Exhibit (d)(1)
▇▇▇▇▇ INTERNATIONAL SERVICES CORPORATION
SECURITAS AB
and
SECURITAS ACQUISITION CORPORATION
AGREEMENT AND PLAN OF MERGER
Dated as of August 3, 2000
TABLE OF CONTENTS
Page
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ARTICLE I. THE TENDER OFFER .....................................................................................2
SECTION 1.1. The Offer......................................................................................2
SECTION 1.2. Company Action.................................................................................3
SECTION 1.3. Directors......................................................................................5
ARTICLE II. THE MERGER...........................................................................................6
SECTION 2.1. The Merger.....................................................................................6
SECTION 2.2. Effective Time.................................................................................6
SECTION 2.3. Effect of the Merger...........................................................................6
SECTION 2.4. Subsequent Actions.............................................................................6
SECTION 2.5. Certificate of Incorporation; By-Laws; Directors and Officers..................................6
SECTION 2.6. Conversion of Securities.......................................................................7
SECTION 2.7. Dissenting Shares..............................................................................7
SECTION 2.8. Surrender of Shares; Stock Transfer Books......................................................7
SECTION 2.9. Option Plans...................................................................................8
SECTION 2.10. Lost Certificates..............................................................................9
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND PURCHASER......................................................................................10
SECTION 3.1. Corporate Organization........................................................................10
SECTION 3.2. Authority Relative to this Agreement..........................................................10
SECTION 3.3. No Conflict; Required Filings and Consents....................................................10
SECTION 3.4. Financing Arrangements........................................................................11
SECTION 3.5. No Prior Activities...........................................................................11
SECTION 3.6. Brokers.......................................................................................11
SECTION 3.7. Offer Documents; Proxy Statement..............................................................11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................12
SECTION 4.1. Organization and Qualification; Subsidiaries..................................................12
SECTION 4.2. Capitalization ...............................................................................12
SECTION 4.3. Authority Relative to this Agreement and the Company Stock....................................13
Option Agreement...........................................................................13
SECTION 4.4. No Conflict; Required Filings and Consents....................................................14
SECTION 4.5. SEC Filings; Financial Statements.............................................................14
SECTION 4.6. Absence of Certain Changes or Events..........................................................15
SECTION 4.7. Litigation....................................................................................16
SECTION 4.8. Employee Benefit Plans........................................................................16
SECTION 4.9. Properties....................................................................................18
SECTION 4.10. Intellectual Property.........................................................................19
SECTION 4.11. Insurance.....................................................................................19
SECTION 4.12. Environmental ................................................................................19
SECTION 4.13. Material Contracts............................................................................20
SECTION 4.14. Conduct of Business...........................................................................21
SECTION 4.15. Taxes.........................................................................................22
SECTION 4.16. Labor Relations...............................................................................24
SECTION 4.17. Transactions with Affiliates..................................................................24
SECTION 4.18. Offer Documents; Proxy Statement..............................................................25
SECTION 4.19. Brokers.......................................................................................25
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SECTION 4.20. Control Share Acquisition.....................................................................25
SECTION 4.21. Rights Agreement Amendment....................................................................25
ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER...............................................................26
SECTION 5.1. Conduct of Business by the Company Pending the Merger.........................................26
SECTION 5.2. No Solicitation...............................................................................28
ARTICLE VI. ADDITIONAL AGREEMENTS...............................................................................30
SECTION 6.1. Proxy Statement...............................................................................30
SECTION 6.2. Meeting of Stockholders of the Company........................................................30
SECTION 6.3. Compliance with Law...........................................................................30
SECTION 6.4. Notification of Certain Matters...............................................................30
SECTION 6.5. Access to Information.........................................................................31
SECTION 6.6. Public Announcements .........................................................................31
SECTION 6.7. Best Efforts; Further Assurances..............................................................31
SECTION 6.8. Agreement to Defend and Indemnify.............................................................32
SECTION 6.9. State Takeover Laws...........................................................................33
ARTICLE VII. CONDITIONS OF MERGER...............................................................................33
SECTION 7.1. Conditions for Each Party's Obligations to Effect the Merger..................................33
SECTION 7.2. Further Condition for Obligations of Parent and Purchaser.....................................34
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER.................................................................34
SECTION 8.1. Termination...................................................................................34
SECTION 8.2. Effect of Termination.........................................................................36
ARTICLE IX. GENERAL PROVISIONS..................................................................................36
SECTION 9.1. Non-Survival of Representations, Warranties and
Agreements.................................................................................36
SECTION 9.2. Notices.......................................................................................37
SECTION 9.3. Expenses......................................................................................38
SECTION 9.4. Certain Definitions...........................................................................38
SECTION 9.5. Headings......................................................................................38
SECTION 9.6. Severability..................................................................................38
SECTION 9.7. Entire Agreement; No Third-Party Beneficiaries................................................38
SECTION 9.8. Assignment....................................................................................38
SECTION 9.9. Governing Law.................................................................................38
SECTION 9.10. Amendment.....................................................................................38
SECTION 9.11. Waiver........................................................................................39
SECTION 9.12. Schedules.....................................................................................39
SECTION 9.13. Counterparts..................................................................................39
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 3, 2000 (the
"Agreement"), between ▇▇▇▇▇ International Services Corporation, a Delaware
corporation (the "Company"), Securitas AB, a joint stock company organized under
the laws of Sweden ("Parent"), and Securitas Acquisition Corporation, a Delaware
corporation and an indirect, wholly owned subsidiary of Parent ("Purchaser").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of the Company, Parent and Purchaser
have each determined that it is in the best interests of their respective
stockholders for Purchaser to acquire the Company upon the terms and subject to
the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Purchaser will
make a cash tender offer (the "Offer") to acquire all shares of the issued and
outstanding Common Stock, par value $.01 per share of the Company (the "Company
Common Stock"), including the associated rights to purchase Series A
Participating Cumulative Preferred Stock, issued under the Rights Agreement (as
defined below) (the "Rights" and together with the Company Common Stock, the
"Shares"), at a price of $21.50 per share of Company Common Stock or such higher
price as may be paid in the Offer (the "Per Share Amount") net to the seller in
cash; and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of the Company, Purchaser and Parent have each approved the merger
(the "Merger") of Purchaser with and into the Company following the Offer in
accordance with the General Corporation Law of the State of Delaware ("Delaware
Law") and upon the terms and subject to the conditions set forth herein; and
WHEREAS, it is also proposed in connection with such acquisition that,
upon the terms and subject to the conditions set forth herein, upon consummation
of the Merger, (i) each then outstanding Option (as defined below) or right to
acquire Shares, whether or not then exercisable or vested, shall be canceled and
(ii) in consideration of such cancellation, the Company shall pay to each such
holder of an Option or such a right, an amount in respect thereof equal to the
product of (A) the excess, if any, of the Per Share Amount over the exercise or
other price therefor and (B) the number of Shares subject thereto (such payment
to be net of applicable withholding taxes); and
WHEREAS, as an inducement and a condition to Parent's and Purchaser's
entering into this Agreement, contemporaneously with the execution and delivery
of this Agreement, (i) the Company has entered into a stock option agreement
with Parent (the "Company Stock Option Agreement"), pursuant to which the
Company has granted to Parent an option to purchase up to the number of shares
of Company Common Stock which represents 19.9% of all shares of Company Common
Stock which are issued and outstanding immediately prior to the exercise of the
option, upon the terms and subject to conditions set forth in the Company Stock
Option Agreement and (ii) certain stockholders of the Company have entered into
a Stockholders' Agreement with Parent and Purchaser (the "Stockholders'
Agreement"), pursuant to which each such stockholder has, among other things,
agreed to tender its Shares in the Offer, granted to Parent a proxy with respect
to the voting of such Shares and granted to Parent an option to purchase such
Shares, in each case upon the terms and subject to the conditions set forth in
the Stockholders' Agreement; and
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has approved this Agreement, the Company Stock Option Agreement and
Parent's acquisition of the Shares pursuant to the Stockholders' Agreement and
has determined based on, among other considerations, a fairness opinion,
that the consideration to be paid for each Share in the Offer and the Merger is
fair to the holders of the Shares and to recommend that the holders of the
Shares accept the Offer and approve this Agreement and the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company, Parent and Purchaser hereby agree as follows:
ARTICLE I.
THE TENDER OFFER
SECTION 1.1. The Offer.
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(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 hereof and none of the events set forth in Annex I
hereto shall have occurred and be existing, Parent shall cause Purchaser to
commence and Purchaser shall commence (within the meaning of Rule 14d-2 under
the Securities Exchange Act of 1934 (the "Exchange Act") the Offer as promptly
as reasonably practicable, but in no event later than seven (7) business days
(as defined in Rule 14d-1 under the Exchange Act) following the initial public
announcement of the execution of this Agreement (treating the business day on
which such public announcement occurs as the first business day). The
obligation of Parent and Purchaser to accept for payment any of the Shares
tendered shall be subject to the satisfaction of those conditions set forth in
Annex I. Parent expressly reserves the right from time to time, subject to
Sections 1(b) and 1(d) hereof, to waive any such condition, to increase the Per
Share Amount, or to make any other changes in the terms and conditions of the
Offer. The Per Share Amount shall be net to the seller in cash, subject to
reduction only for any applicable Federal back-up withholding or stock transfer
taxes payable by the seller. The Company agrees that none of the Shares held by
the Company or any of its Subsidiaries (as hereinafter defined) will be tendered
pursuant to the Offer.
(b) Without the prior written consent of the Company, Parent shall not
(i) decrease the Per Share Amount or change the form of consideration payable in
the Offer (other than to increase the Per Share Amount), (ii) decrease the
number of Shares sought, (iii) amend or waive satisfaction of the Minimum
Condition (as defined in Annex I), (iv) impose additional conditions to the
Offer, (v) amend any one or more of the conditions set forth in Annex I to
broaden the scope of such condition or conditions or otherwise in any manner
adverse to the holders of the Shares, or (vi) amend any other term of the Offer
in any manner adverse to the holders of the Shares. Upon the terms and subject
to the conditions of the Offer, Purchaser will accept for payment and purchase,
as soon as permitted under the terms of the Offer, all of the Shares validly
tendered and not withdrawn prior to the expiration of the Offer.
(c) The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") having only the conditions set forth in Annex I hereto. As
soon as practicable on the date the Offer is commenced, Parent and Purchaser
shall file with the Securities and Exchange Commission (the "SEC") a Tender
Offer Statement on Schedule TO (together with all amendments and supplements
thereto, the "Schedule TO") with respect to the Offer that will comply in all
material respects with the provisions of Schedule TO and all applicable Federal
securities laws, and will contain (including as an exhibit) or incorporate by
reference the Offer to Purchase and forms of the related letter of transmittal
and summary advertisement (which documents, together with any supplements or
amendments thereto, and any other SEC schedule or form which is filed in
connection with the Offer and related transactions, are referred to collectively
herein as the "Offer Documents"). Parent and Purchaser agree promptly to
correct the
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Schedule TO or the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect (and the Company, with
respect to written information supplied by it specifically for use in the
Schedule TO or the Offer Documents, shall promptly notify Parent of any required
corrections of such information and shall cooperate with Parent and Purchaser
with respect to correcting such information) and to supplement the information
provided by it specifically for use in the Schedule TO or the Offer Documents to
include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and Parent and Purchaser further agree to take all steps
necessary to cause the Schedule TO, as so corrected or supplemented, to be filed
with the SEC and the Offer Documents, as so corrected or supplemented, to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable Federal securities laws. The Company and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule TO
or any Offer Documents before they are filed with the SEC. Parent and Purchaser
shall provide the Company in writing with any comments Parent, Purchaser or
their counsel may receive from the SEC or its staff with respect to the Schedule
TO or the Offer Documents promptly after receipt of such comments.
(d) The Offer to Purchase shall provide for an initial expiration date
of twenty (20) business days from the date of commencement. Purchaser agrees
that it shall not terminate or withdraw the Offer or extend the expiration date
of the Offer unless at the expiration date of the Offer the conditions to the
Offer described in Annex I hereto shall not have been satisfied or earlier
waived. If at the expiration date of the Offer, the conditions to the Offer
described in Annex I hereto shall not have been satisfied or earlier waived,
Parent may, from time to time extend the expiration date of the Offer until the
date such conditions are satisfied or earlier waived and Parent becomes
obligated to accept for payment and pay for Shares tendered pursuant to the
Offer; provided, however, that the expiration date of the Offer may not be
extended beyond February 28, 2001 without the consent of the Company.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the expiration date of the Offer (as it may be extended) for
any period required by applicable rules and regulations of the SEC in connection
with an increase in the consideration to be paid pursuant to the Offer, (ii)
extend the expiration date of the Offer (as it may be extended) for up to ten
(10) business days, if on such expiration date the conditions for the Offer
described on Annex I hereto shall have been satisfied or earlier waived, but the
number of Shares that have been validly tendered and not withdrawn represents
less than 90 percent of the then issued and outstanding Shares on a fully
diluted basis, provided, that if Purchaser elects to extend the expiration date
of the Offer as set forth in this clause (ii), the obligation of Purchaser, and
of Parent to cause Purchaser, to accept for payment, purchase and pay for all of
the Shares tendered pursuant to the Offer and not withdrawn shall be subject
only to the Minimum Condition and the conditions set forth in Section (a) of
Annex I hereto, and (iii) provide for a subsequent offering period with respect
to the Offer pursuant to Rule 14d-11; provided, however, that in any case
specified above the expiration date of the Offer may not be extended beyond
February 28, 2001 without the consent of the Company. Parent and Purchaser
agree that if all of the conditions to the Offer set forth on Annex I are not
satisfied on any scheduled expiration date, then if all such conditions are
reasonably capable of being satisfied prior to, February 28, 2001, Purchaser
shall extend the Offer from time to time (each such individual extension not to
exceed ten (10) business days after the previously scheduled expiration date)
until such conditions are satisfied or waived; provided, however, that Purchaser
shall not be required to, and shall not without the consent of the Company,
extend the Offer beyond February 28, 2001.
SECTION 1.2. Company Action.
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(a) The Company hereby approves of and consents to the Offer and represents
and warrants that the Board of Directors, at a meeting duly called and held on
August 2, 2000, at which all of the Directors who were present, duly and
unanimously: (i) approved and adopted this Agreement and the Company Stock
Option Agreement and the transactions contemplated hereby and thereby, including
the
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Offer, the Merger, and Parent's acquisition of Shares pursuant to the
Stockholders' Agreement; (ii) recommended that the stockholders of the Company
accept the Offer, tender their Shares pursuant to the Offer and approve this
Agreement and the transactions contemplated hereby, including the Merger; (iii)
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of the
stockholders of the Company; (iv) took all actions necessary to render the
limitations on business combinations contained in Section 203 of the Delaware
Law inapplicable to this Agreement and the transactions contemplated hereby and
thereby; (v) approved an amendment (the "Rights Agreement Amendment") in the
form of Exhibit 1.2 hereto, to the Company's Rights Agreement dated as of
October 29, 1999 by and between the Company and The Bank of New York, as rights
agent (the "Rights Agreement"), such amendment providing that (A) neither this
Agreement, the Company Stock Option Agreement or the Stockholders' Agreement nor
any of the transactions contemplated hereby or thereby, including the Offer and
the Merger, will result in the occurrence of a "Distribution Date" (as such term
is defined in the Rights Agreement) or otherwise cause any rights thereunder to
become exercisable by the holders thereof and (B) any rights existing thereunder
shall automatically on and as of the Effective Time (as hereinafter defined) be
void and of no further force or effect; and (vi) directed that the Merger be
submitted for consideration at a special meeting of the stockholders of the
Company, if necessary. The Company further represents and warrants that (x)
Credit Suisse First Boston Corporation ("CSFB") has rendered to the Board of
Directors a written opinion, dated as of August 2, 2000, to the effect that,
subject to the assumptions and limitations set forth therein, $21.50 in cash per
Share to be received by the stockholders of the Company pursuant to the Offer
and the Merger is fair to such stockholders from a financial point of view and
(y) a true and correct copy of such opinion has been delivered to Parent.
(b) The Company hereby agrees to file with the SEC, as promptly as
practicable after the filing by Parent and Purchaser of the Schedule TO with
respect to the Offer, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "Schedule 14D-9") that
(i) will comply in all material respects with the provisions of all applicable
Federal securities laws and (ii) will include the opinion of CSFB referred to in
Section 1.2(a) hereof. The Company agrees to make available such Schedule 14D-9
for mailing to the stockholders of the Company along with the Offer Documents
promptly after the commencement of the Offer. The Schedule 14D-9 and the Offer
Documents shall, subject to Section 5.2(b), contain the recommendations of the
Board of Directors described in Section 1.2(a) hereof. The Company agrees
promptly to correct the Schedule 14D-9 if and to the extent that it shall,
become false or misleading in any material respect (and each of Parent and
Purchaser, with respect to written information supplied by it specifically for
use in the Schedule 14D-9, shall promptly notify the Company of any required
corrections of such information and cooperate with the Company with respect to
correcting such information) and to supplement the information contained in the
Schedule 14D-9 to include any information that shall become necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, and the Company shall take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the Company's stockholders to the extent required by applicable
Federal securities laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 before it is filed with
the SEC. The Company shall provide Parent and Purchaser in writing with any
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after receipt of such comments.
(c) In connection with the Offer, the Company shall promptly upon execution
of this Agreement furnish Parent with mailing labels containing the names and
addresses of all record holders of the Shares, non-objecting beneficial owners
list and security position listings of the Shares held in stock depositories (to
the extent obtainable), each as of a recent date, and shall promptly furnish
Parent with such additional information, including updated lists of
stockholders, mailing labels and security position listings, and such other
information and assistance as Parent or its agents may reasonably request (to
the
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extent obtainable) for the purpose of communicating the Offer to the record
and beneficial holders of the Shares.
SECTION 1.3. Directors. Promptly upon the purchase by Purchaser of any of
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the Shares pursuant to the Offer, and from time to time thereafter as Shares are
acquired by Purchaser, Parent shall be entitled to designate such number of
directors of good repute, rounded up to the nearest whole number, on the Board
of Directors as will give Parent, subject to compliance with Section 14(f) of
the Exchange Act, representation on the Board of Directors equal to at least
that number of directors which equals the product of the total number of the
currently serving directors on the Board of Directors (giving effect to the
directors appointed or elected pursuant to this sentence and including current
directors serving as officers of the Company) multiplied by the percentage that
the aggregate number of the Shares beneficially owned by Parent or any affiliate
of Parent (including for purposes of this Section 1.3 such of the Shares as are
accepted for payment pursuant to the Offer, but excluding Shares held by the
Company or any of its Subsidiaries) bears to the number of Shares outstanding;
provided, that Parent shall not be entitled to designate a majority of the
directors on the Board of Directors unless it and its affiliates beneficially
own a majority of the shares of Company Common Stock outstanding. At each such
time, the Company will also cause (i) each committee of the Board of Directors,
(ii) if requested by Parent, the board of directors of each of the Subsidiaries
and (iii) if requested by Parent, each committee of such board to include
persons designated by Parent constituting the same percentage of each such
committee or board as Parent's designees constitute on the Board of Directors.
The Company shall, upon request by Parent, promptly increase the size of the
Board of Directors or exercise its best efforts to secure the resignations of
such number of directors as is necessary to enable Parent's designees to be
elected to the Board of Directors in accordance with the terms of this Section
1.3 and shall use its best efforts to cause Parent's designees to be so elected;
provided, however, that, in the event that Parent's designees are appointed or
elected to the Board of Directors, until the Effective Time (as defined in
Section 2.2 hereof) (x) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ may continue to serve as a director of
the Company and (y) the Board of Directors shall have at least three directors
who are directors on the date hereof and who are neither officers of the Company
nor designees, stockholders, affiliates or associates (within the meaning of the
Federal securities laws) of Parent (such directors, the "Independent
Directors"); provided further, that if at any time or from time to time fewer
than three Independent Directors remain, the other directors shall elect to the
Board of Directors such number of persons who shall be neither officers of the
Company nor designees, stockholders, affiliates or associates of Parent so that
the total of such persons and remaining Independent Directors serving on the
Board of Directors is at least three. Any such person elected to the Board of
Directors pursuant to the second proviso of the preceding sentence shall be
deemed to be an Independent Director for purposes of this Agreement. Subject to
applicable law, the Company shall promptly take all action necessary pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 1.3 and shall include in the
Schedule 14D-9 mailed to stockholders promptly after the commencement of the
Offer (or an amendment thereof or an information statement pursuant to Rule 14f-
1 if Parent has not theretofore designated directors) such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 1.3. Parent will supply the Company any information with respect to
itself and its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to the
contrary, following the time directors designated by Parent constitute a
majority of the Board of Directors and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors shall be required to
(i) amend or terminate on behalf of the Company this Agreement or the Company
Stock Option Agreement, (ii) exercise or waive any of the Company's rights or
remedies hereunder or thereunder, (iii) extend the time for performance of
Parent's or Purchaser's obligations hereunder or thereunder or (iv) take any
other action required to be taken by the Board of Directors hereunder or
thereunder.
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ARTICLE II.
THE MERGER
SECTION 2.1. The Merger. At the Effective Time (as defined in
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Section 2.2) and subject to and upon the terms and conditions of this Agreement
and Delaware Law, Purchaser shall be merged with and into the Company, the
separate corporate existence of Purchaser shall cease, and the Company shall
continue as the surviving corporation. The Company as the surviving corporation
after the Merger hereinafter sometimes is referred to as the "Surviving
Corporation."
SECTION 2.2. Effective Time. As promptly as practicable after the
--------------
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing a Certificate of
Merger, or if applicable, a Certificate of Ownership and Merger, with the
Secretary of State of the State of Delaware, in such form as required by, and
executed in accordance with the relevant provisions of, Delaware Law (the time
of such filing being the "Effective Time").
SECTION 2.3. Effect of the Merger. At the Effective Time, the effect of
--------------------
the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Purchaser shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 2.4. Subsequent Actions. If, at any time after the Effective
------------------
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or Purchaser acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or Purchaser, all such
deeds, bills of sale, assignments and assurances and to take and do, in the name
and on behalf of each of such corporations or otherwise, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights, properties or assets
in the Surviving Corporation or otherwise to carry out this Agreement.
SECTION 2.5. Certificate of Incorporation; By-Laws; Directors and
----------------------------------------------------
Officers.
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(a) Unless otherwise determined by Parent before the Effective Time, at the
Effective Time the Certificate of Incorporation of Purchaser, as in effect
immediately before the Effective Time, shall be the Certificate of Incorporation
of the Surviving Corporation until thereafter amended as provided by law and
such Certificate of Incorporation; provided, however, that Article One of the
Certificate of Incorporation of the Surviving Corporation shall be amended to
read as follows: "FIRST: The name of the corporation is ▇▇▇▇▇ International
Services Corporation."
(b) The By-Laws of Purchaser, as in effect immediately before the Effective
Time, shall be the By-Laws of the Surviving Corporation until thereafter amended
as provided by law, the Certificate of Incorporation of the Surviving
Corporation and such By-Laws.
(c) The directors of Purchaser immediately before the Effective Time will
be the initial directors of the Surviving Corporation, and the officers of the
Company immediately before the Effective Time will be the initial officers of
the Surviving Corporation, in each case until their successors are elected or
appointed and qualified. If, at the Effective Time, a vacancy shall exist on the
Board of
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Directors or in any office of the Surviving Corporation, such vacancy may
thereafter be filled in the manner provided by law.
SECTION 2.6. Conversion of Securities. At the Effective Time, by virtue
------------------------
of the Merger and without any action on the part of Purchaser, the Company or
the holder of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding immediately
before the Effective Time (other than any Shares to be canceled pursuant to
Section 2.6(b) and any Dissenting Shares (as defined in Section 2.7(a)) shall be
canceled and extinguished and be converted into the right to receive the Per
Share Amount in cash payable to the holder thereof, without interest, upon
surrender of the certificate representing such Share. Each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Per Share Amount, without
interest, upon the surrender of such certificate in accordance with Section 2.8
hereof.
(b) Each share of Company Common Stock held in the treasury of the Company
or owned by a subsidiary, and each Share owned by Parent or any direct or
indirect wholly owned subsidiary of Parent or of the Company immediately before
the Effective Time shall be canceled and extinguished and no payment or other
consideration shall be made with respect thereto.
(c) Each share of common stock, $.0l par value, of Purchaser issued and
outstanding immediately before the Effective Time shall thereafter represent one
validly issued, fully paid and nonassessable share of common stock, $.0l par
value, of the Surviving Corporation.
SECTION 2.7. Dissenting Shares.
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(a) Notwithstanding any provision of this Agreement to the contrary, any
Shares held by a holder who has demanded and perfected such holder's demand for
appraisal of such holder's Shares in accordance with Delaware Law (including but
not limited to Section 262 thereof) and as of the Effective Time has neither
effectively withdrawn nor lost his or her right to such appraisal ("Dissenting
Shares"), shall not be converted into or represent a right to receive cash
pursuant to Section 2.6, but the holder thereof shall be entitled to only such
rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of Section 2.7(a), if any holder of
Shares who demands appraisal of such holder's Shares under Delaware Law shall
effectively withdraw or lose (through failure to perfect or otherwise) his or
her right to appraisal, then as of the Effective Time or the occurrence of such
event, whichever later occurs, such holder's Shares shall automatically be
converted into and represent only the right to receive cash as provided in
Section 2.6(a), without interest thereon, upon surrender of the certificate or
certificates representing such Shares.
(c) The Company shall give Parent (i) prompt notice of any written demands
for appraisal or payment of the fair value of any Shares, withdrawals of such
demands, and any other instruments served pursuant to Delaware Law received by
the Company and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under Delaware Law. The Company shall not
voluntarily make any payment with respect to any demands for appraisal and shall
not, except with the prior written consent of Parent, settle or offer to settle
any such demands at a price per Share greater than the Per Share Amount.
SECTION 2.8. Surrender of Shares; Stock Transfer Books.
-----------------------------------------
(a) Before the Effective Time, the Company shall designate a bank or trust
company to act as agent for the holders of Shares (the "Exchange Agent") to
receive the funds necessary to make the
7
payments contemplated by Section 2.6. Parent shall, from time to time, deposit,
or cause to be deposited, in trust with the Exchange Agent for the benefit of
holders of Shares funds in amounts and at times necessary for the payments under
Section 2.8(b) to which such holders shall be entitled at the Effective Time
pursuant to Section 2.6. Such funds shall be invested by the Exchange Agent as
directed by Parent. Any net profits resulting from, or interest or income
produced by, such investments shall be payable as directed by Parent.
(b) Each holder of a certificate or certificates representing any Shares
canceled upon the Merger pursuant to Section 2.6(a) may thereafter surrender
such certificate or certificates to the Exchange Agent, as agent for such
holder, to effect the surrender of such certificate or certificates on such
holder's behalf for a period ending six months after the Effective Time.
Purchaser agrees that promptly after the Effective Time it shall cause the
distribution to holders of record of Shares as of the Effective Time of
appropriate materials to facilitate such surrender. Upon the surrender of
certificates representing the Shares, Parent shall pay or cause the Exchange
Agent to pay the holder of such certificates in exchange therefor cash in an
amount equal to the Per Share Amount multiplied by the number of Shares
represented by such certificate. Until so surrendered, each such certificate
(other than certificates representing Dissenting Shares and certificates
representing Shares held by Parent, or in the treasury of the Company or by a
Subsidiary (as defined below) shall represent solely the right to receive the
aggregate Per Share Amount relating thereto.
(c) If payment of cash in respect of canceled Shares is to be made to a
Person other than the Person in whose name a surrendered certificate or
instrument is registered, it shall be a condition to such payment that the
certificate or instrument so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by reason of such
payment in a name other than that of the registered holder of the certificate or
instrument surrendered or shall have established to the satisfaction of Parent
or the Exchange Agent that such tax either has been paid or is not payable.
(d) At the Effective Time, the stock transfer books of the Company shall be
closed and there shall not be any further registration of transfers of any
shares of capital stock thereafter on the records of the Company. If, after the
Effective Time, certificates for Shares are presented to the Surviving
Corporation, they shall be canceled and exchanged for cash as provided in
Section 2.6(a). No interest shall accrue or be paid on any cash payable upon the
surrender of a certificate or certificates which immediately before the
Effective Time represented outstanding Shares.
(e) Promptly following the date which is six months after the Effective
Time, the Exchange Agent shall deliver to Parent all cash, certificates and
other documents in its possession relating to the transactions contemplated
hereby, and the Exchange Agent's duties shall terminate. Thereafter, each holder
of a certificate representing Shares (other than certificates representing
Dissenting Shares and certificates representing Shares held by Parent or in the
treasury of the Company or by a Subsidiary) may surrender such certificate to
the Surviving Corporation or Parent and (subject to applicable abandoned
property, escheat and similar laws) shall be entitled to receive in
consideration thereof the aggregate Per Share Amount relating thereto, without
any interest or dividends thereon.
(f) The Per Share Amount paid in the Merger shall be net to the holder of
Shares in cash, subject to reduction only for any applicable federal back-up
withholding or, as set forth in Section 2.8(c), stock transfer taxes payable by
such holder.
SECTION 2.9. Stock Plans.
-----------
(a) The Company shall take all actions necessary to provide that, upon
consummation of the
8
Merger, (i) each then outstanding option to purchase shares of Company Common
Stock (the "Options") granted under any of the Company's stock option plans
referred to in Section 4.2, each as amended (collectively, the "Option Plans),
and any and all other outstanding options, stock warrants and stock rights
granted pursuant to such stock option plans or otherwise, and in each case,
whether or not then exercisable or vested, shall be canceled and (ii) in
consideration of such cancellation, the Company shall pay to each such holder of
an Option an amount in respect thereof equal to the product of (A) the excess,
if any, of the Per Share Amount over the exercise price thereof and (B) the
number of Shares subject thereto (such payment to be net of applicable
withholding taxes). The Company may elect at any time prior to the consummation
of the Offer to have the foregoing actions take effect, with respect to some or
all the Options, upon consummation of the Offer, in which case the Company shall
provide written notice of such action to Parent. If the Company so elects and
if, upon consummation of the Offer, Purchaser shall have acquired at least 50
percent of the outstanding Shares, Parent shall as promptly as practicable
following such consummation provide the Company with the funds necessary to
satisfy any of the Company's obligations that arise in connection with such
acquisition of Shares under (i) this Section 2.9(a), (ii) any severance plans or
benefits or change in control or employment agreements between the Company and
any of its employees, as set forth in any Schedule attached hereto, (iii) the
Amended and Restated Credit Agreement dated as of June 30, 1998 among the
Company, the Lenders listed therein, Canadian Imperial Bank of Commerce, as
documentation agent, NationsBank, N.A., as syndication agent, and Bankers Trust
Company, as administrative agent, as amended, and (iv) the Indenture dated as of
March 24, 1997 between the Company and the Bank of New York, as trustee.
(b) Except as provided herein or as otherwise agreed to by the parties, the
Company shall cause the Option Plans to terminate as of the Effective Time and
the provisions in any other plan, program or arrangement, providing for the
issuance or grant by the Company or any of its Subsidiaries of any interest in
respect of the capital stock of the Company or any of its Subsidiaries shall be
deleted as of the Effective Time.
(c) The Company represents and warrants that all the Option Plans provide
that the Company can take the actions described in Section 2.9(a) without
obtaining the consent of any holders of Options.
(d) Prior to the Effective Time, the Board of Directors shall take all
commercially reasonable action to terminate the Company's Employee Stock
Purchase Plan and to return all shares of stock and cash accumulated in each
participant's account to such participants.
SECTION 2.10. Lost Certificates. If any certificate representing any
-----------------
Shares shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the holder thereof claiming such certificate to be
lost, stolen or destroyed and, if required by the Surviving Corporation, the
posting by such holder of a bond, in such reasonable amount as the Surviving
Corporation may direct, as indemnity against any claim that may be made against
it with respect to such certificate, the Exchange Agent will pay, in exchange
for such lost, stolen or destroyed certificate, cash in an amount equal to the
Per Share Amount multiplied by the number of Shares represented by such
certificate, as contemplated by this Article II.
9
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to the
Company as follows:
SECTION 3.1. Corporate Organization. Each of Parent and Purchaser is a
----------------------
corporation duly organized and validly existing and, in the case of Purchaser,
in good standing under the laws of the jurisdiction of its incorporation, and
has the requisite corporate power and authority and any necessary governmental
authority and approvals to own, operate or lease the properties that it purports
to own, operate or lease and to carry on its business as it is now being
conducted.
SECTION 3.2. Authority Relative to this Agreement. Parent and Purchaser
------------------------------------
have the necessary corporate power and authority to enter into this Agreement
and to carry out their obligations hereunder. The execution and delivery of
this Agreement by Parent and Purchaser and the consummation by Parent and
Purchaser of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Parent and Purchaser and no other
corporate proceeding is necessary for the execution and delivery of this
Agreement by Parent or Purchaser, the performance by Parent or Purchaser of
their respective obligations hereunder and the consummation by Parent or
Purchaser of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and Purchaser and constitutes a legal,
valid and binding obligation of each such corporation, enforceable against each
of them in accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding for such remedy may
be brought.
SECTION 3.3. No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by Parent and Purchaser do
not, and the performance of this Agreement by Parent and Purchaser will not, (i)
conflict with or violate any law, regulation, court order, judgment or decree
applicable to Parent or Purchaser or by which any of their property is bound or
affected, (ii) violate or conflict with either the Certificate of Incorporation
or By-Laws or other organizational documents of either Parent or Purchaser or
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default), under or result in any,
or give rise to any rights of termination, cancellation or acceleration of any
obligations or any loss of any material benefit under or result in the creation
of any liens, security interests, pledges, agreements, claims, charges or
encumbrances of any nature whatsoever ("Encumbrances"), on any of the properties
or assets of Parent or Purchaser, pursuant to any agreement, contract,
instrument, permit, license or franchise to which Parent or Purchaser is a party
or by which Parent, Purchaser or any of their property is bound or affected,
except for, in the case of clauses (i) and (iii), conflicts, violations,
breaches or defaults which, individually, or in the aggregate, would not be
reasonably likely to prevent or materially delay the consummation of the
transactions contemplated by this Agreement or the Company Stock Option
Agreement.
(b) Except for (i) applicable requirements, if any, of the Exchange Act,
(ii) the pre-merger notification requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (iii) the filing and
recordation of appropriate merger documents as required by Delaware Law, (iv)
filings as may be required by any applicable "blue sky" laws, and (v) any
filings with the Commerce Department under its regulations pertaining to
mergers, acquisitions and takeovers by foreign persons, neither Parent nor
Purchaser is required to submit any notice, report or other filing with any
10
federal, state or local government or any court, administrative or regulatory
agency or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby. No waiver, consent, approval or authorization of any
Governmental Entity, is required to be obtained or made by either Parent or
Purchaser in connection with its execution, delivery or performance of this
Agreement, except (A) as set forth in Schedule 3.3 or (B) where the failure to
obtain such waivers, consents, approvals or authorizations would not,
individually or in the aggregate, prevent or materially delay the consummation
of the transactions contemplated by this Agreement.
SECTION 3.4. Financing Arrangements. Parent has or will have funds
----------------------
available to it sufficient (i) to enable Purchaser to purchase the Shares in
accordance with the terms of this Agreement, (ii) to pay (A) the amount to which
holders of Shares become entitled upon consummation of the Offer and the Merger,
(B) the amount, if any, that Parent may become obligated hereunder to pay with
respect to the cancellation of Options and (C) the fees and expenses it will
incur in connection therewith, and (iii) to pay any amounts that become due
under any severance plans or agreements or retention or similar bonus plans or
agreements between the Company and its employees, including the Company's
Performance Share Plan as amended through July 8, 1997. Parent has received and
furnished a copy to the Company of a commitment letter from Deutsche Bank AG
dated as of August 3, 2000 pursuant to which Deutsche Bank AG has committed,
subject to the terms and conditions thereof, to enter into a credit agreement
(the "Credit Agreement") with Parent and a syndicate of banks, which Deutsche
Bank AG will use its best efforts to form and for which Deutsche Bank AG will
act as agent and to provide financing. As of the date hereof, Parent knows of
no facts or circumstances that are reasonably likely to result in any of the
conditions set forth in the Credit Agreement not being satisfied. Upon
consummation of the Offer in accordance with the terms hereof, Parent will make
such funds available to Purchaser as are necessary to enable Purchaser to
fulfill its obligations hereunder.
SECTION 3.5. No Prior Activities. Except for obligations or liabilities
-------------------
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby
(including any financing), Purchaser has not incurred any obligations or
liabilities, and has not engaged in any business or activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person
or entity.
SECTION 3.6. Brokers. No broker, finder or investment banker is entitled
-------
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or Purchaser.
SECTION 3.7. Offer Documents; Proxy Statement. None of the information
--------------------------------
supplied by Parent, Purchaser, or their respective officers, directors,
representatives, agents or employees (the "Parent Information"), for inclusion
in the Proxy Statement (as defined in Section 4.18), or in any amendments
thereof or supplements thereto, will, on the date the Proxy Statement is first
mailed to stockholders, at the time of the Company Stockholders' Meeting (as
defined in Section 4.18) or at the Effective Time, contain any statement which,
at such time and in light of the circumstances under which it will be made, will
be false or misleading with respect to any material fact, or will omit to state
any material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Stockholders'
Meeting which has become false or misleading. Neither the Offer Documents, the
Schedule TO, nor any amendments thereof or supplements thereto will, at the time
the Offer Documents, the Schedule TO, or any such amendments or supplements are
filed with the SEC or first published, sent or given to the Company's
stockholders, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Notwithstanding
the foregoing, Parent and Purchaser do not make any
11
representation or warranty with respect to any information that has been
supplied in writing by the Company or its accountants, counsel or other
authorized representatives specifically for use in any of the foregoing
documents. The Offer Documents, the Schedule TO, and any amendments or
supplements thereto will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser as
follows:
SECTION 4.1. Organization and Qualification; Subsidiaries. Each of the
--------------------------------------------
Company and its Subsidiaries (defined below in this Section 4.1) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation (to the extent applicable), and has the
requisite corporate power and authority and any necessary governmental authority
and approvals to own, operate or lease the properties that it purports to own,
operate or lease and to carry on its business as it is now being conducted, and,
in the case of the Company and each of the Subsidiaries incorporated under the
laws of a state within the United States (each a "Domestic Subsidiary"), is duly
qualified or licensed as a foreign corporation to do business and is in good
standing in each jurisdiction where the character of its properties owned,
operated or leased or the nature of its activities makes such qualification or
licensing necessary, except for such failure which, when taken together with all
other such failures, would not have a Material Adverse Effect (as defined below
in this Section 4.1). For purposes of this Agreement, "Subsidiary" means any
corporation or other legal entity of which the Company (either alone or through
or together with any other Subsidiary) owns, directly or indirectly, more than
50% of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity. For purposes of this Agreement,
"Material Adverse Effect" means any change in or effect on the business of the
Company or any of the Subsidiaries that is or is reasonably likely to be
materially adverse to the business, results of operations, properties (including
intangible properties), financial condition, assets or liabilities of the
Company and the Subsidiaries taken as a whole. A true and complete list of all
the Subsidiaries, together with the jurisdiction of incorporation or
organization of each Subsidiary and the percentage of each Subsidiary's
outstanding capital stock owned by the Company or another Subsidiary, is set
forth in Schedule 4.1 hereto.
SECTION 4.2. Capitalization.
--------------
(a) The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, par value $.01 per share; 25,000,000 shares of Series I
non-voting common stock, par value $.01 per share; and 5,000,000 shares of
Preferred Stock, par value $.01 per share. As of the date hereof, (A)
24,342,799 shares of Company Common Stock were issued, of which 19,948,884 were
issued and outstanding, which number of issued and outstanding shares includes
all shares of restricted stock issued under any of the Options Plans, and
4,393,915 shares were held by the Company as treasury shares and all of which
were duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights; (B) 2,720,000 shares of Series I non-voting common
stock were issued, but were not outstanding and are being held by the Company as
treasury shares; (C) no shares of Preferred Stock were issued and outstanding;
(D) 2,218,187 shares of Company Common Stock were reserved for issuance upon the
exercise of outstanding options set forth, on Schedule 4.8 hereto. Except as
set forth in the Company Stock Option Agreement, in Schedule 4.2(a) or in this
Section 4.2(a): (x) there are no other options, calls, warrants or rights,
agreements, arrangements or commitments of any character obligating the Company
or any of the Subsidiaries to issue, deliver or sell any shares of capital stock
of or other
12
equity interests in the Company or any of the Subsidiaries; (y) there are no
bonds, debentures, notes or other indebtedness of the Company having the right
to vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which stockholders of the Company may vote; and (z)
there are no stockholders' agreements, voting trusts or other agreements or
understandings to which the Company is a party or by which it is bound relating
to the voting, registration or disposition of any shares of the capital stock of
the Company (including any such agreements or understandings that may limit in
any way the solicitation of proxies by or on behalf of the Company from, or the
casting of votes by, the stockholders of the Company with respect to the Merger)
or granting to any person or group of persons the right to elect, or to
designate or nominate for election, a director to the Board of Directors. Except
as set forth in Schedule 4.2(a), there are no programs in place or outstanding
contractual obligations of the Company or any of the Subsidiaries (1) to
repurchase, redeem otherwise acquire any shares of capital stock of the Company
or (2) to vote or to dispose of any shares of the capital stock of any of the
Subsidiaries.
(b) All the outstanding capital stock of each of the Subsidiaries owned by
the Company or a Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights and, except as set forth in
Schedule 4.1, is owned by the Company or a Subsidiary free and clear of any
Encumbrance, except for Encumbrances that do not, individually or in the
aggregate, materially interfere with the ownership, business or operations of
the Company and such Subsidiary. There are no existing options, calls, warrants
or other rights relating to the acquisition of issued or unissued capital stock
or other equity interests or securities of any Subsidiary. Except (i) for the
Subsidiaries, (ii) as set forth in Schedule 4.2(b) and (iii) with respect to
such interests that individually have a fair market value of less than $1.0
million and in the aggregate have a fair market value of less than $1.5 million,
the Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for, any
equity or similar interest in any other corporation, partnership, joint venture
or other business association or entity. Except as set forth in Schedule 4.2(b)
and with respect to commitments that are individually less than $500,000 and in
the aggregate are less than $1.5 million, neither the Company nor any Subsidiary
is under any current or prospective obligation to make a capital contribution or
investment in or loan to, or to assume any liability or obligation of, any
corporation, partnership, joint venture or the business association or entity
other than a wholly owned Subsidiary.
SECTION 4.3. Authority Relative to this Agreement and the Company Stock
----------------------------------------------------------
Option Agreement. The Company has the necessary corporate power and authority
----------------
to enter into this Agreement and the Company Stock Option Agreement and,
subject, in the case of this Agreement, to obtaining any necessary stockholder
approval of the Merger, to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Company Stock Option
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval of the
Merger by the Company's stockholders in accordance with Delaware Law, if
required. Each of this Agreement and the Company Stock Option Agreement has been
duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against it in accordance with its
terms except as enforcement may be limited by bankruptcy, insolvency, moratorium
or other similar laws and except that the availability of equitable remedies,
including specific performance, is subject to the discretion of the court before
which any proceeding for such remedy may be brought. The affirmative vote of the
holders of a majority of all the shares of Company Common Stock entitled to vote
approving this Agreement is the only vote of the holders of any class or series
of the Company's capital stock necessary to approve this Agreement and the
Company Stock Option Agreement and the transactions contemplated hereby and
thereby; provided, however, that no such vote shall be required if the Merger is
subject to Section 253 of Delaware Law.
13
SECTION 4.4. No Conflict; Required Filings and Consents.
------------------------------------------
(a) Except as set forth in Schedule 4.4 hereto and assuming compliance with
the matters referred to in Section 4.4(b), the execution and delivery of this
Agreement and the Company Stock Option Agreement by the Company do not, and the
performance of such agreements by the Company will not, (i) conflict with or
violate any law, regulation, court order, judgment or decree applicable to the
Company or any of the Subsidiaries or by which its or any of their property is
bound or affected, (ii) violate or conflict with the Certificate of
Incorporation or By-Laws or equivalent organizational documents of the Company
or any Subsidiary, or (iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time of both would become a default)
under, or result in any, or give rise to any rights of termination, cancellation
or acceleration of any obligations or any loss of any material benefit under, or
result in the creation of an Encumbrance on any of the properties or assets of
the Company or any of the Subsidiaries pursuant to, any agreement, contract,
instrument, permit, license or franchise to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
its or any of their property is bound or affected, except for, in the case of
clauses (i) and (iii), conflicts, violations, breaches or defaults which,
individually or in the aggregate, would not be reasonably likely to (x) have a
Material Adverse Effect, (y) impair, in any material respect, the ability of the
Company to perform its obligations under this Agreement or the Company Stock
Option Agreement or (z) prevent or materially delay the consummation of the
transactions contemplated by this Agreement or the Company Stock Option
Agreement.
(b) Except for (i) applicable requirements, if any, of the Exchange Act,
(ii) the pre-merger notification requirements of the HSR Act, (iii) the filing
and recordation of appropriate merger or other documents as required by Delaware
Law, and (iv) filings as may be required by any "blue sky" laws of various
states, (A) the Company and each of the Subsidiaries are not required to submit
any notice, report or other filing with any Governmental Entity, in connection
with the execution, delivery or performance of this Agreement or the Company
Stock Option Agreement or the consummation of the transactions contemplated
hereby or thereby, and (B) no waiver, consent, approval or authorization of any
Governmental Entity, is required to be obtained or made by the Company in
connection with its execution, delivery or performance of this Agreement or the
Company Stock Option Agreement or the consummation of the transactions
contemplated hereby or thereby, except where the failure to obtain such waivers,
consents, approvals or authorizations would not, individually or in the
aggregate, be reasonably likely to (x) have a Material Adverse Effect, (y)
impair, in any material respect, the ability of the Company to perform its
obligations under this Agreement or the Company Stock Option Agreement or (z)
prevent or materially delay the consummation of the transactions contemplated by
this Agreement or the Company Stock Option Agreement.
SECTION 4.5. SEC Filings; Financial Statements.
---------------------------------
(a) The Company has filed all forms, reports and documents required to be
filed with the SEC since January 1, 1999, including its (i) Annual Reports on
Form 10-K for the fiscal years ended December 31, 1999 and December 31, 1998
respectively, (ii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since January 1, 1999, and (iii)
all other reports or registration statements filed by the Company with the SEC
since January 1, 1999 (collectively, the "SEC Reports"). The SEC Reports (i)
were prepared in accordance in all material respects with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act, as the case may be, and (ii) did not at the time they were filed contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of the Subsidiaries is required to file any statements or
reports with the SEC pursuant to Sections 13(a) or 15(d) of the Exchange Act.
14
(b) The consolidated financial statements contained in the SEC Reports were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto) and fairly present the consolidated financial position of
the Company and the Subsidiaries as at the respective dates thereof and the
consolidated results of operations and changes in financial position of the
Company and the Subsidiaries for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments (which in the aggregate are not material in
amount).
(c) Except as (i) set forth in Schedule 4.5(c), (ii) disclosed in any SEC
Report filed prior to the date of this Agreement or (iii) incurred in the
ordinary course of business consistent with past practice, and except for
obligations incurred in connection with the transactions contemplated by this
Agreement, or the Company Stock Option Agreement, neither the Company nor any of
the Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which, individually or in the
aggregate, would have a Material Adverse Effect.
SECTION 4.6. Absence of Certain Changes or Events. Except as expressly
------------------------------------
permitted by this Agreement or as set forth in Schedule 4.6 hereto or in the SEC
Reports, since January 1, 2000, the business of the Company and the Subsidiaries
has been conducted in the ordinary course consistent with past practice and
there has not been:
(a) any Material Adverse Effect; provided, that any adverse effect (i) that
is caused by conditions affecting the economy or security markets generally,
(ii) that is caused by conditions affecting any of the primary industries in
which the Company currently competes or (iii) resulting from or arising in
connection with this Agreement or the transactions contemplated hereby or the
announcement hereof shall not be taken into account in determining whether there
has been a Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by insurance)
with respect to any of the assets of the Company or any of the Subsidiaries
having a Material Adverse Effect;
(c) any redemption or other acquisition of Shares by the Company or any of
the Subsidiaries or any declaration or payment of any dividend or other
distribution in cash, stock or property with respect to Shares; except for
purchases heretofore made pursuant to the terms of the Company's employee
benefit plans;
(d) any change by the Company in accounting methods, principles or
practices used in preparing the Company's consolidated financial statements,
other than any such change as may have been required by generally accepted
accounting principles and which has been disclosed in writing to Parent;
(e) any material revaluation by the Company of any asset (including,
without limitation, any writing down of the value of inventory or writing off of
notes or accounts receivable), other than in the ordinary course of business
consistent with past practice;
(f) any entry by the Company or any Subsidiary into any commitment or
transaction material to the Company and the Subsidiaries taken as a whole, other
than commitments or transactions entered into in the ordinary course of business
consistent with past practice;
(g) any material increase in or establishment of any bonus, insurance,
severance, deferred compensation, pension, retirement, profit sharing, stock
option (including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards) stock
purchase or other employee benefit plan, or any material other increase in the
compensation payable or to become
15
payable to any directors, officers or key employees of the Company or any
Subsidiary, except in the ordinary course of business consistent with past
practice;
(h) any entry by the Company or any Subsidiary into any employment,
consulting, severance, termination or indemnification agreement (i) with any
employee of a Subsidiary that provides for annual payments of more than $100,000
and a term of one year or more or (ii) with any director or officer of the
Company;
(i) (i) any settlement or compromise by the Company or any Subsidiary of
any claim, litigation or other legal proceeding, other than in the ordinary
course of business consistent with past practice in an amount not involving more
than $2 million or (ii) any payment, discharge or satisfaction by the Company or
any Subsidiary of any other claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than (A) in the
ordinary course of business and consistent with past practice or (B) with
respect to any other such claims, liabilities or obligations reflected or
reserved against in, or contemplated by, the consolidated financial statements
(or the notes thereto) of the Company; or
(j) any agreement, in writing or otherwise, by the Company or any
Subsidiary to take any of the actions described in this Section 4.6, except as
expressly contemplated by this Agreement.
SECTION 4.7. Litigation. Except as disclosed in the SEC Reports or in
----------
Schedule 4.7 hereto, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of the Subsidiaries, or any properties or rights of the
Company or any of the Subsidiaries, before any Governmental Entity or arbitrator
which have a Material Adverse Effect. As of the date hereof, except for orders
or decrees that are generally applicable to all Persons similar to or engaged in
businesses similar to those of the Company and the Subsidiaries, neither the
Company nor any of the Subsidiaries nor any of their property is subject to any
order, judgment, injunction or decree that materially interferes with the
business or operations of the Company or any such Subsidiary.
SECTION 4.8. Employee Benefit Plans.
----------------------
(a) (i) Schedule 4.8(a) sets forth a list that is complete in all material
respects of all "employee benefit plans", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and all
other employee benefit or executive compensation arrangements, perquisite
programs or payroll practices, including, without limitation, any such
arrangements or payroll practices providing severance pay, sick leave, vacation
pay, salary continuation for disability, retirement benefits, deferred
compensation, bonus pay, incentive pay, stock options (including those held by
Directors, employees, and consultants), hospitalization insurance, medical
insurance, life insurance, scholarships or tuition reimbursements, that are
maintained by the Company, any Subsidiary or any entity within the same
"controlled group" as the Company or Subsidiary, within the meaning of Section
4001(a)(14) of ERISA (a "Company ERISA Affiliate") or to which the Company, any
Subsidiary or Company ERISA Affiliate is obligated to contribute thereunder for
current or former employees of the Company, any Subsidiary or Company ERISA
Affiliate (the "Company Employee Benefit Plans"); provided, that the foregoing
representation is given only as to the knowledge of the Company in respect of
any Foreign Subsidiary.
(ii) Schedule 4.8(a)(ii) sets forth with respect to each Option that is
outstanding under the Option Plans as of the date hereof, the name of the holder
of such Option, the number of Shares subject to such Option and the exercise
price per share of such Option.
16
Except as set forth in Schedules 4.8(b) through 4.8(l):
(b) None of the Company Employee Benefit Plans include a "multiemployer
plan", as defined in Section 4001(a)(3) of ERISA (the "Company Multiemployer
Plan") with respect to which the Company or any ERISA Affiliate has a material
contribution obligation. Neither the Company, any Subsidiary nor any Company
ERISA Affiliate has withdrawn in a complete or partial withdrawal from any
Company Multiemployer Plan that has or would result in material liability to the
Company or an ERISA Affiliate, nor has any of them incurred any material
liability due to the termination or reorganization of a Company Multiemployer
Plan. The aggregate withdrawal liability from each of such Company
Multiemployer Plans would not be material, individually or in the aggregate, to
the Company as of the date hereof.
(c) None of the Company Employee Benefit Plans is a "single employer plan",
as defined in Section 4001(a)(15) of ERISA, that is subject to Title IV of
ERISA. Neither the Company, any Subsidiary nor any Company ERISA Affiliate has
incurred any outstanding material liability under Section 4062 of ERISA to the
Pension Benefit Guaranty Corporation or to a trustee appointed under Section
4042 of ERISA. Neither the Company, any Subsidiary nor any Company ERISA
Affiliate has engaged in any transaction described in Section 4069 of ERISA.
Neither the Company nor any Subsidiary maintains, or is required, either
currently or in the future, to provide material medical benefits to employees,
former employees or retirees after their termination of employment, other than
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985.
(d) Each Company Employee Benefit Plan that is intended to qualify under
Section 401 of Internal Revenue Code of 1986, as amended (the "Code"), and each
trust maintained pursuant thereto and intended to be exempt from federal income
taxation under Section 501 of the Code has been determined by the IRS to be so
exempt, and, to the knowledge of the Company, nothing has occurred with respect
to the operation of any such Company Employee Benefit Plan that would cause the
loss of such qualification or exemption or the imposition of any material
liability, penalty or tax under ERISA or the Code.
(e) Except to the extent that the failure to satisfy this representation
would not result in material liability to the Company or an ERISA Affiliate, all
required contributions (including all employer contributions and employee salary
reduction contributions) under any of the Company Employee Benefit Plans have
been timely made to any funds or trusts established thereunder.
(f) There has been no material violation of ERISA or the Code with respect
to the filing of applicable reports, documents and notices regarding the Company
Employee Benefit Plans with the Secretary of Labor or the Secretary of the
Treasury or the furnishing of required reports, documents or notices to the
participants or beneficiaries of the Company Employee Benefit Plans.
(g) None of the Company, the Subsidiaries, the officers of the Company or
any of the Subsidiaries or the Company Employee Benefits Plans which are subject
to ERISA, any trusts created thereunder or any trustee or administrator thereof,
has engaged in a "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) or any other breach of fiduciary
responsibility that could subject the Company, any of the Subsidiaries or any
officer of the Company or any of the Subsidiaries to any material tax or penalty
on prohibited transactions imposed by such Section 4975 or to any material
liability under Section 502(i) or (1) of ERISA.
(h) Neither the Company nor any of the Subsidiaries is a party to any
contract, agreement or other arrangement which could result in the payment of
amounts that could be nondeductible by reason of Section 162(m) of the Code.
17
(i) True, correct and complete copies of the following documents, with
respect to each of the Company Employee Benefit Plans, have been made available
to Parent by the Company: (i) all Company Employee Benefit Plans and related
trust documents, and amendments thereto; (ii) the most recent Forms 5500 and
(iii) summary plan descriptions.
(j) There are no pending actions, claims or lawsuits which have been
asserted, instituted or, to the knowledge of the Company, threatened, against
the Company Employee Benefit Plans, the assets of any of the trusts under such
plans or the plan sponsor or the plan administrator, or against any fiduciary of
the Company Employee Benefit Plans with respect to the operation of such plans
(other than routine benefit claims) that could subject the Company or any ERISA
Affiliate to any material liability.
(k) All Company Employee Benefit Plans subject to ERISA or the Code have
been maintained and administered, in all material respects, in accordance with
their terms and with all provisions of ERISA and the Code, respectively,
(including rules and regulations thereunder) and other applicable federal and
state laws and regulations and all employees required to be included as
participants by the terms of such plans have been properly included.
(l) To the knowledge of the Company, with respect to each Company Employee
Benefit Plan not subject to United States law (a "Company Foreign Benefit
Plan"): (i) the fair market value of the assets of each funded Company Foreign
Benefit Plan, the liability of each insurer for any Company Foreign Benefit Plan
funded through insurance or the book reserve established for any Company Foreign
Benefit Plan, together with any accrued contributions, is sufficient to procure
or provide for the accrued benefit obligations, as of the Effective Time, with
respect to all current and former participants in such plan according to the
actuarial assumptions and valuations most recently used to determine employer
contributions to such Company Foreign Benefit Plan and no transaction
contemplated by this Agreement shall cause such assets or insurance obligations
or book reserve to be less than such benefit obligations; (ii) each Company
Foreign Benefit Plan is in material compliance with applicable law; and (iii)
each Company Foreign Benefit Plan required to be registered with a regulatory
agency or authority has been registered and has been maintained in good standing
with such agency or authority.
SECTION 4.9. Properties.
----------
(a) Each of the Company and the Subsidiaries has good and insurable title
to, or a valid leasehold interest in, all its properties and assets, free and
clear of all material Encumbrances, except as set forth in Schedule 4.9(a) and
for Encumbrances that do not have a Material Adverse Effect.
(b) Schedule 4.9(b) sets forth a true and complete list of each parcel of
real property owned by the Company or any Subsidiary with a fair market value in
excess of $1 million. Schedule 4.9(b) sets forth a true and complete list of
each lease or sublease relating to Leased Real Property (as defined below) that
involves annual expenditures by the Company or any Subsidiary of $250,000 or
more (collectively, the "Company Material Leases").
(c) Except as set forth in Schedule 4.9(c), to the knowledge of the
Company, there is no material violation of any law, ordinance or regulation
(including, without limitation, any building, planning or zoning law, ordinance
or regulation) relating to any of the real property or interests in real
property leased by the Company or any Subsidiary (the "Leased Real Property").
(d) With respect to each of the Company Material Leases, (i) such lease or
sublease is legal, valid, binding, enforceable against the Company or any
Subsidiary and in full force and effect, and (ii) neither the Company nor any
Subsidiary knows of, or has given or received notice of, any violation or
default under any such lease or sublease (nor, to the knowledge of the Company,
does there exist any
18
condition which with the passage of time or the giving of notice or both would
result in such a violation or default thereunder), except for, in the case of
clause (ii), violations or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 4.10. Intellectual Property. Except as set forth in Schedule 4.10
---------------------
or in the SEC Reports, each of the Company and the Subsidiaries owns, or is
licensed or otherwise possesses rights to use all patents, trademarks and
service marks (registered or unregistered), trade names, domain names, computer
software and copyrights and applications and registrations therefor, in each
case, which are material to the conduct of the business of the Company and the
Subsidiaries, taken as a whole (collectively, the "Intellectual Property
Rights"). Except as set forth in Schedule 4.10, there are neither any
outstanding nor, to the knowledge of the Company, threatened disputes or
disagreements with respect to any of the Intellectual Property Rights.
SECTION 4.11. Insurance. To the knowledge of the Company, the Company and
---------
the Subsidiaries maintain insurance policies against all risks of a character
and in such amounts as are usually insured against by similarly situated
companies in the same or similar businesses. Each insurance policy of the
Company and the Subsidiaries is in full force and effect and all premiums due
thereon have been paid in full.
SECTION 4.12. Environmental. Except as set forth in Schedule 4.12 or the
-------------
SEC Reports:
(a) The Company and the Subsidiaries are and have been in compliance with
all applicable Environmental Laws, have obtained all material Environmental
Permits and are in compliance with their requirements, except where the failure
to do so would not, individually or in the aggregate, have a Material Adverse
Effect.
(b) Neither the Company nor any of the Subsidiaries has (i) released,
transported or disposed of any Hazardous Substances on, under, from or at any of
the Company's or any of the Subsidiaries' properties other than in a manner that
could not, in all such cases taken individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect, (ii) any knowledge of the
presence or threat of release of any Hazardous Substances on, under or at any of
the Company's or any of the Subsidiaries' properties arising from the Company's
or any of the Subsidiaries' current or former properties or operations, other
than in a manner that could not reasonably be expected to result in a Material
Adverse Effect, or (iii) received any written notice (A) of any violation of or
liability under any Environmental Laws, (B) of the institution or pendency of
any suit, action, claim, proceeding or investigation by any Governmental Entity
or any third party in connection with any such violation or liability, (C)
requiring the response to or remediation of Hazardous Substances at or arising
from any of the Company's or any of the Subsidiaries' current or former
properties or operations or any other properties, (D) alleging noncompliance by
the Company or any of the Subsidiaries with the terms of any Environmental
Permit in any manner reasonably likely to require material expenditures or to
result in material liability or (E) demanding payment for, response to or
remediation of Hazardous Substances at or arising from any of the Company's or
any of the Subsidiaries' current or former properties or operations or any other
properties, except where any such violation, institution, pendency, response,
remediation, non-compliance or payment would not, individually or in the
aggregate, have a Material Adverse Effect;
(c) The Company and the Subsidiaries have, to the knowledge of the Company,
provided Parent with copies of any material written environmental assessment or
audit report (including all records maintained for required environmental
compliance) or other similar studies or analyses prepared in the last five (5)
years in the possession of the Company or the Subsidiaries relating to any
material real property currently or formerly owned, leased or occupied by the
Company or the Subsidiaries.
19
(d) As used in this Agreement, the following terms have the meanings set
forth below:
(i) "Environmental Law" means any law, in effect and as amended, on
or prior to the Effective Time and any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent decree or judgment, relating to pollution or protection of the
environment, or natural resources, including, without limitation, those
relating to the use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Substances.
(ii) "Environmental Permit" means any permit, approval,
identification number, license or other authorization required under any
applicable Environmental Law.
(iii) "Hazardous Substances" means (a) petroleum and petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (b) any
other chemicals, materials or substances regulated as toxic or hazardous or
as a pollutant, contaminant or waste under any applicable material
Environmental Law.
SECTION 4.13. Material Contracts.
------------------
(a) Except as set forth in the SEC Reports or Schedule 4.13, neither the
Company nor any of the Subsidiaries is a party to or bound by:
(i) any "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC);
(ii) any contract or agreement for the purchase of materials or
personal property from any supplier or for the furnishing of services to
the Company or any Subsidiary that involves or is likely to involve future
aggregate payments by the Company or any of the Subsidiaries of $5 million
or more;
(iii) any contract or agreement for the sale, license or lease (as
lessor) by the Company or any Subsidiary of services, materials, products,
supplies or other assets, owned or leased by the Company or the
Subsidiaries, that involves or is likely to involve future aggregate
payments to the Company or any of the Subsidiaries of $5 million or more,
other than any contract or agreement between the Company and (A) a wholly-
owned Subsidiary or (B) ▇▇▇▇▇ International Liability Management Company;
(iv) any contract, agreement or instrument relating to or evidencing
indebtedness for borrowed money of the Company or any Subsidiary in the
amount of $200,000 or more, other than any contract, agreement or
instrument between the Company and (A) a wholly-owned Subsidiary or (B)
▇▇▇▇▇ International Liability Management Company;
(v) any non-competition agreement or any other agreement or
obligation which purports to limit in any material respect the manner in
which, or the localities in which, any material business of the Company or
the Subsidiaries may be conducted;
(vi) any agreement with any present or former affiliates of the
Company;
(vii) any voting or other agreement governing how any Shares shall be
voted;
(viii) any agreement with any stockholders of the Company; or
20
(ix) any contract or other agreement which would prohibit or
materially delay the consummation of the Merger or any of the transactions
contemplated by this Agreement or the Company Stock Option Agreement.
The foregoing contracts and agreements to which the Company or any Subsidiary
are parties or are bound are collectively referred to herein as "Company
Material Contracts."
(b) Each Company Material Contract is valid and binding on the Company (or,
to the extent a Subsidiary is a party, such Subsidiary) and is in full force and
effect, and the Company and each Subsidiary have performed all obligations
required to be performed by them to date under each Company Material Contract
and each other contract and agreement to which the Company or any Subsidiary is
party or bound (collectively, the "Other Contracts"), except where such
noncompliance, individually or in the aggregate, would not have a Material
Adverse Effect or is otherwise disclosed in the SEC Reports. Neither the
Company nor any Subsidiary knows of, or has given or received notice of, any
violation or default under (nor, to the knowledge of the Company, does there
exist any condition which with the passage of time or the giving of notice or
both would result in such a violation or default under) any Company Material
Contract or Other Contract, except where such violations or defaults,
individually or in the aggregate, would not have a Material Adverse Effect, or
is otherwise disclosed in the SEC Reports.
(c) Except as disclosed in the SEC Reports or in Schedule 4.13 or as
expressly provided for in this Agreement, neither the Company nor any of the
Subsidiaries is a party to any (i) employment or consulting agreement (A) with
any employee of or consultant to the Company or any Domestic Subsidiary that
cannot be terminated on ninety (90) days or less notice or (B) with any employee
of or consultant to any Subsidiary other than a Domestic Subsidiary (a "Foreign
Subsidiary") that cannot be terminated on one year's or less notice and provides
for annual payment of $200,000 or more, (ii) agreement with any officer of the
Company, any Domestic Subsidiary, or the knowledge of the Company, any Foreign
Subsidiary, the benefits of which are contingent or vest, or the terms of which
are materially altered, upon the occurrence of a transaction involving the
Company or any Subsidiaries of the nature contemplated by this Agreement or the
Company Stock Option Agreement, (iii) agreement with respect to any officer of
the Company, any Domestic Subsidiaries or, to the knowledge of the Company, any
Foreign Subsidiary providing any term of employment or compensation guarantee or
(iv) stock or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
Company Stock Option Agreement or the value of any of the benefits of which will
be calculated on the basis of any of such transactions.
SECTION 4.14. Conduct of Business.
-------------------
(a) Except as set forth in Schedule 4.14 or in the SEC Reports, the
business and operations of the Company and the Subsidiaries are not being
conducted in default or violation of any term, condition or provision of (i)
their respective Certificates of Incorporation or By-Laws or similar
organizational documents, or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease or other instrument or agreement of any kind to which the
Company or any of the Subsidiaries is now a party or by which the Company or any
of the Subsidiaries or any of their respective properties or assets may be
bound, except, with respect to the foregoing clause (ii), defaults or violations
that would not, individually or in the aggregate, have a Material Adverse
Effect.
(b) Except as set forth in Schedule 4.14 or in the SEC Reports, the
business and operations of the Company and the Subsidiaries have been, and are
being, conducted in compliance with all Federal, state, local and foreign
statutes, laws, ordinances, rules, regulations, judgments, decrees, orders,
21
concessions, grants, franchises, permits, licenses and other governmental
authorizations and approvals applicable to the Company or any of the
Subsidiaries, except for failures to so comply that would not, individually or
in the aggregate, have a Material Adverse Effect.
(c) The Company and the Subsidiaries have in effect all franchises,
permits, licenses, and other governmental authorizations and approvals
(collectively, the "Company Permits") necessary to own, lease or operate their
properties and assets and to carry on their businesses, except where the failure
to have any such Company Permits would not, individually or in the aggregate,
have a Material Adverse Effect, and no proceedings are pending or, to the
knowledge of the Company, threatened, to revoke or limit any such Company
Permit.
SECTION 4.15. Taxes.
-----
Except as set forth on Schedules 4.15(a) through 4.15(s) or the SEC
Reports:
(a) Except for Tax Returns the failure to file which, when taken together
with all other such failures, has not had and is not reasonably likely to have a
Material Adverse Effect, all Tax Returns (as defined below) by or on behalf of
the Company or any Subsidiary or any affiliated, combined or unitary group of
which the Company or any Subsidiary is or was a member have been duly and timely
filed (giving effect to all timely obtained extensions) with the appropriate
taxing authorities and were, in all material respects, true, complete and
correct.
(b) Except for Taxes the failure to pay which, when taken together with all
other such failures, has not had and is not reasonably likely to have a Material
Adverse Effect, the Company and each Subsidiary has paid or will have had paid
to the appropriate taxing authority on its behalf, within the time and in the
manner prescribed by law, all Taxes (as defined below) for which it is liable.
(c) The Company and each Subsidiary has established on its books and
records adequate reserves for the payment of all Taxes for which it is liable
which are not yet due and payable, and with respect to any such Taxes which have
been proposed, assessed or asserted against them, except for Taxes the failure
to pay which, when taken together with all other such failures, is not
reasonably likely to have a Material Adverse Effect.
(d) The Company and each Subsidiary has complied in all material respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes for which it is liable (including, without limitation,
withholding of such Taxes pursuant to sections 1441 and 1442 of the Code or
similar provisions under any state, local or foreign laws), and has, within the
time and in the manner prescribed by law, withheld and paid over to the
appropriate taxing authorities all amounts required to be so withheld and paid
over under all applicable domestic and foreign laws.
(e) Neither the Company nor any Subsidiary has requested any extension of
time within which to file any material Tax Return in respect of any taxable
year, which Tax Return has not since been filed, other than in the ordinary
course of business consistent with the Company's past practices.
(f) Other than in the ordinary course of business consistent with the
Company's past practices, there are no outstanding waivers or comparable
consents that have been given by the Company or any Subsidiary or with respect
to any Tax Return of the Company or any Subsidiary regarding the application of
any statute of limitations with respect to any Taxes or Tax Returns of the
Company or any such Subsidiary.
(g) No United States federal, state, local or foreign audits, or, to the
knowledge of
22
management, other administrative proceedings or court proceedings are presently
pending against the Company or any Subsidiary with regard to any Taxes or Tax
Returns of the Company or any Subsidiary, except for such audits, investigations
or proceedings, which, when taken together with all other such audits,
investigations or proceedings that are pending or threatened, have not had and
are not reasonably likely to have a Material Adverse Effect, and no notification
other than in the ordinary course of business has been received by the Company
or any Subsidiary of the Company that such an audit, investigation or other
proceeding is pending or threatened.
(h) No material property of the Company or any Subsidiary is property that
the Subsidiary or any party to this transaction is or will be required to treat
as being owned by another person pursuant to the provisions of section 168(f)(8)
of the Internal Revenue Code of 1954, as amended, as in effect prior to the
enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within
the meaning of section 168 of the Code.
(i) No Subsidiary has any material amount of income which is includible in
computing the taxable income of the Company (as determined under section 7701 of
the Code) under section 951 of the Code.
(j) The Company and each domestic Subsidiary, except for ▇▇▇▇▇
International Liability Management Company ("BILMC") for years beginning after
December 31, 1999, (i) are members of an affiliated group of corporations within
the meaning of section 1504(a) of the Code; and such affiliated group filed a
consolidated return with respect to United States federal income taxes and (ii)
neither the Company nor any domestic Subsidiary has liability for the Taxes of
any person (other than members of the affiliated group described in clause (i)
of this Section 4.15(j)) under Treasury Regulations section 1.1502-6 (or a
similar or corresponding provision of state, local, or foreign law), except such
liability for taxes of persons other than members of the affiliated group
described in clause (i) of this Section 4.15(j) which when taken together would
not have a material adverse effect on the financials of the Company.
(k) There are no material Encumbrances for Taxes upon the assets or
properties of the Company or any Subsidiary except for statutory Encumbrances
for Taxes not yet due.
(l) Neither the Company nor any Subsidiary is bound by or has an obligation
to make any payments to a third party under any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement (including any
agreement, contract or arrangement providing for the sharing or ceding of
credits or losses) or has a potential liability or obligation to any third party
as a result of or pursuant to any such agreement, contract, arrangement or
commitment, other than such as would not have a material adverse effect upon the
financials of the Company.
(m) Neither the Company nor any Subsidiary is a party to any agreement,
plan, contract or arrangement that would result, individually or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of section 280G of the Code or similar provision or other law.
(n) Other than in the ordinary course of business consistent with the
Company's past practices since 1993, no closing agreement pursuant to section
7121 of the Code (or any predecessor provision) or any similar provision of any
state, local or foreign law has been entered into by or on behalf of the Company
or any Subsidiary.
(o) To the knowledge of the Company after due inquiry of the persons
responsible for such matters, no jurisdiction where the Company or any
Subsidiary has not filed a Tax Return has made a claim in writing that the
Company or such Subsidiary is required to file a Tax Return in such jurisdiction
which when taken together would not have a material adverse effect on the
financial condition of the
23
Company.
(p) Such overall foreign loss ("OFL") (as defined in section 904 of the
Code and allocated under Treasury Regulation section 1.1502-9) as incurred by
the Company or any Subsidiary as of the end of the Company's most recent taxable
year will not have a material adverse effect on the Company's financial
statements. For all prior periods for which the statute of limitations has not
expired, through the Closing, the Company and each Subsidiary have not and will
not take any action or engage in any transaction including, without limitation,
causing the Company or any Subsidiary to incur additional liabilities and/or
additional expenses (other than (i) any actions or transaction made in the
ordinary course of business, or (ii) any transactions contemplated by this
Agreement) that would create an additional overall foreign loss allocable to the
Company or any Subsidiary under Treasury Regulation section 1.1502-9.
(q) No QEF elections (as defined in section 1295 of the Code) have been
filed by or on behalf of the Company or any Subsidiary.
(r) For purposes of this Agreement, "Taxes" shall mean all taxes, charges,
fees, levies or other assessments, including, without limitation, all net
income, gross income, gross receipts, sales, use, ad valor, goods and services,
capital, transfer, franchise, profits, license, withholding, payroll,
employment, employer health, excise, severance, stamp, occupation, real and
personal property, social security, estimated, recording, gift, value assessed,
windfall profits or other taxes, customs duties, fees, assessments or charges of
any kind whatsoever, whether computed on a separate, consolidated, unitary,
combined or other basis, together with any interest, fines, penalties, additions
to tax or other additional amounts imposed by any taxing authority (domestic or
foreign). For purposes of this Agreement, "Tax Return" shall mean any return,
declaration, report, estimate, information or other document (including any
documents, statements or schedules attached thereto) required to be filed with
any federal, state, local or foreign tax authority with respect to Taxes.
SECTION 4.16. Labor Relations. Except as set forth in the SEC Reports or
---------------
Schedule 4.16: (i) each of the Company and the Subsidiaries is, and has at all
times been in compliance with all applicable laws, rules, regulations and orders
respecting employment and employment practices, terms and conditions of
employment, wages, hours or work and occupational safety and health, and is not
engaged in any unfair labor practices as defined in the National Labor Relations
Act or other applicable law, except where the failure to so comply or the
failure to refrain from engaging in such practices would not, individually or in
the aggregate, have a Material Adverse Effect; (ii) to the knowledge of the
Company, there is no strike, lockout or material labor grievance, slowdown,
stoppage or arbitration pending or threatened against or affecting the Company
or any of the Subsidiaries; (iii) to the knowledge of the Company, neither the
Company nor any of the Subsidiaries is a party to or bound by any collective
bargaining or similar agreement with any union or other labor organization or is
engaged in any labor negotiations with any labor union; (iv) to the knowledge of
the Company, there are no proceedings pending between the Company and any of the
Subsidiaries or any of their respective employees before any federal or state
agency other than with respect to workers compensation claims and other claims
arising in the ordinary course of business; and (v) to the knowledge of the
Company, there are no material activities or proceedings of any labor union to
organize any material number of non-union employees of the Company or any of the
Subsidiaries.
SECTION 4.17. Transactions with Affiliates. Except as set forth in the
----------------------------
SEC Reports or Schedule 4.17, to the knowledge of the Company no present or
former affiliate of the Company has, or since January 1, 2000 has had (i) any
interest in any property (whether real, personal or mixed and whether tangible
or intangible) used in or pertaining to any of the businesses of the Company or
any of the Subsidiaries or (ii) material business dealings or a material
financial interest in any transaction with
24
the Company or any of the Subsidiaries (other than compensation and benefits
received in the ordinary course of business as an employee, director or
Stockholder of the Company or any of the Subsidiaries).
SECTION 4.18. Offer Documents; Proxy Statement. The Schedule 14D-9 will
--------------------------------
comply as to form in all material respects with the Exchange Act and the rules
and regulations thereunder. Neither the Schedule 14D-9 nor any of the
information relating to the Company or its affiliates provided by or on behalf
of the Company specifically for inclusion in the Schedule TO or the Offer
Documents will, at the respective times the Schedule 14D-9, the Schedule TO and
the Offer Documents or any amendments or supplements thereto are filed with the
SEC and are first published, sent or given to stockholders of the Company,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, no representation is made by the
Company with respect to written information supplied by Parent or Purchaser or
their respective accountants, counsel or other authorized representatives,
specifically for inclusion in the Schedule 14D-9. The proxy statement to be sent
to the stockholders of the Company in connection with the meeting of the
Company's stockholders to consider the Merger (the "Company Stockholders'
Meeting") or the information statement to be sent to such stockholders, as
appropriate (such proxy statement or information statement, as amended or
supplemented, is herein referred to as the "Proxy Statement"), will comply as to
form in all material respects with the applicable requirements of the Exchange
Act and the rules and regulations thereunder. The Proxy Statement will not, at
the time the Proxy Statement (or any amendment or supplement thereto) is filed
with the SEC or first sent to stockholders, at the time of the Company
Stockholders' Meeting or at the Effective Time, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is being made by the Company with respect to Parent
Information.
SECTION 4.19. Brokers. No broker, finder or investment banker (other than
-------
CSFB) is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of the Company. The Company has heretofore
furnished to Parent true and complete copies of all agreements and other
arrangements between the Company and CSFB relating to the fee or commission
referred to in this Section 4.19.
SECTION 4.20. Control Share Acquisition. The Company's Board of Directors
-------------------------
has approved the Offer, the Merger, this Agreement, the Company Stock Option
Agreement and Parent's acquisition of Shares pursuant to the Stockholders'
Agreement, and such approval is sufficient to render inapplicable to the Offer,
the Merger, this Agreement, the Company Stock Option Agreement and the
Stockholders' Agreement the limitations on business combinations continued in
Section 203 of Delaware Law. To the knowledge of the Company, no other state
takeover statute or similar statute or regulation applies or purports to apply
to the Offer, the Merger, this Agreement, the Company Stock Option Agreement or
the Stockholders' Agreement or any of the transactions contemplated by this
Agreement, the Company Stock Option Agreement or the Stockholders' Agreement.
SECTION 4.21. Rights Agreement Amendment. The execution and delivery of
--------------------------
the Rights Agreement Amendment by the Company has been duly authorized by all
necessary action under the Rights Agreement and by all necessary corporate
action on behalf of the Company. The Rights Agreement Amendment has been duly
executed and delivered by the Company, and as a result of the Rights Agreement
Amendment, (a) neither this Agreement, the Company Stock Option Agreement or the
Stockholders' Agreement nor any of the transactions contemplated hereby or
thereby, including the Offer and the Merger, will result in the occurrence of a
"Distribution Date" (as defined in the Rights Agreement) or otherwise cause any
of the Rights (as defined in the Rights Agreement) to become exercisable by the
holders thereof, and (b) the Rights shall automatically terminate on and as of
the
25
Effective Time, and be void and of no further force and effect. The Board
of Directors has taken all action required under the Rights Agreement to ensure
that no Distribution Date has occurred or will occur with respect to any
acquisition of Company Common Stock by any Person or group of Persons prior to
the date hereof.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. Conduct of Business by the Company Pending the Merger. From
-----------------------------------------------------
the date of this Agreement to the Effective Time, except as expressly
contemplated by this Agreement or as set forth in Schedule 5.1, the Company
shall, and shall cause each of the Subsidiaries, to (i) carry on its respective
businesses in the ordinary course, (ii) use reasonable efforts to preserve
intact its current business organizations and keep available the services of its
current officers and key employees, (iii) use reasonable efforts to preserve its
relationships with customers, suppliers and other Persons with which it has
business dealings, (iv) use reasonable efforts to comply in all material
respects with all laws and regulations applicable to it or any of its
properties, assets or business and (v) use reasonable efforts to maintain in
full force and effect all the Company Permits necessary for such business,
provided however that the foregoing shall not prevent the Company from borrowing
under its existing credit agreements to satisfy any of its obligations to
holders of Options under Section 2.9(a) hereof. Without limiting the generality
of the foregoing, except as (x) expressly contemplated by this Agreement or (y)
set forth in Schedule 5.1, the Company shall not, and shall cause each of the
Subsidiaries not to:
(a) amend its Certificate of Incorporation or By-Laws or similar
organizational documents or, in the case of the Company, change the number of
directors constituting its entire board of directors;
(b) (i)(A) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its capital stock, except
that a wholly owned Subsidiary may declare and pay a dividend or make advances
to its parent or the Company or (B) redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock or other securities; (ii)
issue, sell, pledge, dispose of or encumber any (A) additional shares of its
capital stock, (B) securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares of its
capital stock, or (C) of its other securities, other than Shares issued upon the
exercise of Options outstanding on the date hereof in accordance with the Option
Plans as in effect on the date hereof; or (iii) split, combine or reclassify any
of its outstanding capital stock;
(c) acquire or agree to acquire (A) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof (including entities which are
Subsidiaries) or (B) any assets, including real estate, except, with respect to
both of clause (A) and (B) above, (x) purchases of inventory, equipment and
supplies in the ordinary course of business consistent with past practice and
(y) other purchases in the ordinary course of business consistent with past
practice in an amount not involving, in the aggregate, more than $5 million for
acquisitions in the United States and Canada and $2 million for acquisitions
outside the United States and Canada;
(d) authorize or make capital expenditures in the aggregate in excess of $4
million;
(e) except in the ordinary course of business, amend or terminate any
Company Material Contract, or waive, release or assign any material rights or
claims thereunder;
26
(f) transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any material property or material assets other than (i) excess or
obsolete assets or (ii) in the ordinary course of business and consistent with
past practice;
(g) (i) except in accordance with the existing policies of the Company,
enter into any employment or severance agreement with or, grant any severance or
termination pay to any officer or director of the Company or any Subsidiary; or
(ii) hire or agree to hire any new or additional corporate officers;
(h) except as required to comply with the terms hereof or applicable law or
as disclosed in any SEC Report or Schedule 5.1, (A) adopt, enter into,
terminate, amend or increase the amount or accelerate the payment or vesting of
any material benefit or award or amount payable under any Company Employee
Benefit Plan or other arrangement for the current or future benefit or welfare
of any director, officer, former employee or, other than in the ordinary course
of business consistent with past practice, current employee, (B) increase in any
manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or, other than in the ordinary course of business consistent
with past practice, employee, (C) other than benefits accrued through the date
hereof and other than in the ordinary course of business for employees other
than officers or directors of the Company, pay any benefit not provided for
under any Benefit Plan, (D) other than bonuses earned through the date hereof
and other than in the ordinary course of business for employees other than
officers and directors, grant any awards under any bonus, incentive, performance
or other compensation plan or arrangement or Company Employee Benefit Plan;
provided that there shall be no grant or award to any director, officer or
employee of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or any removal of
existing restrictions in any Company Employee Benefit Plans or agreements or
awards made thereunder or (E) take any action to fund or in any other way secure
the payment of compensation or benefits under any employee plan, agreement,
contract or arrangement or Company Employee Benefit Plan;
(i) (i) except in connection with any acquisition permitted pursuant to
this Section 5.1 or to satisfy its obligations to holders of Options pursuant to
Section 2.9(a) hereof, or as disclosed on Schedule 5.1, incur or assume any
long-term debt, or except in the ordinary course of business in amounts
consistent with past practice, incur or assume any short-term indebtedness; (ii)
incur or modify any material indebtedness or other liability; (iii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person, except in
the ordinary course of business and consistent with past practice; or (iv)
except for advances or prepayments in the ordinary course of business in amounts
consistent with past practice, make any loans, advances or capital contributions
to, or investments in, any other Person (other than to wholly owned Subsidiaries
or customary loans or advances to employees in accordance with past practice);
(j) change of the accounting methods used by it unless required by
generally accepted accounting principles;
(k) other than in the ordinary course of business consistent with past
practice, make any material Tax election or settle or compromise any material
Tax liability;
(l) (i) settle or compromise any material claim, litigation or other legal
proceeding, other than in the ordinary course of business consistent with past
practice in an amount not involving more than $1 million or (ii) pay, discharge
or satisfy any other material claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction of (A) any such other claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, or (B) of any such other claims, liabilities or obligations reflected
or
27
reserved against in, or contemplated by, the consolidated financial statements
(or the notes thereto) of the Company;
(m) except in the ordinary course of business consistent with past
practice, waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any
Subsidiary is a party;
(n) permit any material insurance policy naming the Company or any
Subsidiary as a beneficiary or a loss payable payee to be canceled or terminated
without notice to Parent, except in the ordinary course of business and
consistent with past practice or in connection with replacing such policy with a
policy providing comparable coverage;
(o) take any action which, or omit to take any action, the omission of
which, would make any of the representations or warranties of the Company
contained in this Agreement untrue and incorrect in any material respect as of
the date when made if such action or omission had then been made, or would
result in any of the conditions set forth in Annex I hereto or the conditions
set forth in Article VII hereof not being satisfied; or
(p) enter into an agreement, contract, commitment or arrangement to do any
of the foregoing, or to authorize, recommend, propose or announce an intention
to do any of the foregoing.
SECTION 5.2. No Solicitation.
---------------
(a) (I) The Company shall not, nor shall it permit or authorize any of the
Subsidiaries, or any officer, director or employee, agent or representative of
the Company or any of the Subsidiaries (collectively, the "Company
Representatives") to, (i) solicit or initiate, or encourage, directly or
indirectly, any inquiries regarding or the submission of, any Takeover Proposal
(as defined below), (ii) except as permitted below, participate in any
discussions or negotiations regarding, or furnish to any Person any information
or data with respect to, or take any other action to knowingly facilitate the
making of any proposal that constitutes any Takeover Proposal or (iii) enter
into any agreement with respect to any Takeover Proposal or approve or resolve
to approve any Takeover Proposal; provided, however, that nothing contained in
this Section 5.2 or any other provision hereof shall prohibit the Company or the
Board of Directors from (A) taking and disclosing to the Company's stockholders
a position with respect to a tender or exchange offer by a third party pursuant
to Rules 14d-9 and 14e-2 promulgated under the Exchange Act or (B) making such
disclosure to the Company's stockholders as, in the good faith judgment of the
Board of Directors, after receiving advice from outside counsel, is required
under applicable law, provided that the Company may not, except as permitted by
Section 5.2(b), withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or Purchaser the approval or recommendation by the
Board of Directors or any such committee of this Agreement, or the Company Stock
Option Agreement or the transactions contemplated hereby or thereby, including
the Offer or the Merger, or Parent's acquisition of Shares pursuant to the
Stockholders' Agreement, or approve or recommend, or propose to approve or
recommend any Takeover Proposal, or enter into any agreement with respect to any
Takeover Proposal. Upon execution of this Agreement, the Company shall, and it
shall cause the Company Representatives to, immediately cease any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Takeover Proposal, and it shall promptly request that each
Person who has heretofore executed a confidentiality agreement in connection
with such Person's consideration of a Takeover Proposal return all confidential
information heretofore furnished to such Person by or on behalf of the Company.
Notwithstanding the foregoing, prior to the time of acceptance of Shares for
payment pursuant to the Offer, the Company may furnish information concerning
its business, properties or assets to any Person or group pursuant to
confidentiality agreements with terms and conditions similar to the
Confidentiality Agreement, dated September 28, 1998, as
28
reconfirmed July 12, 2000 (the "Confidentiality Agreement"), between the Company
and Parent (provided that such confidentiality agreements may not include any
provision granting any such Person or group an exclusive right to negotiate with
the Company), and may negotiate and participate in discussions and negotiations
with such Person or group concerning a Takeover Proposal if: (x) such Person or
group has submitted a Superior Proposal; and (y) the Board of Directors
determines in good faith, based upon advice of outside counsel, that such action
is required to discharge the Board of Director's fiduciary duties to the
Company's stockholders under applicable law.
The Company will promptly notify Parent of the existence of any
proposal, discussion, negotiation or inquiry received by the Company with
respect to any Takeover Proposal. The Company will promptly provide to Parent
any non- public information concerning the Company provided to any other Person
which was not previously provided to Parent. The Company will keep Parent fully
informed of the status of any such Takeover Proposal.
As used in this Agreement, the following terms have the meanings set
forth below:
"Superior Proposal" means an unsolicited bona fide written proposal by
a Third Party to acquire, directly or indirectly, for consideration consisting
solely of cash and/or securities, more than 50% of the Shares then outstanding
or all or substantially all of the assets of the Company, and (i) otherwise on
terms which the Board of Directors determines in good faith to be more favorable
to the Company's stockholders than the Offer and the Merger (based in part on a
written opinion of the Company's independent financial advisor that the value of
the consideration provided for in such proposal exceeds the value of the
consideration provided for in the Offer and the Merger), (ii) for which
financing, to the extent required, is then committed or, in the good faith
judgment of the Board of Directors, is reasonably available, and (iii) which, in
the good faith judgment of the Board of Directors, is reasonably likely to be
consummated without undue delay.
"Takeover Proposal" means any inquiry, proposal or offer, whether in
writing or otherwise, from a Third Party to acquire beneficial ownership (as
defined under Rule 13(d) of the Exchange Act) of all or substantially all of the
assets of the Company or 25% or more of any class of equity securities of the
Company pursuant to a merger, consolidation or other business combination, sale
of shares of capital stock, sale of assets, tender offer, exchange offer or
similar transaction, including any single or multi-step transaction or series of
related transactions.
"Third Party" means any Person or group other than Parent, Purchaser
or any affiliate thereof.
(b) Except as set forth in this Section 5.2(b), neither the Board of
Directors nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Board of Directors or any such committee of this
Agreement, or the Company Stock Option Agreement, or the transactions
contemplated hereby or thereby, including the Offer or the Merger or Parent's
acquisition of Shares pursuant to the Stockholders' Agreement, (ii) approve or
recommend, or propose to approve or recommend any Takeover Proposal or (iii)
enter into any agreement with respect to any Takeover Proposal. Notwithstanding
the foregoing, prior to the time of acceptance for payment of Shares pursuant to
the Offer, the Board of Directors may withdraw or modify its approval or
recommendation of this Agreement, the Offer or the Merger, approve or recommend
a Superior Proposal, or enter into an agreement with respect to a Superior
Proposal, in each case if (A) the Company shall have received a Superior
Proposal, (B) the Board of Directors shall have determined in good faith, based
upon advice of outside counsel, that such action is required to discharge the
Board of Director's fiduciary duties to the Company's stockholders under
Delaware law, (C) at least five business days shall have passed following
written notice from the Company advising Parent
29
that the Board of Directors has received such a Superior Proposal which it
intends to accept, specifying the material terms and conditions of such Superior
Proposal, identifying the Person making such Superior Proposal, but only if the
Company shall have caused its financial and legal advisors to negotiate in good
faith during such five (5) business day period with Parent to make such
adjustments to the terms and conditions of this Agreement as would enable the
Company to proceed with the transactions contemplated herein on such adjusted
terms and (D) concurrently with taking such action the Company shall pay the
Termination Fee and Expenses as provided in Section 8.2(b) (whether or not this
Agreement shall be terminated); provided, however, that in no event shall the
Company be obligated to pay more than $2.5 million in Expenses.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1. Proxy Statement. As promptly as practicable after the
---------------
consummation of the Offer and if required by the Exchange Act or Delaware Law,
the Company shall prepare and file with the SEC, and shall use all reasonable
efforts to have cleared by the SEC, and promptly thereafter shall mail to
stockholders, the Proxy Statement. The Proxy Statement shall contain the
recommendation of the Board of Directors that the Company's stockholders approve
this Agreement and the Merger.
SECTION 6.2. Meeting of Stockholders of the Company. Following the
--------------------------------------
consummation of the Offer, the Company shall promptly take all action necessary
in accordance with Delaware Law and the Company's Restated Certificate of
Incorporation, as amended ("Restated Certificate") and By-Laws to convene the
Company Stockholders' Meeting, if such meeting is required. The stockholder vote
required for approval of the Merger will be no greater than that set forth in
Delaware Law. The Company shall use its best efforts to solicit from
stockholders of the Company proxies in favor of the Merger and shall take all
other action necessary or, in the reasonable opinion of Parent, advisable to
secure any vote of stockholders required by Delaware Law to effect the Merger.
Notwithstanding the foregoing, if Purchaser or any other subsidiary of Parent
shall acquire at least 90 percent of the outstanding Shares on a fully diluted
basis, and provided that the conditions set forth in Article VII shall have been
satisfied or waived, the Company shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after such acquisition, without the approval of the stockholders
of the Company, in accordance with Section 253 of Delaware Law.
SECTION 6.3. Compliance with Law. Each of the Company, Parent and
-------------------
Purchaser will comply in all material respects with all applicable laws and with
all applicable rules and regulations of any Governmental Entity in connection
with its execution, delivery and performance of this Agreement and the Company
Stock Option Agreement and the transactions contemplated hereby and thereby.
SECTION 6.4. Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent of (i) the occurrence, or non-occurrence of any event
whose occurrence, or non-occurrence would be likely to cause either (A) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (B) any condition set forth in Annex I to be unsatisfied in
any material respect at any time from the date hereof to the date Parent
purchases Shares pursuant to the Offer and (ii) any failure of the Company, or,
to the knowledge of the Company, any of its officers, directors, employees or
agents, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it or them hereunder; provided, however, that the
delivery of any notice pursuant to this Section 6.4 shall not (a) limit or
otherwise affect the remedies available hereunder to Parent or (b) by itself
constitute an admission on the part of the
30
Company of a breach of a representation or warranty or a failure to comply with
a covenant, condition or agreement hereunder.
SECTION 6.5. Access to Information. From the date hereof to the Effective
---------------------
Time, the Company shall, and shall cause its Subsidiaries, officers, directors,
employees, auditors and agents to, afford the officers, employees and agents of
Parent and Purchaser reasonable access at all reasonable times to its officers,
employees, agents, properties, offices and other facilities and to all books and
records, and shall promptly furnish Parent and Purchaser with (a) all financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request and (b) a copy of each
report, schedule and other document filed or received by the Company or any of
the Subsidiaries during such period pursuant to the requirements of applicable
securities laws.
SECTION 6.6. Public Announcements. So long as this Agreement is in
--------------------
effect, Parent and the Company shall consult with each other before issuing any
press release or otherwise making any public statements with respect to the
Offer or the Merger and shall not issue, or permit their affiliates to issue,
any such press release or make any such public statement before such
consultation, except as may be required by law, or by any national securities
exchange or an interdealer quotation system designated by the National
Association of Securities Dealers, Inc.
SECTION 6.7. Best Efforts; Further Assurances. (a) Subject to the terms
--------------------------------
and conditions of this Agreement, each of the parties hereto shall use its best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement. In
furtherance and not in limitation of the foregoing, each party hereto agrees to
make an appropriate filing of a Notification and Report Form pursuant to the HSR
Act with respect to the transactions contemplated hereby as promptly as
practicable and in any event within ten (10) business days of the date hereof
and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and to take
all other actions necessary to cause the expiration or termination of the
applicable waiting period under the HSR Act as soon as possible.
(b) In connection with the efforts referenced in Section 6.7(a) to obtain
all requisite approvals and authorizations for the transactions contemplated by
this Agreement under the HSR Act or any other Antitrust Law, each of the parties
hereto shall use its best efforts to (i) cooperate in all respects with each
other in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) keep the other party informed in all material respects of any
material communication received by such party from, or given by such party to,
the Federal Trade Commission (the "FTC"), the Antitrust Division of the
Department of Justice (the "DOJ") or any other Governmental Entity and of any
material communication received or given in connection with any proceeding by a
private party, in each case, regarding any of the transactions contemplated
hereby and (iii) subject to confidentiality obligations of each party to the
other, permit each other party to review any material communication given by it
to, and consult with each other in advance of any meeting or conference with,
the FTC, the DOJ or any such other Governmental Entity or, in connection with
any proceeding by a private party, with any other Person, and to the extent
permitted by the FTC, the DOJ or such other applicable Governmental Entity or
other Person, give each other party the opportunity to attend and participate in
such meetings and conferences. For purposes of this Agreement, "Antitrust Law"
means the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other federal, state and
foreign, if any, statutes, rules, regulations, orders, decrees, administrative
and judicial doctrines and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade or lessening of competition.
31
(c) In furtherance and not in limitation of the covenants of the parties
contained in Sections 6.7(a) and 6.7(b) but subject to the provisions of Section
6.7(d), each of the parties hereto shall use its best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated hereby under any Antitrust Law. In connection with the foregoing,
if any administrative or judicial action or proceeding, including any proceeding
by a private party, is instituted (or threatened to be instituted) challenging
any transaction contemplated by this Agreement as violative of any Antitrust
Law, each of the parties hereto shall cooperate in all respects with each other
and use its respective best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
(d) If any objections are asserted with respect to the transactions
contemplated hereby under any Antitrust Law or if any suit is instituted by any
Governmental Entity or any private party challenging any of the transactions
contemplated hereby as violative of any Antitrust Law, each of the parties
hereto shall use its best efforts to resolve any such objections or challenge as
such Governmental Entity or private party may have to such transactions under
such Antitrust Law so as to permit consummation of the transactions contemplated
by this Agreement. In furtherance and not in limitation of the foregoing, if it
is necessary in order to terminate the waiting period under the HSR Act or
otherwise to permit the Offer to be consummated, each of Parent and Purchaser
agree (i) to divest operations or assets of the Company or Parent's U.S.
operations up to but not in excess of $150 million (the "Divested Business"),
(ii) to hold separate the Divested Business pending such divestiture, and (iii)
to enter into a consent decree requiring it to divest the Divested Business, and
to take such further action in connection therewith as may be necessary to
enable the Offer to be consummated on or prior to February 28, 2001.
(e) Each of the parties hereto agrees, and the Company, prior to the
Effective Time, and Parent, after the Effective Time, agree to cause the Company
and each Subsidiary, to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be necessary
or advisable in order to consummate or implement expeditiously the transactions
contemplated by this Agreement.
SECTION 6.8. Agreement to Defend and Indemnify.
---------------------------------
(a) It is understood and agreed that the Company shall, to the fullest
extent permitted under applicable law and regardless of whether the Merger
becomes effective, indemnify and hold harmless, and after the Effective Time,
Parent and the Surviving Corporation shall, for claims, actions, suits,
proceedings or investigations referred to below that arise during a period of
six years following the Effective Time, to the fullest extent permitted under
applicable law, indemnify and hold harmless, each director, officer, employee,
fiduciary and agent of the Company or any Subsidiary and their respective
subsidiaries and affiliates including, without limitation, officers and
directors serving as such on the date hereof (collectively, the "Indemnified
Parties") against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to any of the transactions
contemplated hereby, including without limitation liabilities arising under the
Securities Act or the Exchange Act in connection with the Offer or the Merger,
and in the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) the Company or, after
the Effective Time, Parent and the Surviving Corporation shall pay as incurred
the reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to the Company or the Surviving
Corporation, promptly as statements therefor are received, and (ii) the Company,
Parent and the Surviving Corporation will cooperate in the defense of any such
matter; provided, however, that neither the Company nor Parent or the Surviving
Corporation shall
32
be liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld); and provided, further, that neither
the Company, Parent or the Surviving Corporation shall be obligated pursuant to
this Section 6.8 to pay the fees and disbursements of more than one counsel for
all Indemnified Parties in any single action except to the extent that, in the
opinion of counsel for the Indemnified Parties, two or more of such Indemnified
Parties have conflicting interests in the outcome of such action. Parent and
Purchaser agree that any claims for indemnification hereunder as to which they
have received written notice prior to the sixth anniversary of the Effective
Time shall survive, whether or not such claims shall have been finally
adjudicated or settled. For six years after the Effective Time, the Surviving
Corporation shall maintain or obtain officers' and directors' liability
insurance (which may be part of Parent's insurance policy) covering the
Indemnified Parties who are currently covered by the Company's officers and
directors liability insurance policy on terms not less favorable than those in
effect on the date hereof in terms of coverage and amounts; provided, however,
that if the aggregate annual premiums for such insurance at any time during such
period exceed the per annum rate of premium paid by the Company for such
insurance as of the date of this Agreement, then the Surviving Corporation shall
provide the maximum coverage that will then be available at an annual premium
equal to such per annum rate as of the date of this Agreement. The Surviving
Corporation shall continue in effect the indemnification provisions currently
provided by the Restated Certificate and By-Laws of the Company for a period of
not less than six years following the Effective Time. This Section 6.8 shall
survive the consummation of the Merger. This covenant shall survive any
termination of this Agreement pursuant to Section 8.1 hereof. Notwithstanding
Section 9.7 hereof, this Section 6.8 is intended to be for the irrevocable
benefit of and to grant third-party rights to Indemnified Parties whether or not
parties to this Agreement, and each of the Indemnified Parties shall be entitled
to enforce the covenants contained herein.
(b) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 6.8.
SECTION 6.9. State Takeover Laws. If any state takeover statute or other
-------------------
similar statute or regulation becomes or is deemed to become applicable to the
Offer, the Merger, this Agreement, the Company Stock Option Agreement or the
Stockholders' Agreement or any of the transactions contemplated by this
Agreement, the Company Stock Option Agreement or the Stockholders' Agreement,
the Company shall promptly, consistent with its directors' and officers'
fiduciary obligations, take all such reasonable actions as are necessary to
render such statute or regulation inapplicable to all of the foregoing.
ARTICLE VII.
CONDITIONS OF MERGER
SECTION 7.1. Conditions for Each Party's Obligations to Effect the Merger.
------------------------------------------------------------
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction on or prior to the Effective Time of the following
conditions:
(a) Purchaser shall have made, or caused to be made, the Offer and shall
have purchased, or caused to be purchased, Shares pursuant to the Offer;
33
(b) The Merger and this Agreement shall have been approved and adopted by
the requisite vote of the stockholders of the Company, if required by Delaware
Law; and
(c) No statute, rule, regulation, judgment, writ, decree, order or
injunction shall have been promulgated, enacted, entered or enforced, and no
other action shall have been taken, by any Governmental Entity that in any of
the foregoing cases has the effect of making illegal or directly or indirectly
restraining, prohibiting or restricting the consummation of the Merger.
(d) Any waiting period applicable to the Merger under the HSR Act shall
have expired or have been terminated.
SECTION 7.2. Further Condition for Obligations of Parent and Purchaser.
---------------------------------------------------------
The obligations of Parent and Purchaser to effect the Merger shall be further
subject to the satisfaction on or prior to the Effective Time of the following
additional condition: the Company shall have performed in all material respects
all obligations and complied in all material respects with all agreements and
covenants of the Company to be performed or complied with by it under this
Agreement at or prior to the Effective Time.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. Termination. This Agreement may be terminated and the Merger
-----------
may be abandoned at any time prior to the Effective Time, whether before or
after approval of matters presented in connection with the Merger by the
stockholders of the Company:
(a) By the mutual written consent of Parent and the Company; or
(b) By either of Parent or the Company if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action (which order,
decree or ruling or other action each party hereto shall use its reasonable best
efforts to have vacated or reversed), in each case permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final
and non-appealable.
(c) By the Company:
(i) if the Company has approved a Superior Proposal in accordance with
Section 5.2(b), provided the Company has complied with all provisions
thereof, including the notice provisions therein, and that it makes
simultaneous payment of the Expenses and the Termination Fee (as defined
below); or
(ii) if Parent or Purchaser shall have terminated the Offer or the
Offer expires without Parent or Purchaser, as the case may be, purchasing
any Shares pursuant thereto; provided that the Company may not terminate
this Agreement pursuant to this Section 8.1(c)(ii) if the Company is in
material breach of any covenant of this Agreement; or
(iii) if Parent, Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to seven (7) business day
following the date of the initial public announcement of the Offer;
provided that the Company may not terminate this Agreement pursuant to this
Section 8.1(c)(iii) if the Company is in material breach of any covenant
of this Agreement; or
34
(iv) if Parent or Purchaser shall have breached in any material
respect any of its representations, warranties, covenants or other
agreements contained in this Agreement which breach or failure to perform
is incapable of being cured or has not been cured by the earlier of (x) ten
business days following written notice thereof to Parent from the Company
and (y) the scheduled expiration of the Offer; or
(v) if the Offer shall not have expired or been terminated on or
before February 28, 2001; provided that the Company may not terminate this
Agreement pursuant to this Section 8.1(c)(v) if the Company is in material
breach of any covenant of this Agreement.
(d) By Parent or Purchaser:
(i) if prior to the purchase of the Shares pursuant to the Offer, the
Board of Directors shall have withdrawn, or modified or changed in a manner
adverse to Parent or Purchaser its approval or recommendation of the Offer,
this Agreement, the Merger, the Company Stock Option Agreement or the
Stockholders' Agreement or shall have approved a Takeover Proposal;
provided, that neither Parent nor Purchaser shall be entitled to terminate
this Agreement pursuant to this Section 8.1(d)(i) solely as a result of the
Company or the Board of Directors taking action in accordance with Section
5.2(b) or making such disclosure to the Company's stockholders as, in good
faith judgment of the Board of Directors, after receiving advice from
outside counsel, is required under applicable law; or
(ii) if Parent or Purchaser shall have terminated the Offer without
Parent or Purchaser purchasing any Shares thereunder, provided that Parent
or Purchaser may not terminate this Agreement pursuant to this Section
8.1(d)(ii) if Parent or Purchaser is in material breach of this Agreement;
or
(iii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of the
conditions set forth in Annex I hereto, Parent, Purchaser, or any of their
affiliates shall have failed to commence the Offer on or prior to seven (7)
business days following the date of the initial public announcement of the
Offer; or
(iv) (A) any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent or Purchaser or their affiliates or any
group of which any of them is a member, shall have acquired beneficial
ownership (as determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the Shares, or (B) the Board of Directors
shall have taken any action, including amending the Rights Plan or waiving
Section 203 of the Delaware law, to enable any Person other than Parent,
Purchaser or their affiliates or any group of which any of them is a member
to acquire beneficial ownership of 15% or more of the Shares; or
(v) if the Company, or any of the Company Representatives, shall take
any of the actions prohibited in clauses (i) or (ii) of Section 5.2(a)
hereof; or
(vi) if the Company shall have breached in any material respect any of
its representations, warranties, covenants or other agreements contained in
this Agreement which breach or failure to perform is incapable of being
cured or has not been cured by the later of (x) ten (10) business days
following written notice thereof to the Company from Parent and (y) the
scheduled expiration of the Offer; or
35
(vii) if the Offer shall not have expired or been terminated on or
before February 28, 2001; provided that Parent or Purchaser may not
terminate this Agreement pursuant to this Section 8.1(c)(vii) if the Parent
or Purchaser is in material breach of this Agreement.
SECTION 8.2. Effect of Termination.
---------------------
(a) In the event of termination of this Agreement by either the Company or
Parent or Purchaser as provided in Section 8.1, this Agreement shall forthwith
become void and have no effect, without any liability or obligation on the part
of Parent, Purchaser or the Company, other than the provisions of this Article
VIII and as provided in Section 6.8 and Section 9.1. The exclusive remedy for
any breach of any of the representations, warranties, covenants or agreements
set forth in this Agreement shall be termination of this Agreement in accordance
with Section 8.1 and, if so entitled pursuant to Section 8.2, receipt of the
Termination Fee and Expenses.
(b) If (x) Parent or Purchaser terminates this Agreement pursuant to
Section 8.1(d)(i), 8.1(d)(iv)(B) or 8.1(d)(v) or (y) the Company terminates this
Agreement pursuant to Section 8.1(c)(i), then in each case, the Company shall
pay, or cause to be paid to Parent, at the time of termination, an amount equal
to $10.0 million (the "Termination Fee") plus an amount equal to Parent's and
Purchaser's actual and reasonable documented out-of-pocket expenses incurred by
Parent or Purchaser in connection with the Offer, the Merger, this Agreement and
the consummation of the transactions contemplated hereby, including, without
limitation, the fees and expenses of Parent's counsel and accountants as well as
all fees and expenses payable to all banks, investment banking firms, and other
financial institutions and Persons and their respective agents and counsel
incurred in connection with acting as Parent's or Purchaser's financial advisor
with respect to, or arranging or committing to provide or providing any
financing for, the transactions contemplated hereby (the "Expenses"); provided,
however, that in no event shall the Company be obligated to pay more than $2.5
million in Expenses. In addition, if (i) this Agreement is terminated by Parent
pursuant to Section 8.1(d)(ii), 8.1(d)(iv)(A) or 8.1(d)(vii) or by the Company
pursuant to Section 8.1(c)(ii) or 8.1(c)(v), (ii) and at the time of such
termination, Parent is not in material breach of this Agreement and the Minimum
Condition has not been satisfied, (iii) a Takeover Proposal is made prior to
such termination and (iv) the Company shall thereafter, within 12 months after a
termination pursuant to any of such provisions, consummate an agreement with
respect to a Takeover Proposal (for purposes of this clause (iv), the term
"Takeover Proposal" shall have the meaning assigned to such term in Section
5.2(a), except that the reference to "25%" therein shall be deemed to be a
reference to "50%") that provides for the payment of consideration with a value
of the Per Share Amount or more per Share to be acquired, the Company shall pay
the Termination Fee and the Expenses concurrently with entering into any such
agreement; provided, however, that in no event shall the Company be obligated to
pay more than $2.5 million in Expenses.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.1. Non-Survival of Representations, Warranties and Agreements.
----------------------------------------------------------
(a) The representations, warranties and agreements in this Agreement shall
terminate at the Effective Time or the termination of this Agreement pursuant to
Section 8.1, as the case may be, except as provided in Sections 6.8 and 8.2 and
except that the agreements set forth in Article II shall survive the Effective
Time during the period of the applicable statute of limitations and those set
forth in Article VIII and Section 9.3 shall survive termination indefinitely.
36
(b) Neither Parent nor Purchaser has relied upon any representations or
warranties (whether written or oral) made by the Company or any officer,
director, employee, agent or affiliate of the Company in connection with the
transactions contemplated by this Agreement and the Company Stock Option
Agreement, other than the representations and warranties of the Company
contained in this Agreement and the Company Stock Option Agreement.
SECTION 9.2. Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made (i) as of the date delivered or sent by facsimile if delivered
personally or by facsimile, and (ii) on the third business day after deposit in
the U.S. mail, if mailed by registered or certified mail (postage prepaid,
return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
(a) if to Parent or Purchaser
Securitas AB
Berkshire House
Feltham Corporate Centre
▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: President
Facsimile: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Promenade Office Park
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. London, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company:
▇▇▇▇▇ International Services Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
37
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.3. Expenses. Except as expressly set forth in Section 8.2, all
--------
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees,
costs and expenses.
SECTION 9.4. Certain Definitions. For purposes of this Agreement, the
-------------------
term:
(a) "affiliate" of a Person means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person;
(b) "control" (including the terms "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of stock, as trustee or executor, by contract or credit
arrangement or otherwise; and
(c) "Person" means an individual, corporation, partnership, association,
trust or any unincorporated organization.
SECTION 9.5. Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.6. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the maximum extent
possible.
SECTION 9.7. Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement, the Confidentiality Agreement and the Company Stock Option Agreement
constitute the entire agreement and supersede any and all other prior agreements
and undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and, except as otherwise expressly provided
herein, this Agreement is not intended to confer upon any other Person any
rights or remedies hereunder.
SECTION 9.8. Assignment. This Agreement shall not be assigned by
----------
operation of law or otherwise.
SECTION 9.9. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed entirely within that State.
SECTION 9.10. Amendment. This Agreement may be amended by the parties
---------
hereto by action taken by Parent and Purchaser, and by action taken by or on
behalf of the Company's Board of Directors at any time before the Effective
Time; provided, however, that, after approval of the Merger by the stockholders
of the Company, no amendment may be made which would reduce the amount or change
the
38
type of consideration into which each Share will be converted upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 9.11. Waiver. At any time before the Effective Time, any party
------
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties of the other parties hereto contained herein or
in any document delivered pursuant hereto and (c) waive compliance by the other
parties hereto with any of their agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only as against such party and only if set forth in an instrument in
writing signed by such party. The failure of any party hereto to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
those rights.
SECTION 9.12. Schedules. Any fact or item which is disclosed on any
---------
Schedule to this Agreement shall be deemed to be an exception to any other
representation or representations made in this Agreement or to be disclosed on
any other Schedule or Schedules, as the case may be, notwithstanding the
omission of a reference or cross reference thereto.
SECTION 9.13. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which shall
constitute one and the same agreement.
39
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
▇▇▇▇▇ INTERNATIONAL SERVICES
CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
SECURITAS AB
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
SECURITAS ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President and Chief
Financial Officer
40
ANNEX I
Conditions to the Offer. Notwithstanding any other provision of the Offer,
-----------------------
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated
under the Exchange Act (relating to Parent's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and (subject to any such rules or regulations) may delay the acceptance for
payment of any tendered Shares and (except as provided in this Agreement) amend
or terminate the Offer as to any Shares not then paid for if (i) there shall not
have been validly tendered and not withdrawn prior to the expiration of the
Offer a number of Shares which represents at least a majority of the number of
shares of Company Common Stock outstanding on a fully diluted basis (the
"Minimum Condition") or (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer
or (iii) at any time after the date of this Agreement and before the time of
acceptance for payment of any such Shares, any of the following events shall
occur and be continuing or conditions exists:
(a) there shall be an injunction or other order, decree, judgment or ruling
issued by a Governmental Entity of competent jurisdiction or a statute, rule,
regulation, executive order or other action shall have been enacted, promulgated
or taken by a Governmental Entity of competent jurisdiction which in any such
case (i) restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger or the performance of the other transactions
contemplated by this Agreement, or the Company Stock Option Agreement, (ii)
prohibits or restricts the ownership or operation by Parent (or any of its
affiliates or subsidiaries) of any portion of its or the Company's business or
assets which is material to the business of all such entities taken as a whole,
or compels Parent (or any of its affiliates or subsidiaries) to dispose of or
hold separate any portion of its or the Company's business or assets which is
material to the business of all such entities taken as a whole, (iii) imposes
material limitations on the ability of Parent effectively to acquire or to hold
or to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote the Shares purchased by Parent on all matters
properly presented to the stockholders of the Company, or (iv) imposes any
material limitations on the ability of Parent or any of its respective
affiliates or subsidiaries effectively to control in any material respect the
business and operations of the Company and its subsidiaries, the effect of
which, in the case of clauses (iii) and (iv) above, is material to the business
of all such entities taken as a whole; or
(b) this Agreement shall have been terminated by the Company or Parent in
accordance with its terms or any event shall have occurred which gives Parent or
Purchaser the right to terminate this Agreement or not consummate the Merger; or
(c) there shall have occurred any event that, individually or when
considered together with any other matter, has or has had a Material Adverse
Effect; provided that, for purposes of this clause (c), any adverse effect that
is caused by conditions affecting the economy or financial markets generally or
results from this Agreement or the transactions contemplated hereby or the
announcement hereof shall not be taken into account in determining whether there
has been a Material Adverse Effect; or
(d) any of the representations and warranties of the Company set forth in
this Agreement that are qualified by reference to materiality or a Material
Adverse Effect shall not be true and correct, or any such representations and
warranties that are not so qualified shall not be true and correct in any
respect that is reasonably likely to have a Material Adverse Effect, in each
case as if such representations and warranties were made at the time of such
determination; provided that, for purposes of this clause (d), any adverse
effect that is caused by conditions affecting the economy or financial markets
generally or results from this Agreement or the transactions contemplated hereby
or the announcement hereof shall not be taken into account in determining
whether there has been a Material Adverse Effect; or
1
(e) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or covenant
of the Company to be performed or complied with by it under this Agreement; or
(f) there shall have occurred and be continuing (i) any general suspension
of, or limitation on prices for, trading in securities on any national
securities exchange or the over-the-counter market (other than a shortening of
trading hours or any coordinated trading halt for less than 24 hours triggered
solely as a result of a specified increase or decrease in a market index), (ii)
a declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States or Sweden, (iii) any material limitation (whether
or not mandatory) by a government or Governmental Entity, on the extension of
credit by banks or other lending institutions in the United States or Sweden,
(iv) a commencement of a war or armed hostilities or other national calamity
directly involving the United States or Sweden, or (v) in the case of any of the
foregoing existing at the time of the execution of this Agreement, a material
acceleration or worsening thereof; or
(g) the Board of Directors (i) shall have withdrawn, or modified or changed
in a manner adverse to Parent or Purchaser (whether or not included in an
amendment of the Schedule 14D-9) its approval or recommendation of this
Agreement, the Company Stock Option Agreement or the Stockholders' Agreement or
the transactions contemplated hereby or thereby, including the Offer or the
Merger, (ii) recommended a Takeover Proposal or (iii) shall have adopted any
resolution to effect any of the foregoing; provided, that the foregoing shall
not apply solely as a result of the Company or the Board of Directors making
such disclosure to the Company's stockholders as, in good faith judgment of the
Board of Directors, after receiving advice from outside counsel, is required
under applicable law; or
(h) any Person or "group" (as defined in Section 13(d)(3) of the Exchange
Act) other than Parent or Purchaser, or their affiliates or any group of which
any of them is a member shall have acquired beneficial ownership (as determined
pursuant to Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the
Shares, or the Board of Directors shall have taken any action, including
amending the Rights Plan or waiving Section 203 of the Delaware Law, to enable
any Person other than Parent, Purchaser or their affiliates or any group of
which any of them is a member to acquire beneficial ownership of 15% or more of
the Shares; or
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Purchaser regardless of the circumstances (including any action or
inaction by Purchaser) giving rise to any such conditions and, subject to the
terms of this Agreement, may be waived by Purchaser in whole or in part at any
time and from time to time, in each case, in the exercise of the good faith
judgment of Purchaser and subject to the terms of this Agreement. The failure
by Purchaser 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.
2