EXHIBIT 99.(c)(1)
EXECUTION COPY
================================================================================
PINKERTON'S, INC.
SECURITAS AB
and
SECURITAS ACQUISITION CORP.
==============================
AGREEMENT AND PLAN OF MERGER
===============================
===============================
Dated as of February 19, 1999
===============================
================================================================================
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I. THE TENDER OFFER.............................................. 2
SECTION 1.1. The Offer.............................................. 2
SECTION 1.2. Company Action......................................... 5
SECTION 1.3. Directors.............................................. 6
ARTICLE II. THE MERGER................................................... 8
SECTION 2.1. The Merger............................................. 8
SECTION 2.2. Effective Time......................................... 8
SECTION 2.3. Effect of the Merger................................... 8
SECTION 2.4. Subsequent Actions..................................... 8
SECTION 2.5. Certificate of Incorporation; By-Laws;
Directors and Officers................................ 9
SECTION 2.6. Conversion of Securities............................... 9
SECTION 2.7. Dissenting Shares...................................... 10
SECTION 2.8. Surrender of Shares; Stock Transfer Books.............. 11
SECTION 2.9. Stock Plans............................................ 12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND PURCHASER............................................... 13
SECTION 3.1. Corporate Organization................................. 13
SECTION 3.2. Authority Relative to this Agreement................... 13
SECTION 3.3. No Conflict; Required Filings and
Consents.............................................. 14
SECTION 3.4. Financing Arrangements................................. 15
SECTION 3.5. No Prior Activities.................................... 15
SECTION 3.6. Brokers................................................ 15
SECTION 3.7. Offer Documents; Proxy Statement....................... 15
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 16
SECTION 4.1. Organization and Qualification;
Subsidiaries.......................................... 16
SECTION 4.2. Capitalization......................................... 17
SECTION 4.3. Authority Relative to this Agreement and............... 18
- i -
SECTION 4.4. No Conflict; Required Filings and........................ 19
SECTION 4.5. SEC Filings; Financial Statements........................ 20
SECTION 4.6. Absence of Certain Changes or Events..................... 21
SECTION 4.7. Litigation............................................... 22
SECTION 4.8. Employee Benefit Plans................................... 23
SECTION 4.9. Properties............................................... 26
SECTION 4.10. Intellectual Property.................................... 27
SECTION 4.11. Insurance................................................ 27
SECTION 4.12. Environmental............................................ 27
SECTION 4.13. Material Contracts....................................... 29
SECTION 4.14. Conduct of Business...................................... 31
SECTION 4.15. Taxes.................................................... 31
SECTION 4.16. Labor Relations.......................................... 35
SECTION 4.17. Transactions with Affiliates............................. 35
SECTION 4.18. Offer Documents; Proxy Statement......................... 35
SECTION 4.19. Brokers.................................................. 36
SECTION 4.20. Control Share Acquisition................................ 36
SECTION 4.21. Rights Agreement Amendment............................... 37
SECTION 4.22. Y2K Compliance........................................... 37
ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER.......................... 37
SECTION 5.1. Conduct of Business by the Company
Pending the Closing...................................... 37
SECTION 5.2. No Solicitation.......................................... 40
ARTICLE VI. ADDITIONAL AGREEMENTS.......................................... 43
SECTION 6.1. Proxy Statement.......................................... 43
SECTION 6.2. Meeting of Stockholders of the Company................... 43
SECTION 6.3. Compliance with Law...................................... 44
SECTION 6.4. Notification of Certain Matters.......................... 44
SECTION 6.5. Access to Information.................................... 44
SECTION 6.6. Public Announcements..................................... 44
SECTION 6.7. Reasonable Efforts; Cooperation.......................... 45
SECTION 6.8. Agreement to Defend and Indemnify........................ 45
- ii -
SECTION 6.9. State Takeover Laws.................................... 47
ARTICLE VII. CONDITIONS OF MERGER........................................ 47
SECTION 7.1. Conditions for Each Party's Obligations
to Effect the Merger................................... 47
SECTION 7.2. Conditions for Obligations of Parent and
Purchaser.............................................. 47
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER.......................... 48
SECTION 8.1. Termination............................................ 48
SECTION 8.2. Effect of Termination.................................. 50
ARTICLE IX. GENERAL PROVISIONS........................................... 51
SECTION 9.1. Non-Survival of Representations,
Warranties and Agreements.............................. 51
SECTION 9.2. Notices................................................ 51
SECTION 9.3. Expenses............................................... 52
SECTION 9.4. Certain Definitions.................................... 52
SECTION 9.5. Headings............................................... 53
SECTION 9.6. Severability........................................... 53
SECTION 9.7. Entire Agreement; No Third-Party
Beneficiaries.......................................... 53
SECTION 9.8. Assignment............................................. 53
SECTION 9.9. Governing Law.......................................... 53
SECTION 9.10. Amendment.............................................. 54
SECTION 9.11. Waiver................................................. 54
SECTION 9.12. Schedules.............................................. 54
SECTION 9.13. Counterparts........................................... 54
- iii -
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 19, 1999 (the
"Agreement"), among ▇▇▇▇▇▇▇▇▇'▇, Inc., a Delaware corporation (the "Company"),
Securitas AB, a Swedish corporation ("Parent"), and Securitas Acquisition Corp.,
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, $.001 par value (the "Shares"), of the Company (the
"Company Common Stock"), including the associated rights (the "Rights") to
purchase Series A Junior Participating Preferred Stock issued under the Rights
Agreement, dated as of July 12, 1991 (the "Rights Agreement"), between the
Company and The Bank of New York, as successor rights agent, for $ 29.00 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), 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); 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 Shares 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, as an inducement to Parent's and Purchaser's entering into
this Agreement, contemporaneously with the execution and delivery of this
Agreement the Company and the Parent have entered into employment agreements
with certain senior executive officers of the Company (the "Employment
Agreements"); 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 Shares pursuant to the Stockholders Agreement and has
determined that the consideration to be paid for each Share in the Offer and the
Merger is fair to the holders of such Shares and to recommend that the holders
of such 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.
---------
(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 practicable, but in no event later than five business days following the
execution of this Agreement. The obligation of Parent and Purchaser to accept
for payment any 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
- 2 -
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 no 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, (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
(vi) amend any other term of the Offer in any manner adverse to the holders of
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 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 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer that will comply in all
material respects with the provisions of such Schedule 14D-1 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 Schedule 14D-1 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 14D-1 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 14D-1 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 14D-1,
as so corrected or supplemented, to be filed with the SEC and the Offer
Documents,
- 3 -
as so corrected or supplemented, to be disseminated to holders of Shares, in
each case as and to the extent required by applicable Federal securities laws.
The Company and its counsel shall be given a reasonable opportunity to review
and comment on 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 Offer Documents promptly after receipt of such comments.
(d) The Offer to Purchase shall provide for an initial expiration
date of 20 business days (as defined in Rule 14d-1 under the Exchange Act) 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 June 30, 1999 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 and (ii) extend the expiration date of the Offer (as it may be
extended) for up to ten 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, however, that the expiration date of
-------- -------
the Offer may not be extended beyond June 30, 1999 without the consent of the
Company. Parent and Purchaser agree that if all of the conditions to the Offer
set forth on Annex A are not satisfied on any scheduled expiration date, then if
all such conditions are reasonably capable of being satisfied prior to June 30,
1999, Purchaser shall extend the Offer from time to time (each such individual
extension not to exceed 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 extend the Offer beyond June
30, 1999.
- 4 -
SECTION 1.2. Company Action.
--------------
(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 February 19, 1999, at which all of the Directors 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 Offer, the Merger, the Employment Agreements 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 action
necessary to render the limitations on business combinations contained in
Section 203 of Delaware Law and the Company's Restated Certificate of
Incorporation (the "Restated Certificate") inapplicable to this Agreement, the
Company Stock Option Agreement, the Stockholders Agreement and the transactions
contemplated hereby and thereby; and (v) approved an amendment to the Rights
Agreement, in the form of Exhibit 1.2 hereto (the "Rights Agreement 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 the Rights to become exercisable by the holders thereof and (B)
the Rights shall automatically on and as of the Effective Time (as hereinafter
defined) be void and of no further force or effect. The Company further
represents and warrants that (x) ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities
Corporation ("DLJ") has rendered to the Board of Directors a written opinion,
dated as of February 19, 1999, to the effect that, subject to the assumptions
and limitations set forth therein, $29.00 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 14D-1 with
respect to the Offer, a Tender Offer 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 DLJ referred to in Section 1.2(a) hereof. The Company agrees to mail
such Schedule 14D-9 to the stockholders of the Company along with the Offer
Documents promptly after the
- 5 -
commencement of the Offer. The Schedule 14D-9 and the Offer Documents shall
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 Shares, non-objecting beneficial
owners list and security position listings of Shares held in stock depositories,
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 for the purpose of communicating the Offer
to the record and beneficial holders of ▇▇▇▇▇▇.
SECTION 1.3. Directors. Promptly upon the purchase by Purchaser
---------
of any 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, rounded up to the next 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 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 Shares
beneficially owned by Parent or any affiliate of Parent (including for purposes
of this Section 1.3 such Shares as are accepted for payment pursuant to the
Offer, but excluding Shares held by the Company or any of its Subsidiaries)
bears to the
- 6 -
number of Shares outstanding. At each such time, the Company will also cause (i)
each committee of the Board of Directors, (ii) if requested by ▇▇▇▇▇▇, 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 ▇▇▇▇▇▇, 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 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, shareholders, 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, the Company
Stock Option Agreement or the Termination Agreement, dated as of the date
hereof, among the Company, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (ii)
- 7 -
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.
ARTICLE II.
THE MERGER
SECTION 2.1. The Merger. At the Effective Time (as defined in
----------
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
- 8 -
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.
--------
(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 ▇▇▇▇▇▇▇▇▇'▇,
Inc."
(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 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
- 9 -
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 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.
-----------------
(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 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 subsection (a) of this
Section, 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 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.
- 10 -
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 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 ▇▇▇▇▇▇. Any
net profits resulting from, or interest or income produced by, such investments
shall be payable as directed by ▇▇▇▇▇▇.
(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 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) 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
shares of any shares of capital
- 11 -
▇▇▇▇▇ 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) may surrender such certificate
to Parent and (subject to applicable abandoned property, escheat and similar
laws) 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 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 90 percent of the outstanding Shares, Parent shall as promptly
as practicable following such
- 12 -
consummation provide the Company with the funds necessary to satisfy its
obligations under this Section 2.9(a).
(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.
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 ▇▇▇▇▇▇ 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.
- 13 -
This Agreement has been duly executed and delivered by ▇▇▇▇▇▇ and Purchaser and
constitutes a legal, valid and binding obligation of each such corporation,
enforceable against each of them in accordance with its terms.
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 give to others any rights of termination or cancellation of,
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 property or assets of Parent or Purchaser pursuant to, any contract,
instrument, permit, license or franchise to which Parent or Purchaser is a party
or by which Parent or Purchaser or any of its property is bound or affected,
except for, in the case of clauses (i) and (iii), conflicts, violations,
breaches or defaults which would not prevent or materially delay the
consummation of any of the transactions contemplated by this 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 required under applicable foreign antitrust or competition laws and (vi)
any filings with the Department of the Treasury 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
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
- 14 -
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 and (ii) to pay (A) the amount to
which holders of Shares become entitled upon consummation of 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. 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, its 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 nor any amendments thereof or
supplements thereto will, at any time the Offer Documents or any such amendments
or supplements are filed with
- 15 -
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 representation or warranty with respect to
any information that has been supplied by the Company or its accountants,
counsel or other authorized representatives for use in any of the foregoing
documents. The Offer Documents 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, operations, properties (including intangible
properties), condition (financial or otherwise), assets or liabilities of the
Company and the Subsidiaries taken
- 16 -
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: (i)
100,000,000 shares of Company Common Stock; (ii) 1,000 shares of 8% Class A
cumulative preferred stock, par value $100 per share ("Class A Preferred
Stock"); (iii) 47,000 shares of 8% Class B cumulative preferred stock, par value
$100 per share ("Class B Preferred Stock"); (iv) 20,000 shares of 11% Class C
cumulative preferred stock, par value $100 ("Class C Preferred Stock") and; (v)
5,000,000 shares of preferred stock, par value $.001 per share ("Designated
Preferred Stock"), of which 200,000 shares have been designated Series A Junior
Participating Preferred Stock. As of the date hereof, (A) 12,663,031 shares of
Company Common Stock were issued, of which 12,246,631 shares were issued and
outstanding and 416,400 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) no shares of Class A Preferred Stock,
Class B Preferred Stock, Class C Preferred Stock or Designated Preferred Stock
were issued and outstanding, (C) 831,139 shares of Company Common Stock were
reserved for issuance upon the exercise of outstanding Options under the
Company's 1990 Stock Option Plan, (D) 1,441,003 shares of Company Common Stock
were reserved for issuance upon the exercise of outstanding Options under the
1995 ▇▇▇▇▇▇▇▇▇'▇, Inc. Performance and Equity Incentive Plan and (E) 200,000
shares of Series A Junior Participating Preferred Stock were reserved for
issuance upon the exercise of the Rights. Except as set forth 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 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
- 17 -
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
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.
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
- 18 -
accordance with its terms. 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.
SECTION 4.4. No Conflict; Required Filings and
----------------------------------
Consents.
--------
(a) Except as set forth in Schedule 4.4 hereto, 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 Domestic 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, (iv) filings as may be required by any "blue sky" laws of various
states and (v) any filings required under applicable foreign antitrust or
competition laws, 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
- 19 -
Company Stock Option Agreement or the consummation of the transactions
contemplated hereby or thereby. 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 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 December 29, 1995, its (i) Annual Reports on Form
10-K for the fiscal years ended December 26, 1997 and December 27, 1996,
respectively, (ii) Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 20, 1998, June 12, 1998 and September 4, 1998, (iii) all proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
held since December 29, 1995 and (iv) all other reports or registration
statements filed by the Company with the SEC since December 29, 1995
(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.
(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 presented 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).
- 20 -
(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, 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 December 26, 1997, 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 (i) any adverse
effect that is caused by conditions affecting the economy or security markets
generally shall not be taken into account in determining whether there has been
a Material Adverse Effect and (ii) any adverse effect that is caused by
conditions affecting the primary industry in which the Company currently
competes 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 Company Common Stock 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
Company Common Stock, 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;
(e) any 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
- 21 -
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 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 $200,000
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 $250,000 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 are reasonably likely to have a Material Adverse Effect. As of the date
hereof, except for orders or decrees that are generally applicable to all
Persons 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
- 22 -
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 best knowledge of the Company's senior
management 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 of Company Common Stock subject to
such Option and the exercise price per share of such Option.
(b) Except as set forth in Schedule 4.8(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
- 23 -
▇▇▇▇▇, 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. Except as set forth in Schedule 4.8(c),
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 Company's knowledge, 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.
- 24 -
(h) The aggregate liability for benefits accrued and the aggregate
accumulated benefit obligation under the Company's Supplemental Retirement
Income Plan, as amended (the "SRIP"), are $16,480,941 and $23,371,182,
respectively, determined as of December 31, 1998 and on the basis of the
actuarial assumptions set forth in the most recent actuarial valuation for the
SRIP, a true and complete copy of which is attached as Schedule 4.8(h). The
Company has currently in force Company-owned life insurance policies having an
aggregate cash value of $14,744,782 and an aggregate death benefit of
$70,837,147, the aggregate annual premiums for which are $2,055,940.
(i) 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.
(j) True, correct and complete copies of the following documents,
with respect to each of the Company Employee Benefit Plans, have been delivered
or 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.
(k) There are no pending actions, claims or lawsuits which have
been asserted, instituted or, to the Company's knowledge, 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.
(l) 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.
(m) To the best knowledge of the Company's senior management, 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
- 25 -
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
marketable title to, or a valid leasehold interest in, all its properties and
assets, free and clear of all 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 $1,000,000. 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 best knowledge
of the Company's senior management, 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 and in full force and
effect, (ii) except as otherwise set forth in Schedule 4.9(d), such lease or
sublease will not cease to be legal, valid, binding, enforceable and in full
force and effect on terms identical to those currently in effect as a result of
the consummation of the transactions contemplated by this Agreement or the
Company Stock Option Agreement, nor will the consummation of such transactions
constitute a breach or default under such lease or sublease or otherwise give
the landlord a right to terminate such lease or sublease and (iii) neither the
Company nor any Subsidiary knows of, or has given or received notice of, any
violation or default thereunder (nor, to the knowledge of the Company, does
there exist any condition which with the passage of time or the giving
- 26 -
of notice or both would result in such a violation or default thereunder),
except for, in the case of clause (iii), 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, 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
Company's knowledge, threatened disputes or disagreements with respect to any of
the Intellectual Property Rights.
SECTION 4.11. Insurance. Schedule 4.11 sets forth a true and
---------
complete list of all insurance policies carried by, or covering the Company and
the Subsidiaries with respect to their businesses, assets and properties and
with respect to which records are maintained at the Company's principal
executive offices, together with, in respect of each such policy, the name of
the insurer, the policy number, the type of policy, the amount of coverage and
the deductible. 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 set forth on Schedule 4.11 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:
-------------
(a) The Company and the Subsidiaries are and have been in
compliance with all applicable Environmental Laws, have obtained all
Environmental Permits and are in compliance with their requirements, and have
resolved all past non-compliance with Environmental Laws and Environmental
Permits without any pending, on-going or future obligation, cost or liability,
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) placed,
held, located, released, transported or disposed of any Hazardous Substances on,
under, from or at any of the Company's or any of the Subsidiaries' properties or
any other 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
- 27 -
Substances on, under or at any of the Company's or any of the Subsidiaries'
properties or any other property but 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
payment would not, individually or in the aggregate, have a Material Adverse
Effect;
(c) No Environmental Law imposes any obligation upon the Company or
the Subsidiaries arising out of or as a condition to any transaction
contemplated by this Agreement, the Company Stock Option Agreement or the
Stockholders Agreement, including any requirement to modify or to transfer any
permit or license, any requirement to file any notice or other submission with
any Governmental Entity, the placement of any notice, acknowledgment or covenant
in any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree. No Encumbrance has been placed upon
any of the Company's or the Subsidiaries' properties under any Environmental
Law;
(d) The Company and the Subsidiaries have, to the best knowledge of
the Company's senior management, provided Parent with copies of any
environmental assessment or audit report (including all records maintained for
required environmental compliance) or other similar studies or analyses in the
possession of the Company or the Subsidiaries relating to any real property
currently or formerly owned, leased or occupied by the Company or the
Subsidiaries.
(e) As used in this Agreement, the following terms have the
meanings set forth below:
(i) "Environmental Law" means any law, now or hereafter in
effect and as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, relating to pollution or protection of the
- 28 -
environment, health or safety 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 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 $5,000,000
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 $5,000,000 or more;
(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;
(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, the business of the Company or the
Subsidiaries may be conducted;
- 29 -
(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
(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. 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.
(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 sixty 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 payments of $200,000 or more, (ii) agreement with any officer of the
Company, any Domestic Subsidiary or, to the best knowledge of senior management
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 the Subsidiaries of the nature
contemplated by this Agreement or the Company Stock Option
- 30 -
Agreement, (iii) agreement with respect to any officer of the Company, any
Domestic Subsidiaries or, to the best knowledge of senior management 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, 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, 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, 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.
-----
(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
- 31 -
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,
investigations, 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
- 32 -
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) Other than in the ordinary course of business consistent with
the Company's past practices, no power of attorney or similar document which is
currently in force has been granted by the Company or any Subsidiary with
respect to any matter relating to Taxes.
(i) No 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.
(j) Neither the Company nor any Subsidiary has any material amount
of income which is includible in computing the taxable income of a United States
person (as determined under section 7701 of the Code) under section 951 of the
Code.
(k) The Company and each Subsidiary (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
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(k)) under Treasury
Regulations section 1.1502-6 (or a similar or corresponding provision of state,
local, or foreign law);
(l) Except as set forth in Schedule 4.15, 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.
(m) Neither the Company or 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.
-33-
(n) Except as set forth in Schedule 4.15, 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.
(o) Other than in the ordinary course of business consistent with the
Company's past practices, 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.
(p) To the best knowledge of senior management 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.
(q) Neither the Company nor any Subsidiary has an overall foreign loss (as
defined in section 904 of the Code and allocated under Treasury Regulation
section 1.1502-9) as of the end of the Company's most recent taxable year. 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 overall foreign loss allocable to the Company or any Subsidiary under
Treasury Regulation section 1.1502-9.
(r) No QEF elections (as defined in section 1295 of the Code) have been
filed by or on behalf of the Company or any Subsidiary.
(s) 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 valorem, 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
- 34 -
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 best knowledge of the
Company's senior management, 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 best knowledge of
the Company's senior management, 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 best knowledge of the Company's senior
management, 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 best knowledge of the
Company's senior management, there are no activities or proceedings of any labor
union to organize any non-union employees of the Company or any of the
Subsidiaries.
SECTION 4.17. Transactions with Affiliates. Except as disclosed in
----------------------------
Schedule 4.17, no present or former affiliate of the Company has, or since
December 26, 1997 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 the
Company or any of the Subsidiaries (other than compensation and benefits
received in the ordinary course of business as an employee or director of the
Company or any of the Subsidiaries).
SECTION 4.18. Offer Documents; Proxy Statement. The Schedule 14D-9
--------------------------------
will comply 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
- 35 -
Company or its affiliates provided by or on behalf of the Company specifically
for inclusion in the Schedule 14D-1 or the Offer Documents will, at the
respective times the Schedule 14D-9, the Schedule 14D-1 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. No
representation is made by the Company with respect to written information
supplied by Parent or Purchaser 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 in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations thereunder except
that no representation or warranty is being made by the Company with respect to
Parent Information. 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.
SECTION 4.19. Brokers. No broker, finder or investment banker (other
-------
than DLJ) 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 DLJ.
SECTION 4.20. Control Share Acquisition. The 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 contained in
Section 203 of Delaware Law and Article TWELFTH of the Restated Certificate. No
other state takeover statute or similar statute or regulation or other
comparable takeover provision of the Restated Certificate or By-Laws applies or
purports to apply to the Offer, the Merger, this Agreement, the
- 36 -
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 Company, and as a result of such 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"
or otherwise cause the Rights to become exercisable by the holders thereof and
(b) the Rights shall automatically terminate on and as of the Effective Time be
void and of no further force or effect. The Board of Directors has taken all
action required under the Rights Agreement to ensure that no "Distribution Date"
(as defined in the Rights Agreement) has occurred or will occur with respect to
any acquisition prior to the date hereof of Company Common Stock by any Person
or group of Persons.
SECTION 4.22. Y2K Compliance. The Company has established and is
--------------
implementing an enterprise-wide program to provide (x) that the change of the
year from 1999 to the year 2000 would not have a Material Adverse Effect and (y)
that the impacts of such change on the vendors and customers of the Company and
the Subsidiaries would not have a Material Adverse Effect.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1. Conduct of Business by the Company Pending the
----------------------------------------------
Closing. From the date of this Agreement to the Effective Time, except as
-------
expressly contemplated by this Agreement, the Company shall, and shall cause
each of the Subsidiaries, to (i) carry on its respective businesses in the
ordinary course, (ii) use all reasonable efforts to preserve intact its current
business organizations and keep available the services of its current officers
and key employees, (iii) use all reasonable efforts to preserve its
relationships with customers, suppliers and other Persons with which it has
business dealings, (iv) use all 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 all 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
- 37 -
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 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 more than $5.0 million for acquisitions in
the United States and Canada and $2.0 million for acquisitions outside the
United States and Canada;
(d) authorize or make capital expenditures in the aggregate in excess
of $13.1 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;
(f) transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any property or assets other than (i) excess or obsolete assets or (ii)
in the ordinary course of business and consistent with past practice;
- 38 -
(g) (i) enter into any employment or severance agreement with or,
except in accordance with the existing policies of the Company, 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 officers;
(h) except as required to comply with applicable law, (A) adopt,
enter into, terminate, amend or increase the amount or accelerate the payment or
vesting of any 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, 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);
- 39 -
(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 Tax election or settle or compromise any Tax liability;
(l) (i) settle or compromise 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 $1,000,000 or (ii) pay, discharge
or satisfy any other 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 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 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 or omit to take any action 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
had then been taken or omitted, 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) The Company shall not, nor shall it permit or authorize any of the
Subsidiaries or any officer, director, 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,
- 40 -
any inquiries regarding or the submission of, any Takeover Proposal (as defined
below), (ii) 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, its approval or
recommendation 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 August 27, 1998 (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 Delaware law.
The Company will promptly notify Parent of the existence of any
proposal, discussion, negotiation or inquiry
- 41 -
received by the Company with respect to any Takeover Proposal, and the Company
will immediately communicate to Parent the material terms of any proposal,
discussion, negotiation or inquiry which it may receive (and will promptly
provide to Parent copies of any written proposal received by the Company in
connection therewith). 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 and material terms 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 20% 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, the Offer or the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Takeover
- 42 -
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 Parent's receipt of written notice from the Company advising
Parent 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 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 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
- 43 -
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 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 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
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.4 shall not limit or otherwise affect the remedies available hereunder
to Parent.
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
- 44 -
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.
SECTION 6.7. Reasonable Efforts; Cooperation. Upon the terms and
-------------------------------
subject to the conditions hereof, each of the parties hereto shall use all
reasonable efforts to obtain in a timely manner all necessary waivers, consents
and approvals and to effect all necessary registrations and filings, and to use
all reasonable efforts to take, or cause to be taken, all other actions and to
do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including, without limitation, (i) cooperating
in responding to inquiries from, and making presentations to, regulatory
authorities and (ii) defending against and responding to any action, suit,
proceeding, or investigation, whether judicial or administrative, challenging or
relating to this Agreement, the Company Stock Option Agreement or the
Stockholders Agreement or the transactions contemplated hereby or thereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed.
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 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
- 45 -
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 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 obliged 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 ▇▇▇▇▇▇▇▇▇ 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 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.
- 46 -
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 take all action 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, the Shares pursuant to the
Offer;
(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 and all approvals of and consents to
the Merger required under applicable foreign antitrust or competition laws shall
have been obtained and be in full force and effect.
SECTION 7.2. Conditions 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 conditions:
(a) 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 be true and correct, and any such representations and
warranties that are not so qualified shall be true and correct except where the
failure to be so true and correct would not be reasonably likely to have
- 47 -
a Material Adverse Effect, in each case as if such representations and
warranties were made at the Effective Time; provided that, for purposes of this
Section 7.2(a), any adverse effect that is caused by conditions affecting the
economy or financial markets generally or results from the announcement of the
transactions contemplated by this Agreement shall not be taken into account in
determining whether there has been a Material Adverse Effect; and
(b) 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
- 48 -
pursuant to this Section 8.1(c)(ii) if the Company is in material breach of
this Agreement; or
(iii) if Parent, Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer; provided that the
Company may not terminate this Agreement pursuant to this Section
8.1(c)(iii) if the Company is in material breach of this Agreement; or
(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 June 30, 1999; 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 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 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
- 49 -
I hereto, Parent, Purchaser, or any of their affiliates shall have failed
to commence the Offer on or prior to five 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, 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 Agreement or
waiving Section 203 of the Delaware Law or Article TWELFTH of the Restated
Certificate, to enable any Person 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 described in clauses (i) or (ii) of Section 5.2(a)
hereof, regardless of whether such action is permitted by this Agreement;
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 earlier of (x) ten business
days following written notice thereof to the Company from Parent and (y)
the scheduled expiration of the Offer; or
(vii) if the Offer shall not have expired or been terminated on
or before June 30, 1999; 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 and except that
nothing herein shall relieve any party for breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement. Any damages
arising out of any such breach shall be reduced by the amount of any fees or
expenses paid pursuant to Section 8.2(b).
- 50 -
(b) If (x) Parent or Purchaser terminates this Agreement pursuant to
Section 8.1(d)(i), 8.1(d)(iv)(B) or 8.1(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 $7.5 million (the "Termination Fee") plus an amount equal to Parent's and
Purchaser's actual and reasonably 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 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) and at the time of such termination,
Parent is not in material breach of this Agreement and the Minimum Condition has
not been satisfied, then if the Company shall thereafter, within 12 months after
a termination pursuant to any of such provisions, enter into an agreement with
respect to a Takeover Proposal that provides for the payment of consideration
with a value of $29.00 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. 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 Section 8.2
and except that the agreements set forth in Article II and Section 6.8 shall
survive the Effective Time indefinitely and those set forth in Article VIII and
Section 9.3 shall survive termination indefinitely.
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
- 51 -
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
Lindhagensplan 70
Stockholm, Sweden
Attention: President
▇▇▇▇▇▇▇▇▇: 46 8 657 7071
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company:
▇▇▇▇▇▇▇▇▇'▇, Inc.
World Support Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.3. Expenses. Except as expressly set forth in Section
--------
8.2(b), 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,
- 52 -
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.
- 53 -
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 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 in such a way as to make its relevance to another
representation or representations made in this Agreement or to the information
called for by another Schedule or Schedules to this Agreement readily apparent
shall be deemed to be an exception to such representation or representations or
to be disclosed on such 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.
- 54 -
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.
▇▇▇▇▇▇▇▇▇'▇, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
SECURITAS AB
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
SECURITAS ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
- 55 -
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 of Company Common Stock 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 all approvals of and consents to this Agreement, the
Company Stock Option Agreement and the Stockholders Agreement and the
transactions contemplated hereby and thereby that are required under applicable
foreign antitrust or competition laws shall not have been obtained prior to the
expiration of the Offer or be in full force and effect at such expiration or
(iii) at any time after the date of this Agreement and before the time of
payment for any such Shares (whether or not any Shares have theretofore been
accepted for payment or paid for pursuant to the Offer), 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, the Company Stock Option Agreement or the
Stockholders 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 their
respective affiliates or
subsidiaries effectively to control in any material respect the business and
operations of the Company and its subsidiaries; 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 the announcement of the transactions contemplated by this Agreement
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 the announcement of the transactions
contemplated by this Agreement shall not be taken into account in determining
whether there has been a Material Adverse Effect; or
(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 (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 an government or Governmental Entity, on the extension of
credit by banks or other lending institutions, (iv) a commencement of a war or
armed hostilities or other national calamity directly involving the United
States or Sweden, (v) any decline of at least 20 percent in the Standard &
Poor's 500 Index from the levels thereof as of the last trading day immediately
preceding the date of this Agreement or (vi) in the case of any
- 2 -
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 (including by 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, 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 Agreement or waiving Section 203 of the Delaware
Law or Article TWELFTH of the Restated Certificate, to enable any Person to
acquire beneficial ownership of 15% or more of the Shares; or
(i) any party to the Stockholders Agreement other than the Purchaser
and Parent shall have breached or failed to perform any of its agreements under
such agreement or breached any of its representations and warranties in such
agreement or any such agreement shall not be valid, binding and enforceable,
except for such breaches or failures or failures to be valid, binding and
enforceable that do not materially and adversely affect the benefits expected to
be received by Parent and Purchaser under this Agreement or the Stockholders
Agreement;
which, in the reasonable judgment of Parent with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger.
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 the Merger 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
- 3 -
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.
-4-