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AGREEMENT AND PLAN OF MERGER
by and among
AEGIS GROUP PLC,
AEGIS ACQUISITION CORP.
and
MARKET FACTS, INC.
DATED AS OF APRIL 29, 1999
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TABLE OF CONTENTS
Section Page
1. The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Offer Documents. . . . . . . . . . . . . . . . . . . . . 2
1.3 Company Actions. . . . . . . . . . . . . . . . . . . . . 3
1.4 Directors. . . . . . . . . . . . . . . . . . . . . . . . 4
2. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . 5
2.3 Effect of the Merger . . . . . . . . . . . . . . . . . . 5
2.4 Charter; By-laws; Directors and Officers . . . . . . . . 6
2.5 Conversion of Securities . . . . . . . . . . . . . . . . 6
2.6 Payment for Shares . . . . . . . . . . . . . . . . . . . 7
2.7 Stock Transfers. . . . . . . . . . . . . . . . . . . . . 8
2.8 Stock Options. . . . . . . . . . . . . . . . . . . . . . 8
2.9 Dissenting Shares. . . . . . . . . . . . . . . . . . . . 9
2.10 Lost Certificates. . . . . . . . . . . . . . . . . . . .10
3. Representations and Warranties Of Parent and the Purchaser . . . .10
3.1 Organization . . . . . . . . . . . . . . . . . . . . . .10
3.2 Authority Relative to this Agreement . . . . . . . . . .10
3.3 Financing. . . . . . . . . . . . . . . . . . . . . . . .11
3.4 Ownership of Shares. . . . . . . . . . . . . . . . . . .11
3.5 Information Supplied . . . . . . . . . . . . . . . . . .11
3.6 Interim Operations of Purchaser. . . . . . . . . . . . .11
3.7 Board Recommendation . . . . . . . . . . . . . . . . . .11
4. Representations and Warranties of the Company. . . . . . . . . . .12
4.1 Organization and Qualification . . . . . . . . . . . . .12
4.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . .12
4.3 Capitalization . . . . . . . . . . . . . . . . . . . . .12
4.4 Authority Relative to Agreement. . . . . . . . . . . . .13
4.5 Compliance . . . . . . . . . . . . . . . . . . . . . . .13
4.6 Commission Filings . . . . . . . . . . . . . . . . . . .14
4.7 Material Contracts . . . . . . . . . . . . . . . . . . .16
4.8 Litigation . . . . . . . . . . . . . . . . . . . . . . .16
4.9 Properties . . . . . . . . . . . . . . . . . . . . . . .17
4.10 Intellectual Property. . . . . . . . . . . . . . . . . .17
4.11 Labor Matters. . . . . . . . . . . . . . . . . . . . . .18
4.12 Board Recommendation . . . . . . . . . . . . . . . . . .19
i
4.13 Compliance with Law. . . . . . . . . . . . . . . . . . .19
4.14 Changes. . . . . . . . . . . . . . . . . . . . . . . . .19
4.15 Vote Required For Merger . . . . . . . . . . . . . . . .20
4.16 Information Supplied . . . . . . . . . . . . . . . . . .20
4.17 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . .20
4.18 Pension and Benefits Plans; ERISA. . . . . . . . . . . .21
4.19 Insurance Policies and Coverages . . . . . . . . . . . .24
4.20 Environmental Matters. . . . . . . . . . . . . . . . . .24
4.21 Rights Agreement . . . . . . . . . . . . . . . . . . . .25
4.22 Year 2000. . . . . . . . . . . . . . . . . . . . . . . .25
4.23 Opinion of Financial Advisor . . . . . . . . . . . . . .25
4.24 Section 203 of the Delaware Law Not Applicable . . . . .25
4.25 Absence of Certain Changes . . . . . . . . . . . . . . .26
5. Conduct of Business Pending the Merger . . . . . . . . . . . . . .26
6. Additional Agreements. . . . . . . . . . . . . . . . . . . . . . .28
6.1 Proxy Statement. . . . . . . . . . . . . . . . . . . . .28
6.2 Action of Stockholders of the Company; Voting and
Disposition of the Shares; Approval by Parent. . . . . .28
6.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . .29
6.4 Additional Agreements. . . . . . . . . . . . . . . . . .30
6.5 Third Party Offers . . . . . . . . . . . . . . . . . . .30
6.6 Access to Information. . . . . . . . . . . . . . . . . .32
6.7 Officers' and Directors' Insurance; Indemnification. . .32
6.8 Certain Contracts. . . . . . . . . . . . . . . . . . . .34
6.9 Employee Stock Ownership Plan. . . . . . . . . . . . . .34
6.10 Employee Matters . . . . . . . . . . . . . . . . . . . .34
6.11 Appraisal Rights . . . . . . . . . . . . . . . . . . . .35
6.12 Accountants. . . . . . . . . . . . . . . . . . . . . . .35
7. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
7.1 Conditions to Obligation of Each Party to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . .35
7.2 Conditions of Obligations of Parent and Purchaser. . . .36
7.3 Conditions of Obligations of the Company . . . . . . . .36
8. Termination, Amendment and Waiver. . . . . . . . . . . . . . . . .37
8.1 Termination. . . . . . . . . . . . . . . . . . . . . . .37
8.2 Effect of Termination. . . . . . . . . . . . . . . . . .38
8.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . .38
8.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . .38
9. General Provisions . . . . . . . . . . . . . . . . . . . . . . . .39
9.1 Brokers. . . . . . . . . . . . . . . . . . . . . . . . .39
9.2 Public Statements. . . . . . . . . . . . . . . . . . . .39
ii
9.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . .39
9.4 Interpretation . . . . . . . . . . . . . . . . . . . . .40
9.5 Representations and Warranties . . . . . . . . . . . . .41
9.6 Action by Company. . . . . . . . . . . . . . . . . . . .41
9.7 Miscellaneous. . . . . . . . . . . . . . . . . . . . . .41
9.8 Waiver of Jury Trial . . . . . . . . . . . . . . . . . .41
ANNEX I CONDITIONS TO THE OFFER. . . . . . . . . . . . . . . . . 1
EXHIBITS
Exhibit A Certificate of Incorporation of Surviving Corporation
Exhibit B By-Laws of Surviving Corporation
SCHEDULES
Schedule 4.2 Subsidiaries
Schedule 4.3 Capitalization
Schedule 4.5 Compliance
Schedule 4.6 Commission Filings
Schedule 4.7 Materials Contracts
Schedule 4.10 Intellectual Property
Schedule 4.11 Labor Matters
Schedule 4.14 Changes
Schedule 4.17 Taxes
Schedule 4.18 Pension and Benefit Plans; ERISA
Schedule 4.19 Insurance Policies and Coverages
Schedule 5.2 Conduct of Business Pending the Merger
Schedule 6.8 Certain Contracts
iii
INDEX OF DEFINED TERMS
Definition Page
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Acquiring Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Applicable Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Associate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Break-up Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Claims.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Code........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company 10-K's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Company Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . .22
Company Intellectual Property Rights . . . . . . . . . . . . . . . . . . . .17
Company Pension Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Company Welfare Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Competing Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
December Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Designation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DGCL........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Disclosed Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Employee Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Encumbrance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Environmental Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
ERISA......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
ESOP.......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Executive Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Filings..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Hazardous Substance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
HSR Act... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Independent Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Intervening Tender Offer . . . . . . . . . . . . . . . . . . . . . . . . . . 2
iv
KPMG........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Lien.......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Marks....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . .12
Merger...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Multiple Employer Plans. . . . . . . . . . . . . . . . . . . . . . . . . . .22
Offer....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Offer Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Offer to Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Option Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 25
Option Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Parent...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Payment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Per Share Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Permitted Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Review Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Reviewed Financial Statements. . . . . . . . . . . . . . . . . . . . . . . .35
Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Rights Agreement Amendment . . . . . . . . . . . . . . . . . . . . . . . . .25
Schedule 14D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Shares...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Special Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Subsequent Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12, 40
Superior Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Tax......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Taxable... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Taxes..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Trade Secrets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
U.S. Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Year 2000 Problem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
v
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of April 29,
1999, is by and among Aegis Group plc, a company incorporated under the laws of
England and Wales ("Parent"), Aegis Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Parent (the "Purchaser"), and Market Facts,
Inc., a Delaware corporation (the "Company").
RECITALS
1. Parent proposes to acquire the Company and the Company proposes to be
acquired by Parent pursuant to the terms of this Agreement.
2. In furtherance of such acquisition it is proposed that the Purchaser
will make a cash tender offer (the "Offer") to purchase up to 100% of the issued
and outstanding shares of Common Stock, par value $1.00 per share (the
"Shares"), of the Company for $31.00 per Share, or such higher price as may be
paid if the Offer is amended, net to the seller in cash (the "Per Share
Amount").
3. It is further proposed that the Purchaser, or another direct or
indirect wholly-owned subsidiary of Parent, merge with and into the Company (the
"Merger") following consummation of the Offer, and that the Shares not tendered
and accepted pursuant to the Offer will thereupon be converted into the right to
receive the Per Share Amount (Purchaser and the Company sometimes being
hereinafter referred to as the "Constituent Corporations").
4. As a condition and inducement to Parent's and Purchaser's entering
into this Agreement and incurring the obligations set forth herein, concurrently
with execution and delivery of this Agreement, Parent and Purchaser have entered
into one or more Option and Voting Agreements (collectively the "Option
Agreements") with the individuals and entities named therein (the
"Stockholders"), pursuant to which, among other things, each Stockholder has
agreed to vote the Shares then owned by such Stockholder in favor of the Merger,
to grant Parent an irrevocable proxy to vote such Shares, and to grant an option
to purchase all Shares then owned by such Stockholder to Parent.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, Parent, the Purchaser and the Company
hereby agree as follows:
1. THE OFFER
1.1 THE OFFER. Provided that nothing shall have occurred which would
result in a failure to satisfy any of the conditions set forth in ANNEX I
hereto, Parent shall cause the Purchaser to and the Purchaser shall, as soon as
practicable after the date hereof, and in any event not later than five (5)
business days after the day on which the Purchaser's intention to make the Offer
is announced commence (within the meaning of Rule 14d-2(a) of the Securities
Exchange Act of 1934, as
1
amended (the "Exchange Act")) the Offer for all of the outstanding Shares at the
Per Share Amount. Subject to the Minimum Condition as defined in ANNEX I and
subject only to the other conditions set forth in ANNEX I, the Purchaser shall
consummate the Offer as soon as legally permissible. Purchaser expressly
reserves the right to waive any such condition or to increase the Per Share
Amount or, subject to the provisions of this Section 1.1, to make other changes
in the terms and conditions of the Offer. The Offer shall be made by means of
an offer to purchase (the "Offer to Purchase") containing the Minimum Condition,
and no other conditions except those set forth in ANNEX I hereto, and shall not
be amended with respect to any provision thereof set forth in such Annex or the
Minimum Condition, with respect to a reduction in the price or change in the
form of consideration to be paid in the Offer, or with respect to an extension
of the Offer (except as provided in this Section 1.1) without the consent of the
Company; provided, however, that Purchaser may extend the expiration date (x) in
its sole discretion from time to time, if on the initial scheduled or any
extended expiration date of the Offer the Minimum Condition has not been
satisfied, or any of the other conditions set forth in ANNEX I shall not have
been satisfied or waived, until such time as such conditions are satisfied or
waived; provided, however, that unless agreed to by the Company, any extended
expiration date pursuant to this clause (x) may not be later than ninety (90)
days from the date of commencement of the Offer, or one hundred twenty (120)
days from such date if within such ninety (90) day period a tender offer for at
least 20% of the outstanding Shares is commenced by any person who is not an
affiliate (as defined under the rules promulgated pursuant to the Securities Act
of 1933) of Parent or Purchaser (an "Intervening Tender Offer"), or (y) for a
period not to exceed ten (10) business days, notwithstanding that all conditions
to the Offer are satisfied as of such expiration date of the Offer, if,
immediately prior to the expiration date of the Offer (as it may be extended),
the Shares tendered and not withdrawn pursuant to the Offer, together with the
Shares subject to the Option Agreements, without duplication, equal less than
90% of the outstanding Shares and Purchaser expressly irrevocably waives any
condition (other than the Minimum Condition) that subsequently may not be
satisfied during such extension of the Offer, or (z) for any period required by
any rule, regulation, interpretation or position of the Securities and Exchange
Commission (the "Commission") or the staff thereof applicable to the Offer.
Without limiting the right of Purchaser to extend the Offer pursuant to the
provisions of this Section 1.1, in the event that (i) the Minimum Condition
shall not have been satisfied or (ii) the conditions set forth in ANNEX I shall
not have been satisfied or waived at the scheduled or any extended expiration
date of the Offer, at the request of the Company, the Purchaser shall, and
Parent shall cause Purchaser to, extend the expiration date of the Offer in
increments of five (5) business days each until the earliest to occur of (x) the
satisfaction or waiver of the Minimum Condition or such other condition, (y) the
termination of this Agreement in accordance with its terms, and (z) ninety (90)
days from commencement of the Offer or one hundred twenty (120) days from such
date in the event of an Intervening Tender Offer (unless extended by agreement
of the parties). The Purchaser agrees to pay for all Shares tendered pursuant
to the Offer that it is obligated to purchase as promptly as practicable.
1.2 OFFER DOCUMENTS. On the date of commencement of the Offer, Parent
and the Purchaser shall file with the Commission with respect to the Offer a
Schedule 14D-1 (the "Schedule 14D-1") which will comply in all material respects
with the provisions of applicable federal securities law, and will contain the
Offer to Purchase and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements thereof or
2
amendments thereto, are referred to herein collectively as the "Offer
Documents"). The Schedule 14D-1 and the Offer Documents, on the date the
Schedule 14D-1 is filed with the Commission, and on the date the Offer Documents
are first published, sent or given to stockholders shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation or warranty is made by Parent or Purchaser with respect to
written information supplied by the Company or any of its stockholders. Parent,
Purchaser and the Company each agree promptly to correct the Schedule 14D-1 or
the Offer Documents if and to the extent that any information provided by any of
them shall have become false or misleading in any material respect, and to take
all steps necessary to cause such Schedule 14D-1 as so corrected to be filed
with the Commission and such Offer Documents as so corrected to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review and comment on any Offer Documents before they
are filed with the Commission. Parent and Purchaser agree to provide the
Company and its counsel with any comments that Parent, Purchaser or their
counsel may receive from the Commission or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
1.3 COMPANY ACTIONS. The Company hereby consents to the Offer and
represents that (a) its Board of Directors (at a meeting duly called and held)
has (i) unanimously determined that each of this Agreement, the Offer and the
Merger are fair to and in the best interests of the stockholders of the Company,
(ii) approved this Agreement and the transactions contemplated hereby, including
the Offer and the Merger, and such approval constitutes approval of the Offer,
this Agreement, and the transactions contemplated hereby, including the Merger,
for purposes of Section 203 of the Delaware General Corporation Law, as amended
(the "DGCL"), and (iii) after considering its fiduciary duties under applicable
law upon the advice of counsel, resolved to recommend acceptance of the Offer,
approval and adoption of this Agreement and approval of the Merger by the
Company's stockholders, and (b) Xxxxxxxx & Co. Inc. has delivered to the Board
of Directors of the Company its written opinion that the Offer Consideration and
the Merger Consideration to be received by the holders of Shares in the Offer
and the Merger, respectively, is fair, from a financial point of view, to such
holders. The Board of Directors of the Company may withdraw or modify its
approval or recommendation of the Offer, this Agreement or the Merger if the
Board of Directors of the Company shall conclude in good faith upon advice of
counsel that such action is required under applicable law for the discharge of
such Board's fiduciary duties. The Company hereby consents to the inclusion in
the Offer Documents of the recommendation referred to in this Section 1.3
The Company hereby agrees to file with the Commission as promptly as
practicable after the filing by Parent and Purchaser of the Schedule 14D-1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing, subject to
the penultimate sentence of the preceding paragraph, such recommendations of the
Board of Directors of the Company in favor of the Offer and the Merger and
otherwise complying with Rule 14D-9 under the Exchange Act. The Schedule 14D-9
shall comply in all material respects with the Exchange Act and shall contain
(or shall be amended in a timely manner to contain) all information which is
required to be included therein in accordance with the Exchange
3
Act and the rules and regulations thereunder and, on the date filed with the
Commission and on the date first published, sent or given to stockholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation or warranty is made by the Company
with respect to written information supplied by Parent or Purchaser specifically
for inclusion in the Schedule 14D-9. The Company, Parent and Purchaser each
agree promptly to correct any information provided by them for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect and the Company further agrees to take all
lawful action necessary to cause the Schedule 14D-9 as so corrected to be filed
promptly with the Commission and disseminated to the holders of Shares, in each
case as and to the extent required by applicable law. Parent, Purchaser and
their counsel shall be given a reasonable opportunity to review and comment on
the Schedule 14D-9 and any amendments thereto prior to filing thereof with the
Commission.
In connection with the Offer, the Company shall promptly furnish Parent
with mailing labels, security position listings and all available listings or
computer files containing the names and addresses of the record holders of the
Shares as of the latest practicable date and shall furnish Parent with such
information and assistance (including updated lists of stockholders, mailing
labels and lists of security positions) as Parent or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of the
Shares. Subject to the requirements of applicable law, and except for such
actions as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, until consummation
of the Merger, Parent and Purchaser and each of their affiliates, associates,
partners, employees, agents and advisors shall hold in confidence the
information contained in such labels and lists, shall use such information only
in connection with the Offer and the Merger, and, if this Agreement is
terminated, in accordance with its terms, shall deliver promptly to the Company
all copies of such information then in their possession or control.
1.4 DIRECTORS. Promptly upon the acceptance for payment and purchase by
the Purchaser pursuant to the Offer and the Option Agreements of such number of
Shares which represents at least a majority of the outstanding Shares (on a
fully diluted basis), and from time to time thereafter, the Parent shall be
entitled to designate such number of directors (the date on which such
designated persons become directors being the "Designation Date"), rounded up to
the next whole number, on the Board of Directors as will give the Purchaser,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Board of Directors (including any directors designated by Parent then
serving on the Board of Directors) equal to at least that number of directors
which equals the product of the total number of directors on the Board of
Directors (giving effect to the directors elected pursuant to this sentence)
multiplied by the percentage that such number of Shares so accepted for payment
and paid for by the Purchaser, together with the Shares, if any, beneficially
owned by Parent and its affiliates as of the date hereof, bears to the number of
Shares outstanding and the Company shall, at such time, cause the Purchaser's
designees to be so elected; provided, however, that until the Effective Time (as
hereinafter defined) the Board of Directors shall have at least two directors
who are directors on the date hereof who are not employees of the Company and
who have not been designated as directors of the Company by Parent and its
affiliates (the "Independent Directors"); provided further, that if the number
of Independent Directors shall be
4
reduced below two because of disability or resignation, the remaining
Independent Director shall be entitled to designate one person to fill such
vacancy who shall be deemed to be an Independent Director for purposes of this
Agreement. Subject to applicable law, the Company shall take all action
necessary to effect any such election, including mailing to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder.
Subject to applicable law, the Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.4 and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if the Company has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.4. Parent will supply the Company and be
solely responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding anything in this Agreement to the contrary, prior to the
Effective Time the affirmative vote of a majority of the Independent Directors
shall be required to (i) amend or terminate this Agreement on behalf of the
Company, (ii) exercise or waive any of the Company's rights or remedies
hereunder, (iii) extend the time for performance of the Purchaser's obligations
hereunder, or (iv) take any other action by the Company in connection with this
Agreement required to be taken by the Board of Directors.
2. THE MERGER
2.1 THE MERGER. At the Effective Time (as defined below), in accordance
with this Agreement and the DGCL, the Purchaser shall be merged with and into
the Company, the separate existence of the Purchaser (except as may be continued
by operation of law) shall cease, and the Company shall continue as the
surviving corporation. The Company hereinafter sometimes is referred to as the
"Surviving Corporation." At the election of Parent exercised prior to the
filing of any proxy statement pursuant to Section 6.1 hereof, the Merger may be
structured so that the Company shall be merged with and into the Purchaser with
the result that the Purchaser shall be the Surviving Corporation. If Parent
elects to structure the Merger so that the Purchaser, rather than the Company,
is the Surviving Corporation, any inaccuracy of any representation or warranty
of the Company which is premised on the assumption that the Company shall be the
Surviving Corporation, which representation or warranty becomes inaccurate
solely as a result of the Purchaser, rather than the Company, being the
Surviving Corporation, shall not be deemed to be a breach of such representation
or warranty and shall not release Parent or the Purchaser from their duties and
obligations under the Offer and this Agreement. At the election of Parent,
another direct or indirect wholly-owned subsidiary of Parent may be substituted
for the Purchaser for purposes of this Section 2.1. If any such change in
structure or Purchaser is made as aforesaid, the parties agree to make
appropriate amendments to this Agreement prior to mailing any Proxy Statement
pursuant to Section 6.1.
2.2 EFFECTIVE TIME. The Merger shall become effective at the date and
time when the Certificate of Merger or Certificate of Ownership and Merger, as
applicable, is filed by the Secretary in accordance with the applicable
provisions of the DGCL (or at such later time specified as the
5
Effective Time in the Certificate of Merger or Certificate of Ownership, as
applicable), which Certificate shall be submitted for filing as soon as
practicable after all of the conditions set forth in Section 7 are fulfilled or
waived, provided that this Agreement has not been previously terminated pursuant
to Section 8.1 hereof. The date and time when the Merger shall become effective
are herein referred to as the "Effective Time."
2.3 EFFECT OF THE MERGER. The effect of the Merger shall be as set
forth in the DGCL. From and after the Effective Time the Surviving Corporation
shall possess all of the rights, privileges, powers and franchises of a public
as well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all and
singular rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all debts due to
either of the Constituent Corporations on whatever account, as well as for stock
subscriptions and all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations; and the title to any
real estate vested by deed or otherwise, in each of the Constituent
Corporations, shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired; and all debts, liabilities and
duties of the Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if said debts
and liabilities had been incurred by it.
2.4 CHARTER; BY-LAWS; DIRECTORS AND OFFICERS. The Certificate of
Incorporation of the Surviving Corporation shall be amended to read as set forth
in EXHIBIT A hereto, and the by-laws of the Surviving Corporation shall be as
set forth in EXHIBIT B hereto, and such documents shall contain the provisions
of the Company's certificate of incorporation and by-laws required to be
maintained pursuant to Section 6.7(b), as in effect immediately prior to the
Effective Time, until thereafter amended as provided therein and under the DGCL,
except that the Certificate of Incorporation of the Surviving Corporation shall
provide that the name of the Surviving Corporation shall be "Market Facts, Inc."
The directors of the Surviving Corporation from and after the Effective Time
shall be as follows: Xxxxxxx Xxxxx, Xxxxx Xxx, Xxxxxxxx Xxxxxxxxx, Xxxxx
Xxxxxxx, Xxx Xxxxx, Xxxx Xxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxx X. Xxxxx and Xxxxxxx
X. Xxxxxxxx, and the officers of the Company immediately prior to the Effective
Time will be the initial officers of the Surviving Corporation, in each case
until their successors are duly elected or appointed and qualified, or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-laws.
2.5 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of the Purchaser, the Company, the
Surviving Corporation or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to Section 2.5(b) or
2.5(c) hereof and any Dissenting Shares (as defined in Section 2.9)), shall be
converted into and become the right to receive the Per Share Amount in cash,
without interest thereon (the "Merger Consideration").
6
(b) Each share of Series B Preferred Stock which is issued and
outstanding immediately prior to the Effective Time shall be canceled and
retired, and no payment shall be made with respect thereto.
(c) Each Share which is issued and outstanding immediately prior
to the Effective Time, and owned by the Purchaser, Parent or the Company or any
direct or indirect subsidiary of the Purchaser, Parent or the Company, shall be
canceled and retired, and no payment shall be made with respect thereto.
(d) All shares of Common Stock of the Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted into and
become a sole validly issued, fully paid and nonassessable share of Common Stock
of the Surviving Corporation.
2.6 PAYMENT FOR SHARES.
(a) Prior to the Effective Time, Purchaser shall appoint a bank
or trust company located in the City of New York having assets equal to or
greater than $500,000,000 to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration, and shall deposit or shall cause to be
deposited with the Paying Agent in a separate fund established for the benefit
of the holders of Shares, for payment in accordance with this Article II,
through the Paying Agent (the "Payment Fund"), immediately available funds in
amounts necessary to make the payments pursuant to Section 2.5(a) and this
Section 2.6 to holders (other than the Company or any Subsidiary of the Company
or Parent, Purchaser or any other subsidiary of Parent, or holders of Dissenting
Shares) or shall enter into such other agreement or arrangement with respect to
such payments as may be satisfactory to the Company. The Paying Agent shall,
pursuant to irrevocable instructions, pay the Merger Consideration out of the
Payment Fund.
From time to time at or after the Effective Time, Parent shall take
all lawful action necessary to make the appropriate cash payments, if any, to
holders of Dissenting Shares. The Paying Agent shall invest portions of the
Payment Fund as Parent directs in obligations of or guaranteed by the United
States of America, in commercial paper obligations receiving the highest
investment grade rating from both Xxxxx'x Investors Services, Inc. and Standard
& Poor's Corporation, or in certificates of deposit, bank repurchase agreements
or banker's acceptances of commercial banks with capital exceeding
$1,000,000,000 (collectively, "Permitted Investments"); PROVIDED, HOWEVER, that
the maturities of Permitted Investments shall be such as to permit the Paying
Agent to make prompt payment to former holders of Shares entitled thereto as
contemplated by this Section. Parent shall cause the Payment Fund to be
promptly replenished to the extent of any losses incurred as a result of
Permitted Investments. All earnings on Permitted Investments shall be paid to
Parent. If for any reason (including losses) the Payment Fund is inadequate to
pay the amounts to which holders of Shares shall be entitled under this Section
2.6, Parent shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) As soon as reasonably practicable after the Effective Time,
Parent shall instruct the Paying Agent to mail to each holder of record (other
than the Company or any
7
Subsidiary of the Company or Parent, Purchaser or any other subsidiary of
Parent) of a Certificate or Certificates which, immediately prior to the
Effective Time, evidenced outstanding Shares (the "Certificates"), (i) a form of
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Paying Agent, and shall be in such form and have such
other provisions as Parent reasonably may specify), and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for payment
therefor. Upon surrender of a Certificate for cancellation to the Paying Agent
together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the holder
of such Certificate shall be entitled to receive in respect thereof cash in an
amount equal to the product of (x) the number of Shares represented by such
Certificate, and (y) the Merger Consideration, and the Certificate so
surrendered shall forthwith be canceled. Absolutely no interest shall be paid
or accrued on the Merger Consideration payable upon the surrender of any
Certificate. If payment is to be made to a person other than the person in
whose name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed, or
otherwise in proper form for transfer, to the person who is to receive such
payment, and that the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment to a person other than the
registered holder of the surrendered Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
2.6(b), each Certificate (other than Certificates representing Shares owned by
Parent or any subsidiary of Parent or held in the treasury of the Company) shall
represent for all purposes only the right to receive the Merger Consideration,
without any interest thereon.
(c) Any portion of the Payment Fund which remains undistributed
to the holders of Shares for twelve (12) months after the Effective Time shall
be delivered to Parent or its designee, upon demand, and any holders of Shares
who have not theretofore complied with this Article III and the instructions set
forth in the letter of transmittal mailed to such holder after the Effective
Time shall thereafter look only to Parent for payment of the Merger
Consideration to which they are entitled. All interest accrued in respect of
the Payment Fund shall inure to the benefit of and be paid to Parent.
(d) Any portion of the Payment Fund remaining unclaimed by
holders of Shares as of a date which is immediately prior to such time as such
amounts would otherwise escheat to or become property of any government entity
shall, to the extent permitted by applicable law, become the property of
Purchaser free and clear of any claims or interest of any person previously
entitled thereto. Except as otherwise required by applicable law, neither
Parent nor the Surviving Corporation shall be liable to any holder of Shares for
any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(e) Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as Parent is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Parent, such withheld amounts shall be
treated for all
8
purposes of this Agreement as having been paid to the holder of the Shares in
respect of which such deduction and withholding was made by Parent.
(f) From and after the Effective Time, holders of Certificates
shall cease to have any rights as stockholders of the Company, except as
provided by applicable law.
2.7 STOCK TRANSFERS. At the Effective Time, there shall be no further
registration of transfers of Shares thereafter on the records of the Company.
Subject to Section 2.6(d), on or after the Effective Time, any Certificates
presented to the Paying Agent or Parent for any reason shall represent only the
right to receive the Merger Consideration, subject to all of the requirements of
this Agreement.
2.8 STOCK OPTIONS. At the Effective Time, each holder of an Employee
Option (as hereafter defined), whether or not then vested or exercisable shall,
in settlement thereof, receive for each Share subject to such Employee Option an
amount (subject to any applicable withholding tax) in cash equal to the
difference between the Offer Consideration and the per Share exercise price of
such Employee Option to the extent such difference is a positive number (such
amount being hereinafter referred to as, the "Option Consideration"); PROVIDED,
HOWEVER, that with respect to any person subject to Section 16(a) of the
Exchange Act, any such amount shall be paid as soon as practicable after the
first date payment can be made without liability to such person under Section
16(b) of the Exchange Act. Upon receipt of the Option Consideration, the
Employee Option shall be canceled. The surrender of an Employee Option to the
Company in exchange for the Option Consideration shall be deemed a release of
any and all rights the holder had or may have had in respect of such Employee
Option. Prior to the Effective Time, the Company shall obtain all necessary
consents or releases from holders of Employee Options under the Company's stock
option plan and to take all such other lawful action as may be necessary to give
effect to the transactions contemplated by this Section 2.8. Except as
otherwise agreed to by the parties, (i) all stock option plans of the Company
shall terminate as of the Effective Time and the provisions in 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 thereof, shall
be canceled as of the Effective Time, and (ii) the Company shall ensure that
following the Effective Time no participant in any stock option plan or other
plans, programs, arrangements or agreements shall have any right thereunder to
acquire equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof and to terminate all such plans. The failure of the Company
to cancel any Employee Option or to ensure that following the Effective Time no
participants in any stock option plan or other plan, program, arrangement or
agreement shall have the right thereunder to acquire any equity interest of the
Company, the Surviving Corporation or any Subsidiary or to terminate any such
plans, which options or equity interests shall not be material in number, shall
not be deemed to have a Material Adverse Effect for the purposes of Section
7.2(b) and paragraph (C) of ANNEX I. Prior to the Effective Time, the Company
shall not take any action to accelerate the vesting of any unvested stock
options as a result of the Offer or the Merger.
2.9 DISSENTING SHARES. Notwithstanding any other provisions of this
Agreement to the contrary, Shares that are outstanding immediately prior to the
Effective Time and which are held by stockholders who shall have not voted in
favor of the Merger or consented thereto in writing and
9
who shall have demanded properly in writing appraisal for such shares in
accordance with Section 262 of the DGCL (collectively, the "Dissenting Shares")
shall not be converted into or represent the right to receive the Merger
Consideration. Such stockholders instead shall be entitled to receive payment
of the appraised value of such Shares held by them in accordance with the
provisions of such Section 262, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender in the manner provided
in Section 2.6, of the Certificate or Certificates that, immediately prior to
the Effective Time, evidenced such Shares. The Company shall give Parent and
the Purchaser prompt written notice of any demands for payment, or notices of
intent to demand payment, received by the Company with respect to Shares, and
Parent and the Purchaser shall have the right to participate in and control all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent or as otherwise required by
law, make any payment with respect to, or settle, or offer to settle, any such
demands.
2.10 LOST CERTIFICATES. If 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 and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such certificate, the
Paying Agent will pay the Merger Consideration in accordance with the terms of
the Offer to the registered owner of such Shares.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER.
The Purchaser and Parent each represents and warrants to the Company as
follows:
3.1 ORGANIZATION. Each of Parent and the Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power to carry on
its respective business as now conducted.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) Each of Parent and the Purchaser has the requisite corporate
power and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Parent and the Purchaser and the consummation
by each of them of the transactions contemplated hereby have been duly
authorized by the respective Boards of Directors of Parent and the Purchaser and
by the stockholders of the Purchaser, and no other corporate proceeding on the
part of either of Parent or the Purchaser is necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and the Purchaser and constitutes a valid and legally
binding obligation of each such corporation, enforceable against each such
corporation in accordance with
10
its terms, except as the enforcement hereof may be limited by general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
(b) Neither the execution and delivery of this Agreement by
Parent and the Purchaser nor the consummation by Parent and the Purchaser of the
transactions contemplated hereby, nor compliance by Parent and the Purchaser
with any of the provisions hereof will (i) violate, conflict with, or result in
a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination 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 the Purchaser or any other direct or indirect subsidiary of
Parent under, any of the terms, conditions or provisions of (x) the certificates
of incorporation, by-laws or other organizational documents of Parent or the
Purchaser or any other direct or indirect subsidiary of Parent, or (y) any
material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Parent or the Purchaser or
any other direct or indirect subsidiary of Parent is a party, or to which any of
them or any of their respective properties or assets may be subject, or (ii)
subject to compliance with the statutes and regulations referred to in the next
paragraph, violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to Parent or the Purchaser or any other
direct or indirect subsidiary of Parent or any of their respective properties or
assets; except, in the case of each of clauses (i) and (ii) above, for such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances, which, in the
aggregate, would not have a material adverse effect on the financial condition,
business or results of operations of Parent and its subsidiaries, taken as a
whole, or which will be cured, waived or terminated prior to the expiration of
the Offer.
(c) Other than in connection with or in compliance with the
provisions of the DGCL, the Exchange Act, the "takeover" or "blue sky" laws of
various states, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), and any
required foreign regulatory approvals, no notice to, filing with, or
authorization, consent or approval of, any domestic or foreign public body or
authority is necessary for the consummation by Parent and the Purchaser of the
transactions contemplated by this Agreement, except where failures to give such
notices, make such filings or obtain such authorizations, consents or approvals
will not have a material adverse effect on the financial condition, business or
results of operations of Parent and its subsidiaries, taken as a whole, and will
not prevent the consummation of the transactions contemplated hereby or
otherwise prevent Parent or Purchaser from performing their respective
obligations under this Agreement.
3.3 FINANCING. The Purchaser presently has available to it or can
borrow under existing lines of credit or other existing financing arrangements
sufficient funds to enable the Purchaser to pay for all the Shares purchased
pursuant to the Offer and to make all necessary payments in respect of the
Merger.
3.4 OWNERSHIP OF SHARES. As of the date hereof, Parent and its
affiliates do not beneficially own any Shares. During the term of this
Agreement and so long as the Company has not failed to perform its obligations
hereunder in any material respect, neither Parent nor any of its
11
affiliates shall acquire, directly or indirectly, any Shares other than pursuant
to the Offer and the Merger.
3.5 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Parent or Purchaser for inclusion or incorporation by reference in
(i) the Schedule 14D-9 at the time the Schedule 14D-9 is filed with the SEC and
at any time it is amended or supplemented, or (ii) the Proxy Statement (as
defined in Section 6.1 hereof) at the date it is first mailed to the Company's
stockholders or at the time of the Company Stockholders Meeting, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to made the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event with respect
to Parent or Purchaser, or with respect to information supplied by Parent or
Purchaser for inclusion of the Schedule 14D-9 or the Proxy Statement, shall
occur which is required to be described in an amendment of, or a supplement to,
such documents, such event shall be so described to the Company.
3.6 INTERIM OPERATIONS OF PURCHASER. Purchaser was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
3.7 BOARD RECOMMENDATION. The Board of Directors of the Parent, at a
meeting duly called and held, has determined that each of the Offer and the
Merger is fair to and in the best interests of Parent and has approved the same.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Parent and the Purchaser the
following:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power to carry on its business as now
conducted. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or leased or the nature of its activities makes such
qualification necessary, except for failures to be so qualified or in good
standing which would not, in the aggregate, have a material adverse effect on
the financial condition, business, operations or results of operations of the
Company and its Subsidiaries, taken as a whole and will not prevent the
consummation of the transactions contemplated hereby ("Material Adverse
Effect"). Copies of the certificate of incorporation and by-laws of the Company
heretofore delivered to the Purchaser are accurate and complete as of the date
hereof. The Company is not in substantial violation of any of the provisions of
its Restated Certificate of Incorporation or Bylaws.
4.2 SUBSIDIARIES. The only corporations or other entities more than 50%
of whose outstanding voting securities or other equity interests are directly or
indirectly owned by the Company are those named in SCHEDULE 4.2 hereof (the
"Subsidiaries"). SCHEDULE 4.2 also contains a complete and accurate list of all
other corporations, partnerships, joint ventures or other legal entities of
which the Company owns, directly or indirectly, any voting stock or other equity
or
12
beneficial interest, together with the jurisdiction of organization of such
entity. Each Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has the
requisite corporate power to carry on its business as now conducted. Each
Subsidiary is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or leased or the nature of its activities makes such qualification necessary,
except for failures to be so qualified or in good standing which in the
aggregate would not have a Material Adverse Effect. All of the outstanding
capital stock of each Subsidiary has been validly issued. Except as set forth
in such Schedule, the Company is, directly or indirectly, the record and
beneficial owner of all of the outstanding shares of capital stock or other
equity interest of each of such Subsidiaries and other entities, there are no
irrevocable proxies with respect to such shares and no equity securities of any
of the Subsidiaries are or may become required to be issued for any reason. All
of the shares of the Subsidiaries owned by the Company have been validly issued
and are fully paid and nonassessable and are owned by it free and clear of any
Encumbrance with respect thereto. Solely for purposes of this Section 4.2,
"Encumbrance" shall mean any pledge, security interest, lien, claim,
encumbrance, mortgage, charge, hypothecation, option, right of first refusal or
offer, preemptive right, voting agreement, voting trust, proxy, power of
attorney, escrow, option, forfeiture, penalty, action at law or in equity,
security agreement, stockholder agreement or other agreement, arrangement,
contract, commitment, understanding or obligation, or any other restriction,
qualification or limitation on the use, transfer, right to vote, right to
dissent and seek appraisal, receipt of income or other exercise of any attribute
of ownership.
4.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 15,000,000 shares of Common Stock, $1.00 par value, and 500,000
shares of preferred stock, no par value (the "Preferred Stock"), of which 25,000
shares were designated as Series A Preferred Stock and 100 were designated as
Series B Preferred Stock. As of the date hereof (a) 8,944,701 shares of Common
Stock were validly issued and outstanding, fully paid and nonassessable, (b)
1,965,357 shares of Common Stock were held in the treasury of the Company, (c)
932,900 shares of Common Stock were reserved for issuance pursuant to
outstanding employee stock options ("Employee Options") heretofore granted under
the Company's stock option plan, (d) 100,000 shares were reserved for issuance
in connection with possible future purchase price payments in connection with a
past acquisition, (e) no shares of Series A Preferred Stock were outstanding,
and (f) 100 shares of Series B Preferred Stock were outstanding. The Shares and
the Series B Preferred Shares are the only outstanding voting securities of the
Company. Except as contemplated by clauses (a) through (f) above or set forth
on SCHEDULE 4.3, there are no other shares of capital stock or other equity
securities of the Company outstanding and no other outstanding options,
warrants, rights to subscribe for (including any preemptive rights), calls or
commitments of any character whatsoever to which the Company or any of its
Subsidiaries is a party or may be bound requiring the issuance or sale of shares
of any capital stock or other equity securities of the Company or any of its
Subsidiaries or securities or rights convertible into or exchangeable for such
shares or other equity securities, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue (i) additional shares of its capital stock or
other equity securities or (ii) options, warrants or rights to purchase or
acquire any additional shares of its capital stock or other equity securities or
securities convertible into or exchangeable for such shares or other equity
securities. All shares subject to issuance pursuant to options referred to in
clauses
13
(c) and (d) hereof, upon issuance on the terms and conditions specified in such
options, will be duly authorized, validly issued, fully paid and nonassessable.
There are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Shares. Other than
as set forth on SCHEDULE 4.3, there are no stockholder agreements, voting trusts
or other agreements or understandings to which the Company or any of its
Subsidiaries is a party relating to voting or disposition of any shares of
capital stock of the Company or any Subsidiary or granting to any person or
group of persons the right to elect, or to designate or nominate for election, a
director to the board of directors of the Company or any Subsidiary.
4.4 AUTHORITY RELATIVE TO AGREEMENT. The Company has the requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Except for the approval of its stockholders (if required under the DGCL) as set
forth in Section 6.2 of this Agreement, no other corporate proceeding on the
part of the Company is necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement hereof may be limited by general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
4.5 COMPLIANCE.
(a) Except as set forth on SCHEDULE 4.5(a) hereto, neither the
execution and delivery of this Agreement by the Company, nor, the consummation
by the Company of the transactions contemplated hereby, nor, compliance by the
Company with any of the provisions hereof will (a) violate, conflict with, or
result in a breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge, claim, right of first refusal
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 (i) their
respective charters or bylaws, or (ii) any bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which the
Company or any such Subsidiary is a party or to which they or any of their
respective properties or assets may be subject, or (b) subject to compliance
with the statutes and regulations referred to in the next paragraph, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to the Company and its Subsidiaries or any of their respective
properties or assets; except, in the case of each of clauses (a) and (b) above,
for such violations, conflicts, breaches, defaults, terminations, accelerations
or creations of liens, security interests, charges, claims, rights of first
refusal or encumbrances, which, in the aggregate, would not have a Material
Adverse Effect, or which will be cured, waived or terminated prior to the
expiration of the Offer; provided, however, that except for the agreements set
forth in SCHEDULE 4.5(a), to the knowledge of the Company there are no such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges, claims, rights of first refusal
or encumbrances, which, in the aggregate, would have a Material Adverse Effect
or which will need to be cured, waived or terminated prior to the expiration of
the Offer.
14
(b) Other than in connection with or in compliance with the
provisions of the DGCL, the Exchange Act, the "takeover" or "blue sky" laws of
various states, the HSR Act and any required foreign regulatory approvals, no
notice to, filing with, or authorization, consent or approval of any domestic or
foreign public body, authority or self-regulatory organization is necessary for
the consummation by the Company of the transactions contemplated by this
Agreement, except where failures to give such notices, make such filings or
obtain such authorizations, consents or approvals will not have a Material
Adverse Effect, and will not prevent or delay the consummation of the
transactions contemplated hereby or otherwise prevent the Company from
performing its obligations under this Agreement.
4.6 COMMISSION FILINGS.
(a) The Company has made available to Parent its (a) Annual
Reports on Form 10-K (the "Company 10-K's") for the years ended December 31,
1996, December 31, 1997 and December 31, 1998 as filed with the Commission, (b)
proxy statements relating to all of the Company's meetings of stockholders
(whether annual or special) since January 1, 1996, and (c) all other reports or
registration statements filed by the Company with the Commission since
January 1, 1996 (collectively, the "Filings"). The Filings were prepared and
the Subsequent Filings (as defined hereafter) will be prepared in all material
respects in accordance with the requirements of the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act and the rules and
regulations of the Commission thereunder applicable to such Filings and
Subsequent Filings. As of their respective dates, the Filings (including all
exhibits and schedules thereto and documents incorporated by reference therein)
did not contain and the Subsequent Filings will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of the Company and its Subsidiaries (including any related notes or
schedules thereto) included or incorporated by reference in the Filings have
complied in all material respects with the applicable published accounting rules
and regulations of the Commission with respect thereto and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as indicated in the notes or schedules
thereto), and fairly present the consolidated financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of operations and cash flows of the Company and its consolidated
Subsidiaries for the respective periods then ended, except as otherwise
indicated in the notes thereto (subject, in the case of any unaudited interim
financial statements, to normal year-end adjustments which were not and are not
expected, individually or in the aggregate, to have a Material Adverse Effect).
Since January 1, 1992 and until the consummation of the Offer, the Company has
filed or will file with the Commission all reports, proxy statements and other
documents required by Section 13, 14 or 15 of the Exchange Act to be filed by
it. All reports, proxy statements and other documents required by the Exchange
Act to be filed by the Company after the date hereof and until the consummation
of the Offer, except for the Schedule 14D-9 and the Proxy Statement (as
hereinafter defined), are referred to herein as the "Subsequent Filings."
15
(b) Except as and to the extent set forth on, or reserved
against on, the consolidated balance sheet of the Company and its consolidated
Subsidiaries as of December 31, 1998, including the notes thereto, neither the
Company nor any Subsidiary has any liability or obligation of any nature
(whether accrued, absolute, contingent, fixed, liquidated, unliquidated or
otherwise) that would be required to be reflected on, or reserved against in, a
balance sheet of the Company, or in the notes thereto, prepared in accordance
with generally accepted accounting principles, except for liabilities or
obligations (i) disclosed in any Filing filed since December 31, 1998, and prior
to the execution and delivery of this Agreement, or in SCHEDULE 4.6(b), or (ii)
incurred in the ordinary course of business since December 31, 1998 consistent
with past practices, that would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect. SCHEDULE 4.6(b) sets
forth the amount of principal and unpaid interest outstanding as of December 31,
1998, under each instrument evidencing Indebtedness (as defined hereafter) of or
borrowed money of the Company and its Subsidiaries which will accelerate or
become due or result in a right of redemption or repurchase on the part of the
holder of such Indebtedness (with or without due notice or lapse of time) as a
result of this Agreement, the Merger or the consummation of the transactions
contemplated hereby.
(c) Except as disclosed in the Filings or as set forth in
SCHEDULE 4.6(c), none of the Company or any of the Subsidiaries is indebted to
any current director or Executive Officer (as defined hereafter) of the Company
or any former director or Executive Officer of the Company (except for amounts
due as normal salaries and bonuses, in reimbursement of ordinary expenses and
directors' fees), and no such person is indebted to the Company or any of the
Subsidiaries, and there have been no other transactions of the type required to
be disclosed in a proxy statement filed under the Exchange Act pursuant to Item
404 of Regulation S-K under the Securities Act. For purposes of this Agreement,
"Executive Officer" shall mean the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer and any Executive Vice President.
(d) Except as identified in SCHEDULE 4.6(d), no Indebtedness of
the Company or any of the Subsidiaries in excess of $100,000 contains any
restriction upon (i) the prepayment of such Indebtedness, (ii) the incurrence of
other Indebtedness by the Company or any of the Subsidiaries, or (iii) the
ability of the Company or any of the Subsidiaries to grant any liens on its
properties or assets. For purposes of this Agreement, "Indebtedness" shall mean
(i) all indebtedness for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices),
(ii) any other indebtedness which is evidenced by a note, bond, debenture or
similar instrument, (iii) all obligations under financing leases (as such term
is used in accordance with generally accepted accounting principles), (iv) all
obligations in respect of acceptances issued or created, (v) all liabilities
secured by any lien on any property, and (vi) all guarantee obligations.
4.7 MATERIAL CONTRACTS.
(a) All of the material contracts of the Company and its
Subsidiaries that are required to be described in the Filings or to be filed as
exhibits thereto have been described or filed as required. Neither the Company
nor any Subsidiary nor, to the knowledge of the Company, any other party is in
breach of or default under any such contract currently in effect to which the
16
Company or any of its Subsidiaries is a party, except for such breaches and
defaults which are described in SCHEDULE 4.7 or which would not have,
individually or in the aggregate, a Material Adverse Effect.
(b) Except as set forth in SCHEDULE 4.7, the Company has not
granted any right of first refusal or similar right in favor of any third party
with respect to any material portion of its properties or assets or entered into
any non-competition agreement or similar agreement restricting its ability to
engage in any business which, in either case, would result in a Material Adverse
Effect.
(c) SCHEDULE 4.7 sets forth a list, as of the date of this
agreement, of all agreements of the Company with any stockholder who, to the
Company's knowledge, beneficially owns 5% or more of the outstanding Common
Stock or any current Executive Officer or director of the Company or any former
director or Executive Officer of the Company. Except as set forth in SCHEDULE
4.7, no current Executive Officer or director of the Company, former Executive
Officer of the Company or any "associate" (as such term is defined in Rule 14a-1
under the Exchange Act) of any such Executive Officer or director, has any
material interest in any material contract or property (real or personal,
tangible or intangible), used in, or pertaining to the business of the Company.
4.8 LITIGATION. Other than as set forth in the Company's 10-K for the
year ended December 31, 1998, there are no actions, suits, proceedings or, to
the Company's knowledge, investigations pending or, to the knowledge of the
Company threatened against the Company or any of its Subsidiaries, nor is the
Company or any of its Subsidiaries subject to any order, judgment, writ,
injunction or decree (collectively the "Disclosed Litigation"), except in either
case for matters which, in the aggregate, would not have a Material Adverse
Effect and would not materially adversely affect the Company's ability to
perform its obligations under this Agreement. There are no obligations or
liabilities, whether accrued, contingent or otherwise and whether required to be
disclosed, including without limitation, those relating to matters involving any
Environmental Law (as hereinafter defined), or any other facts and circumstances
of which the management of the Company has knowledge, that are reasonably likely
to result in any claims against or obligations or liabilities of the Company or
any of its Subsidiaries, that, alone or in the aggregate, would be reasonably
likely to have a Material Adverse Effect.
4.9 PROPERTIES. The Company and its Subsidiaries have good title to, or
in the case of leased property have valid leasehold interests in, all of their
respective properties and assets (whether real or personal, tangible or
intangible) except for imperfections in title or invalidities in leasehold
interests that do not, individually or in the aggregate, materially detract from
the value reflected in the Company's December 31, 1998 audited consolidated
balance sheet included in its December 31, 1998 Form 10-K "December Balance
Sheet." None of such properties or assets is subject to any mortgage, lien,
pledge, charge, security interest, right of first refusal, encumbrance or other
adverse claim of any kind ("Lien"), except: (i) Liens reflected on the
Company's December Balance Sheet, (ii) Liens for taxes not yet due or being
contested in good faith and for which adequate accruals or reserves have been
established on the December Balance Sheet, and (iii) Liens which do not,
individually or in the aggregate materially detract from the value reflected on
the December Balance Sheet or materially interfere with any present or intended
use of any material properties or assets.
17
4.10 INTELLECTUAL PROPERTY.
(a) "Company Intellectual Property Rights" means all trademarks,
trademark rights, trade names, trade name rights, patents, patent rights,
industrial models, copyrights, service marks, trade secrets, computer software
programs or applications (in both source code and object code form), maskworks,
schematics, technology, ideas, algorithms, processes, know-how, inventions and
applications for patents, and applications for trademark, copyright and service
xxxx registrations and all other tangible and intangible proprietary rights and
information owned by or licensed to the Company or any Subsidiary which the
Company or any Subsidiary otherwise possesses legally enforceable rights to use.
(b) SCHEDULE 4.10(b) contains a complete and accurate list of
all current material contracts, agreements, understandings or arrangements
relating to the Company Intellectual Property Rights to which the Company is a
party or by which the Company is bound, except for any license implied by the
sale of a product, any client engagement contracts and any paid-up licenses for
commercially available software programs under which the Company is the
licensee. Except as set forth on SCHEDULE 4.10(b)(2)(1), there are no
outstanding and, to the Company's knowledge, no threatened disputes or
disagreements with respect to the Company's Intellectual Property Rights
relating to any such material contracts, agreements, understandings or
arrangements.
(c) Know-How Necessary for the Business. The Company
Intellectual Property Rights are all those used by the Company for the operation
of the business of the Company and its Subsidiaries as they are currently
conducted. Either the Company or one of its Subsidiaries is the owner of all
right, title, and interest in and to each of the Company Intellectual Property
Rights, free and clear of all liens, security interests, charges, encumbrances,
equities and other adverse claims other than liens granted to primary lending
institutions, and, except as set forth on SCHEDULE 4.10(c) and the documents
identified therein, to the Company's knowledge, has the right to use without
payment to a third party such Company Intellectual Property Rights.
(d) Trademarks. SCHEDULE 4.10(D) contains a complete and
accurate list of all trademarks, trademark rights, trade names, trade name
rights and servicemarks owned and currently used by the Company (collectively,
the "Marks"). All registrations of the Marks that have been registered with the
United States Patent and Trademark Office the ("U.S. Marks") are currently in
effect and are otherwise valid. No U.S. Xxxx has been or is now involved in any
opposition or cancellation proceeding and, to the Company's knowledge, no such
action is threatened with respect to any of the Marks. Except as disclosed on
SCHEDULE 4.10(d), to the Company's knowledge, there is no potentially
interfering trademark or trademark application of any third party. Except as
disclosed on SCHEDULE 4.10, to the Company's knowledge, no Xxxx is currently
being infringed, challenged or threatened in any way. To the Company's
knowledge, none of the Marks infringes or is alleged to infringe any trade name,
trademark, or service xxxx of any third party.
(e) Copyrights. SCHEDULE 4.10(e) contains a complete and
accurate list of all copyrights for significant works of authorship owned and
currently used or proposed to be used by the Company and registered with the
United States Copyright Office ("Copyrights"). All the Copyrights have been
registered and are valid and enforceable, and the Copyrights are not subject
18
to any maintenance fees or taxes or actions falling due within ninety (90) days
after the Effective Time. To the Company's knowledge, no Copyright is infringed
or has been challenged or threatened in any way. To the Company's knowledge,
none of the subject matter of any of the Copyrights infringes or is alleged to
infringe any copyright of any third party or is a derivative work based on the
work of a third party. To the Company's knowledge, all works subject to the
Copyrights are original works of authorship of regular employees of the Company
or independent contractors who have assigned their rights in such works to the
Company and no part of any such work, other than a fair use of an insubstantial
part, has been copied from any other source.
(f) Trade Secrets. Each of the Company and its Subsidiaries has
taken reasonable precautions to protect the secrecy, confidentiality, and value
of its trade secrets (the "Trade Secrets"). To the Company's knowledge, either
the Company or one of its Subsidiaries has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets used or proposed to be
used by the Company or any of its Subsidiaries. To the Company's knowledge, the
Trade Secrets are not part of the public knowledge or literature, and have not
been used, divulged, or appropriated either for the benefit of any person (other
than the Company or any of its Subsidiaries) or to the detriment of the Company
or any of its Subsidiaries other than pursuant to agreements containing
confidentiality provisions. To the Company's knowledge, no Trade Secret is
currently subject to any adverse claim or is currently being challenged or
threatened in any way.
4.11 LABOR MATTERS. Neither the Company nor any Subsidiary is a party to
any collective bargaining or other labor union contract, and no collective
bargaining agreement is being negotiated by the Company or any Subsidiary. To
the knowledge of the Company, there are no material activities or proceedings of
any labor union to organize any employees of the Company or any Subsidiary.
There is no material labor dispute, strike or work stoppage against the Company
or any Subsidiary pending or, to the knowledge of the Company threatened which
may interfere with the business activities of the Company or any of its
Subsidiaries. Except as set forth on SCHEDULE 4.11, neither the Company nor any
Subsidiary has received any notice that its current practices are not in
compliance, in all material respects, with all applicable laws respecting
employment and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health, and is not engaged in any
unfair labor practices as defined in the National Labor Relations Act or other
similar laws of any jurisdiction. There is no unfair labor practice or similar
charge or complaint against the Company or any of its Subsidiaries pending or,
to the knowledge of the Company, threatened before the National Labor Relations
Board or any similar state or foreign agency. Except as set forth on SCHEDULE
4.11, no charges with respect to or relating to the Company or any of its
Subsidiaries are pending before the Equal Employment Opportunity Commission or
any other federal, state, local or foreign agency responsible for the prevention
of unlawful employment practices. Except as set forth on SCHEDULE 4.11, neither
the Company nor any Subsidiary has received notice of the intent of any federal,
state, local or foreign agency responsible for the enforcement of labor or
employment laws to conduct an investigation with respect to or relating to the
Company or any of the Subsidiaries and no such investigation is in progress.
Except as set forth on SCHEDULE 4.11, there are no complaints, lawsuits or other
proceedings pending or, to the knowledge of the Company, threatened in any forum
by or on behalf of any present or former employee of the Company or any present
employee of any Subsidiary, any applicant for employment or classes of the
foregoing alleging breach of any express or implied contract or employment, any
19
laws governing employment or the termination thereof or other discriminatory,
wrongful or tortuous conduct in connection with the employment relationship,
except in each case which would not result in a Material Adverse Effect.
4.12 BOARD RECOMMENDATION. The Board of Directors has duly approved this
Agreement and the Merger and other transactions contemplated hereby on the terms
and conditions set forth herein, and recommended that the stockholders of the
Company accept the Offer and approve and adopt this Agreement and the Merger.
4.13 COMPLIANCE WITH LAW. To the knowledge of the Company, the Company
has not violated or failed to comply with any statute, law, ordinance,
regulation, rule or order of any foreign, federal, state or local government or
any other governmental department or agency, or any judgment, decree or order of
any court, applicable to its business or operations except where any such
violation or failure to comply would not have a Material Adverse Effect; and, to
the knowledge of the Company, the conduct of the Company's business is in
conformity with all energy, public utility, health, OSHA and environmental
requirements and all other foreign, federal, state and local governmental and
regulatory requirements except where any such non-conformity would not have a
Material Adverse Effect. The Company and its Subsidiaries have all permits,
licenses and franchises from governmental agencies required to conduct their
businesses as now being conducted, except for such permits, licenses and
franchises the absence of which would not have a Material Adverse Effect.
4.14 CHANGES. Except as contemplated by this Agreement, set forth on
SCHEDULE 4.14 or reflected in any financial statement or note thereto referred
to in Section 4.6 filed with the Commission prior to the date hereof, since
December 31, 1998, the Company and its Subsidiaries have conducted their
businesses only in the ordinary and usual course, and there has not been:
(a) any change, condition, circumstance or event which would
have a Material Adverse Effect;
(b) other than as required by a change in generally accepted
accounting principles, any change in accounting methods, principles or practices
by the Company affecting its assets, liabilities or business;
(c) other than as required by a change in generally accepted
accounting principles, any revaluation by the Company or any of its Subsidiaries
of any of its assets, including without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business;
(d) any damage, destruction or loss, whether or not covered by
insurance, materially adversely affecting the financial condition, business or
results of operations of the Company and its Subsidiaries taken as a whole;
(e) any declaration, setting aside or payment of dividends or
distributions in respect of the Shares or any redemption, purchase or other
acquisition of any of its securities;
20
(f) any adoption of a plan of liquidation or resolutions
providing for the liquidation, dissolution, merger, consolidation or other
reorganization of the Company;
(g) any issuance by the Company of, or commitment of the Company
to issue, any shares of capital stock or securities convertible into or
exchangeable or exercisable for shares of capital stock other than pursuant to
the stock option plans of the Company or the ESOP or as set forth in 2.c. on
SCHEDULE 4.3;
(h) any increase in the benefits under, or the establishment or
amendment of, any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without limitation, the
granting of stock options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee benefit plan, or any
other increase in the compensation payable or to become payable to any Executive
Officer or Senior Vice President of the Company or any Subsidiary except as set
forth in SCHEDULE 4.14;
(i) any entry by the Company into any employment, consulting,
termination or indemnification agreement with any Executive Officer or Senior
Vice President of the Company or any Subsidiary or entry into any such agreement
with any other person outside the ordinary course of business except as set
forth in SCHEDULE 4.14; or
(j) any agreement by the Company to do any of the things
described in the preceding clauses (a) through (i) other than as expressly
provided for herein.
4.15 VOTE REQUIRED FOR MERGER. The affirmative vote of the holders of a
majority of the issued and outstanding Shares is sufficient for stockholder
approval of the Merger.
4.16 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) any
of the Offer Documents at the time the Offer Documents are filed with the
Commission and at any time they are amended or supplemented, or (ii) the Proxy
Statement (as defined in Section 6.1 hereof) at the date it is first mailed to
the Company's stockholders or at the time of the Company Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
4.17 TAXES. The Company and its Subsidiaries have filed all material tax
returns required to be filed by such party, and the most recent financial
statements contained in the Company's Commission Filings reflect an adequate
reserve in accordance with generally accepted accounting principles for all
taxes payable by the Company and its Subsidiaries accrued through the date of
such financial statements. The unpaid taxes, including any contingent tax
liabilities and net deferred tax liabilities, of the Company which have accrued
as of the date of the most recent financial statements contained in the Filings
do not materially exceed the reserve for accrued tax liability set forth or
included in such financial statements. The Company has delivered or made
available to Parent correct and complete copies of all federal Income Tax
Returns, examination reports, and statements of deficiencies assessed against or
agreed to by any of the Company and its Subsidiaries since
21
December 31, 1995. Neither the Company nor any of its consolidated Subsidiaries
has been advised of any deficiency claimed or proposed to be claimed against or
relating to the Company or any of its consolidated Subsidiaries that would be
material to the Company by any taxing authority which has not been paid, settled
or described in SCHEDULE 4.17 and there are no matters under discussion with any
taxing authority which might result in the assessment of additional amounts
against or relating to the Company or any of its Subsidiaries that would be
material to the Company. Except as set forth on SCHEDULE 4.17, there are no
pending audits or examinations of any tax returns filed by the Company or any of
its consolidated Subsidiaries. As of the date of this Agreement, the
consolidated federal income tax returns of the Company and the Subsidiaries have
been audited by the Internal Revenue Service (or the appropriate statute of
limitations has expired) for all fiscal years through and including December 31,
1994. All deficiencies asserted or proposed as a result of any examinations or
audits of any tax returns have been paid or adequately provided for on the books
of the Company or one of its consolidated Subsidiaries in accordance with
generally accepted accounting principles. Neither the Company nor any of its
consolidated Subsidiaries has waived any statute of limitation in respect of
Income Taxes or agreed to any extension of time with respect to an Income Tax
assessment or deficiency. The Company is not a party to or bound by any
agreement providing for the allocation or sharing of taxes with any entity which
is not, either directly or indirectly, a subsidiary of the Company. Neither the
Company nor, to its knowledge, any of its consolidated Subsidiaries (i) has
filed a consent pursuant to or agreed to the application of Section 341(f) of
the Code, (ii) has an application pending with respect to any tax requesting
permission for a change in accounting method, or (iii) is required to make any
adjustments to income pursuant to Section 481 of the Code. The Company does not
own real property that would or may subject the parties hereto or the Surviving
Corporation to a transfer or gains tax in Illinois as a result of the Merger
(unless Purchaser elects to merge the Company into Merger Sub and except for
transactions after the Merger). The Company is not a "United States real
property holding corporation" as defined in Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. To the
knowledge of the Company, all taxes and assessments required to have been
withheld or collected by the Company on or before the date hereof have been duly
withheld and collected on or before the date hereof and have been duly paid over
to the proper governmental authorities, as and to the extent required by law.
For the purpose of this Agreement, the term "tax" (and, with correlative
meaning, the terms "taxes" and "taxable") shall include all federal, state,
local and foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise and other taxes, duties or
assessments of any nature whatsoever, together with all interest, penalties and
additional imposed with respect to such amounts.
4.18 PENSION AND BENEFITS PLANS; ERISA.
(a) SCHEDULE 4.18(a) hereto contains a true and complete list of
(i) all "employee benefit plans", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all other
employee compensation and benefit arrangements or payroll practices, including,
without limitation, "change of control," severance pay, sick leave or other
leave of absence, vacation or holiday pay, salary continuation or disability,
consulting or compensation, retirement, deferred compensation, bonus or other
incentive compensation, stock option, award or purchase, restricted stock award,
hospitalization, medical insurance, life insurance and scholarship or other
educational assistance programs or agreements maintained by the Company or any
of its
22
Subsidiaries or to which the Company or any of its Subsidiaries contributed or
were required to contribute during the past six (6) years or is obligated to
contribute thereunder ("Company Employee Benefit Plans"), and (ii) all "employee
pension plans", as defined in Section 3(2) of ERISA maintained by the Company or
any of its Subsidiaries or to which the Company or any of its Subsidiaries
contributed or is obligated to contribute thereunder ("Company Pension Plans").
None of the Company Employee Benefit Plans or the Company Pension Plans is a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA or is or has been
subject to Section 4036 or 4064 of ERISA ("Multiple Employer Plans") or a
defined benefit pension plan subject to Title IV of ERISA.
(b) Except as set forth on SCHEDULE 4.18(b), each Company
Pension Plan and Company Employee Benefit Plan intended to qualify under Section
401 of the Code so qualify and has received a favorable determination letter
from the Internal Revenue Service. The trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the Code, and nothing
has occurred with respect to the operation of the Company Pension Plans or
Company Employee Benefit Plans which could cause the loss of such qualification
or exemption or the imposition of any material liability (except for benefits,
insurance premiums or administrative expenses), penalty, or tax under ERISA or
the Code.
(c) All contributions required by law to have been made under
any of the Company Employee Benefit Plans or the Company Pension Plans to any
funds or trusts established thereunder or in connection therewith have been made
by the due date thereof (including any valid extension) and no accumulated
funding deficiencies (without regard to any waivers granted under Section 412 of
the Code) exist in any of the Company Employee Benefit Plans or the Company
Pension Plans subject to Section 412 of the Code.
(d) True, correct and complete copies of the following
documents, with respect to each of the Company Employee Benefit Plans and the
Company Pension Plans, have been made available or delivered by the Company to
Parent: (A) all plan, agreements and related trust documents, and amendments
thereto, (B) the most recent Form 5500 (with Schedules) with respect to each
plan (if any such report was required), (C) the most recent actuarial report and
valuation, (D) the most recent Internal Revenue Service determination letter,
(E) all summary plan descriptions (whether or not required to be furnished
pursuant to ERISA) and the most recent annual and periodic accounting of related
plan assets with respect to each Employee Benefit Plan, (F) written descriptions
of all material non-written agreements relating to the Company Employee Benefit
Plans and the Company Pension Plans, (G) employment, consulting or individual
compensation, severance, deferred compensation or any similar agreements (and
any amendments to such agreements), (H) employee manuals and policies, and (I)
material employee communications relating to each plan other than communications
involving routine claims for benefits.
(e) There are no pending actions, claims or lawsuits which have
been instituted or, to the knowledge of the Company, threatened against Company
Employee Benefit Plans or the Company Pension Plans, the assets of any of the
trusts under such plans, the plan sponsor, the plan administrator or any
fiduciary of the Company Employee Benefit Plans or the Company Pension Plans
with respect to the operation of such plans (other than routine benefit claims).
To the Company's knowledge, no event has occurred and there exists no condition
or set of circumstances
23
in connection with which the Company or any Subsidiary or any Company Employee
Benefit Plan or Company Pension Plan, directly or indirectly, could be subject
to any liability under ERISA, the Code or any other law, regulation or
governmental order including all Canadian federal, provincial and municipal law,
regulations or governmental orders applicable to any Benefit Plan (other than
for customary benefits).
(f) Except as set forth on SCHEDULE 4.18(f), the Company
Employee Benefit Plans and the Company Pension Plans have been maintained and
administered, in all material respects, in accordance with their terms and with
all provisions of ERISA (including applicable regulations thereunder), other
applicable Federal and state law and applicable Canadian federal, provincial or
municipal law, and neither the Company nor any of its Subsidiaries nor any
"party in interest" or "disqualified person" with respect to the Company
Employee Benefit Plans and the Company Pension Plans has engaged in a
"reportable event" (as such term is defined in ERISA) or non-exempt "prohibited
transaction" within the meaning of Section 4975 of the Code or Section 406 of
ERISA. No termination of a Company Employee Benefit Plan or Company Pension
Plan, if it has occurred or were to occur before the consummation of the Offer
or the Effective Time, as the case may be, would present a risk of liability to
any governmental entity or other persons that would have a Material Adverse
Effect.
(g) Except as disclosed on SCHEDULE 4.18(g), neither the Company
nor any of its Subsidiaries maintains retiree life or retiree health insurance
plans which are "welfare benefit plans" within the meaning of Section 3(l) of
ERISA and which provide for continuing benefits or coverage for any participant
or any beneficiary of a participant except as may be required under Section
4980B of the Code and at the sole expense of the participant or the
participant's beneficiary.
(h) Neither the Company nor any of its Subsidiaries has any
contract, plan, or commitment, whether legally binding or not, to create any
additional Company Employee Benefit Plan or Company Pension Plan or to modify
any existing Company Employee Benefit Plan or Company Pension Plan.
(i) Except as set forth in SCHEDULE 4.18(i), the Company has no
contract, agreement, obligation or arrangement with any employee or other
person, any of the payments or other benefits of which will be increased or the
vesting of the benefits under which will be accelerated by any change of control
of the Company or the occurrence of any of the transactions contemplated by this
Agreement or the benefits under which will be calculated on the basis of the
transactions contemplated by this Agreement.
(j) With respect to any period for which any contribution to or
in respect of any Company Employee Benefit Plan or Company Pension Plan is not
yet due or owing, the Company and each of its Subsidiaries has made due and
sufficient current accruals for such contributions and other payments in
accordance with generally accepted accounting principles and such current
accruals through March 31, 1999 are duly and fully provided for in the financial
statements of such entity for the period then ended.
24
(k) Except as disclosed in the Filings or SCHEDULE 4.18(k),
there exist no employment, consulting, severance or termination agreements,
arrangements or understandings between the Company and any of the ten (10)
highest compensated employees of the Company and its Subsidiaries as measured by
earnings reported on Form W-2s for the year ended December 31, 1998.
4.19 INSURANCE POLICIES AND COVERAGES. SCHEDULE 4.19 lists and describes
all insurance policies (including policy amounts and deductibles) which provide
coverage to the Company, including, without limitation, general liability, fire
and title insurance policies on its assets (the "Insurance Policies"). To the
Company's knowledge, the Company's insurance coverages are adequate for the
conduct of the business and for the full repair or replacement of its assets in
the event any such assets are damaged, destroyed or lost as the result of any
fire or other casualty or loss customarily insured against under extended fire
and "all risk" insurance policies. The Company has not received notice of
termination of any policy and has no knowledge of any facts or conditions which,
with notice or lapse of time, or both, would or might result in a termination of
any of the policies. Neither the Company nor any of its Subsidiaries is in
material default, and to the Company's knowledge, no event has occurred (or
failed to occur) that, with the passage of time or the giving of notice or both
would constitute a material default by the Company under any such policy of
insurance, or would entitle the insurer under such insurance to deny coverage of
any claim against the Company or any Subsidiary.
4.20 ENVIRONMENTAL MATTERS. Except as disclosed in the Filings prior to
the date hereof, to the knowledge of the Company, (i) the Company and its
Subsidiaries are in substantial compliance with all applicable Environmental
Laws; (ii) the properties presently or formerly owned or operated by the Company
or its Subsidiaries (including, without limitation, soil, groundwater or surface
water on, under or adjacent to the properties, and buildings thereon) (the
"Properties") do not contain any Hazardous Substance (as hereinafter defined)
other than as permitted under applicable Environmental Laws, do not, and have
not, contained any underground storage tanks, do not have any asbestos present
(and have not had any asbestos removed therefrom) and have not been used as a
sanitary landfill or hazardous waste disposal site (provided, however, that with
respect to Properties formerly owned or operated by the Company, such
representation is limited to the period during which period the Company owned or
operated such Properties); (iii) neither the Company nor any of its Subsidiaries
has received any notices, demand letters or request for information from any
governmental entity or any third party alleging that the Company may be in
substantial violation of, or liable under, any Environmental Law and neither the
Company, its Subsidiaries nor the Properties is subject to any court order,
administrative order or decree arising under any Environmental Law; and (iv) no
Hazardous Substance has been disposed of, released or transported from any of
the Properties during the time such Property was owned or operated by the
Company or one of its Subsidiaries, other than as permitted under applicable
Environmental Law. Following the date hereof, except as would not reasonably be
expected to have a Material Adverse Effect, the representation in this Section
is true and correct without regard to any limitation as to the date hereof or
the knowledge of the Company. "Environmental Law" means any Federal, state,
foreign or local law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, common law, order, judgment, decree,
injunction, requirement or agreement with any governmental entity, (x) relating
to the protection, preservation or restoration of the environment, (including,
25
without limitation, air, water, surface water, groundwater, surface or
subsurface soil or any other natural resource), or to human health or safety, or
(y) the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Substances, in each case as amended and as now in effect.
"Hazardous Substance" means (A) any substance presently listed, defined,
designated or classified as hazardous, toxic or radioactive under any
Environmental Law, whether by type or by quantity, including any substance
containing such substance as a component; (B) petroleum and petroleum products
including crude oil and any fractions thereof; (C) natural gas, synthetic gas,
and mixtures thereof; (D) radon; (E) asbestos; and (F) any substance with
respect to which a federal, state or local agency requires environmental
investigation, monitoring, reporting or remediation.
4.21 RIGHTS AGREEMENT. The Company has amended its Rights Agreement
dated as of July 26, 1989 between the Company and First Chicago Trust Company of
New York (the "Rights Agreement"), so that (i) neither the Parent nor the
Purchaser (nor any entity acquiring Shares as contemplated by this Agreement)
shall constitute an "Acquiring Person" as defined in Section 1(a) of the Rights
Agreement as a result of the execution and delivery of this Agreement and the
Option and Voting Agreements dated of even date herewith between Parent and the
stockholders of the Company named therein (the "Option Agreements"), (ii) the
acquisition of shares of the Common Stock of the Company by the Parent or the
Purchaser (or any affiliate of the Parent's or the Purchaser's) pursuant to the
consummation of the Offer or the consummation of the transactions contemplated
by this Agreement and the Option Agreements shall not cause the Parent or the
Purchaser or any of their respective affiliates to become an "Acquiring Person,"
(iii) no Distribution Date (as defined in the Rights Agreement) shall occur as a
result of the commencement of the Offer, and (iv) no Shares Acquisition Date (as
defined in the Rights Agreement) shall occur as a result of the commencement of
the Offer and/or the execution and delivery of this Agreement, and/or the Option
Agreements and/or the consummation of any of the transactions contemplated
hereby or thereby. Such amendment (the "Rights Agreement Amendment") also
provides that the Final Expiration Date (as defined in the Rights Agreement)
with respect to the Rights shall occur upon acceptance by Parent or Purchaser
(or other wholly owned subsidiary of Parent) of the Shares pursuant to the
Offer.
4.22 YEAR 2000. The Company has reviewed the areas within the business
and operations of the Company and its Subsidiaries which could be adversely
affected by, and has developed a plan to address on a timely basis, the "Year
2000 Problem" (that is, the risk that computer applications used by the Company
and its Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), and has made related appropriate inquiry of material
suppliers, vendors and customers. Based on its review and inquiries, the
Company reasonably believes that the Year 2000 Problem will not have a Material
Adverse Effect.
4.23 OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
of Xxxxxxxx & Co. Inc. dated April 29, 1999, to the effect that, as of the date
hereof, the Offer Consideration to be received by the holders of Shares in the
Offer and the Merger Consideration to be received by the holders of Shares in
the Merger is fair from a financial point of view to such holders, a signed,
true
26
and complete copy of which opinion has been delivered to Parent, and such
opinion has not been withdrawn or modified.
4.24 SECTION 203 OF THE DELAWARE LAW NOT APPLICABLE. The Board has taken
all actions so that the restrictions contained in Section 203 of the DGCL
applicable to a "business combination" (as defined in Section 203) will not
apply to the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated by this Agreement.
4.25 ABSENCE OF CERTAIN CHANGES. Except as and to the extent set forth
on, or reserved against on, the consolidated balance sheet of the Company and
its consolidated Subsidiaries as of December 31, 1998, including the notes
thereto, to the Company's knowledge, with respect to each of the Subsidiaries,
since the later of December 31, 1995 or the respective date of incorporation or
acquisition of the relevant Subsidiary, there has not been (i) any adverse
change in the condition (financial or otherwise) of the properties, assets,
liabilities, results of operation of the relevant Subsidiary, or (ii) any
damage, destruction or loss (whether or not covered by insurance) adversely
affecting the properties, assets, liabilities, financial condition, results of
operations or business prospects of the relevant Subsidiary, which, in any case,
either alone or in the aggregate, would result in a Material Adverse Effect.
5. CONDUCT OF BUSINESS PENDING THE MERGER.
The Company covenants and agrees that, prior to the earlier of the
Designation Date and the Effective Time, unless Parent shall otherwise agree in
writing or as otherwise expressly contemplated by this Agreement:
5.1 The business of the Company and its Subsidiaries shall be conducted
in the ordinary course of business, and the Company and its Subsidiaries shall
not take any material action except in the ordinary course of business and
consistent with past practices, and the Company and its Subsidiaries shall use
their respective best efforts to maintain and preserve their respective business
organization, assets, employees and advantageous business relationships.
5.2 Without Parent's prior written consent, neither the Company nor any
of its Subsidiaries shall directly or indirectly do any of the following:
(a) amend its charter or by-laws (or comparable charter
documents);
(b) except as set forth on SCHEDULE 5.2(b), authorize for
issuance, issue, sell, deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or any
other securities, except in the case of Shares of the Company, as required by
Employee Options outstanding on the date hereof or Company Employee Benefit
Plans as in effect on the date hereof, or amend any of the terms of any such
securities or agreements outstanding on the date hereof;
27
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, or redeem or otherwise acquire any securities of the Company or any of
the Subsidiaries;
(d) (i) incur or assume any long-term debt, except in the
ordinary course of business under existing facilities or required refinancings
or replacements thereof, or incur or assume any short-term debt, except in the
ordinary course of business, or issue or sell any debt securities or rights to
acquire any debt securities of the Company or any Subsidiary; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except
wholly-owned subsidiaries of the Company in the ordinary course of business and
consistent with past practice; or (iii) make any loans, advances or capital
contributions to, or investments in, any person other than a wholly-owned
subsidiary of the Company in the ordinary course of business (except for
customary loans or advances to directors, officers or employees in accordance
with past practice or as required by existing contractual arrangements or
agreements);
(e) other than as set forth on SCHEDULE 5.2(e) or as required by
ERISA, as now or hereafter in effect, enter into, adopt or amend any bonus,
profit sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, pension, retirement,
deferred compensation, employment, severance or other employee benefit
agreements, trusts, plans, funds or other arrangements for the benefit or
welfare of any director, officer or employee, or (except (i) in the case of
persons whose compensation has been established by the Compensation Committee of
the Board of Directors, for increases in amounts previously approved by such
Committee, and (ii) in the case of all other directors, officers or employees,
for normal increases in the ordinary course of business that are consistent with
past practices and that, in the aggregate, do not result in a material increase
in benefits or compensation expense to the Company), increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit or make any distribution or award not required by any existing plan or
arrangement (including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units) or enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing;
(f) except pursuant to existing contractual arrangements or
agreements disclosed pursuant to this Agreement, acquire, sell, lease, license,
dispose of, mortgage or otherwise encumber any assets outside the ordinary
course of business or any assets which are material, in the aggregate, to the
Company and its Subsidiaries, taken as a whole, or enter into any material
commitment or transaction outside the ordinary course of business;
(g) except as may be required by law, take any action to
terminate or amend or accelerate the vesting of any benefits under any of its
employee benefit plans;
(h) waive or release any rights material to the Company and its
Subsidiaries, taken as a whole, or make any payment, direct or indirect, of any
material liability of the Company or any of its Subsidiaries before the same
comes due in accordance with its terms;
28
(i) except as set forth on SCHEDULE 5.2(i), acquire or agree to
acquire, including, without limitation, by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof without Parent's
prior written consent;
(j) except as set forth in SCHEDULE 5.2(j), make any capital
expenditure or expenditures which exceed $250,000 in the aggregate; and
(k) take, or agree in writing or otherwise to take, any of the
foregoing actions or any action which would make any representation or warranty
of the Company contained in this Agreement untrue or incorrect as of the date
when made or as of a future date.
6. ADDITIONAL AGREEMENTS
6.1 PROXY STATEMENT. Promptly after consummation of the Offer, if
Company stockholder approval is required by law, the Company and Parent shall
prepare and shall file with the Commission as soon as is reasonably practicable
a preliminary proxy statement, together with a form of proxy, or preliminary
information statement with respect to the meeting of the Company's stockholders
for the purpose of approving and adopting this Agreement and the Merger and all
actions contemplated hereby which require the approval of the Company's
stockholders, and as promptly as practicable thereafter, subject to compliance
with the rules and regulations of the Commission, shall mail a definitive proxy
statement or information statement to stockholders of the Company. The term
"Proxy Statement" shall mean such proxy or information statement at the time it
initially is mailed to the Company's stockholders and all amendments or
supplements thereto, if any, similarly filed and mailed. The information
provided and to be provided by Parent, the Purchaser and the Company,
respectively, for use in the Proxy Statement shall, on the date the Proxy
Statement is first mailed to the Company's stockholders and on the date of the
Special Meeting (as defined in Section 6.2), be true and correct in all material
respects and shall not omit to state any material fact necessary in order to
make such information not misleading, and Parent, the Company and the Purchaser
each agree to correct any information provided by it for use in the Proxy
Statement which shall have become false or misleading in any material respect.
The Proxy Statement shall comply as to form in all material respects with all
applicable requirements of federal securities laws.
6.2 ACTION OF STOCKHOLDERS OF THE COMPANY; VOTING AND DISPOSITION OF THE
SHARES; APPROVAL BY PARENT.
(a) Promptly after consummation of the Offer, if required by
law, the Company shall take all action necessary, in accordance with the DGCL
and its Certificate of Incorporation and Bylaws, to convene a meeting of its
stockholders (the "Special Meeting") as promptly as practicable to consider and
vote upon the approval of this Agreement and the Merger (if required by the
DGCL). The Proxy Statement shall contain the recommendation of the Board of
Directors that the stockholders of the Company vote to adopt and approve the
Merger and this Agreement, and the Company shall, if proxies are solicited, use
its best efforts to solicit from its stockholders proxies in favor of such
adoption and approval and to take all other action necessary or, in the
reasonable
29
judgment of Parent, helpful to secure the vote or consent of stockholders
required by the DGCL to effect the Merger; provided, however, that the Board of
Directors of the Company at any time prior to the Effective Time may withdraw,
modify or change any such recommendations or refrain from soliciting proxies in
favor of the Merger to the extent that the Board of Directors of the Company
determines in good faith after consultation with and based upon the advice of
outside legal counsel that the failure to so withdraw, modify or change its
recommendation or to refrain from soliciting proxies in favor of the Merger
would cause the Board of Directors of the Company to breach its fiduciary duties
to the Company's stockholders under applicable law. Notwithstanding anything to
the contrary contained in this Agreement, any such withdrawal, modification or
change of recommendation in accordance with the provisions of this Section
6.2(a) shall not constitute a breach of this Agreement by the Company, but the
Company shall nonetheless submit this Agreement to its stockholders as
contemplated by this Section 6.2. At the Special Meeting, Parent and its direct
and indirect subsidiaries and affiliates shall vote, or cause to be voted, all
of the Shares then owned by them in favor of the Merger.
(b) Parent and the Purchaser shall not, and they shall cause
their direct and indirect subsidiaries and affiliates not to, sell, transfer,
assign, encumber or otherwise dispose of the Shares acquired by them pursuant to
the Offer or otherwise prior to the Special Meeting; provided, however, that
this Section 6.2(b) shall not apply to (i) any pledge or other encumbrance of
any or all of such Shares effected in connection with any financing for the
Offer and the Merger; and (ii) the sale, transfer, assignment, encumbrance or
other disposition of any or all of such Shares in transactions involving solely
Parent, the Purchaser and/or one or more of their direct or indirect
wholly-owned subsidiaries.
(c) Parent shall (i) cause Purchaser promptly to submit this
Agreement and the transactions contemplated hereby for approval and adoption by
its parent by written consent of sole stockholder; (ii) cause the shares of
capital stock of Purchaser to be voted for adoption and approval of this
Agreement and the transactions contemplated hereby; and (iii) cause to be taken
all additional actions necessary for Purchaser to adopt and approve this
Agreement and the transactions contemplated hereby.
(d) Notwithstanding the foregoing, at the election of the
Parent, in the event that Purchaser shall acquire at least 90% of the then
outstanding Shares, the parties hereto agree, subject to Article 7, to take all
necessary and appropriate action to cause the Merger to become effective, in
accordance with Section 253 of the DGCL, as soon as reasonably practicable after
such acquisition, without a meeting of the stockholders of the Company.
6.3 EXPENSES.
(a) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Offer or the Merger is consummated,
PROVIDED, HOWEVER, that:
(i) The Company agrees that, if (A) the Purchaser shall
terminate this Agreement pursuant to Section 8.1(c) (iii) or (iv);
(B) the Company shall terminate
30
this Agreement pursuant to Section 8.1(b)(v); (C) the Purchaser
shall terminate the Offer because the Minimum Condition (as defined
in ANNEX I hereof) is not satisfied and at or prior to such time the
Company has received one or more proposals for a Competing
Transaction which at the time of such occurrence has not been
absolutely and unconditionally withdrawn or abandoned and within six
(6) months after the date of termination a Competing Transaction is
entered into by the Company, and within twelve (12) months of such
termination a Competing Transaction is consummated, then, in any
such case, promptly after any such termination (or, with respect to
item (C), upon the consummation of such Competing Transaction) by
Parent or the Company, the Company shall pay to Purchaser or its
designee an amount equal to $9,000,000 (the "Break-up Fee") and
shall reimburse Parent for all of its out-of-pocket costs and
expenses in connection with its investigation of the Company and its
Subsidiaries and the negotiation and implementation of this
Agreement up to an amount equal to $1,500,000 to Purchaser or its
designee;
(ii) the Purchaser agrees that if this Agreement is terminated by
the Company pursuant to Section 8.1(b)(i) or (iv) hereof, the
Purchaser shall pay to the Company the sum of $4,500,000.
(b) Any amount payable by the Company or the Purchaser shall be
made as promptly as practicable, but in no event later than the third (3rd)
business day following termination of this Agreement (or, with respect to item
(C), upon the consummation of such Competing Transaction) and shall be made by
wire transfer of immediately available funds to an account designated by the
payee.
(c) The Company and the Purchaser each agree that the payments
provided for by Sections 6.3(a)(i) and Section 6.3(a)(ii) shall be the sole and
exclusive remedy of the Purchaser and the Company, respectively, upon any
termination of this Agreement as described in Section 6.3(a) and such remedies
shall be limited to the sum stipulated in Section 6.3(a) regardless of the
circumstances (including willful or deliberate conduct) giving rise to such
termination.
6.4 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein
provided, including but not limited to Section 6.2(a), each of the parties
hereto agrees to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by the Offer and this Agreement, and to cooperate with
each other in connection with the foregoing, including using reasonable efforts
(a) to obtain all necessary waivers, consents and approvals from other parties
to material loan agreements, leases and other contracts; (b) to obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any federal, state or foreign law or regulations; (c) to resolve any
action, suit, proceeding or investigation of the type described in paragraph (a)
of ANNEX I which shall have been instituted; (d) to defend all lawsuits or other
legal proceedings (other than as specified in the preceding clause (c))
challenging this Agreement or the consummation of the transactions contemplated
hereby; (e) promptly to effect all necessary registrations and filings
including, but not limited to, filings under the HSR Act and prompt submissions
of information requested by governmental authorities; and (f) to fulfill all
31
conditions to this Agreement. The parties hereto shall cooperate with each
other in connection with the making of all such filings, including by providing
copies of all such documents to the nonfiling party and its advisors prior to
filing and providing a reasonable opportunity for comment in connection
therewith. In addition, after the date of consummation of the Offer, Parent and
Purchaser shall use all reasonable efforts to cause the Company to perform any
of its obligations to be performed under this Agreement from such date until the
Effective Time, including voting all Shares held by either of them in favor of
approving this Agreement.
6.5 THIRD PARTY OFFERS. The Company shall immediately cease and cause
to be terminated all existing discussions or negotiations relating to a
Competing Transaction (as defined below), with any parties conducted heretofore.
The Company will not, directly or indirectly, and will instruct its
representatives not to, directly or indirectly, initiate, (i) solicit or
encourage (including by way of furnishing information or assistance), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing
Transaction, (ii) enter into or maintain discussions or negotiate with any
person in furtherance of or relating to such inquiries or to obtain a Competing
Transaction, (iii) agree to or endorse any Competing Transaction, or (iv)
authorize or permit any representative of the Company or any of its Subsidiaries
to take any such action. The Company shall promptly notify Purchaser if any
such inquiries or proposals are received by the Company or an affiliate of the
Company regarding a Competing Transaction, and the Company shall promptly inform
Purchaser in reasonable detail of any such inquiry or proposal. The Company
shall keep Parent informed, on a current basis, of significant developments and
changes in status relating to any such proposals; provided, however, that prior
to the consummation of the Offer, nothing contained in this Section 6.5 shall
prohibit the Board of Directors of the Company from (i) furnishing information
to, or entering into discussions or negotiations with, any person that after the
date hereof makes an unsolicited proposal regarding a Competing Transaction or
agreeing to or endorsing any Competing Transaction, if, and only to the extent
that, (A) the Board of Directors of the Company, after consultation with and
based upon the advice of independent legal counsel, determines in good faith
that such action is required for the Board of Directors of the Company to comply
with its fiduciary duties to stockholders imposed by Delaware law, (B) prior to
furnishing such information to, or entering into discussions or negotiations
with such person or agreeing to or endorsing any Competing Transaction, the
Board of Directors of the Company determines in good faith, after consultation
with and based upon the advice of a financial advisor of a nationally recognized
reputation, that such Competing Transaction is a Superior Proposal, (C) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person, the Company provides written notice to Purchaser to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such person, and (D) such information to be so furnished has
been previously delivered to Purchaser; or (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a Competing Transaction. The
Company agrees that if it determines that a Competing Transaction is a Superior
Proposal, it shall immediately notify Purchaser of such determination, and shall
not take any action with respect to such Competing Transaction or this Agreement
for at least forty-eight (48) hours after such notification.
For purposes of this Agreement, "Competing Transaction" shall mean any of
the following involving the Company or any of its Subsidiaries: (a) except as
disclosed in SCHEDULE 5.2(i) any
32
merger, consolidation, share exchange, business combination, or other similar
transaction; (b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 20% or more of the assets of the Company and its Subsidiaries,
taken as a whole, in a single transaction or series of transactions; (c) any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of the outstanding shares of capital stock of
the Company or the filing of a registration statement under the Securities Act
in connection therewith; (d) any solicitation of proxies in opposition to
approval by the Company's stockholders of the Merger; (e) the adoption by the
Company of a plan of liquidation, the declaration or payment by the Company of
an extraordinary dividend on any of its shares of capital stock or the
effectuation by the Company of a recapitalization or other type of transaction
that would involve either a change in the Company's outstanding capital stock or
a distribution of assets of any kind to the holders of such capital stock; (f)
the repurchase by the Company or any of its Subsidiaries of 20% or more of the
outstanding Shares; or (g) any agreement to, or public announcement by the
Company or any other person, entity or group of a proposal, plan or intention
to, do any of the foregoing.
For purposes of this Agreement, a "Superior Proposal" means any proposal
relating to a Competing Transaction (as hereinafter defined) made by a third
party on terms which (if consummated) the Board of Directors of the Company
determines in its good faith judgment (based upon the advice of a financial
advisor of nationally recognized reputation) to be more financially favorable to
the Company's stockholders than the Offer and the Merger and for which
financing, to the extent required, is then committed or which, in the good faith
judgment (based upon the advice of a financial advisor of nationally recognized
reputation) of the Board of Directors of the Company, is reasonably capable of
being financed by such third party.
6.6 ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the Effective Time,
the Company will give Parent and the Purchaser and their authorized
representatives, and representatives of financial institutions identified by
Parent as its sources of financing, at reasonable times and upon reasonable
notice, full access to all officers, employees, offices, warehouses and other
facilities and to all books and records of the Company and each of its
Subsidiaries, will permit Parent and the Purchaser to make such inspections as
Parent or the Purchaser may reasonably require and will cause the officers and
independent auditors of the Company and its Subsidiaries to furnish Parent and
the Purchaser with such financial and operating data and other information
including access to working papers of its independent auditors with respect to
the business and properties of the Company and its Subsidiaries as Parent or the
Purchaser may from time to time reasonably request.
(b) Parent and the Purchaser will, and Parent will cause its
representatives to, comply with the terms of the letter agreement dated
March 18, 1999, between the Company and Parent. The term "Representative" as
used this Section 6.6(b) shall have the meaning set forth in such letter
agreement.
33
6.7 OFFICERS' AND DIRECTORS' INSURANCE; INDEMNIFICATION.
(a) It is understood and agreed that the Company shall indemnify
and hold harmless, and, after the Effective Time, the Surviving Corporation
shall, and, so long as the Surviving Corporation or any of its successors and
assigns is an affiliate of Parent, Parent shall, and shall cause the Surviving
Corporation to, indemnify and hold harmless, each present and former director
and officer of the Company or any of its Subsidiaries (the "Indemnified
Parties") against any losses, claims, damages, liabilities, costs, expenses
(including attorneys fees), judgments and amounts paid in settlement in
connection with any threatened, pending or completed claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative (collectively, "Claims"), arising out of or pertaining to any
action or omission or alleged action or omission occurring on or prior to the
Effective Time and based in whole or in part on the fact that such person is or
was such a director or officer (including, without limitation, any Claims which
arise out of or relate to the transactions contemplated by this Agreement)
whether asserted or commenced prior to or after the Effective Time, to the
fullest extent now or hereafter permitted by the DGCL , including provisions
relating to advances of expenses incurred in the defense of any action or suit,
provided that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under the DGCL
shall be made by independent counsel mutually selected by the Indemnified Party
and the Surviving Corporation. In the event any such Claim is brought against
any Indemnified Party (whether arising before or after the Effective Time), (i)
the Indemnified Parties may retain counsel satisfactory to them and the Company
(or them and the Surviving Corporation after the Effective Time), (ii) the
Company (or after the Effective Time, the Surviving Corporation) shall, and, so
long as the Surviving Corporation or any of its successors and assigns is an
affiliate of Parent, Parent shall, and shall cause the Surviving Corporation to,
pay all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received, and (iii) the Company (or after
the Effective Time, the Surviving Corporation) will, and, so long as the
Surviving Corporation or any of its successors and assigns is an affiliate of
Parent, Parent shall, and shall cause the Surviving Corporation to, use their
respective best efforts to assist in the vigorous defense of any such matter;
provided, that neither Parent, the Company nor the Surviving Corporation shall
be liable for any settlement effected without Parent's written consent, which
consent, however, shall not be unreasonably withheld. Any Indemnified Party
wishing to claim indemnification under this Section 6.7, upon learning of any
such Claim, shall notify the Company or the Surviving Corporation or Parent, as
the case may be, thereof and shall deliver to the Company or the Surviving
Corporation or Parent an undertaking to repay any amounts advanced pursuant
hereto when and if a court of competent jurisdiction shall render final
judgment, not subject to appeal, that such Indemnified Party was not entitled to
indemnification under this Section. Notwithstanding the foregoing, the
Surviving Corporation, including its affiliates, shall not, in connection with
any one such action or proceeding or separate but substantially similar actions
or proceedings arising out of the same general allegations, be liable for the
fees and expenses of more than one separate firm of attorneys at any time for
all Indemnified Parties except to the extent that: (i) such Indemnified Parties
have been advised by counsel that there exist actual or potential differing
interests between them, or (ii) local counsel, in addition to such parties'
regular counsel, is necessary or desirable in order to effectively defend
against such action or proceeding. The Surviving Corporation, including its
affiliates, shall not have any obligation hereunder to any Indemnified Party
when and if a court of competent
34
jurisdiction shall ultimately determine, and such determination shall have
become final and not subject to further appeal, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
(b) For six (6) years after the Effective Time, the Surviving
Corporation shall, and, so long as the Surviving Corporation or any of its
successors and assigns is an affiliate of Parent, Parent shall cause the
Surviving Corporation to, maintain, without modification or amendment that would
adversely affect the rights thereunder of any Indemnified Party, the provisions
of the Company's certificate of incorporation and bylaws with respect to
indemnification and liability of officers, directors and employees.
(c) For six (6) years after the Effective Time, the Surviving
Corporation shall, and, so long as the Surviving Corporation or any of its
successors and assigns is an affiliate of Parent, Parent shall cause the
Surviving Corporation to, provide officers' and directors' liability insurance
covering the Indemnified Parties who are currently covered by the Company's
officers' and directors' liability insurance policy on terms no less favorable
than those of such policy in terms of coverage and amounts; provided, that in no
event shall the Surviving Corporation or the Parent be required to expend in
excess of 200% of the rates currently paid by the Company (it being understood
that if any annual premium would exceed such agreed upon amount, the Surviving
Corporation shall provide the maximum coverage available for such amount).
(d) Without limiting the generality of the other provisions of
this Section 6.7, the Surviving Corporation shall, and, so long as the Surviving
Corporation or any of its successors and assigns is an affiliate of Parent,
Parent shall cause the Surviving Corporation to, honor any agreements disclosed
to Parent and the Purchaser prior to the date of this Agreement between the
Company and its directors, officers, employees and agents providing for
indemnification.
(e) This Section 6.7 shall survive the Merger, shall be binding
upon all successors and assigns of the Surviving Corporation, shall continue for
six (6) years after the Effective Time (or, in the case of Claims occurring on
or prior to the expiration of such six (6) year period and as to which notice
shall have been provided pursuant to Section 6.7(a) which have not been resolved
prior to the expiration of such six (6) year period, until such Claims are
finally resolved) and is intended to benefit each of the Indemnified Parties,
each of whom shall be entitled to enforce this Section 6.7 against the Company,
Parent and the Surviving Corporation. In the event the Surviving Corporation or
any of its successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger, or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 6.7.
6.8 CERTAIN CONTRACTS. Parent hereby agrees to pay, or cause the
Surviving Corporation to pay, without offset, deduction, counterclaim,
interruptions or deferment (other than as required by applicable law) all
benefits due under the terms of all contracts, agreements, arrangements,
policies and commitments of the Company and its Subsidiaries with or with
respect to its current or former employees, officers and directors
(collectively, the "Contracts") which benefits are vested
35
on or prior to the Effective Time or which become vested thereafter or as a
result of the transactions contemplated hereby. Without limiting the foregoing,
Parent acknowledges that the Company has entered into, and hereby agrees to
honor and to cause the Surviving Corporation to honor the employment agreements
identified on SCHEDULE 6.8 hereto.
6.9 EMPLOYEE STOCK OWNERSHIP PLAN. All accounts in the Company's
Employee Stock Ownership Plan (the "ESOP") shall become 100% vested as of the
Effective Time. The Company shall take all steps necessary to terminate, as of
or as promptly as practicable after the Effective Time, the ESOP, and the
balance of each participant's account in the ESOP shall be delivered to such
participant on or as promptly as practicable after the termination of the ESOP.
6.10 EMPLOYEE MATTERS.
(a) With respect to each active employee of the Company or any
Subsidiary as of the Effective Time (including any such employee absent as of
such date from active service for any reason, including but not limited to
disability or leave of absence but excluding any terminated employee receiving
severance) ("Applicable Employees"), Parent shall cause the Surviving
Corporation to provide, for a period ending on the first anniversary of the
Effective Time employee benefit plans, programs, policies and arrangements
(other than stock options and other equity-based benefits) which in the
aggregate are no less favorable than those provided under the applicable
employee benefit plans, programs, policies and arrangements of the Company and
each Subsidiary in effect on the Closing. Such Applicable Employees shall be
given credit under each new employee benefit plan, program, policy or
arrangement of Purchaser or any of its Affiliates in which such Applicable
Employees are eligible to participate for all service with the Company or any
Subsidiary or any predecessor employer (to the extent such credit was given by
the Company or any Subsidiary) for purposes of eligibility, vesting and benefit
accrual.
(b) Purchaser shall cause its medical, dental, and other health
plans, to the extent that such plans will apply to the Company's employees, to
(i) waive any preexisting condition limitations for conditions covered under the
applicable medical, dental or other health plans of the Company or any
Subsidiary (the "Company Welfare Plans"), and (ii) honor any deductible and
out-of-pocket expenses incurred by the Applicable Employees and their dependents
under the Company Welfare Plans during the portion of 1999 preceding the
Closing. Purchaser shall also cause to be waived any medical certification for
the Applicable Employees up to the amount of coverage the Applicable Employees
had under the life insurance plan of the Company or any Subsidiary, to the
extent that such plans will apply to the Company's employees. The provisions of
this Section 6.10 shall not be construed as obligating Parent or the Surviving
Corporation to provide any employees of the Company with equity or options on
equity of Parent, affiliates of Parent or the Surviving Corporation or any other
direct or indirect subsidiaries of Parent, to provide any applicable Employee or
its dependents any benefits or coverage which they do not enjoy at the present
time, or, following the first anniversary of Effective Time, to continue to
provide any benefits or plans which Parent or the Surviving Corporation
determines no longer to provide.
6.11 APPRAISAL RIGHTS. The Company shall not settle or compromise any
claim for appraisal rights prior to the Effective Time without the prior written
consent of Parent.
36
6.12 ACCOUNTANTS. The Company shall cause KPMG LLP ("KPMG"), the
Company's independent auditors, to deliver to Parent on or prior to the
Effective Time a letter dated the date of consummation of the Offer attaching an
Independent Accountants' Review Report (the "Review Report") with respect to the
condensed consolidated financial statements contained in any reports filed by
the Company with the Commission pursuant to the Exchange Act with respect to the
periods ending after December 31, 1998 (the "Reviewed Financial Statements").
The Review Report shall be addressed to the Company and shall confirm that KPMG
has conducted a review in accordance with the standards established by the
American Institute of Certified Public Accountants and, that based on this
review, KPMG is not aware of any material modifications that should be made to
the Reviewed Financial Statements.
7. CONDITIONS
7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) This Agreement and the Merger shall have been approved and
adopted by the requisite vote of the stockholders of the Company required by the
DGCL and the Company's Certificate of Incorporation and, if required by
applicable law, by the requisite vote of the stockholders of Parent;
(b) Any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated and any required approvals in connection with any pre-merger
notification filing with any relevant non-U.S. antitrust authority shall have
been obtained and shall have remained in full force and effect;
(c) No preliminary or permanent injunction or other order,
decree or official action issued by any United States Federal or state or
foreign court or regulatory or administrative agency or commission of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States Federal or state or foreign governmental
authority of competent jurisdiction, shall be in effect, which would (i) make
the acquisition or holding by Parent or its subsidiaries or affiliates of the
shares of Common Stock of the Surviving Corporation illegal or otherwise prevent
the consummation of the Merger, or (ii) impose any limitations on the ability of
Parent effectively to control, directly or indirectly through its subsidiaries,
in any material respect the business and operations of the Company; and
(d) The Purchaser shall have accepted for payment and paid for
Shares tendered pursuant to the Offer; provided that this condition shall be
deemed waived by the Purchaser and Parent if the failure to accept for payment
and purchase Shares pursuant to the Offer is for any reason other than the
failure to satisfy the conditions to the Offer set forth in ANNEX I hereto.
7.2 CONDITIONS OF OBLIGATIONS OF PARENT AND PURCHASER. The obligations
of Parent and Purchaser to effect the Merger are subject to the satisfaction of
the following conditions, any or all of which may be waived in whole or in part
by Parent and Purchaser.
37
(a) The representations and warranties of the Company set forth
in this Agreement (without giving effect to any materiality or similar
qualifications contained therein) shall be true and correct as of the expiration
of the Offer as if made on and as of the date of the expiration of the Offer,
except (i) for changes specifically permitted by this Agreement, (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date, (iii) in any case where such
failure to be so true and correct would not in the aggregate have a Material
Adverse Effect, and Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer and by the chief financial officer of
the Company to such effect, and (iv) notwithstanding anything in this Agreement
or ANNEX I to the contrary, in the event that any of the representations and
warranties of the Company with respect to any subsidiaries are determined to be
inaccurate, and all such inaccuracies capable of measurement in dollar amounts,
in the aggregate, exceed $3 million, then only the amounts in excess of $3
million will be taken into account in determining whether such inaccuracies,
taken together with all other breaches of representations and warranties,
generally, result in a Material Adverse Effect .
(b) The Company shall have performed or complied with all
obligations, covenants and agreements required to be performed by it under this
Agreement at or prior to the expiration of the Offer, unless all such failures
together in their entirety would not have a Material Adverse Effect, and Parent
shall have received a certificate signed on behalf of the Company by the chief
executive officer and by the chief financial officer of the Company to such
effect.
(c) All licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and other third parties as
are necessary in accordance with the transactions contemplated hereby shall have
been obtained and be in full force and effect, except such licenses, permits,
consents, approvals, authorizations, qualifications and orders, the failure to
deliver which would not have a Material Adverse Effect with respect to the
Company.
7.3 CONDITIONS OF OBLIGATIONS OF THE COMPANY. The obligations of the
Company to effect the Merger is subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by the
Company.
(a) The representations and warranties of Parent and Purchaser
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Effective Time as though
made on and as of the Effective Time, except as otherwise contemplated by this
Agreement, and the Company shall have received a certificate signed on behalf of
Parent by the chief executive officer and by the chief financial officer of
Parent to such effect.
(b) Parent and Purchaser shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Effective Time, and the Company shall have received a
certificate signed on behalf of Parent by the chief executive officer and by the
chief financial officer of Parent to such effect.
38
8. TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. Subject to Section 9.6, this Agreement may be
terminated at any time prior to the Effective Time, whether prior to or after
approval by the stockholders of the Company:
(a) By mutual written consent of the Boards of Directors of the
Parent and the Company; or
(b) By the Company:
(i) If the Purchaser shall have failed to commence the
Offer by within five (5) business days of the day which Purchaser's
intention to make the Offer is announced; or
(ii) If the Offer is terminated in accordance with its
terms without the purchase of any Shares thereunder; or
(iii) If the Offer shall not have been consummated within
the period applicable pursuant to Section 1.1; or
(iv) If, prior to the purchase of any Shares pursuant to
the Offer, the Purchaser deliberately fails to perform in any
material respect any of its obligations under this Agreement; or
(v) If, prior to the purchase of any Shares pursuant to
the Offer the Board of Directors shall have (A) withdrawn, modified
or changed in a manner adverse to the Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger; or (B)
shall have recommended to the stockholders of the Company any
Superior Proposal, which is then pending, or resolved to do so;
provided that any termination of this Agreement by the Company
pursuant to this Section 8.1(b)(v) shall not be effective until the
close of business on the second (2nd) full business day after notice
of such termination to Purchaser;
(c) By the Purchaser:
(i) If, due to an occurrence which would result in a
failure to satisfy any of the conditions set forth in ANNEX I
hereto, the Purchaser shall have (A) failed to commence the Offer
within five (5) business days of the day in which Purchaser's
intention to make the Offer is announced, or (B) terminated the
Offer after having complied with the provisions of Section 1.1
without any purchase of Shares thereunder; or
(ii) If the Effective Time shall not have occurred on or
before October 31, 1999, unless prior thereto Parent, the Purchaser
and their affiliates shall have
39
acquired beneficial ownership of at least a majority of the then
outstanding Shares; or
(iii) If, prior to the purchase of Shares pursuant to the
Offer, the Board of Directors (A) shall have withdrawn, modified or
changed in a manner adverse to the Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger, or (B)
shall have presented to the stockholders of the Company any
Competing Transaction, or (C) shall have resolved to do any of the
foregoing; or
(iv) If, prior to the purchase of Shares pursuant to the
Offer, the Company deliberately fails to perform in any material
respect any of its material obligations under this Agreement; or
(v) If Parent or its representatives shall have been
notified that there shall have occurred prior to 1:00 a.m. Chicago
time on April 30, 1999 an adverse effect on the financial markets
such as would lead a reasonable underwriter in the U.K. to decide
not to underwrite an issue of securities by Parent.
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 8.1, then (a) this Agreement shall forthwith
become void, and there shall be no liability or obligation on the part of
Parent, the Purchaser or the Company, except as set forth in this Section 8.2
and in Section 6.3 and Section 6.6(b); and (b) the Purchaser shall terminate the
Offer, if still pending, without purchasing any Shares thereunder.
8.3 AMENDMENT. Subject to Section 9.6, this Agreement may not be
amended except by action of the Board of Directors of each of the parties hereto
set forth in an instrument in writing signed on behalf of each of the parties
hereto; PROVIDED, HOWEVER, that after approval of the Merger by the stockholders
of the Company, no amendment may be made which amends the Certificate of
Incorporation of the Surviving Corporation, decreases the Per Share Price or in
any other way adversely affects the rights of such stockholders without the
approval of such stockholders.
8.4 WAIVER. Subject to Section 9.6, at any time prior to the Effective
Time, whether before or after the Special Meeting, any party hereto, by action
taken by its Board of Directors, may (a) extend the time for the performance of
any of the obligations or other acts of any other party hereto, or (b) subject
to the proviso contained in Section 8.3, waive compliance with any of the
agreements of any other party or with any conditions to its own obligations.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party by a duly authorized officer.
9. GENERAL PROVISIONS
9.1 BROKERS.
(a) The Company represents and warrants that no broker, finder
or investment banker other than Xxxxxxxx & Co. Inc., is entitled to any
brokerage, finder's or other fee or
40
commission in connection with the Offer or the Merger based upon arrangements
made by or on behalf of the Company. A copy of the engagement letter with
Xxxxxxxx & Co. Inc. has previously been delivered to Parent.
(b) Parent represents and warrants that no broker, finder or
investment banker other than Xxxxxx Xxxxxxx Xxxx Xxxxxx is entitled to any
brokerage, finder's or other fee or commission in connection with the Offer or
the Merger based upon arrangements made by or on behalf of Parent or its
affiliates. A copy of the engagement letter with Xxxxxx Xxxxxxx Xxxx Xxxxxx
has previously been delivered to the Company.
9.2 PUBLIC STATEMENTS. Without the prior written consent of the other
party, neither party will issue any press release or otherwise make any public
statements with respect to this Agreement or any transactions contemplated
hereby except (a) to such party's directors, employees, agents, advisors and
affiliates, in each case on a confidential and need-to-know basis, or (b) as is
required, in the opinion of its outside counsel, by applicable law (including,
without limitation, Federal securities laws) or pursuant to applicable
requirements of any listing agreement with or the rules of the NYSE, the
NASDAQ/NMS or the London Stock Exchange, as applicable, provided that if any
party hereto proposes to make any disclosure based upon the opinion of its
counsel such party will use its reasonable efforts to advise and consult with
the other party reasonably prior to such disclosure concerning the information
such party proposes to disclose.
9.3 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by telecopier to the parties at the following addresses or at such other
addresses as shall be specified by the parties by like notice:
(a) If to Parent or the Purchaser:
Aegis Group plc
00X Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX0X 0XX, Xxxxxx Xxxxxxx
Attention: Xxxxxxx Xxxxx, Chief Executive Officer
Telephone No.: 00-000-000-0000
Telecopy No.: 00-000-000-0000
With a copy to:
Aegis Group plc
0 Xxxxx xx Xxxxxxx
00000 Xxxxx Xx Defense
Xxxxx 000, Xxxxxx
Attention: Xxxxxxxx Xxxxxxxxx
Telephone No.: 00-0-00-00-00-00
Telecopy No.: 00-0-00-00-00-00
41
With a copy to:
Xxxxxxxx Xxxxxxxxxx & Xxxxx LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000, U.S.A.
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
and
(b) If to the Company:
Market Facts, Inc.
0000 Xxxx Xxxx Xxxxx Xxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000, U.S.A.
Attention: Xxxxxx X. Xxxxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
with a copy to:
Lord, Bissell & Brook
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000, X.X.X.
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone No.: 000-000-0000
Telecopy No.: 000- 000-0000
9.4 INTERPRETATION. When a reference is made in this Agreement to
subsidiaries of Parent, the Purchaser or the Company, the word "subsidiaries"
means any corporation more than 50% of whose outstanding voting securities, or
any partnership, joint venture or other entity more than 50% of whose total
equity interest, is directly or indirectly owned by Parent, the Purchaser or the
Company, as the case may be. For purposes of this Agreement the Company shall
not be deemed to be an affiliate or subsidiary of the Purchaser or Parent. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
9.5 REPRESENTATIONS AND WARRANTIES. The respective representations and
warranties of the Company, Parent and the Purchaser contained herein shall
expire with, and be terminated and extinguished upon the purchase of Shares
pursuant to the Offer, and thereafter neither the Company, Parent nor the
Purchaser nor any officer, director or agent thereof shall be under any
liability whatsoever with respect to any such representation or warranty. This
Section 9.5 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the consummation of the Merger.
42
9.6 ACTION BY COMPANY. Any action required or permitted to be taken
hereunder on or prior to the Effective Time (other than the performance of the
Company's obligations hereunder in accordance with the terms hereof) by the
Company or by the Board of Directors of the Company (including any amendment or
waiver of any provision hereof) shall require the consent of a majority, but not
less than two, of the Independent Directors.
9.7 MISCELLANEOUS. This Agreement (a) constitutes the entire agreement
and supersedes all other prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof (except for the confidentiality letter agreement described in Section
6.6(b)); (b) except for Sections 6.7, 6.8, 6.9 and 6.10 hereof (each of which is
intended to benefit the persons referred to therein or entitled to the benefits
thereof and each of which shall be enforceable by such persons), is not intended
to confer upon any other person any rights or remedies hereunder; (c) shall not
be assigned, except by the Purchaser to a directly or indirectly wholly-owned
subsidiary of Parent which in a written instrument shall agree to assume all of
such party's obligations hereunder and be bound by all of the terms and
conditions of this Agreement; provided, however, that no such assignment shall
relieve the assigning party of its obligations hereunder; and (d) shall be
governed in all respects, including validity, interpretation and effect, by the
internal laws of the State of Delaware, without giving effect to the principles
of conflict of laws of the State of Delaware or any other jurisdiction that
would call for the application of the law of any jurisdiction other than the
State of Delaware. Only the Purchaser (or Parent, or a directly or indirectly
wholly-owned subsidiary of Parent to which the Purchaser assigns such rights and
obligations) may commence the Offer or purchase Shares thereunder. This
Agreement may be executed in one or more counterparts which together shall
constitute a single agreement.
9.8 WAIVER OF JURY TRIAL. EACH OF PARENT, PURCHASER, AND THE COMPANY
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PURCHASER, THE COMPANY OR PARENT IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
43
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
AEGIS GROUP PLC
By:
-------------------------------------------
Xxxxxxx Xxxxx, Chief Executive Officer
AEGIS ACQUISITION CORP.
By:
-------------------------------------------
Xxxxxxx Xxxxx, Chief Executive Officer
MARKET FACTS, INC.
By:
-------------------------------------------
Xxxxx X. Xxxxxxxxx, Chairman of the Board
S-1
44
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Parent or Purchaser shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
expiration or termination of the Offer), to pay for any Shares tendered, and may
postpone the acceptance for payment or, subject to the restriction referred to
above, payment for any Shares tendered, and may amend or terminate the Offer
(whether or not any Shares have theretofore been purchased or paid for) if, (i)
there have not been validly tendered and not withdrawn prior to the time the
Offer shall otherwise expire a number of Shares which constitutes a majority of
the Shares outstanding on a fully-diluted basis on the date of purchase ("on a
fully-diluted basis" having the meaning, as of any date: the number of Shares
outstanding, together with Shares the Company is then required to issue pursuant
to obligations outstanding at the date under employee stock option or other
benefit plans), less the number of Shares subject to the Option Agreements (the
"Minimum Condition"); (ii) all material regulatory and related approvals have
not been obtained or made on terms reasonably satisfactory to Purchaser; (iii)
any applicable waiting periods under the HSR Act shall not have expired or been
terminated prior to the expiration of the Offer; or (iv) at any time on or after
the date of the Agreement and before acceptance for payment of, or payment for,
such Shares any of the following events shall occur:
(A) any governmental entity or federal, state or foreign court
of competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, executive order, decree,
injunction or other order which is in effect (or pending) and which (1)
restricts, prevents or prohibits the making or consummation of the Offer,
the Merger or any transaction contemplated by the Merger Agreement, (2)
prohibits or limits materially the ownership or operation by the Company,
Parent or any of their subsidiaries of all or any material portion of the
business or assets of the Company and its subsidiaries taken as a whole, or
compels the Company, Parent, or any of their subsidiaries to dispose of or
hold separate all or any material portion of the business or assets of the
Company and its subsidiaries taken as a whole, (3) imposes limitations on
the ability of Parent, Purchaser or any other subsidiary of Parent to
exercise effectively full rights of ownership of any Shares, including,
without limitation, the right to vote any Shares acquired by Purchaser
pursuant to the Offer or otherwise on all matters properly presented to the
Company's stockholders, including, without limitation, the approval and
adoption of the Merger Agreement and the transactions contemplated thereby,
or (4) requires divestitures by Parent, Purchaser or any other affiliate of
Parent of any Shares; provided that Parent shall have used all commercially
reasonable efforts to cause any such decree, judgment, injunction or other
order to be vacated or lifted; or
(B) the representations and warranties of the Company contained
in the Merger Agreement (without giving effect to any materiality or
similar qualifications contained therein) shall not be true and correct as
of the date of consummation of the Offer as though made on and as of such
date except (1) for changes specifically permitted by the Merger
I-1
Agreement, (2) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of
such date, (3) in any case where such failure to be true and correct would
not, in the aggregate, have a Material Adverse Effect, and (iv)
notwithstanding anything in this Agreement or ANNEX I to the contrary, in
the event that any of the representations and warranties of the Company
with respect to any subsidiaries are determined to be inaccurate, and all
such inaccuracies capable of measurement in dollar amounts, in the
aggregate, exceed $3 million, then only the amounts in excess of $3 million
will be taken into account in determining whether such inaccuracies, taken
together with all other breaches of representations and warranties
generally, result in a Material Adverse Effect.
(C) the Company shall not have performed or complied with any of
its obligations, covenants and agreements under the Merger Agreement to be
performed or complied with by it unless all such failures together in their
entirety would not have a Material Adverse Effect;
(D) the Merger Agreement shall have been terminated in
accordance with its terms;
(E) prior to the purchase of Shares pursuant to the Offer, the
Company shall have received any offer (other than pursuant to this
Agreement) for the purchase of Shares, the purchase of substantially all of
the Company's assets, the merger of the Company or any other transaction
which would require the withdrawal or material modification of the Offer,
the Merger Agreement or the Merger and the Board shall have withdrawn or
materially modified or changed (including by amendment of the Schedule
14D-9) in a manner adverse to Purchaser its recommendation of the Offer,
the Merger Agreement or the Merger; or
(F) (1) any person or group shall have entered into a definitive
agreement or agreement in principle with the Company with respect to a
merger, consolidation, sale of a material portion of the assets of the
Company, or other business combination with the Company; (2) (A) the Board
of Directors of the Company or any committee thereof shall have withdrawn,
modified or changed in a manner adverse to Parent or Purchaser its approval
or recommendation of the Offer, the Merger or the Agreement, or approved or
recommended any Competing Transaction, or (B) the Board of Directors of the
Company or any committee thereof shall have resolved to do any of the
foregoing;
(G) there shall have occurred any change, condition event or
development that has a Material Adverse Effect (excluding any change,
condition, event or development arising out of or attributable to general
economic conditions);
(H) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange, the NASDAQ\NMS or the London Stock Exchange for a period in
excess of 24 hours (excluding any coordinated trading halt triggered solely
as a result of a specified decrease in a market index and suspensions or
limitations resulting solely from physical damage or interference with such
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exchange or association not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or the United Kingdom or (iii) any
material limitation (whether or not mandatory) by any government or
governmental authority of the United States or the United Kingdom on the
extension of credit by banks or other lending institutions,
(I) the Stockholders (as defined in the Option Agreements) shall
have failed to comply in any material respect with their obligations
pursuant to the Option Agreements,
which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Purchaser and its
affiliates and may be asserted by Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser, in whole or in
part, from time to time in its sole discretion, except as otherwise provided in
the Agreement. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right and may be asserted at any time and from
time to time. Any determination by Purchaser concerning any of the events
described herein shall be final and binding. Unless otherwise defined herein,
capital terms used herein shall have the meanings ascribed to them in the
Acquisition Agreement among the Parent, Purchaser and the Company to which this
ANNEX I is attached (the "Agreement").
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EXHIBIT A
CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION
A-1
EXHIBIT B
BY-LAWS OF SURVIVING CORPORATION
B-1
