.
SECTION 5.10. NOTIFICATION OF CERTAIN MATTERS. The Corporation shall give
prompt notice to Parent of: (a) any notice of, or other communication relating
to, a default or event that, with notice or lapse of time or both, would become
a default, received by the Corporation or any of its Subsidiaries subsequent to
the date of this Agreement and prior to the Effective Time, under any Material
Contract to which the Corporation or any of its Subsidiaries is a party or is
subject; and (b) any change or occurrence in the Corporation and its
Subsidiaries taken as a whole which has had a Material Adverse Effect on the
Corporation and its Subsidiaries, taken as a whole, or the occurrence of any
event which is reasonably likely to result in such a Material Adverse Effect.
Each of the Corporation and Parent shall give prompt notice to the other party
of any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
SECTION 5.11. RIGHTS AGREEMENT. The Corporation shall not redeem the Rights
or amend (other than to delay the Distribution Date (as defined therein) or to
render the Rights inapplicable to the Offer and the Merger) or terminate the
Rights Agreement prior to the Effective Time without the consent of the Parent
unless required to do so by a court of competent jurisdiction.
SECTION 5.12. PROPERTIES; MATERIAL CONTRACTS. The Corporation will use, and
will cause its Subsidiaries to use, all reasonable efforts to (a) maintain and
keep their respective properties in their current condition in all material
respects, except for ordinary wear and tear and damage due to casualty or other
extraordinary occurrence, and (b) perform in all material respects their
respective obligations under the Material Contracts.
SECTION 5.13. DIVIDENDS, ETC. Prior to the Closing, the Corporation will not
declare, pay or set aside for payment any dividend or distributions, including a
distribution of rights, in respect of its capital stock or redeem, purchase or
otherwise acquire any shares of its capital stock, except as contemplated by
this Agreement, in connection with the cancellation or exercise of stock
options, or any such dividends, distributions or payments made by or to any
Subsidiary.
SECTION 5.14. FULL ACCESS. The Corporation will, until the Closing afford to
Parent, its counsel, accountants and other authorized representatives, full and
complete access, upon reasonable notice and in a reasonable manner, to the
offices, properties, books and records of the Corporation and each of its
Subsidiaries in order that Parent may have full opportunity to make such
reasonable investigations as it shall desire as to the business and affairs of
the Corporation and its Subsidiaries. The Corporation will also cause its
officers, accountants and attorneys to furnish, upon reasonable notice and in a
reasonable manner, such additional financial and operating data and other
information as Parent shall from time to time reasonably request. Parent shall,
and shall cause its directors, officers, employees, partners, agents, counsel,
accountants and other authorized representatives and any proposed lender,
placement agent or underwriter to, keep confidential any and all information
(whether in writing or otherwise) obtained or developed pursuant to this
Agreement in accordance with the provisions of Section 6.1 hereof.
ARTICLE VI--COVENANTS OF PARTIES
The Corporation hereby covenants and agrees with Parent and Sub, and Parent
and Sub hereby covenant and agree with the Corporation, that:
SECTION 6.1. CONFIDENTIALITY. (a) Until the Closing Time, or, in the event
of the termination of this Agreement pursuant to Article VIII, for a period of
three years from the date of such termination, the Corporation, Parent and Sub
and their respective affiliates, consultants, advisors, officers, employees,
directors and agents ("Representatives") shall hold in strictest confidence and
not divulge, use or make available to any other person any information of the
other obtained from any investigation of the other in connection with the
transactions contemplated hereby (including all data, reports, interpretations,
electronic images, computer software, forecasts and records), or given to them
by the other or by others performing services for them or the other or in a
confidential relationship with the other (herein collectively referred to as
"Information"), except to the extent (i) such party is compelled to disclose
such Information by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law (provided such disclosing party provides
the other parties hereto with prompt notice of such proposed disclosure so that
such other parties may seek a protective order or other appropriate remedy),
(ii) such Information becomes generally available to the public other than as a
result of a breach of this Section or is otherwise available from third parties
not under a duty to keep such Information confidential, (iii) such Information
was at the time of its disclosure to such person previously known to it, (iv)
such disclosure is permitted by Section 6.4 (relating to public announcements)
or otherwise pursuant to this Agreement, or (v) such Information is divulged to
such party's Representatives (provided that each such person agrees to be bound
by the provisions of this Section). Neither Parent, Sub nor the Corporation, nor
any of their respective Representatives, will misuse to the detriment of the
other, any Information obtained from the other. If the Share Purchase does not
occur, upon the request of the Corporation or Parent and Sub, the party to whom
such request is made shall as directed by the requesting party destroy or return
to the requesting party any and all copies of written Information covered by
this Section furnished to such non-requesting party or its representatives by,
or on behalf of, the requesting party or otherwise obtained, prepared or
developed by or on behalf of the non-requesting party, and such destruction
shall be certified in writing to the requesting party.
(b) For a period of three years from the date of the termination of this
Agreement, if the Share Purchase does not occur, Parent (and any affiliate
thereof) will not (i) solicit for hire or employ any person who on the date
hereof or on the date of such termination was an employee of the Corporation or
any of its Subsidiaries or (ii) cause any individual engaged as an independent
contractor by the Corporation or any of its Subsidiaries to breach or void such
individual's independent contractor agreement with the Corporation.
(c) Contemporaneous with the Share Purchase, Parent shall make or cause the
Corporation and each of its Subsidiaries to make, by certified or bank check or
other means acceptable to the payee thereof, all payments which are required to
be made on or after such time under any agreement in effect on the date hereof
between the Corporation or any of such Subsidiaries and (i) any officer or other
employee thereof as a result of a "change of control" (as defined in any such
agreement) having occurred or as a result of the termination of such officer's
or employee's employment, whether voluntary or otherwise, and (ii) all
non-employee directors of the Company with respect to deferred compensation,
including, without limitation the severance, bonus and other payments listed in
DL 6.1, which amounts have been reviewed and approved by Parent and Sub.
SECTION 6.2. COOPERATION. The Corporation and Parent will cooperate with
each other and each such party shall take all reasonable actions that may be
necessary or desirable to consummate the transactions contemplated pursuant to
this Agreement, including, but not limited to, furnishing to each other, or
reviewing, the information relating to each of them required by applicable
statutes, rules and regulations for the purpose of preparing the Offer
Documents, any federal and state securities law filings and any filings under
the HSR Act. Prior to the execution of this Agreement, Parent will provide the
Corporation with a copy in draft form of the Offer Documents and will make
available a final copy of the Offer Documents prior to filing with the SEC. Each
party covenants that all such information furnished to the other or reviewed by
it will be true and correct in all material respects to the knowledge of such
party. Parent and the Corporation will promptly notify the other party hereto of
any comments or requests for additional information from the SEC or state
securities law administrators or relating to any filing under the HSR Act
relating to the Offer, and will upon request supply the other parties hereto
with copies of all correspondence between them or their representatives and the
SEC or members of its staff or state securities law administrators with respect
to the transaction contemplated hereby or relating to any filing under the HSR
Act relating thereto.
SECTION 6.3. FILINGS; CONSENTS; REMOVAL OF OBJECTIONS. Each party hereto
agrees to exert all reasonable efforts to consummate the Offer and the Merger at
the earliest practicable time, including, without limitation, (i) preparing and
filing all requisite applications, documents and notifications (including filing
with the FTC and the DOJ the Notification and Report Forms under the HSR Act and
cooperating with each other with respect to the filing of any additional
information with respect thereto) in connection with the transaction
contemplated herein required by applicable law, (ii) responding as promptly as
practicable to all inquiries in connection therewith, (iii) removing or
satisfying, if reasonably practicable, any objections to the validity or
legality of the Share Purchase, and (iv) satisfying the conditions to the
consummation of the Share Purchase set forth herein.
SECTION 6.4. PUBLIC ANNOUNCEMENTS. Parent, Sub and the Corporation will
consult with each other before issuing any press release or making any public
statement with respect to the Offer or this Agreement and, except as may be
required by applicable law or the NYSE Rules, will not issue any such press
release or make any such public statement without the prior consent of the other
party hereto, which consent will not be unreasonably withheld or delayed.
SECTION 6.5. EMPLOYEE BENEFITS. (a) Until the first anniversary of the
Effective Time, Parent shall ensure that all employees and officers of the
Corporation and Subsidiaries receive compensation and benefits in the aggregate
substantially comparable to the compensation and benefits received by such
individuals immediately prior to the date hereof. Notwithstanding the foregoing,
following the Effective Time, the Parent may terminate the employment of any
employee (subject to the payment of severance benefits payable to the employee
in connection with such termination).
(b) Until the first anniversary of the Effective Time, Parent shall keep in
effect all severance policies that are applicable to employees and officers of
the Corporation and its Subsidiaries immediately prior to the date hereof.
(c) Following the Effective Time, (i) Parent shall ensure that no employee
welfare benefit plan adopted by the Corporation or the Subsidiaries shall have
any preexisting condition limitations and (ii) Parent shall honor all premiums
and deductibles paid by the employees, officers and directors of the Corporation
and Subsidiaries under all Employee Benefit Plans up to (and including) the
Effective Time.
(d) Following the Effective Time, for purposes of eligibility and vesting,
Parent shall honor all service credit accrued by the employees, officers and
directors of the Corporation and Subsidiaries under all Employee Benefit Plans
up to (and including) the Effective Time.
SECTION 6.6. INDEMNIFICATION AND INSURANCE. (a) From and after the Share
Purchase, Parent shall cause the Corporation to (i) maintain in effect in the
Certificate of Incorporation of the Corporation the provisions with respect to
the indemnification set forth in Article VII of the Certificate of Incorporation
of the Corporation as in effect at the Share Purchase, which provisions shall
not be amended, repealed or otherwise modified for a period of six (6) years
from the Effective Time in any manner that would adversely affect the rights
thereunder of individuals (or their estates) who at the date of this Agreement
and/or as of the closing of the Share Purchase are or were directors, officers,
employees or agents of the Corporation or its Subsidiaries, unless such
modification is required by law and (ii) maintain in effect for a period of six
(6) years from the Share Purchase each Indemnification Agreement in effect (as
of such date) between the Corporation or any of its Subsidiaries and officers
and directors of the Corporation and its Subsidiaries, which Indemnification
Agreement shall not be amended or modified during such period in any manner that
would adversely affect the rights of the individual who is a party thereto.
(b) Prior to the Share Purchase, the Corporation shall purchase a six year
"tail" insurance policy with its current carrier substantially identical in all
respects to the Corporation's current directors' and officers' liability
insurance coverage (and providing coverage for an amount not less than
$30,000,000 and providing for two reinstatement options, exercisable at any time
during such six year tail period of $30,000,000) covering those persons who are
currently covered on the date of this Agreement by the Corporation's directors'
and officers' liability insurance policy (a copy of which has been heretofore
delivered to Parent) (the "Indemnified Parties").
(c) In the event the Corporation or Parent or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Corporation
or Parent, as the case may be, shall assume the obligations set forth in this
Section.
(d) Notwithstanding the foregoing, nothing herein shall be construed to
relieve Parent or the Corporation of their respective obligations to any
Indemnified Party pursuant to this Section, and each of the Indemnified Parties
shall be entitled to enforce such obligations (including the right to
indemnification) directly against the Parent or the Corporation without first
making any claim with respect thereto against any applicable successor or
assign.
(e) This Section 6.6 shall survive the consummation of the Share Purchase
and the Merger, if necessary, is intended to benefit the Corporation and the
Indemnified Parties, and shall be binding on all successors and assigns of the
Corporation and the Parent. Parent shall cause the Corporation to honor its
obligations pursuant to this Section 6.6 from and after the Share Purchase.
SECTION 6.7. RESIGNATION OF DIRECTORS. The Corporation shall cause each of
the persons who are members of the Board of Directors of the Corporation or of
the Board of Directors of the Subsidiaries (other than Allied Bond & Collection
Agency, Inc.) immediately prior to the Closing to deliver their resignations as
directors of the Corporation and such Subsidiaries, which resignations shall be
effective as of the Closing.
SECTION 6.8. CONFIDENTIALITY AGREEMENT. Purchaser and the Corporation hereby
agree that as of the date hereof the Confidentiality Agreement dated August 18,
1997 between Purchaser and the Corporation shall in all respects be terminated.
SECTION 6.9. CERTAIN ACTIONS OF PARENT AND SUB. Parent and Sub will not take
any action, or omit to take any reasonable action, which in all likelihood would
(i) have a Material Adverse Effect on the ability of Parent or Sub to consummate
the transactions contemplated hereby, or (ii) cause any of the representations
and warranties contained in Article IV which are qualified as to materiality to
fail to be true and correct in any respect or any such representation or
warranty which is not so qualified to fail to be true and correct in all
material respects, as if such representations and warranties were made at and as
of the Closing, except to the extent any such representation or warranty was
expressly made only as of a different date.
ARTICLE VII--CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT, SUB AND THE
CORPORATION. The respective obligations of Parent and Sub, on the one hand, and
the Corporation, on the other hand, to effect the Merger are subject to the
satisfaction or waiver (subject to applicable law) at or prior to the Effective
Time of each of the following conditions:
(a) APPROVAL OF CORPORATION'S SHAREHOLDERS. To the extent required by
applicable law, this Agreement and the Merger shall have been approved and
adopted by holders of the requisite number of outstanding shares of the
Common Stock of the Corporation entitled to vote in accordance with
applicable law (if required by applicable law) and the Corporation's
Certificate of Incorporation and By-Laws;
(b) HSR ACT. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated;
(c) INJUNCTION. No preliminary or permanent injunction or other order
shall have been issued by any court or by any governmental or regulatory
agency, body or authority which prohibits the consummation of the Merger and
the transactions contemplated by this Agreement and which is in effect at
the Effective Time, PROVIDED, HOWEVER, that, in the case of a decree,
injunction or other order, each of the parties shall have used reasonable
efforts to prevent the entry of any such injunction or other order and to
appeal as promptly as possible any decree, injunction or other order that
may be entered; and
(d) STATUTES. No statute, rule, regulation, executive order, decree or
order of any kind shall have been enacted, entered, promulgated or enforced
by any court or governmental authority which prohibits the consummation of
the Merger or has the effect of making the purchase of the Common Stock
illegal.
ARTICLE VIII--TERMINATION AND ABANDONMENT
SECTION 8.1. TERMINATION. This Agreement may be terminated prior to the
Share Purchase and the Merger may be abandoned after the Share Purchase:
(a) by mutual written consent of the Corporation, on the one hand, and
of Parent and Sub, on the other hand;
(b) by either Parent, on the one hand, or the Corporation, on the other
hand, if any governmental or regulatory agency shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for shares of Common Stock pursuant to the Offer and such order,
decree or ruling or other action shall have become final and nonappealable;
(c) by Parent, on the one hand, or the Corporation, on the other hand,
if the Share Purchase shall not have occurred within 120 days after
commencement of the Offer, unless the Share Purchase shall not have occurred
because of a material breach of any representation, warranty, obligation,
covenant, agreement or condition set forth in this Agreement on the part of
the party seeking to terminate this Agreement;
(d) by the Parent, in the event of a breach by the Corporation of any
representation, warranty, covenant or agreement contained in this Agreement
which (A) would give rise to the failure of a condition set forth in
paragraph (d) or (f) of Annex I to this Agreement, and (B) cannot or has not
been cured prior to the earlier of (i) 15 days after the giving of written
notice of such breach to the Corporation and (ii) two business days prior to
the date on which the Offer expires;
(e) by either Parent, on the one hand, or the Corporation, on the other
hand, if the Board of Directors of the Corporation determines that an
Acquisition Proposal constitutes a Superior Proposal and the Board believes
(and has been advised by independent outside counsel) that a failure to
terminate this Agreement and enter into an agreement to effect the Superior
Proposal would constitute a breach of its fiduciary duties; PROVIDED,
HOWEVER, the Corporation may not terminate this Agreement pursuant to this
Section 8.1(e) unless and until three days have elapsed following delivery
to Parent of a written notice of such determination by the Board of
Directors and during such three day period the Corporation has fully
cooperated with the Parent, including, without limitation, informing the
Parent of the terms and conditions of such Superior Proposal with the intent
of enabling both parties to agree to a modification of the terms and
conditions of this Agreement so that the transactions contemplated hereby
may be effected; and PROVIDED FURTHER that at the end of such three day
period the Board of Directors of the Corporation determines that the
Acquisition Proposal constitutes a Superior Proposal and the Board continues
to believe (and has again been advised by independent outside counsel) that
a failure to terminate this Agreement and enter into an agreement to effect
the Superior Proposal would constitute a breach of its fiduciary duties;
PROVIDED FURTHER that this Agreement shall not terminate pursuant to this
Section 8.1(e) unless (i) prior to such termination Parent has received all
fees and expenses set forth in Section 9.1 by wire transfer in same day
funds and (ii) simultaneously with such termination the Corporation enters
into a definitive acquisition, merger or similar agreement to effect the
Superior Proposal which acquisition agreement (x) permits the Corporation to
terminate the acquisition agreement in the event the Board of Directors of
the Corporation determines to effect a transaction with Parent and (y) does
not provide for breakup fee or other inducement to the acquiror other than
reimbursement of documented out of pocket expenses incurred in connection
with such Superior Proposal;
(f) by the Corporation, in the event of a breach by the Parent or Sub
of any representation, warranty, covenant or agreement contained in this
Agreement which cannot or has not been cured within 15 days after the
giving of written notice of such breach to the Parent and Sub, except, in
any case where such failure is not reasonably likely to affect adversely
Parent's or Sub's ability to complete the Offer and/or Merger.
SECTION 8.2. EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 8.1 hereof by Parent or Sub, on the one hand, or
the Corporation, on the other hand, 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 shall become void and have no
effect, and there shall be no liability hereunder on the part of Parent, Sub or
the Corporation, except that Sections 6.1, 6.4, 9.1 and this Section 8.2 hereof
shall survive any termination of this Agreement. Nothing in this Section 8.2
shall relieve any party to this Agreement of liability for breach of this
Agreement.
ARTICLE IX--MISCELLANEOUS
SECTION 9.1. FEES AND EXPENSES. (a) Except as provided in paragraph (b)
below, all costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
(b) If this Agreement is terminated:
(i) by Parent because of an event set forth in clause (iv)(e) of Annex I
of this Agreement; or
(ii) by Parent or the Corporation in accordance with the terms of
Section 8.1(e) of this Agreement; or
(iii) by the Corporation pursuant to Section 8.1(c), if, prior to such
termination, the Corporation shall have directly or indirectly notified any
of its stockholders that a third party has made an Acquisition Proposal or a
third party shall have announced an Acquisition Proposal, and within twelve
months after such termination, the Corporation or any of its Subsidiaries
enters into an agreement with respect to any merger or any other business
combination, sale or other disposition of any material amount of assets,
sale of shares of capital stock which would give the acquirors not less than
10% of the issued Shares, a tender offer or exchange offer or similar
transaction involving the Corporation or one or more of its Subsidiaries
accounting for more than 10% of the Corporation's consolidated income in its
prior fiscal year (a "Third Party Acquisition"), or a Third Party
Acquisition occurs within twelve months after the Corporation's termination
of this Agreement pursuant to Section 8.1(c), involving any such party (or
any affiliate or associate thereof) (x) with whom the Corporation or any
Subsidiary (or their respective representatives) during the term of this
Agreement had any discussions with respect to a Third Party Acquisition, (y)
to whom the Corporation or any Subsidiary (or any of their respective
representatives) during the term of this Agreement furnished information
with respect to or with a view toward a Third Party Acquisition, or (z) who
during the term of this Agreement had submitted a proposal or expressed any
interest publicly or to the Corporation or any Subsidiary (or their
respective representatives) in a Third Party Acquisition, which Third Party
Acquisition contemplates a direct or indirect consideration for shares of
Common Stock in excess of the Merger Consideration, in the case of each of
clauses (x), (y) and (z) prior to such termination; then the Corporation
shall (except as required to be earlier paid in accordance with Section
8.1(e)) pay to Parent in same day funds Seven Million Seven Hundred Thousand
Dollars ($7,700,000.00), which shall be deemed to include reimbursement for
all out-of-pocket fees and expenses incurred by Parent or on its behalf in
connection with the transactions contemplated hereby.
SECTION 9.2. NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing and shall be given by personal delivery,
reputable overnight courier service, certified mail (postage prepaid, return
receipt requested), facsimile (with a copy sent via prepaid first class mail) or
first class mail, as follows:
If to the Corporation, to:
The Union Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
and Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Zimet, Haines, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent and Sub, to:
c/o Outsourcing Solutions Inc.
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▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
and Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
White & Case
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as such party may hereafter specify by notice to the
other party hereto delivered in accordance with this Section. Each such notice,
request or other communication shall be effective (a) if personally delivered,
when presented, (b) if by reputable overnight courier, the next business day
following the delivery thereof to such courier (or such later date as is
demonstrated by a BONA FIDE receipt therefor), (c) if given by certified mail
(postage prepaid, return receipt requested), three business days after deposit
in the mails, (d) if given by facsimile, when the appropriate answerback or
other confirmation of receipt is received, or (e) if given by any other means,
when received.
SECTION 9.3. TERMINATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein shall terminate at the Share
Purchase and neither the Corporation nor any officer, director, employee,
stockholder, fiduciary or agent of the Corporation shall be under any liability
or obligation whatsoever with respect to any such representation or warranty
after such time. This Section shall not limit any covenant or agreement of the
parties hereto which by its terms contemplates performance after the Share
Purchase.
SECTION 9.4. AMENDMENTS. Subject to applicable law, this Agreement may be
amended, modified or supplemented only by the mutual written agreement of the
parties hereto at any time prior to the Effective Time with respect to any of
the terms contained herein; except that Sections 6.1(c), 6.5 and 6.6 above may
not be amended or supplemented to the detriment of any intended third party
beneficiary thereof without the express written consent of such beneficiary.
SECTION 9.5. WAIVERS. At any time prior to the Closing, Parent, on the one
hand, and the Corporation, on the other hand, may (a) extend the time for the
performance of any agreement of the other party hereto, (b) waive any inaccuracy
in the representations and warranties of the other party contained herein or in
any document delivered pursuant hereto or (c) waive compliance with any
agreement of the other party or any condition contained herein (unless pursuant
hereto such condition may not be waived) to be satisfied by such other party.
Any agreement on the part of any party to any such extension, and any such
waiver, shall be effective only if set forth in a writing signed on behalf of
such party and delivered to the other party hereto.
SECTION 9.6. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; PROVIDED, that no party may assign or
otherwise transfer any of its rights or obligations under this Agreement without
the prior written consent of the other party hereto and any attempt to so assign
such right or obligation shall be void AB INITIO.
This Agreement shall be binding upon and is solely for the benefit of the
parties hereto and their respective permitted successors and assigns, and
nothing in this Agreement is intended to confer upon any other person any rights
or remedies of any nature whatsoever under or by reason of this Agreement,
except that (i) in the event that the Share Purchase shall be consummated, then
from and after the Share Purchase the provisions of Sections 6.1(c), 6.5 and 6.6
shall inure to the benefit of the employees, option holders and other persons
specified therein, who, as the intended beneficiaries of such Sections, shall
each be entitled to enforce his or her rights under such Sections and (ii) the
provisions of Section 6.6 shall inure to the benefit of the Indemnified Parties,
who, as the intended beneficiaries of such Section 6.6, shall each be entitled
to enforce his or her rights under such Section.
SECTION 9.7. GOVERNING LAW AND FORUM. This Agreement shall be construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely therein, except that, with respect to matters of
corporate law, Delaware law shall apply.
SECTION 9.8. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
force and effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by the other parties hereto.
SECTION 9.9. ENTIRE AGREEMENT; SCHEDULES AND EXHIBITS. This Agreement,
including the Schedules and Annex I hereto (which are hereby made a part of this
Agreement), contains all of the terms, conditions and representations and
warranties agreed upon by the parties relating to the subject matter of this
Agreement and supersedes all prior and contemporaneous agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter.
SECTION 9.10. HEADINGS AND TABLE OF CONTENTS. The headings in this Agreement
and the Table of Contents are included herein for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
ARTICLE X--DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings ascribed to such terms in this Article.
(a) "Balance Sheet Date" shall have the meaning ascribed to such term in
Section 3.9.
(b) "Cash Payment" shall have the meaning ascribed to such term in Section
1.4.
(c) "Certificate of Merger" shall have the meaning ascribed to such term in
Section 2.1.
(d) "Certificates" shall have the meaning ascribed to such term in Section
2.4.
(e) "Closing" shall have the meaning ascribed to such term in Section 2.10.
(f) "Closing Date" shall have the meaning ascribed to such term in Section
2.10.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
(h) "Corporation Filings" shall have the meaning ascribed to such term in
Section 3.7.
(i) "Corporation Financial Statements" shall have the meaning ascribed to
such term in Section 3.8.
(j) "Corporation Stock" shall have the meaning ascribed to such term in the
preamble to this Agreement.
(k) "Corporation 10-Ks" shall have the meaning ascribed to such term in
Section 3.7.
(l) "Credit Agreement" shall have the meaning ascribed to such term in
Section 3.10.
(m) "DGCL" shall have the meaning ascribed to such term in Section 1.2.
(n) "DL" is the Disclosure Letter.
(o) "DOJ" shall mean the United States Department of Justice.
(p) "Dissenting Shareholders" shall have the meaning ascribed to such term
in Section 2.3.
(q) "Effective Time" shall have the meaning ascribed to such term in Section
2.1.
(r) "ERISA" shall have the meaning ascribed to such term in Section 3.14.
(s) "Exchange Act" shall have the meaning ascribed to such term in Section
1.1.
(t) "FTC" shall mean the Federal Trade Commission.
(u) "GAAP" shall have the meaning ascribed to such term in Section 3.8.
(v) "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
(w) "Material Adverse Effect" shall mean any change in or effect on the
applicable corporation that either is, or in all reasonable likelihood will be,
materially adverse to the business, operations, financial condition, results of
operations, assets, liabilities or reserves of such corporation and its
subsidiaries, taken as a whole.
(x) "Material Contracts" shall have the meaning ascribed to such term in
Section 3.18.
(y) "Merger" shall have the meaning ascribed to such term in the preamble of
this Agreement.
(z) "Merger Consideration" shall have the meaning ascribed to such term in
Section 2.2.
(aa) "NYSE Rules" shall mean the rules and regulations promulgated by the
New York Stock Exchange, Inc.
(bb) "Offer" shall have the meaning ascribed to such term in the preamble of
this Agreement.
(cc) "Offer Documents" shall have the meaning ascribed to such term in
Section 1.1(b).
(dd) "Options" shall have the meaning ascribed to such term in Section 1.4.
(ee) "Parent Audited Financial Statements" shall have the meaning ascribed
to such term in Section 4.5.
(ff) "Paying Agent" shall have the meaning ascribed to such term in Section
2.4.
(gg) "Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization, a group and a government or other department or agency thereof.
(hh) "Per Share Amount" shall have the meaning ascribed to such term in the
preamble to this Agreement.
(ii) "Proxy Statement" shall have the meaning ascribed to such term in
Section 2.11.
(jj) "Rights Agreement" shall have the meaning ascribed to such term in
Section 1.2.
(kk) "Schedule 14D-1" shall have the meaning ascribed to such term in
Section 1.1(b).
(ll) "Schedule 14D-9" shall have the meaning ascribed to such term in
Section 1.2(b).
(mm) "SEC" shall mean the United States Securities and Exchange Commission.
(nn) "Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
(oo) "Share Purchase" shall have the meaning ascribed to such term in
Section 1.1.
(pp) "Shares" shall have the meaning ascribed to such term in the preamble
to this Agreement.
(qq) "Subsidiaries" shall have the meaning ascribed to such term in Section
3.6.
(rr) "Surviving Corporation" shall have the meaning ascribed to such term in
Section 2.1(b).
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
ATTEST: THE UNION CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ----------------------------------------
------------------------------ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Title: Chairman of the Board
ATTEST:
OUTSOURCING SOLUTIONS INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ----------------------------------------
------------------------------ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Title: Vice President
ATTEST:
▇▇▇▇▇▇▇ ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ----------------------------------------
------------------------------ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Title: Vice President and Treasurer
ANNEX I
TO SHARE PURCHASE AGREEMENT AND PLAN OF MERGER
CONDITIONS TO THE SHARE PURCHASE
The capitalized terms used in this Annex I shall have the meanings set forth
in the Agreement to which it is annexed.
Notwithstanding any other provision of the Offer or the Agreement, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1c under the Exchange Act, pay for
any shares of Common Stock tendered pursuant to the Offer and may terminate the
Offer or amend the Offer as and to the extent provided in Section 1.1 of the
Agreement and may postpone the acceptance of, and payment for, shares of Common
Stock, if (i) there shall not have been validly tendered and not withdrawn prior
to the expiration of the Offer a number of shares of Common Stock which
represent two-thirds of the total voting power of all shares of capital stock of
the Corporation outstanding on a fully-diluted basis, (ii) any applicable
waiting period under the HSR Act shall not have expired or been terminated,
(iii) Parent shall not have received financing necessary for it and Sub to
consummate the Offer and the other transactions contemplated by the Agreement in
accordance with the terms of the bank commitment letter dated December 22, 1997,
to Parent from The Chase Manhattan Bank, Chase Securities Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇
Credit Partners L.P. or (iv) if, at any time on or after the date of the
Agreement and at or before the Share Purchase any of the following shall occur:
(a) there shall be instituted or pending any action or proceeding by any
government or governmental authority or agency, domestic or foreign, or by
any other Person, domestic or foreign, before any court or governmental
authority or agency, domestic or foreign, (i) challenging or seeking to, or
which could reasonably be expected to make illegal, impede, delay or
otherwise directly or indirectly materially restrain, prohibit or make more
costly the Offer or the Merger or seeking to obtain material damages, (ii)
seeking to prohibit or materially limit the ownership or operation by Parent
or Sub of all or any material portion of the business or assets of the
Corporation or any of its Subsidiaries taken as a whole or to compel Parent
or Sub to dispose of or hold separately all or any material portion of the
business or assets of Parent or Sub or the Corporation or any of its
Subsidiaries taken as a whole or seeking to impose any material limitation
by reason of the transactions contemplated by the Agreement on the ability
of Parent or Sub to conduct its business or own such assets, (iii) seeking
to impose limitations on the ability of Parent or Sub effectively to
exercise full rights of ownership of the shares of Common Stock, including,
without limitation, the right to vote any shares of Common Stock acquired or
owned by Sub or Parent on all matters properly presented to the
Corporation's shareholders, (iv) seeking to require divestiture by Parent or
Sub of any shares of Common Stock, (v) otherwise directly or indirectly
relating to the Offer or the Merger and which, could reasonably be expected
to materially adversely affect the Corporation or any of its Subsidiaries or
Sub or Parent, or (vi) otherwise having a Material Adverse Effect on the
Corporation and its Subsidiaries taken as a whole;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
Parent, Sub, the Corporation or any Subsidiary of the Corporation or (ii)
the Offer or the Merger, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, other than the routine application of the waiting period provisions
of the HSR Act to the Offer or to the Merger, which could reasonably be
expected to directly or indirectly, result in any of the consequences
referred to in clauses (i) through (vi) of paragraph (a) above;
(c) any change (other than as a result of general economic conditions)
shall have occurred, or Parent shall have become aware of any fact, that is
reasonably likely to have a Material Adverse Effect on the Corporation and
its Subsidiaries taken as a whole;
(d) any of the representations or warranties made by the Corporation in
the Agreement that are qualified as to materiality shall be untrue or
incorrect in any respect or any of such representations and warranties that
are not so qualified shall be untrue or incorrect in any material respect as
of the date of this Agreement or immediately prior to the Share Purchase;
(e) the Corporation's Board of Directors shall have withdrawn, modified
or amended in any respect adverse to Parent or Sub its recommendation of the
Offer or the Merger, or shall have resolved to do so;
(f) the Corporation shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Corporation to be performed
or complied with by it under this Agreement; or
(g) the Agreement shall have been terminated in accordance with its
terms;
which, in the reasonable judgment of Sub, makes it inadvisable to proceed with
such acceptance for payment or payment.
The foregoing conditions (including those set forth in clauses (i)-(iv)
above) are for the sole benefit of the Parent and Sub and may be asserted by any
of them, or may be waived by the Parent or Sub, in whole or in part at any time
and from time to time in its sole discretion. The failure by the Parent or Sub
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.