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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
OSI HOLDINGS CORP.,
BOXER ACQUISITION CORP.
AND
PAYCO AMERICAN CORPORATION
Dated as of August 13, 1996
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER AND RELATED MATTERS.......................... 2
1.01 The Merger.............................................. 2
1.02 Conversion of Stock..................................... 3
1.03 Surrender of Certificates............................... 3
1.04 Payment................................................. 4
1.05 No Further Rights of Transfers.......................... 5
1.06 Stock Option and Other Plans............................ 6
1.07 Articles of Incorporation of the Surviving
Corporation............................................ 7
1.08 By-Laws of the Surviving Corporation.................... 7
1.09 Directors and Officers of the Surviving
Corporation............................................ 7
1.10 Closing................................................. 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE
COMPANY............................................. 8
2. Representations and Warranties of the
Company................................................ 8
2.01 Due Organization, Good Standing and
Corporate Power........................................ 8
2.02 Authorization and Validity of Agreement................. 8
2.03 Capitalization.......................................... 9
2.04 Subsidiaries and Investments............................ 9
2.05 Consents and Approvals; No Violations................... 10
2.06 Company Reports and Financial Statements................ 11
2.07 Absence of Certain Changes.............................. 12
2.08 Title to Properties; Encumbrances....................... 13
2.09 Compliance with Laws.................................... 13
2.10 Litigation.............................................. 13
2.11 Employee Benefit Plans.................................. 14
2.12 Taxes................................................... 16
2.13 Liabilities............................................. 18
2.14 Licenses; Intellectual Property......................... 18
2.15 Broker's or Finder's Fee................................ 19
2.16 Environmental Laws and Regulations...................... 19
2.17 Real Property; Leases................................... 20
2.18 Material Contracts...................................... 21
(i)
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2.19 Employment Relations.................................... 23
2.20 Customers Relations..................................... 23
2.21 Voting Requirements..................................... 24
2.22 Opinion of Financial Advisor............................ 24
2.23 State Anti-Takeover Statutes............................ 24
ARTICLE III REPRESENTATIONS OF PARENT AND
PURCHASER............................................ 24
3. Representations and Warranties of Parent
and Purchaser........................................... 24
3.01 Due Organization; Good Standing and
Corporate Power....................................... 24
3.02 Authorization and Validity of Agreement................. 24
3.03 Consents and Approvals; No Violations................... 25
3.04 Broker's or Finder's Fee................................ 26
3.05 Ownership of Company's Common Stock..................... 26
ARTICLE IV TRANSACTIONS PRIOR TO CLOSING DATE...................... 26
4.01 Access to Information Concerning
Properties and Records................................ 26
4.02 Confidentiality......................................... 27
4.03 Conduct of the Business of the Company.................. 27
4.04 Proxy Statement......................................... 29
4.05 Stockholder Approval.................................... 29
4.06 Reasonable Best Efforts................................. 29
4.07 No Solicitation of Other Offers......................... 30
4.08 Notification of Certain Matters......................... 32
4.09 HSR Act................................................. 32
4.10 Directors' and Officers' Insurance;
Indemnification....................................... 32
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE COMPANY............................................ 34
5. Conditions Precedent to Obligations of the
Company................................................. 34
5.01 Truth of Representations and Warranties................. 34
5.02 Performance of Agreements............................... 34
5.03 Approval of Company's Stockholders...................... 34
5.04 HSR Act................................................. 34
5.05 Injunction.............................................. 34
5.06 Statutes................................................ 35
5.07 Financing............................................... 35
5.08 Third Party Consents; Governmental
Approvals. ........................................... 35
5.09 Certificates............................................ 35
(ii)
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ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF
PARENT AND PURCHASER.................................. 35
6. Conditions Precedent to Obligations of Parent
and Purchaser........................................... 35
6.01 Truth of Representations and Warranties................. 35
6.02 Performance of Agreements............................... 36
6.03 No Material Adverse Effect.............................. 36
6.04 Approval of Company's Stockholders...................... 36
6.05 HSR Act................................................. 36
6.06 Injunction.............................................. 36
6.07 Statutes................................................ 36
6.08 Financing............................................... 36
6.09 Third Party Consents; Governmental
Approvals............................................. 37
6.10 Certificates............................................ 37
6.11 Amendment of Stock Plans and Consents to
Cancellation of Options............................... 37
ARTICLE VII TERMINATION AND ABANDONMENT............................ 37
7.01 Termination............................................. 37
7.02 Effect of Termination................................... 39
ARTICLE VIII MISCELLANEOUS..................................... 39
8.01 Fees and Expenses....................................... 39
8.02 Representations and Warranties.......................... 41
8.03 Extension; Waiver....................................... 41
8.04 Public Announcements.................................... 41
8.05 Notices................................................. 41
8.06 Entire Agreement........................................ 43
8.07 Binding Effect; Benefit; Assignment..................... 44
8.08 Amendment and Modification.............................. 44
8.09 Further Actions......................................... 44
8.10 Headings................................................ 44
8.11 Counterparts............................................ 44
8.12 Applicable Law.......................................... 44
8.13 Severability............................................ 45
8.14 Certain Definitions .................................... 45
(iii)
SCHEDULES
Schedule 2.03 Capitalization
Schedule 2.04 Subsidiaries and Investments
Schedule 2.05 Consents and Approvals
Schedule 2.07 Absence of Certain Changes
Schedule 2.08 Encumbrances
Schedule 2.09 Compliance with Laws
Schedule 2.10 Litigation
Schedule 2.11 Employee Benefit Plans
Schedule 2.12 Taxes
Schedule 2.14 Licenses; Intellectual Property
Schedule 2.16 Environmental Laws and Regulations
Schedule 2.17 Real Property; Leases
Schedule 2.18 Material Contracts
Schedule 2.19 Employment Relations
Schedule 7.01(d) Termination
(iv)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 13, 1996 (this
"Agreement"), by and among OSI HOLDINGS CORP., a Delaware corporation
("Parent"), BOXER ACQUISITION CORP., a Delaware corporation ("Purchaser"), and
PAYCO AMERICAN CORPORATION, a Wisconsin corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Purchaser and
the Company have approved the acquisition of the Company by Parent and
Purchaser;
WHEREAS, to complete such acquisition, the respective Boards of
Directors of Parent, Purchaser and the Company have approved the merger of
Purchaser with and into the Company (the "Merger"), pursuant to and subject to
the terms and conditions of this Agreement;
WHEREAS, the Board of Directors of the Company and the Special
Committee of the Board of Directors of the Company (the "Special Committee") has
each determined that the Merger is fair to, and in the best interests of, the
stockholders of the Company;
WHEREAS, simultaneously with the execution of this Agreement,
Purchaser has entered into an agreement with certain stockholders of the Company
pursuant to which such stockholders agree, subject to certain conditions, to
vote the shares of the Common Stock of the Company owned by them in favor of the
Merger; and
WHEREAS, simultaneously with the execution of this Agreement, and as
required by the Purchaser, the Company has entered into a covenant not to
compete agreement and consulting agreement with Xxxxxx X. Punches, covenant not
to compete agreements and employment agreements with eight other executive
officers of the Company and a covenant not to compete agreement with Xxxxxx X.
Xxxxxxxx, all of which agreements shall be effective only upon the consummation
of the Merger.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
1.01 The Merger. (a) Subject to the terms and conditions of this
Agreement, at the time of the Closing (as defined in Section 1.10 hereof),
articles of merger (the "Articles of Merger") shall be duly prepared, executed
and acknowledged by the Company in accordance with the Wisconsin Business
Corporation Law (the "WBCL") and a certificate of merger (the "Certificate of
Merger") shall be duly prepared, executed and acknowledged by Purchaser and the
Company in accordance with the Delaware General Corporation Law (the "DGCL") and
shall be filed on the Closing Date (as defined in Section 1.10 hereof). The
Merger shall become effective upon the filing of the Articles of Merger with the
Secretary of State of the State of Wisconsin and the Certificate of Merger with
the Secretary of State of the State of Delaware in accordance with applicable
law. The date and time when the Merger shall become effective is hereinafter
referred to as the "Effective Time."
(b) At the Effective Time, Purchaser shall be merged with and into the
Company and the separate corporate existence of Purchaser shall cease, and the
Company shall continue as the surviving corporation under the laws of the State
of Wisconsin under the name of "Payco American Corporation" (the "Surviving
Corporation").
(c) From and after the Effective Time, the Merger shall have the
effects set forth in the WBCL and the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the properties,
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.
(d) If Purchaser so elects, the Merger may alternatively be structured
with Purchaser as the Surviving Corporation. In the event of such an election,
the parties agree to execute an appropriate amendment to this Agreement in order
to reflect such election. If Purchaser elects to structure the Merger so that
Purchaser rather than the Company is the Surviving Corporation, the inaccuracy
of any representation or warranty of the Company which becomes inaccurate solely
as a result of Purchaser becoming the
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Surviving Corporation, rather than the Company, shall not be deemed to be a
breach of such representation or warranty.
1.02 Conversion of Stock. At the Effective Time:
(a) Each share of common stock, par value $.10 per share, of the
Company (the "Common Stock") then issued and outstanding (other than any shares
of Common Stock which are held by any subsidiary of the Company or in the
treasury of the Company, or which are held, directly or indirectly, by Parent or
any direct or indirect subsidiary of Parent (including Purchaser), all of which
shall be cancelled and none of which shall receive any payment with respect
thereto) shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into and represent the right to receive an
amount in cash, without interest, equal to $14.00 (the "Merger Consideration")
payable to the holder thereof less any required withholding taxes; and
(b) Each share of capital stock of Purchaser then issued and
outstanding shall, by virtue of the Merger and without any action on the part of
the holder thereof, become one fully paid and nonassessable share of capital
stock of like tenor of the Surviving Corporation.
1.03 Surrender of Certificates. (a) Prior to the Effective Time,
Parent shall designate a bank or trust company located in the United States,
reasonably satisfactory to Company, to act as paying agent (the "Paying Agent")
for purposes of making the cash payments contemplated hereby. As soon as
practicable after the Effective Time, Parent shall cause the Paying Agent to
mail and/or make available to each holder of a certificate theretofore
evidencing shares of Common Stock (other than those which are held by any
subsidiary of the Company or in the treasury of the Company or which are held
directly or indirectly by Parent or any direct or indirect subsidiary of Parent
(including Purchaser)) a notice and letter of transmittal advising such holder
of the effectiveness of the Merger and the procedure for surrendering to the
Paying Agent such certificate or certificates which immediately prior to the
Effective Time represented outstanding Common Stock (the "Certificates") in
exchange for the Merger Consideration deliverable in respect thereof pursuant to
this Article I. Upon the surrender for cancellation to the Paying Agent of such
Certificates, together with a letter of transmittal, duly executed and completed
in accordance with the instructions thereon, and any other items specified by
the letter of transmittal, the
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Paying Agent shall promptly pay to the Person (as defined in Section 8.14
hereof) entitled thereto the Merger Consideration deliverable in respect
thereof. Until so surrendered, each Certificate shall be deemed, for all
corporate purposes, to evidence only the right to receive upon such surrender
the Merger Consideration deliverable in respect thereof to which such Person is
entitled pursuant to this Article I. No interest shall be paid or accrued in
respect of such cash payments.
(b) If the Merger Consideration (or any portion thereof) is to be
delivered to a Person other than the Person in whose name the Certificates
surrendered in exchange therefor are registered, it shall be a condition to the
payment of the Merger Consideration that the Certificates so surrendered shall
be properly endorsed or accompanied by appropriate stock powers and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
Person requesting such transfer pay to the Paying Agent any transfer or other
taxes payable by reason of the foregoing or establish to the satisfaction of the
Paying Agent that such taxes have been paid or are not required to be paid.
(c) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof as determined in accordance with this Article I,
provided that, the Person to whom the Merger Consideration is paid shall, as a
condition precedent to the payment thereof, give Parent a bond in such sum as it
may direct or otherwise indemnify Parent in a manner satisfactory to it against
any claim that may be made against Parent with respect to the Certificate
claimed to have been lost, stolen or destroyed.
1.04 Payment. Concurrently with or immediately prior to the Effective
Time, Parent or Purchaser shall deposit in trust with the Paying Agent cash in
United States dollars in an aggregate amount equal to the product of (i) the
number of shares of Common Stock outstanding immediately prior to the Effective
Time (other than shares of Common Stock which are held by any subsidiary of the
Company or in the treasury of the Company or which are held directly or
indirectly by Parent or any direct or indirect subsidiary of Parent (including
Purchaser)) and (ii) the Merger Consideration (such amount being hereinafter
referred to as the "Pay-
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ment Fund"). The Payment Fund shall be invested by the Paying Agent as directed
by Parent in direct obligations of the United States, obligations for which the
full faith and credit of the United States is pledged to provide for the payment
of principal and interest, commercial paper rated of the highest quality by
Xxxxx'x Investors Services, Inc. or Standard & Poor's Ratings Group or
certificates of deposit, bank repurchase agreements or bankers' acceptances of a
commercial bank having the highest rating of Xxxxx'x Investors Services, Inc. or
Standard & Poor's Ratings Group (collectively, "Permitted Investments") or in
money market funds which are invested in Permitted Investments, and any net
earnings with respect thereto shall be paid to Parent as and when requested by
Parent. The Paying Agent shall, pursuant to irrevocable instructions, make the
payments referred to in Section 1.02(a) hereof out of the Payment Fund. The
Payment Fund shall not be used for any other purpose except as otherwise agreed
to by Parent. Promptly following the date which is three months after the
Effective Time, the Paying Agent shall pay to Parent all cash, certificates and
other instruments in its possession that constitute any portion of the Payment
Fund, and the Paying Agent's duties shall terminate. Thereafter, each holder of
a Certificate may surrender such Certificate to the Surviving Corporation and
(subject to applicable abandoned property, escheat and similar laws) receive in
exchange therefor the Merger Consideration, without interest, but shall have no
greater rights against the Surviving Corporation or Parent than may be accorded
to general creditors of the Surviving Corporation or Parent under applicable
law. Notwithstanding the foregoing, neither the Paying Agent nor any party
hereto shall be liable to a holder of shares of Common Stock for any Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
1.05 No Further Rights of Transfers. At and after the Effective Time,
each holder of a Certificate shall cease to have any rights as a stockholder of
the Company, except for, in the case of a holder of a Certificate (other than
shares to be cancelled pursuant to Section 1.02(a) hereof), the right to
surrender his or her Certificate in exchange for payment of the Merger
Consideration, and no transfer of shares of Common Stock shall be made on the
stock transfer books of the Surviving Corporation. Certificates presented to the
Surviving Corporation after the Effective Time shall be cancelled and exchanged
for cash as provided in this Article I. At the close of business on the day of
the
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Effective Time the stock ledger of the Company with respect to Common Stock
shall be closed.
1.06 Stock Option and Other Plans. (a) Prior to the Effective Time,
the Board of Directors of the Company shall adopt amendments to the stock option
plans of the Company (the "Stock Plans") to provide that in the event of a
merger pursuant to which the stockholders of the Company receive cash for their
shares, the holders of outstanding options to purchase Common Stock (the
"Options") heretofore granted under the Stock Plans shall be entitled, upon
exercise of the Options on or after the effective date of such merger, only to
receive the same cash consideration per share with respect to each share subject
to such Options as received by the stockholders in connection with such merger,
without interest (subject to any applicable withholding taxes, the "Cash
Payment"). Except for any benefits due participants under the Company's Common
Share Equivalent Plan, any then outstanding stock appreciation rights or limited
stock appreciation rights shall be cancelled as of immediately prior to the
Effective Time without any payment therefor. All vested benefits as of the
Effective Time pursuant to the Company's Common Share Equivalent Plan shall be
paid in cash at the Effective Time whether or not payment would otherwise then
be due. As provided herein, the Stock Plans and any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any subsidiary (collectively with the
Stock Plans, referred to as the "Stock Incentive Plans") shall terminate as of
the Effective Time. The Company will use its reasonable best efforts to obtain
all necessary consents to ensure that upon the Effective Time, the holders of
Options, all of which shall become fully vested as of the Effective Time, shall
surrender the same in cancellation and settlement thereof for a cash
consideration equal to the Cash Payment, less the exercise price of such related
Options.
(b) All Stock Plans shall terminate as of the Effective Time and the
provisions in any other Employee Benefit Plan (as defined in Section 2.11)
providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
deleted as of the Effective Time, and the Company shall use its best efforts to
ensure that following the Effective Time no holder of an Option or any
participant in any Stock Plans shall have any right
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thereunder to acquire any capital stock of the Company, Parent or the Surviving
Corporation.
1.07 Articles of Incorporation of the Surviving Corporation. The
Articles of Incorporation of the Company, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation.
1.08 By-Laws of the Surviving Corporation. The By-Laws of the Company,
as in effect immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation.
1.09 Directors and Officers of the Surviving Corporation. At the
Effective Time, the directors of Purchaser immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, each of such directors
to hold office, subject to the applicable provisions of the Articles of
Incorporation and By-Laws of the Surviving Corporation, until the next annual
stockholders' meeting of the Surviving Corporation and until their respective
successors shall be duly elected or appointed and qualified. At the Effective
Time, the officers of the Company immediately prior to the Effective Time shall,
subject to the applicable provisions of the Articles of Incorporation and
By-Laws of the Surviving Corporation, be the officers of the Surviving
Corporation until their respective successors shall be duly elected or appointed
and qualified.
1.10 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of White & Case, 1155 Avenue of the Americas, New York, New
York, as soon as practicable after the last of the conditions set forth in
Articles V and VI hereof is fulfilled or waived (subject to applicable law) but
in no event later than February 12, 1997, or at such other time and place and on
such other date as Parent and the Company shall mutually agree (the "Closing
Date").
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Purchaser as follows:
2.01 Due Organization, Good Standing and Corporate Power. The Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Wisconsin. The Company has the requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. The Company is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the character or location of the properties owned, leased or operated by the
Company or the nature of the business conducted by the Company makes such
qualification necessary, except where the failure to be so duly qualified would
not have a material adverse effect on the business, properties, assets,
liabilities, operations, financial condition, results of operations or prospects
of the Company and its subsidiaries (as hereinafter defined) taken as a whole (a
"Material Adverse Effect").
2.02 Authorization and Validity of Agreement. The Company has full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and, subject to requisite approval by the holders of
its Common Stock of this Agreement and the Merger, to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company, and the consummation by it of the transactions
contemplated hereby, have been duly authorized and approved by its Board of
Directors and the Special Committee and no other corporate action on the part of
the Company is necessary to authorize the execution, delivery and performance of
this Agreement by the Company and the consummation of the transactions
contemplated hereby (other than the approval of this Agreement and the Merger by
the holders of a majority of the shares of Common Stock). This Agreement has
been duly executed and delivered by the Company, and assuming the valid
authorization, execution and delivery of this Agreement by Parent and Purchaser,
is a valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except to the extent that its enforceability
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may be subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
2.03 Capitalization. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, $0.10 par value, and 500,000
shares of preferred stock, no par value (the "Preferred Stock"). As of August 9,
1996, (i) 10,155,085 shares of Common Stock were issued and outstanding, (ii)
610,426 shares of Common Stock were reserved for issuance pursuant to
outstanding options granted under the Stock Plans, (iii) no shares of Preferred
Stock were issued and outstanding, and (iv) no shares of Common Stock were held
in the Company's treasury. All issued and outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable, and are not subject to, nor were they issued in violation of, any
preemptive rights. Except as set forth in this Section 2.03 or on Schedule 2.03
previously delivered to Parent, (i) there are no shares of capital stock of the
Company authorized, issued or outstanding and (ii) there are not as of the date
hereof, and at the Effective Time there will not be, any outstanding or
authorized options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable securities, or other
commitments, contingent or otherwise, relating to Common Stock or any other
shares of capital stock of the Company, pursuant to which the Company is or may
become obligated to issue shares of Common Stock, any other shares of its
capital stock or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of the capital stock of the
Company. The Company has no authorized or outstanding bonds, debentures, notes
or other indebtedness the holders of which have the right to vote (or
convertible or exchangeable into or exercisable for securities having the right
to vote) with the stockholders of the Company or any of its subsidiaries on any
matter.
2.04 Subsidiaries and Investments. Set forth on Schedule 2.04
previously delivered to Parent is a list of each corporation, partnership and
other business entity in which the Company owns, directly or indirectly, any
equity security or other equity interest and which is controlled, directly or
indirectly, by the Company (a "subsidiary"). Except as set forth on Schedule
2.04 each subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of
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its incorporation (as set forth on Schedule 2.04), and has all requisite power
to own its property and to carry on its business as now being conducted. Set
forth on Schedule 2.04 is a list of jurisdictions in which each subsidiary is
qualified as a foreign corporation. Such jurisdictions are the only
jurisdictions in which the character or location of the properties owned or
leased by each subsidiary, or the nature of the business conducted by each
subsidiary, makes such qualification necessary, except where the failure to be
so qualified would not have a Material Adverse Effect. All of the outstanding
shares of capital stock and other equity interests of each subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable, and,
except as set forth on Schedule 2.04, are owned, of record and beneficially, by
the Company or a subsidiary, free and clear of all liens, encumbrances,
restrictions and claims of every kind. Except as disclosed on Schedule 2.04, no
shares of capital stock and other equity interests of any subsidiary are
reserved for issuance and there are no outstanding options, warrants, rights,
subscriptions, claims, agreements, obligations, convertible or exchangeable
securities or other commitments, contingent or otherwise, relating to the
capital stock of any subsidiary or pursuant to which any subsidiary is or may
become obligated to issue or exchange any shares of capital stock or other
equity interests. Neither the Company nor any subsidiary owns, directly or
indirectly, any capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust, joint venture or
other entity except as set forth on Schedule 2.04.
2.05 Consents and Approvals; No Violations. Assuming (i) the filings
required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), are made and the waiting period thereunder has been
terminated or has expired, (ii) the filings required to be made with the
Securities and Exchange Commission (the "Commission") in connection or in
compliance with the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations of the Commission are made, (iii) such
filings are made and approvals received as may be required pursuant to any
applicable state securities, "blue sky" or anti-takeover laws, (iv) the filing
of the Articles of Merger as required by the WBCL, the filing of the Certificate
of Merger as required by the DGCL and the filing of other appropriate merger
documents is made, (v) the valid authorization, execution and delivery of this
Agreement by Parent and Purchaser and (vi) requisite approval of the Merger by
the holders of Common Stock is received, the
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execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby will not: (1) violate any
provision of the Articles of Incorporation or the By-Laws of the Company or any
of its subsidiaries; (2) violate any statute, ordinance, rule, regulation, order
or decree of any court or of any governmental or regulatory body, agency or
authority applicable to the Company or any of its subsidiaries or by which any
of their respective properties or assets may be bound; (3) require any filing
with, or permit, consent or approval of, or the giving of any notice to, any
governmental or regulatory body, agency or authority; or (4) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company or any of its subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease, franchise agreement or other instrument or
obligation to which the Company or any of its subsidiaries is a party, or by
which it or any of their respective properties or assets may be bound except for
in the case of clauses (3) and (4) above for such filing, permit, consent or
approval listed on Schedule 2.05 to be delivered to Parent within ten days after
the date of this Agreement, the absence of which, and violations, breaches,
defaults, conflicts and Encumbrances of which, in the aggregate, would not have
a Material Adverse Effect.
2.06 Company Reports and Financial Statements. Since December 31, 1992
the Company has filed all forms, reports and documents with the Commission
required to be filed by it pursuant to the federal securities laws and the
Commission rules and regulations thereunder, and all forms, reports and
documents filed with the Commission have complied in all material respects with
all applicable requirements of the federal securities laws and the Commission
rules and regulations promulgated thereunder. The Company has, prior to the date
of this Agreement, made available to Parent true and complete copies of all
forms, reports, registration statements and other filings filed by the Company
with the Commission since December 31, 1992 (such forms, reports, registration
statements and other filings, together with any exhibits, any amendments thereto
and information incorporated by reference therein, are sometimes collectively
referred to as the "Commission Filings"). As of their respective dates,
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the Commission Filings did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Each of the consolidated balance sheets as of the end of
the fiscal years ended December 31, 1993, December 31, 1994 and December 31,
1995 and the consolidated statements of earnings, consolidated statements of
stockholders' equity and consolidated statements of cash flows for the fiscal
years ended December 31, 1993, December 31, 1994 and December 31, 1995 included
in the Commission Filings, were prepared in accordance with generally accepted
accounting principles (as in effect from time to time) applied on a consistent
basis (except as may be indicated therein or in the notes or schedules thereto)
and fairly present in all material respects the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof and the
results of their operations and cash flows for the periods then ended. The
consolidated balance sheet as of March 31, 1996 and the consolidated statement
of earnings, consolidated statement of stockholders' equity and consolidated
statement of cash flows for the fiscal quarter then ended included in the
Commission Filings were prepared in accordance with generally accepted
accounting principles (except as permitted by Regulation S-X adopted by the
Commission) applied on a consistent basis (except as may be indicated therein or
in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated subsidiaries
as of March 31, 1996 and the results of operations and cash flows for the fiscal
quarter then ended.
2.07 Absence of Certain Changes. Except as previously disclosed in the
Commission Filings or in Schedule 2.07 previously delivered to Parent, since
December 31, 1995 (i) there has not been any material adverse change in the
business, operations, financial condition or results of operations of the
Company and its subsidiaries taken as a whole; (ii) the businesses of the
Company and each of its subsidiaries have been conducted only in the ordinary
course; (iii) neither the Company nor any of its subsidiaries has, outside the
ordinary course of business, incurred any material liabilities (direct,
contingent or otherwise) or engaged in any material transaction or entered into
any material agreement; (iv) the Company and its subsidiaries have not increased
the compensation of any officer or granted any general salary or benefits
increase to their employees other than in the ordinary course of business; (v)
neither
-12-
the Company nor any of its subsidiaries has taken any action referred to in
Section 4.03 hereof except as permitted or required thereby; (vi) there has been
no declaration, setting aside or payment of any dividend or other distribution
with respect to the capital stock of the Company; and (vii) there has been no
change by the Company in accounting principles, practices or methods.
2.08 Title to Properties; Encumbrances. Except to the extent that any
breach of the representations set forth in this Section could not reasonably be
expected to have a Material Adverse Effect: the Company and each of its
subsidiaries has good title to (i) all its tangible properties and assets (real
and personal), including, without limitation, all the properties and assets
reflected in the consolidated balance sheet as of December 31, 1995 except as
indicated in the notes thereto and except for properties and assets reflected in
the consolidated balance sheet as of December 31, 1995 which have been sold or
otherwise disposed of in the ordinary course of business, and (ii) all the
tangible properties and assets purchased by the Company and any of its
subsidiaries since December 31, 1995 except for such properties and assets which
have been sold or otherwise disposed of in the ordinary course of business, in
each case subject to no encumbrance, lien, charge or other restriction of any
kind or character ("Encumbrances"), except for (a) Encumbrances reflected in the
consolidated balance sheet as of December 31, 1995, (b) Encumbrances for current
taxes, assessments or governmental charges or levies on property not yet due and
delinquent, (c) Encumbrances arising by operation of law and (d) Encumbrances
described on Schedule 2.08 previously delivered to Parent (Encumbrances of the
type described in clauses (a), (b), (c) and (d) above are hereinafter sometimes
referred to as "Permitted Encumbrances").
2.09 Compliance with Laws. Except as set forth on Schedule 2.09
previously delivered to Parent, each of the Company and its subsidiaries is in
compliance with all applicable laws, regulations, orders, judgments and decrees
(including, without limitation, the Fair Debt Collection Practices Act and any
state or local counterpart or equivalent) except for such noncompliances as
could not reasonably be likely to have a Material Adverse Effect.
2.10 Litigation. Except as disclosed in the Commission Filings or as
set forth in Schedule 2.10 previously delivered to Parent, there is no action,
suit, proceeding at
-13-
law or in equity, or any arbitration or any administrative or other proceeding
by or before (or, to the knowledge of the Company, any investigation by) any
governmental or other instrumentality or agency, pending, or, to the knowledge
of the Company, threatened, against or affecting the Company or any of its
subsidiaries, or any of their properties or rights which could materially and
adversely affect the right or ability of the Company or any of its subsidiaries
to carry on its business as now conducted, which could reasonably be likely to
have a Material Adverse Effect or which could reasonably be expected to prevent
or materially delay consummation of the transactions contemplated by this
Agreement, and the Company knows of no valid basis for any such action,
proceeding or investigation. Except as set forth in Schedule 2.10, none of the
Company or any of its subsidiaries is subject to any judgment, order or decree
entered in any lawsuit, proceeding or administrative action in which the Company
or any of its subsidiaries is a party which could reasonably be likely to have a
Material Adverse Effect. There are no such suits, actions, claims, proceedings
or investigations pending or, to the knowledge of the Company, threatened,
seeking to prevent or challenging the transactions contemplated by this
Agreement.
2.11 Employee Benefit Plans.
(a) Schedule 2.11 previously delivered to Parent contains an accurate
and complete list of all domestic and foreign (1) "employee benefit plans,"
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations thereunder ("ERISA"); (2)
bonus, stock option, stock purchase, restricted stock, incentive,
profit-sharing, pension or retirement, deferred compensation, medical, life,
disability, accident, leave and supplemental retirement benefit plans, programs,
arrangements, commitments and/or practices (whether or not insured); (3)
employment, termination, and severance contracts or agreements; and (4)
consulting agreements in excess of $60,000 or not terminable by the Company upon
less than ninety days' notice; for active, retired or former employees or
directors that have been established, maintained or contributed to since January
1, 1993 (or with respect to which an obligation to contribute has been
undertaken) or with respect to which any potential liability is borne by the
Company and/or any of its subsidiaries (including, for this purpose and for the
purpose of all of the representations in this Section 2.11, any predecessors to
the Company or to any of its subsidiaries and all employers (whether or not
incor-
-14-
porated) that are or were by reason of common control treated together with the
Company and/or any of its subsidiaries as a single employer within the meaning
of Section 414 of the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder (the "Code") ("Plans").
(b) Except to the extent that any breach of the representations set
forth in this sentence could not reasonably be expected to have a Material
Adverse Effect: (1) each Plan is in compliance with applicable law and has been
administered and operated in accordance with its terms; (2) each Plan which is
intended to be "qualified" within the meaning of Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service and,
to the knowledge of the Company, no event has occurred and no condition exists
which could reasonably be expected to result in the revocation of any such
determination; (3) no Plan is subject to Section 412 of the Code or Section 302
or Title IV of ERISA and neither the Company nor any of its subsidiaries has
ever contributed to or had any obligation to contribute to (or borne any
liability with respect to) any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA); (4) neither the Company nor any of its subsidiaries nor,
to the Company's knowledge, any other "disqualified person" or "party in
interest" (as defined in Section 4975(e)(2) of the Code and Section 3(14) of
ERISA, respectively) has engaged in any transactions in connection with any Plan
that could reasonably be expected to result in the imposition of a penalty
pursuant to Section 502(i) of ERISA, damages pursuant to Section 409 of ERISA or
a tax pursuant to Section 4975(a) of the Code; and (5) no liability, claim,
action or litigation, has been made, commenced or is expected or, to the
Company's knowledge, threatened with respect to any Plan (other than for
benefits payable in the ordinary course).
(c) The Company has delivered or caused to be delivered to Parent and
its counsel true and complete copies of all material documents in connection
with each Plan, including, without limitation (where applicable): (1) all Plans
as in effect on the date hereof, together with all amendments thereto,
including, in the case of any Plan not set forth in writing, a written
description thereof; (2) all current summary plan descriptions, summaries of
material modifications, and material communications; (3) all current trust
agreements, declarations of trust and other documents establishing other funding
arrangements (and all amendments thereto and the latest financial statements
thereof); (4) the
-15-
most recent Internal Revenue Service determination letter obtained with respect
to each Plan intended to be qualified under Section 401(a) of the Code or exempt
under Section 501(a) of the Code; (5) the most recently filed Internal Revenue
Service Form 5500 for each Plan required to file such Form; (6) the most
recently prepared financial statements; and (7) all material agreements and
contracts relating to each Plan.
2.12 Taxes. (a) Tax Returns. The Company and each of its subsidiaries,
has timely filed or caused to be timely filed with the appropriate taxing
authorities all Federal and other material returns, statements, forms and
reports for Taxes (as hereinafter defined) ("Returns") that are required to be
filed by, or with respect to, the Company and such subsidiaries. The Returns
reflect accurately all material liability for Taxes of the Company and such
subsidiaries for the periods covered thereby. "Taxes" means all taxes,
assessments, charges, duties, fees, levies or other governmental charges,
including, without limitation, all Federal, state, local, foreign and other
income, franchise, profits, capital gains, capital stock, transfer, sales, use,
occupation, property, excise, severance, windfall profits, stamp, license,
payroll, withholding and other taxes, assessments, charges, duties, fees, levies
or other governmental charges of any kind whatsoever (whether payable directly
or by withholding and whether or not requiring the filing of a Return), all
estimated taxes, deficiency assessments, additions to tax, penalties and
interest and shall include any liability for such amounts as a result either of
being a member of a combined, consolidated, unitary or affiliated group or of a
contractual obligation to indemnify any person or other entity.
(b) Payment of Taxes. All material Taxes and Tax liabilities of the
Company and its subsidiaries have been timely paid or adequately disclosed and
fully provided for as a liability on the financial statements of the Company and
its subsidiaries in accordance with generally accepted accounting principles.
(c) Other Tax Matters. (i) Schedule 2.12 previously delivered to
Parent sets forth (A) each taxable year or other taxable period of the Company
or any of its subsidiaries for which an audit or other examination of Taxes by
the appropriate tax authorities of any nation, state or locality is currently in
progress (or scheduled to be conducted) together with the names of the
respective tax author-
-16-
ities conducting (or scheduled to conduct) such audits or examinations and a
description of the subject matter of such audits or examinations, (B) the most
recent taxable year or other taxable period for which an audit or other
examination relating to Federal income taxes of the Company and its subsidiaries
has been finally completed and the disposition of such audit or examination, (C)
the taxable years or other taxable periods of the Company or any of its
subsidiaries which will not be subject to the normally applicable statute of
limitations by reason of the existence of circumstances that would cause any
such statute of limitations for applicable Taxes to be extended, (D) the amount
of any proposed adjustments (and the principal reason therefor) relating to any
Returns for Tax liability of the Company or any of its subsidiaries which have
been proposed or assessed by any taxing authority and (E) a list of all notices
received by the Company or any of its subsidiaries from any taxing authority
relating to any issue which could affect the Tax liability of the Company or any
of its subsidiaries, which issue has not been finally determined and which, if
determined adversely to the Company or any such subsidiaries, could result in a
material Tax liability.
(ii) Except as provided on Schedule 2.12, neither the Company nor any
of its subsidiaries has been included in any "consolidated," "unitary" or
"combined" Return (other than Returns which include only the Company and any
subsidiaries of the Company) provided for under the law of the United States,
any foreign jurisdiction or any state or locality with respect to Taxes for any
taxable period for which the statute of limitations has not expired.
(iii) All material Taxes which the Company or any of its subsidiaries
is (or was) required by law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and payable.
(iv) Except as previously disclosed to Parent, the Company is not a
party to any agreement that would require it to make any payment that would
constitute an "excess parachute payment" for purposes of Sections 280G and 4999
of the Internal Revenue Code of 1986, as amended (the "Code").
(v) There are no tax sharing, allocation, indemnification or similar
agreements or arrangements in effect as between the Company, any subsidiary, or
any predecessor or affiliate thereof and any other party under
-17-
which Parent, Purchaser or the Company (or any of its subsidiaries) could be
liable for any Taxes or other claims of any party other than the Company or any
subsidiary of the Company.
(vi) No indebtedness of the Company or any of its subsidiaries
consists of "corporate acquisition indebtedness" within the meaning of Section
279 of the Code.
(vii) Neither the Company nor any of its subsidiaries has been
required to include in income any adjustment pursuant to Section 481 of the Code
by reason of a voluntary change in accounting method initiated by the Company or
any of its subsidiaries, and the Internal Revenue Service has not initiated or
proposed any such adjustment or change in accounting method.
2.13 Liabilities. Neither the Company nor any of its subsidiaries has
outstanding any material claims, liabilities or indebtedness, contingent or
otherwise, except as set forth in the consolidated balance sheet as of December
31, 1995, or referred to in the footnotes thereto, other than liabilities
incurred subsequent to December 31, 1995 in the ordinary course of business.
Neither the Company nor any of its subsidiaries is in default in respect of the
terms and conditions of any indebtedness or other agreement, except for such
defaults which are not likely to result in a Material Adverse Effect.
2.14 Licenses; Intellectual Property. The Company and its subsidiaries
each possess, or own sufficient legal rights to, all licenses, patents, trade
names, trademarks and service marks (each a "License") necessary for the
ownership or use of the Company's and each subsidiary's properties and the
conduct of their businesses as presently conducted, except for which the failure
to own or possess could not reasonably be likely to result in a Material Adverse
Effect. Except as set forth on Schedule 2.14 previously delivered to Parent, all
such Licenses are in full force and effect and, since January 1, 1993, neither
the Company nor any of its subsidiaries has received any written notice of any
event, inquiry, investigation or proceeding threatening the validity of any such
License. To the Company's knowledge, neither the Company nor any of its
subsidiaries has infringed, or is now infringing, on any License or other right
belonging to any other Person.
-18-
2.15 Broker's or Finder's Fee. Except for Xxxxxxx Xxxxx & Company,
L.L.C. (whose fees and expenses will be paid by the Company in accordance with
the Company's agreement with such firm, a true and correct copy of which has
been previously delivered to Parent by the Company), no agent, broker, Person or
firm acting on behalf of the Company is, or will be, entitled to any broker's,
finder's or other similar fee from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with any of the parties
hereto, in connection with this Agreement or any of the transactions
contemplated hereby, based upon arrangements made by the Company.
2.16 Environmental Laws and Regulations. Except as set forth on
Schedule 2.16 previously delivered to Parent:
(a) Neither the Company nor any of its subsidiaries has generated,
used, treated or stored any Hazardous Materials (as hereinafter defined) on any
Company Property (as hereinafter defined) and to the Company's knowledge, no
Hazardous Materials have been generated, used, treated or stored on or released
or disposed on any Company Property except in each case where the failure to be
in compliance with Environmental Laws (as hereinafter defined) could not
reasonably be expected to have a Material Adverse Effect.
(b) The Company and its subsidiaries are in compliance with
Environmental Laws and the requirements of permits issued under such
Environmental Laws with respect to any Company Property except where the failure
to be in such compliance could not reasonably be expected to have a Material
Adverse Effect.
(c) There are no pending or, to the Company's knowledge, threatened
Environmental Claims (as hereinafter defined) against the Company or its
subsidiaries or any Company Property.
(d) For purposes of this Section 2.16, the following definitions shall
apply:
"Company Property" means any real property and improvements owned,
leased, used, operated or occupied by the Company and its subsidiaries.
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any
-19-
form that is friable, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing levels of polychlorinated
biphenyls, and radon gas; and (b) any chemicals, materials or substances defined
as or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," or words of similar import,
under any applicable Environmental Law.
"Environmental Law" means any federal, state or local statute, law,
rule, regulation, ordinance, code, policy or rule of common law (and in each
case as may have been amended) in effect as of the date of this Agreement, and
any judicial or administrative interpretation thereof as of the date as of this
Agreement, including any judicial or administrative order, consent decree or
judgment, relating to the environment, health, safety or Hazardous Materials,
including the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, 42 U.S.C. ss. 6901 et seq.; the Resource Conservation and Recovery
Act, 42 U.S.C. ss. 9601 et seq.; the Federal Water Pollution Control Act, 33
U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et
seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking Water
Act, 42 U.S.C. ss. 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C. ss.
2701 et seq.; and their state and local counterparts and equivalents.
"Environmental Claims" means administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such Law (hereafter
"Claims"), including (a) Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (b) Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
2.17 Real Property; Leases. Except as set forth on Schedule 2.17
previously delivered to Parent, neither the Company nor any of its subsidiaries
owns any real property. Schedule 2.17 also contains a list of all leases of real
property to which the Company or any subsidiary is a party requiring an annual
aggregate payment of at least $25,000.
-20-
Except as otherwise set on Schedule 2.17, each such lease set forth on Schedule
2.17 is in full force and effect; all rents and additional rents due to date
from the Company and its subsidiaries on each such lease have been paid; neither
the Company nor any of its subsidiaries has received notice that it is in
material default under any such lease; and except as set forth on Schedule 2.17,
there exists, with respect to the Company and its subsidiaries, and to the
Company's knowledge with respect to any party other than the Company or its
subsidiaries, no event, occurrence, condition or act (including the consummation
of the Merger) which, with the giving of notice, the lapse of time or the
happening of any further event or condition, would become a default by the
Company or any of its subsidiaries under such lease, except for such defaults
which could not reasonably be expected to result in a Material Adverse Effect.
2.18 Material Contracts. Except as set forth on Schedule 2.17 and
Schedule 2.18 previously delivered to Parent, neither the Company nor any of its
subsidiaries has or is bound by:
(a) any agreement, contract or commitment that involves the
performance of services by it of an amount or value (as measured by the
revenue derived therefrom during 1995) in excess of $2,000,000 annually,
unless terminable by the Company on not more than 90 days notice,
(b) any material agreement, contract or commitment not in the ordinary
course of business,
(c) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other distribution
in respect of its capital stock,
(d) any agreement, contract or commitment to be performed relating to
capital expenditures in excess of $500,000,
(e) any agreement, indenture or instrument relating to indebtedness
for borrowed money or the deferred purchase price of property (excluding
trade payables in the ordinary course of business, intercompany
indebtedness and leases for telephones, copy machines, facsimile machines
and other office equipment),
-21-
(f) any loan or advance to (other than advances to employees in the
ordinary course of business in amounts of $25,000 or less to any individual
and $100,000 in the aggregate or advances against future collections
entered into in the ordinary course of business not in excess of $500,000
to any one client or $2,000,000 in the aggregate), or investment in (other
than investments in subsidiaries), any Person, or any agreement, contract
or commitment relating to the making of any such loan, advance or
investment or any agreement, contract or commitment involving a sharing of
profits (except for bonus arrangements with employees entered into in the
ordinary course of business consistent with past practice),
(g) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any Person (other than in the ordinary course
of business and other than with respect to any indebtedness or obligation
of the Company or any subsidiary),
(h) any management service, consulting or any other similar type of
contract (other than contingent fee agreements with collection attorneys),
involving payments of more than $60,000 annually, unless terminable by the
Company on not more than 90 days notice,
(i) any agreement, contract or commitment limiting the ability of the
Company or any of its subsidiaries to engage in any line of business or to
compete with any Person,
(j) any warranty, guaranty or other similar undertaking with respect
to a contractual performance extended by the Company or any of its
subsidiaries other than in the ordinary course of business, or
(k) any material amendment, modification or supplement in respect of
any of the foregoing.
Except as otherwise set forth on Schedule 2.18, each contract or
agreement set forth on Schedule 2.18 is in full force and effect and there
exists no default or event of default or event, occurrence, condition or act
(including the consummation of the Merger) on the part of the Company or any
subsidiary or, to the knowledge of the Company, on the part of any other Person
which, with the giving of notice,
-22-
the lapse of time or the happening of any other event or condition, would become
a default or event of default thereunder, except for such default or event of
default which could not reasonably be likely to result in a Material Adverse
Effect.
2.19 Employment Relations. Except as set forth on Schedule 2.19
previously delivered to Parent and except for any violations or breaches which,
singly or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect:
(a) The Company and each of its subsidiaries is in compliance with all
Federal, state or other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and has not, and is not, engaged in any unfair labor
practice;
(b) no unfair labor practice complaint against the Company or any of
its subsidiaries is pending before the National Labor Relations Board;
(c) there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against or involving the Company or any of its
subsidiaries;
(d) neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement and no collective bargaining agreement is
currently being negotiated by the Company or any of its subsidiaries; and
(e) no claim in respect of the employment of any employee has been
asserted or, to the knowledge of the Company, threatened, against the
Company or any of its subsidiaries.
2.20 Customers Relations. None of the top twenty customers of the
Company (based on the Company's 1995 consolidated revenues) has notified the
Company or any of its subsidiaries that it intends to either (i) terminate or
modify in a manner adverse to the Company or any of its subsidiaries its
contractual arrangements with the Company or any of its subsidiaries or (ii)
substantially curtail the amount of business it currently does with the Company
or any of its subsidiaries.
-23-
2.21 Voting Requirements. The affirmative vote of the holders of a
majority of all the shares of Common Stock entitled to be cast 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 transactions
contemplated by this Agreement. Sections 180.1130-1133 of the WBCL are
inapplicable to the transactions contemplated by this Agreement. This
representation is made in reliance upon, and assumes the accuracy of, the
Parent's and Purchaser's representation made in Section 3.05 of this Agreement.
2.22 Opinion of Financial Advisor. The Company has received the
opinion of Xxxxxxx Xxxxx & Company, L.L.C., to the effect that, as of the date
of this Agreement, the consideration to be received in the Merger by the
Company's stockholders is fair to the Company's stockholders from a financial
point of view, and a complete and correct signed and correct signed copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to Parent.
2.23 State Anti-Takeover Statutes. The Company has taken all necessary
action to render Sections 180.1140-1145 and Section 180.1150 of the WBCL
inapplicable to the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS OF PARENT AND PURCHASER
3. Representations and Warranties of Parent and Purchaser. Each of
Parent and Purchaser represents and warrants to the Company as follows:
3.01 Due Organization; Good Standing and Corporate Power. Each of
Parent and Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
3.02 Authorization and Validity of Agreement. Each of Parent and
Purchaser has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and Purchaser, and the consummation by each of them of
the transactions contemplated hereby, have been duly authorized by the Boards of
Directors
-24-
of Parent and Purchaser and, to the extent legally required, by their respective
stockholders. No other corporate action on the part of either of Parent or
Purchaser is necessary to authorize the execution, delivery and performance of
this Agreement by each of Parent and Purchaser and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and Purchaser and is a valid and binding obligation
of each of Parent and Purchaser, enforceable against each of Parent and
Purchaser in accordance with its terms, except that such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and general equitable
principles.
3.03 Consents and Approvals; No Violations. Assuming (i) the filings
required under the HSR Act are made and the waiting period thereunder has been
terminated or has expired, (ii) filings required to be made with the Commission
in connection or in compliance with the Exchange Act and the rules and
regulations of the Commission are made, (iii) the filing of the Articles of
Merger as required by the WBCL, the filing of the Certificate of Merger as
required by the DGCL and the filing of other appropriate merger documents, if
any, is made and (iv) the valid authorization, execution and delivery of this
Agreement by the Company, the execution and delivery of this Agreement by Parent
and Purchaser and the consummation by Parent and Purchaser of the transactions
contemplated hereby will not: (1) violate any provision of the Certificate of
Incorporation or By-Laws of Parent or Purchaser; (2) violate any statute,
ordinance, rule, regulation, order or decree of any court or of any governmental
or regulatory body, agency or authority applicable to Parent or Purchaser or by
which either of their respective properties or assets may be bound; (3) require
any filing with, or permit, consent or approval of, or the giving of any notice
to any governmental or regulatory body, agency or authority; or (4) result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
Parent or Purchaser under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, franchise, permit, agreement, lease or
other instrument or obligation to which Parent or Purchaser is a party, or by
which they or their respective properties or assets may be bound, except for in
the case of
-25-
clauses (3) and (4) above, such filing, permit, consent, approval or violation
which would not reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
3.04 Broker's or Finder's Fee. No agent, broker, Person or firm acting
on behalf of Parent or Purchaser is, or will be, entitled to any fee, commission
or broker's or finder's fees from the Company or any stockholder of the Company
in connection with this Agreement or any of the transactions contemplated
hereby.
3.05 Ownership of Company's Common Stock. Neither Parent nor Purchaser
is a "significant shareholder", as defined in Section 180.1130 of the WBCL, of
the Company and neither Parent nor Purchaser is an affiliate, as defined in
Section 180.0103 of the WBCL, of a significant shareholder of the Company.
ARTICLE IV
TRANSACTIONS PRIOR TO CLOSING DATE
4.01 Access to Information Concerning Properties and Records. During
the period commencing on the date hereof and ending on the Closing Date, the
Company shall, and shall cause each of its subsidiaries to, upon reasonable
notice, afford Parent and Purchaser, and their respective counsel, accountants,
consultants and other authorized representatives, full access during normal
business hours to the employees, properties, books and records of the Company
and its subsidiaries in order that they may have the opportunity to make such
investigations as they shall desire of the affairs of the Company and its
subsidiaries; provided that such investigations shall be conducted so as to
minimize disturbances to the operation of the Company's business. The Company
shall furnish reasonably promptly to Parent and Purchaser (a) a copy of each
report, schedule, registration statement and other document filed by it or its
subsidiaries during such period pursuant to the requirements of Federal or state
securities laws and (b) all other information concerning its or its
subsidiaries' business, properties and personnel as Parent and Purchaser may
reasonably request. The Company agrees to cause its officers and employees to
furnish such additional financial and operating data and other information and
respond to such inquiries as Parent or Purchaser shall from time to time
reasonably request.
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4.02 Confidentiality. Information obtained by Parent and Purchaser
pursuant to Section 4.01 hereof shall be subject to the provisions of the
Confidentiality Agreement between the Company and Account Portfolios, Inc. dated
November 9, 1995 (the "Confidentiality Agreement"), to which Parent made itself
subject pursuant to a letter agreement dated May 3, 1996.
4.03 Conduct of the Business of the Company. During the period from
the date of this Agreement to the Closing Date, the Company shall, and shall
cause each of its subsidiaries to, conduct its operations only according to its
ordinary and usual course of business; use its reasonable efforts to (i)
preserve intact its business organizations, (ii) keep available the services of
its officers and employees and (iii) maintain satisfactory relationships with
licensors, suppliers, distributors, customers, landlords, employees, agents and
others having business relationships with it. Notwithstanding the immediately
preceding sentence, prior to the Closing Date, except as may be first approved
in writing by Parent or as is otherwise permitted or required by this Agreement,
the Company shall, and shall cause each of its subsidiaries to:
(a) maintain its Articles of Incorporation, by-laws and other
organizational documents, as applicable, in its form on the date of this
Agreement,
(b) other than in the ordinary course of business consistent with past
practice, refrain from paying or increasing any bonuses, salaries, or other
compensation to any director, officer, employee or stockholder or entering
into any employment, severance, or similar agreement with any director,
officer, or employee,
(c) refrain from the adopting or, other than in the ordinary course of
business consistent with past practice, increasing of any profit sharing,
bonus, deferred compensation, savings, insurance, pension, retirement, or
other employee benefit plan for or with any of its employees except as
required by law,
(d) refrain from entering into any material contract or commitment
except material contracts and commitments in the ordinary course of
business,
-27-
(e) refrain from increasing its indebtedness for borrowed money except
current borrowings in the ordinary course,
(f) refrain from cancelling or waiving any claim or right of
substantial value which individually or in the aggregate is material,
(g) refrain from declaring or paying any dividends in respect of its
capital stock or redeeming, purchasing or otherwise acquiring any of its
capital stock,
(h) refrain from making any material change in accounting methods or
practices, except as required by law or generally accepted accounting
principles,
(i) refrain from issuing or selling any shares of capital stock or any
other securities except pursuant to outstanding options, or issuing any
securities convertible into, or options, warrants or rights to purchase or
subscribe to, or entering into any arrangement or contract with respect to
the issue and sale of, any shares of its capital stock or any other
securities, or making any other changes in its capital structure,
(j) refrain from selling, leasing or otherwise disposing of any
material asset or property other than sales in the ordinary course of
business consistent with past practice,
(k) refrain from making any capital expenditure or commitment
therefor, except in the ordinary course of business,
(l) refrain from writing off as uncollectible any notes or accounts
receivable, except write-offs in the ordinary course of business consistent
with past practice,
(m) refrain from purchasing or otherwise acquiring portfolios of
loans, notes, accounts receivable, mortgages or other indebtedness, for a
purchase price in excess of $500,000 for any such portfolio, and
(n) refrain from agreeing in writing to do any of the foregoing.
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4.04 Proxy Statement. As promptly as practicable, the Company will
prepare and file a preliminary Proxy Statement with the Commission and will use
its reasonable best efforts to respond to the comments of the Commission in
connection therewith and to furnish all information required to prepare the
definitive Proxy Statement (including, without limitation, financial statements
and supporting schedules and certificates and reports of independent public
accountants). The Company will cause the definitive Proxy Statement to be mailed
to the stockholders of the Company and, if necessary, after the definitive Proxy
Statement shall have been so mailed, promptly circulate amended, supplemental or
supplemented proxy material and, if required in connection therewith, resolicit
proxies. The Company will not use any proxy material in connection with the
meeting of its stockholders without Parent's prior approval, which shall not be
unreasonably withheld.
4.05 Stockholder Approval. The Company, acting through its Board of
Directors, shall, in accordance with applicable law, call a special meeting of
the holders of Common Stock for the purpose of voting upon this Agreement and
the Merger and the Company agrees that this Agreement and the Merger shall be
submitted at such special meeting. The Company shall use its reasonable efforts
to solicit from its stockholders proxies, and shall take all other action
necessary and advisable, to secure the vote of stockholders required by
applicable law to obtain the approval for this Agreement. Subject to Section
4.07 of this Agreement, the Company agrees that it will include in the Proxy
Statement the recommendation of its Board of Directors that holders of Common
Stock approve and adopt this Agreement and approve the Merger.
4.06 Reasonable Best Efforts. Each of the Company, Parent and
Purchaser shall, and the Company shall cause each of its subsidiaries to,
cooperate and use their respective reasonable best efforts to take, or cause to
be taken, all appropriate action, and to make, or cause to be made, all filings
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, their respective reasonable best efforts to
obtain, prior to the Closing Date, all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company and its subsidiaries as are necessary for
consummation of the transactions contem-
-29-
plated by this Agreement and to fulfill the conditions to the Merger.
4.07 No Solicitation of Other Offers. (a) Neither the Company nor any
of its subsidiaries shall, directly or indirectly, take (and the Company shall
not authorize or permit its or its subsidiaries' officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants or
other agents or affiliates, to so take) any action to (i) encourage, solicit or
initiate the submission of any Acquisition Proposal (as hereinafter defined),
(ii) enter into any agreement with respect to any Acquisition Proposal or (iii)
participate in any way in discussions or negotiations with, or, furnish any
information to, any Person (other than the Company, Parent or Purchaser) in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal (including without limitation by taking any action that
would make Section 180.1141 of the WBCL inapplicable to an Acquisition Proposal)
that constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal, provided, however, that the Company may participate in discussions or
negotiations with or furnish information to any third party which proposes a
transaction which the Board of Directors of the Company reasonably believes will
result in a Superior Proposal if the Board of Directors determines, in its good
faith judgment (and has been advised by independent legal counsel), that failing
to take such action would constitute a breach of its fiduciary obligations under
applicable law. In addition, neither the Board of Directors of the Company nor
the Special Committee shall withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent the approval and recommendation of the
Merger and this Agreement or approve or recommend, or propose to approve or
recommend, any Acquisition Proposal; provided that the Board of Directors of the
Company and the Special Committee may recommend to its shareholders an
Acquisition Proposal and in connection therewith withdraw or modify its approval
or recommendation of this Agreement and the Merger if (i) the Board of Directors
of the Company and the Special Committee have determined that such Acquisition
Proposal is a Superior Proposal, (ii) all the conditions to the Company's right
to terminate this Agreement in accordance with Section 7.01(d) have been
satisfied (including the payment of the amounts required by Section 8.01) and
(iii) this Agreement is terminated in accordance with Section 7.01(d). Any
actions permitted under, and taken in compliance with, this Section
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4.07 shall not be deemed a breach of any covenant or agreement of such party
contained in this Agreement.
"Acquisition Proposal" shall mean any proposed merger or other
business combination, sale or other disposition of any material amount of
assets, sale of shares of capital stock, tender offer or exchange offer or
similar transactions involving the Company or any of its subsidiaries. "Superior
Proposal" shall mean a bona fide proposal made by a third party to acquire not
less than 80% of the outstanding shares of the Company pursuant to a tender
offer, a merger or a sale of all or substantially all of the assets of the
Company on terms which a majority of the members of the Board of Directors of
the Company determines in its good faith judgment to be more favorable to the
Company's stockholders than the transactions contemplated hereby.
(b) In addition to the obligations of the Company set forth in
paragraph (a), on the date of receipt thereof the Company shall advise Parent of
any request for information or of any Acquisition Proposal, or any proposal with
respect to any Acquisition Proposal, the material terms and conditions of such
request or takeover proposal, and the identity of the person making any such
takeover proposal or inquiry. The Company will keep Parent fully informed in all
material respects of the status and details (including amendments or proposed
amendments) of any such request, takeover proposal or inquiry and keep Parent
fully informed in all material respects as to the details of any information
requested of or provided by the Company and as to the details of all discussions
or negotiations with respect to any such request, takeover proposal or inquiry.
-31-
(c) Immediately following the Closing, the Company will request each
person which has heretofore executed a confidentiality agreement in connection
with its consideration of acquiring the Company or any portion thereof to return
all confidential information heretofore furnished to such person by or on behalf
of the Company.
4.08 Notification of Certain Matters. The Company shall give prompt
notice to Parent of: (i) the occurrence, or non-occurrence, of any event known
to the Company, the occurrence, or non-occurrence, of which would reasonably be
expected to cause any representation or warranty of the Company contained in
this Agreement to be untrue or inaccurate in any material respect, (ii) any
failure of the Company to comply with or satisfy any covenants, condition or
agreement to be complied with or satisfied by it hereunder, (iii) any notice of,
or other communication relating to, a material default or event that, with
notice or lapse of time or both, would become a material default, received by
the Company or any of its subsidiaries subsequent to the date of this Agreement
and prior to the Effective Time, under any material contract to which the
Company or any of its subsidiaries is a party or is subject, and (iv) the
occurrence of any event known to the Company which has resulted in or could
reasonably be expected to result in a Material Adverse Effect. Each of the
Company and Parent shall give prompt notice to the other party of any notice or
other communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement.
4.09 HSR Act. The Company and Parent shall, as soon as practicable,
file Notification and Report Forms under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") and shall use their reasonable best efforts to
respond as promptly as practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or documentation.
4.10 Directors' and Officers' Insurance; Indemnification. (a) The
Articles of Incorporation and the by-laws of the Surviving Corporation (or
Purchaser if this Agreement shall be amended to provide that Purchaser is the
Surviving Corporation) shall contain the provisions with respect to
indemnification and exculpation from liability set forth in
-32-
the Company's Articles of Incorporation and by-laws on the date of this
Agreement, which provisions shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who on or prior to the
Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by law.
(b) For three years from the Effective Time, the Surviving Corporation
shall either (x) maintain in effect the Company's current directors' and
officers' liability insurance policy covering those persons who are currently
covered on the date of this Agreement by such policy (a copy of which has been
heretofore delivered to Parent) (the "Indemnified Parties"); provided, however,
that in no event shall the Surviving Corporation be required to expend in any
one year an amount in excess of 150% of the annual premiums currently paid by
the Company for such insurance which the Company represents to be $44,500 for
the twelve month period ended November 25, 1996 (the "Current Premium"); and
provided further, that if the annual premiums of such insurance coverage exceed
150% of the Current Premium, the Surviving Corporation may, at its option,
terminate the existing policy and obtain a policy with the greatest coverage
available for a cost not exceeding 150% of the Current Premium and containing
terms and conditions which are no less advantageous in any material respect to
the Company's current and past directors and officers and provided that said
substitution does not result in any gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time; provided further, that the
Surviving Corporation may substitute for such Company policy a policy with at
least the same coverage containing terms and conditions which are no less
advantageous in any material respect to the Company's current and past directors
and officers and provided that said substitution does not result in any gaps or
lapses in coverage with respect to matters occurring prior to the Effective Time
or (y) cause Parent's directors' and officers' liability insurance then in
effect to cover those persons who are covered on the date of this Agreement by
the Company's directors' and officers' liability insurance policy, but only if
Parent's policy provides at least the same coverage containing terms and
conditions which are no less advantageous in any material respect to the
Company's current and past directors and officers and provided that said
substitution does not result in any gaps
-33-
or lapses in coverage with respect to matters occurring prior to the Effective
Time.
ARTICLE V
CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE COMPANY
5. Conditions Precedent to Obligations of the Company. The obligations
of the Company to effect the Merger are subject to the satisfaction or waiver
(subject to applicable law) at or prior to the Effective Time of each of the
following conditions:
5.01 Truth of Representations and Warranties. The representations and
warranties of Parent and Purchaser contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date.
5.02 Performance of Agreements. All of the agreements of Parent and
Purchaser to be performed prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed in all material respects.
5.03 Approval of Company's Stockholders. This Agreement and the Merger
shall have been approved and adopted by the holders of the outstanding Common
Stock in accordance with the requirements of the WBCL.
5.04 HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated.
5.05 Injunction. No preliminary or permanent injunction or other order
shall have been issued by any court or by any governmental or regulatory agency,
body or authority which prohibits the consummation of the Merger and the other
transactions contemplated by this Agreement and which is in effect at the
Effective Time; provided, however, that, in the case of a decree, injunction or
other order, each of the parties shall have used reasonable efforts to prevent
the entry of any such injunction or other order and to appeal as promptly as
possible any decree, injunction or other order that may be entered.
-34-
5.06 Statutes. No statute, rule, regulation, executive order, decree
or order of any kind shall have been enacted, entered, promulgated or enforced
by any court or governmental authority which prohibits the consummation of the
Merger or has the effect of making the consummation of the Merger illegal.
5.07 Financing. Parent shall have received financing necessary to
enable it and Purchaser to consummate the transactions contemplated by this
Agreement in accordance with the terms contained in the "highly confident"
letters dated August 12, 1996 to Parent from Xxxxxxx, Xxxxx & Co. and Chase
Securities Inc. and the commitment letter dated August 7, 1996 to Parent from
Pearl Street L.P., The Chase Manhattan Bank and Chase Securities Inc.
5.08 Third Party Consents; Governmental Approvals. All consents,
approvals or waivers, if any, required in connection with the consummation of
the transactions contemplated by this Agreement shall have been received. All of
the consents, approvals, authorizations, exemptions and waivers from
governmental agencies that shall be required in order to enable Company to
consummate the transactions contemplated hereby shall have been obtained.
5.09 Certificates. The Company shall have received a certificate of
Parent executed on its behalf by an executive officer of Parent to the effect
that the conditions set forth in Sections 5.01, 5.02 and 5.07 hereof have been
satisfied.
ARTICLE VI
CONDITIONS PRECEDENT TO
OBLIGATIONS OF PARENT AND PURCHASER
6. Conditions Precedent to Obligations of Parent and Purchaser. The
obligations of Parent and Purchaser to effect the Merger are subject to the
satisfaction or waiver (subject to applicable law) at or prior to the Effective
Time of each of the following conditions:
6.01 Truth of Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and correct
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date,
-35-
except where the failure of such representations and warranties to be true and
correct shall not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
6.02 Performance of Agreements. All of the agreements of the Company
to be performed prior to the Closing pursuant to the terms of this Agreement
shall have been duly performed in all material respects.
6.03 No Material Adverse Effect. Prior to the Closing there shall have
been no Material Adverse Effect.
6.04 Approval of Company's Stockholders. This Agreement and the Merger
shall have been approved and adopted by the holders of the outstanding Common
Stock in accordance with the requirements of the WBCL.
6.05 HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated.
6.06 Injunction. No preliminary or permanent injunction or other order
shall have been issued by any court or by any governmental or regulatory agency,
body or authority which prohibits the consummation of the Merger and the other
transactions contemplated by this Agreement and which is in effect at the
Effective Time; provided, however, that, in the case of a decree, injunction or
other order, each of the parties shall have used reasonable efforts to prevent
the entry of any such injunction or other order and to appeal as promptly as
possible any decree, injunction or other order that may be entered.
6.07 Statutes. No statute, rule, regulation, executive order, decree
or order of any kind shall have been enacted, entered, promulgated or enforced
by any court or governmental authority which prohibits the consummation of the
Merger or has the effect of making the consummation of the Merger illegal.
6.08 Financing. Parent shall have received financing necessary to
enable it and Purchaser to consummate the transactions contemplated by this
Agreement in accordance with the terms contained in the "highly confident"
letters dated August 12, 1996 to Parent from Xxxxxxx, Xxxxx & Co. and Chase
Securities Inc. and the commitment letter dated
-36-
August 7, 1996 to Parent from Pearl Street L.P., The Chase Manhattan Bank and
Chase Securities Inc.
6.09 Third Party Consents; Governmental Approvals. All consents,
approvals or waivers, if any, required in connection with the consummation of
the transactions contemplated by this Agreement shall have been received. All of
the consents, approvals, authorizations, exemptions and waivers from
governmental agencies that shall be required in order to enable Parent and
Purchaser to consummate the transactions contemplated hereby shall have been
obtained.
6.10 Certificates. Parent and Purchaser shall have received a
certificate of the Company executed on its behalf by an executive officer of the
Company to the effect that the conditions set forth in Sections 6.01 and 6.02
hereof have been satisfied.
6.11 Amendment of Stock Plans and Consents to Cancellation of Options.
The Board of Directors of the Company shall have amended the Stock Plans in
accordance with Section 1.06 hereof, and the Company shall, as provided in such
Section, have obtained all necessary consents to ensure that, upon the Effective
Time, the holders of Options shall surrender the same in cancellation and
settlement thereof for a cash consideration equal to the Cash Payment, less the
exercise price of such related Options. After the Effective Time, the Surviving
Corporation shall have no obligation to issue, transfer or sell any shares of
common stock of the Surviving Corporation pursuant to any Employee Benefit Plan.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after approval of the Merger by the Company's
stockholders:
(a) by mutual written consent of the Company and Parent;
(b) by either Parent, on the one hand, or the Company, on the other
hand, if any governmental or regulatory agency shall have issued an order,
decree or ruling or taken
-37-
any other action permanently enjoining, restraining or otherwise prohibiting the
consummation of the Merger and such order, decree or ruling or other action
shall have become final and nonappealable;
(c) by either Parent, on the one hand, or the Company, on the other
hand, if the Merger shall not have been consummated by February 12, 1997, or by
the Company if the Merger shall not have been consummated within 60 days after
approval of this Agreement and the Merger by the Company's stockholders, unless
the Merger shall not have been consummated because of an intentional or willful
material breach of any representation or warranty on the part of the Company set
forth in this Agreement or because of a material breach of any covenant or
agreement on the part of the Company set forth in this Agreement which the
Company has failed to cure within ten days after written notice thereof by
Parent to the Company;
(d) by either Parent, on the one hand, or the Company, on the other
hand, if the Board of Directors of the Company and if required the Special
Committee, determines in its good faith judgment that an Acquisition Proposal
will result in a Superior Proposal and the Board determines in its good faith
judgment (and has been advised by independent legal counsel) that a failure to
terminate this Agreement and enter into an agreement to effect the Superior
Proposal would constitute a breach of its fiduciary obligations under applicable
law; provided, however the Company may not terminate this Agreement pursuant to
this Section 7.01(d) unless (i) the Company has given reasonably prompt written
notice to Parent of the receipt of such Acquisition Proposal and following such
notification by the Company of Parent of receipt of such Acquisition Proposal
the Company keeps Parent reasonably informed of the terms and conditions of such
Acquisition Proposal (and any modification thereto), and the identity of the
Person making such Proposal, (ii) prior to or simultaneously with such
termination the Company has paid the $4,800,000 amount set forth in Section 8.01
by wire transfer in same day funds to the account identified in Schedule 7.01(d)
previously delivered to the Company and (iii) prior to or simultaneously with
such termination the Company enters into a definitive acquisition, merger or
similar agreement to effect the Superior Proposal;
(e) by Parent if (i) there shall have been a breach of any
representation or warranty on the part of the Company contained in this
Agreement which would reasonably
-38-
be expected to have a Material Adverse Effect, (ii) there shall have been a
material breach of any covenant or agreement on the part of the Company
contained in this Agreement and the Company has failed to cure such breach
within ten days after written notice thereof from Parent, or (iii) the Board of
Directors of the Company or the Special Committee shall have withdrawn or
modified in a manner adverse to Parent its approval or recommendation of this
Agreement or the Merger and shall not have reinstated such approval or
recommendation within three business days thereof or the Company shall have
entered into a definitive acquisition, merger or similar agreement to effect a
Superior Proposal; or
(f) by the Company if (i) any of the representations and warranties of
Parent or Purchaser contained in this Agreement were untrue or incorrect in any
material respect when made or have since become, and at the time of termination
remain, incorrect in any material respect, or (ii) Parent or Purchaser shall
have breached or failed to comply in any material respect with any of their
respective obligations under this Agreement.
7.02 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.01 hereof by Parent, on the one hand, or the
Company, on the other hand, written notice thereof shall forthwith be given to
the other party or parties specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall become void and have no
effect, and there shall be no liability hereunder on the part of Parent,
Purchaser or the Company, except that Sections 4.02, 8.01 and this Section 7.02
hereof shall survive any termination of this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.01 Fees and Expenses. (a) Except as provided in paragraphs (b) or
(c) below, all costs and expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
(b) (i) If this Agreement is terminated (A) by the Company pursuant to
Section 7.01(c) under circumstances where the conditions to the Company's
obligations set forth in
-39-
Sections 5.01, 5.02 and 5.04 through 5.08, inclusive, have been satisfied and
prior to such termination, the Company shall have notified its stockholders that
a third party has made a Superior Proposal or a third party shall have publicly
announced a proposal which may represent a Superior Proposal, or (B) by Parent
pursuant to Section 7.01(e)(i) or (ii) as a result of an intentional or willful
breach, and within twelve months after such termination, the Company enters into
an agreement with respect to any merger or any other business combination, sale
or other disposition of any material amount of assets, sale of shares of capital
stock, tender offer or exchange offer or similar transaction involving the
Company or any of its subsidiaries (a "Third Party Acquisition"), or a Third
Party Acquisition occurs, involving any party (or any affiliate or associate
thereof) (x) with whom the Company (or its agents) during the term of this
Agreement had any discussions with respect to a Third Party Acquisition, (y) to
whom the Company (or its agents) during the term of this Agreement furnished
information with respect to or with a view toward a Third Party Acquisition, or
(z) who during the term of this Agreement had submitted a proposal or expressed
any interest publicly or to the Company in a Third Party Acquisition, which
Third Party Acquisition contemplates a direct or indirect consideration for
shares of Common Stock in excess of the Merger Consideration, in the case of
each of clauses (x), (y) and (z) prior to such termination or (ii) if this
Agreement is terminated (A) by the Company in accordance with Section 7.01(d),
or (B) by Parent pursuant to Section 7.01(e)(iii), then the Company shall pay to
Parent in same day funds, within two business days following such termination
(except as required to be earlier paid in accordance with Section 7.01(d)) an
amount (reduced by any amount or reimbursement paid pursuant to Section 8.01(c))
equal to $4,800,000 plus, within two business days of being furnished with
appropriate documentation, reimbursement for the out-of-pocket fees and expenses
reasonably incurred by Parent in connection with the Merger and the transactions
contemplated thereby (not to exceed $1,500,000 in the aggregate).
(c) If Parent terminates this Agreement pursuant to Section 7.01(e)(i)
or (ii) as a result of an intentional or willful breach, then the Company shall
pay to Parent in same day funds, within two business days following such
termination $1,000,000, plus, within two business days of being furnished with
appropriate documentation, reimbursement for the out-of-pocket fees and expenses
reasonably incurred by Parent in connection with the Merger and the transactions
-40-
contemplated thereby (not to exceed $1,500,000 in the
aggregate).
8.02 Representations and Warranties. The respective representations
and warranties of the Company, on the one hand, and Parent and Purchaser, on the
other hand, contained herein or in any certificates or other documents delivered
prior to or at the Closing shall not be deemed waived or otherwise affected by
any investigation made by any party. Each and every such representation and
warranty shall expire with, and be terminated and extinguished as of the
Effective Time and thereafter none of the Company, Parent or Purchaser or their
respective officers, directors, employees and agents shall be under any
liability whatsoever with respect to any such representation or warranty.
8.03 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by or on behalf of the Board of Directors of the
Company and the Special Committee and the Board of Directors of Parent or
Purchaser, may (i) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein by any other applicable party or
in any document, certificate or writing delivered pursuant hereto by any other
applicable party or (iii) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
8.04 Public Announcements. The Company, on the one hand, and Parent
and Purchaser, on the other hand, agree to consult promptly with each other
prior to issuing any press release or otherwise making any public statement with
respect to the transactions contemplated hereby, and shall not issue any such
press release or make any such public statement prior to such consultation and
review by the other party of a copy of such release or statement, unless such
party has been advised by counsel that such release or statement is required by
applicable law.
8.05 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or telecopier, as follows:
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(a) if to the Company, to it at:
Payco American Corporation
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Punches
with a copy to:
Xxxxx & Xxxxx
000 Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
(b) if to Parent, to it at:
OSI Holdings Corp.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
with a copy to:
XxXxxx De Leeuw & Co.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx
with a further copy to:
White & Case
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
-42-
(c) if to Purchaser, to it at:
c/o OSI Holdings Corp.
000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
with a copy to:
XxXxxx De Leeuw & Co.
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx
with a further copy to:
White & Case
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All notices, requests, demands, waivers
and communications shall be deemed received as follows; (i) if sent by prepaid
registered or certified mail, return receipt requested, on the earlier of the
date shown on the receipt or three (3) days after being deposited with the U.S.
Postal Service; (ii) if placed for delivery with a recognized overnight courier
service, on the regularly scheduled date for delivery established by such
courier service; (iii) if delivered by hand, when delivered.
8.06 Entire Agreement. This Agreement, the schedules previously
delivered to Parent and the Company, the Confidentiality Agreement and other
documents referred to herein or delivered pursuant hereto, collectively contain
the entire understanding of the parties hereto with respect to the subject
matter contained herein and supersede all prior agreements and understandings,
oral and written, with respect thereto.
-43-
8.07 Binding Effect; Benefit; Assignment. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties. Nothing
in this Agreement, expressed or implied, is intended to confer on any Person
other than the parties hereto or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
8.08 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented in writing by the parties
hereto in any and all respects before the Effective Time (notwithstanding any
stockholder approval), by action taken by the Board of Directors of the Company
and the Special Committee and the Board of Directors of Parent and Purchaser or
by the respective officers authorized by them; provided, however, that after any
such stockholder approval, no amendment shall be made which by law requires
further approval by such stockholders without such further approval.
8.09 Further Actions. Each of the parties hereto agrees that, subject
to the provisions of this Agreement and to its legal obligations, it will use
its reasonable best efforts to fulfill all conditions precedent specified
herein, to the extent that such conditions are within its control, and to do all
things reasonably necessary to consummate the transactions contemplated hereby.
8.10 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only, do not constitute
a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.
8.11 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
8.12 Applicable Law. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with the
laws of the State of Wisconsin, without regard to the conflict of laws rules
thereof.
-44-
8.13 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
8.14 Certain Definitions . "Person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, a group and a government or other department or
agency thereof. "Knowledge of the Company", "known to the Company" or words of
similar import mean the actual knowledge of any executive officer or director of
the Company. "Notice to the Company", "notice received by the Company" or words
of similar import shall mean written notice received by any executive officer or
director of the Company.
-45-
IN WITNESS WHEREOF, each of Parent, Purchaser and the Company have
caused this Agreement to be executed by their respective officers thereunto duly
authorized, all as of the date first above written.
OSI HOLDINGS CORP.
By /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
Title: Secretary and Treasurer
BOXER ACQUISITION CORP.
By /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
Title: President
PAYCO AMERICAN CORPORATION
By /s/ Xxxxxx Punches
-------------------------------
Name: Xxxxxx Punches
Title: Chairman
