Exhibit 99(c)(3)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BYOWC PARTNERS LLC,
BRIDGEPORT HOLDINGS INC.,
BRIDGEPORT ACQUISITION CORPORATION
and
MICRO WAREHOUSE, INC.
Dated as of December 20, 1999
TABLE OF CONTENTS
ARTICLE I TENDER OFFER AND MERGER.........................................................2
SECTION 1.01 THE OFFER..........................................................2
SECTION 1.02 TERMS AND CONDITIONS OF THE OFFER..................................2
SECTION 1.03 COMPANY ACTION.....................................................5
SECTION 1.04 DIRECTORS..........................................................5
SECTION 1.05 THE MERGER.........................................................6
SECTION 1.06 EFFECTIVE TIME.....................................................7
SECTION 1.07 CONVERSION OF SHARES...............................................7
SECTION 1.08 DISSENTING SHARES..................................................7
SECTION 1.09 SURRENDER OF SHARES................................................8
SECTION 1.10 OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN...........................9
SECTION 1.11 CERTIFICATE OF INCORPORATION AND BYLAWS...........................10
SECTION 1.12 DIRECTORS AND OFFICERS............................................10
SECTION 1.13 OTHER EFFECTS OF MERGER...........................................10
SECTION 1.14 PROXY STATEMENT...................................................10
SECTION 1.15 ADDITIONAL ACTIONS................................................11
SECTION 1.16 MERGER WITHOUT MEETING OF STOCKHOLDERS............................11
SECTION 1.17 LOST, STOLEN OR DESTROYED CERTIFICATES............................11
SECTION 1.18 MATERIAL ADVERSE EFFECT...........................................11
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................12
SECTION 2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES......................12
SECTION 2.02 CERTIFICATE OF INCORPORATION AND BYLAWS...........................12
SECTION 2.03 CAPITALIZATION....................................................13
SECTION 2.04 AUTHORITY RELATIVE TO THIS AGREEMENT..............................14
SECTION 2.05 CONTRACTS; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.............14
SECTION 2.06 COMPLIANCE; PERMITS...............................................15
SECTION 2.07 SEC FILINGS; FINANCIAL STATEMENTS.................................16
SECTION 2.08 ABSENCE OF CERTAIN CHANGES OR EVENTS..............................16
SECTION 2.09 NO UNDISCLOSED LIABILITIES........................................16
SECTION 2.10 ABSENCE OF LITIGATION.............................................17
SECTION 2.11 EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS.....................17
SECTION 2.12 LABOR MATTERS.....................................................19
SECTION 2.13 DISCLOSURE DOCUMENTS..............................................19
SECTION 2.14 RESTRICTIONS ON BUSINESS ACTIVITIES...............................20
SECTION 2.15 TITLE TO PROPERTY.................................................20
SECTION 2.16 TAXES.............................................................20
SECTION 2.17 ENVIRONMENTAL MATTERS.............................................22
SECTION 2.18 BROKERS...........................................................23
SECTION 2.19 INTELLECTUAL PROPERTY.............................................23
SECTION 2.20 INTERESTED PARTY TRANSACTIONS.....................................24
SECTION 2.21 INSURANCE.........................................................24
SECTION 2.22 PRODUCT LIABILITY.................................................25
SECTION 2.23 OPINION OF FINANCIAL ADVISOR......................................25
SECTION 2.24 RIGHTS AGREEMENT..................................................25
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT....................................25
SECTION 3.01 ORGANIZATION AND GOOD STANDING....................................25
SECTION 3.02 AUTHORIZATION; BINDING AGREEMENT..................................26
SECTION 3.03 GOVERNMENTAL APPROVALS............................................26
SECTION 3.04 NO VIOLATIONS.....................................................26
SECTION 3.05 DISCLOSURE DOCUMENTS..............................................26
SECTION 3.06 FINDERS AND INVESTMENT BANKERS....................................27
SECTION 3.07 FINANCING ARRANGEMENTS............................................27
SECTION 3.08 NO PRIOR ACTIVITIES...............................................28
SECTION 3.09 DGCL SECTION 203..................................................28
SECTION 3.10 BENEFICIAL OWNERSHIP OF SHARES....................................28
SECTION 3.11 SURVIVING CORPORATION AFTER THE MERGER............................28
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER.......................................29
SECTION 4.01 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.............29
SECTION 4.02 NO SOLICITATION...................................................31
ARTICLE V ADDITIONAL AGREEMENTS.........................................................33
SECTION 5.01 APPROVAL OF THE MERGER............................................33
SECTION 5.02 VOTING OF SHARES BY PURCHASER.....................................33
SECTION 5.03 ACCESS TO INFORMATION; CONFIDENTIALITY............................33
SECTION 5.04 CONSENTS; APPROVALS...............................................34
SECTION 5.05 INDEMNIFICATION AND INSURANCE.....................................34
SECTION 5.06 NOTIFICATION OF CERTAIN MATTERS...................................36
SECTION 5.07 FURTHER ACTION....................................................36
SECTION 5.08 PUBLIC ANNOUNCEMENTS..............................................36
SECTION 5.09 CONVEYANCE TAXES..................................................37
SECTION 5.10 OPTION PLANS AND BENEFITS, ETC. ..................................37
SECTION 5.11 EMPLOYEE MATTERS..................................................37
SECTION 5.12 COMPLIANCE WITH STATE PROPERTY TRANSFER STATUTES..................37
SECTION 5.13 FINANCING COVENANTS...............................................38
ARTICLE VI CONDITIONS TO THE MERGER.....................................................39
SECTION 6.01 OFFER.............................................................39
SECTION 6.02 STOCKHOLDER APPROVAL..............................................39
SECTION 6.03 NO INJUNCTION OR ACTION...........................................39
SECTION 6.04 GOVERNMENTAL APPROVALS............................................39
ARTICLE VII TERMINATION.................................................................40
SECTION 7.01 TERMINATION.......................................................40
SECTION 7.02 [INTENTIONALLY OMITTED]...........................................42
SECTION 7.03 EFFECT OF TERMINATION.............................................42
SECTION 7.04 FEES AND EXPENSES.................................................42
ARTICLE VIII GENERAL PROVISIONS.........................................................43
SECTION 8.01 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.......43
SECTION 8.02 CERTAIN LIMITATIONS...............................................44
SECTION 8.03 NOTICES...........................................................45
SECTION 8.04 CERTAIN DEFINITIONS...............................................46
SECTION 8.05 AMENDMENT.........................................................47
SECTION 8.06 WAIVER............................................................47
SECTION 8.07 HEADINGS..........................................................47
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SECTION 8.08 SEVERABILITY......................................................47
SECTION 8.09 ENTIRE AGREEMENT..................................................47
SECTION 8.10 ASSIGNMENT........................................................47
SECTION 8.11 PARTIES IN INTEREST...............................................48
SECTION 8.12 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.............48
SECTION 8.13 ENFORCEMENT; GOVERNING LAW; JURISDICTION..........................48
SECTION 8.14 COUNTERPARTS......................................................49
SECTION 8.15 WAIVER OF JURY TRIAL..............................................49
SECTION 8.16 OBLIGATIONS OF BYOWC..............................................49
SECTION 8.17 INTERPRETATION....................................................49
ANNEX I............................................................................51
ANNEX II...........................................................................54
Summary of Terms of Warrant..............................................................56
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 20, 1999
(this "AGREEMENT"), among BYOWC Partners LLC, a Delaware limited liability
company ("BYOWC"), Bridgeport Holdings Inc. ("PARENT"), a Delaware corporation
and a subsidiary of BYOWC, Bridgeport Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Parent ("PURCHASER"), and Micro
Warehouse, Inc., a Delaware corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of BYOWC, the
Company, Purchaser and Parent have determined that it is in the best interests
of their respective stockholders and members for Purchaser to acquire the
Company; and
WHEREAS, in furtherance thereof Parent has formed Purchaser
for the purpose of making a tender offer (the "PURCHASER OFFER") to acquire
shares of common stock of the Company (the "COMPANY COMMON STOCK"), par value
$.01 (the "SHARES"), for $19.00 per share in cash, or such higher price as may
be paid in the Offer (the "PER SHARE AMOUNT"), subject to any applicable
withholding, net to the seller in cash without interest; and
WHEREAS, the Company has agreed to simultaneously make an
offer to acquire Shares (the "COMPANY OFFER", and, together with the Purchaser
Offer, the "OFFER") for the Per Share Amount, subject to any applicable
withholding, net to the seller in cash without interest; and
WHEREAS, the Purchaser Offer and the Company Offer shall
together be an offer to acquire all of issued and outstanding Shares, subject to
the priority set forth in this Agreement; and
WHEREAS, also in furtherance thereof, the Boards of Directors
of the Company, Purchaser and Parent have each approved this Agreement and the
merger of Purchaser with the Company (the "MERGER") following the Offer, upon
the terms and subject to the conditions set forth herein and in accordance with
the applicable provisions of the General Corporation Law of the State of
Delaware (the "DGCL"); and
WHEREAS, the Board of Directors of the Company has approved
this Agreement and the Merger and resolved to recommend acceptance of the Offer
and the adoption of this Agreement to the Company's stockholders and has
determined that the Offer and the Merger are fair to and in the best interest of
the Company's stockholders.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, BYOWC, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
TENDER OFFER AND MERGER
SECTION 1.01 THE OFFER. (a) Provided that this Agreement shall
not have been terminated in accordance with SECTION 7.1 hereof and that none of
the events set forth in ANNEX I or ANNEX II hereto shall have occurred and be
existing, Purchaser shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "SECURITIES EXCHANGE ACT")) the Purchaser Offer, and the Company
shall commence the Company Offer, as promptly as practicable, but in no event
later than five business days following the first public announcement of the
execution of this Agreement, and each shall use reasonable best efforts to
consummate the Offer.
(b) The Purchaser Offer and the Company Offer shall be
conducted for practical purposes as a single offer, with Shares being accepted
for payment and purchased in the Offer according to the following order of
priority: first, Purchaser shall accept for payment and purchase Shares up to a
maximum number of Shares equal to the Purchaser Share Number; and second, the
Company shall accept for payment and purchase Shares up to a maximum number of
Shares equal to the Company Share Number. "COMPANY SHARE NUMBER" means the sum
of (x) $200,000,000 and (y) the aggregate exercise price of all options to
acquire stock of the Company exercised following the date hereof and prior to
consummation of the Offer (the "OPTION EXERCISE AMOUNT") divided by the Per
Share Amount. "PURCHASER SHARE NUMBER" means the total number of issued and
outstanding Shares less the Shares otherwise owned by BYOWC, Parent or Purchaser
and less the Company Share Number. The Company agrees that no Shares held by the
Company or any subsidiary of the Company will be tendered pursuant to the Offer.
(c) The Per Share Amount payable in the Offer shall be net to
each seller in cash, subject to reduction only for any applicable withholding
taxes and, if (but only if) the Per Share Amount is to be paid other than to a
registered holder of Shares, any applicable transfer taxes payable by such
seller.
SECTION 1.02 TERMS AND CONDITIONS OF THE OFFER. (a) The
obligation of Purchaser to accept for payment any Shares tendered shall be
subject to the satisfaction of only those conditions set forth in ANNEX I hereto
and the obligation of the Company to accept for payment any Shares tendered
shall be subject to the satisfaction of only those conditions set forth in ANNEX
II hereto.
(b) Without the prior written consent of the Company, Purchaser
will not, and Parent will cause Purchaser not to, (i) decrease or change the
form of the Per Share Amount, (ii) decrease the number of Shares sought in the
Purchaser Offer, (iii) amend or waive the Minimum Condition (as defined in Annex
I hereto), or impose conditions other than the conditions set forth in Annex I
on the Offer, or (iv) amend any term of the Purchaser Offer in any manner
materially adverse to stockholders of the Company; PROVIDED, HOWEVER, that
subject to applicable legal requirements, Parent may cause Purchaser to waive
the conditions set forth in Annex I, other than the Minimum Condition and the
conditions set forth in paragraph (c) and (d) of Annex I, in Parent's sole
discretion. Assuming the prior satisfaction or waiver of the conditions set
forth in Annex I, Parent will cause Purchaser to accept for payment, and pay
for, in accordance with the
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terms of the Purchaser Offer, Shares validly tendered and not withdrawn pursuant
to the Purchaser Offer as soon as practicable after the Initial Expiration Date
(as defined below) or any extension thereof and in any subsequent offering
period of the Purchaser Offer, up to a number of Shares equal to the Purchaser
Share Number, in the order of priority set forth in Section 1.01(b).
(c) Without the prior written consent of Parent, the Company
will not (i) decrease or change the form of the Per Share Amount, (ii) decrease
the number of Shares sought in the Company Offer, (iii) impose conditions other
than the conditions set forth in Annex II on the Company Offer, or (iv) amend
any term of the Company Offer in any manner materially adverse to Parent or
Purchaser; PROVIDED, HOWEVER, that subject to applicable legal requirements, the
Company may waive any condition set forth in Annex II other than the conditions
set forth in paragraphs (c) and (d) of Annex II in the Company's sole
discretion. Assuming the prior satisfaction or waiver of the conditions in Annex
II, the Company will accept for payment, and pay for, in accordance with the
terms of the Company Offer, Shares validly tendered and not withdrawn pursuant
to the Offer as soon as practicable after the Initial Expiration Date or any
extension thereof and in any subsequent offering period of the Offer, up to a
number of Shares equal to the Company Share Number, in the order of priority set
forth in Section 1.01(b). All Shares purchased by the Company pursuant to the
Company Offer shall, at the election of the Company, be immediately cancelled or
returned to the treasury of the Company.
(d) The Offer shall initially expire on the later to occur of
(x) twenty (20) business days after the date of its commencement and (y) January
28, 2000 (the "INITIAL EXPIRATION DATE"), unless this Agreement is terminated in
accordance with SECTION 7.01 hereof, in which case the Offer (whether or not
previously extended in accordance with the terms hereof) shall expire on such
date of termination. Purchaser and the Company shall not terminate or withdraw
the Offer or extend the expiration date of the Offer unless at the expiration
date of the Offer the conditions to the Offer described in ANNEX I and ANNEX II
hereto shall not have been satisfied or earlier waived. Notwithstanding the
foregoing, but subject in all events to Section 7.01, Purchaser may, without the
consent of the Company, extend the Offer at any time, and from time to time, (i)
if at the then scheduled expiration date of the Offer any of the conditions to
the obligations of Purchaser and the Company to accept Shares for payment (other
than the Minimum Condition, as to which this clause does not apply) shall not
have been satisfied or waived, until such time as such conditions are satisfied
or waived; (ii) if all conditions to the obligations of Purchaser and the
Company to accept Shares for payment (other than the Minimum Condition) shall
have been satisfied or waived, the Minimum Condition has not been satisfied but
the number of Shares tendered, together with the Shares otherwise owned by
BYOWC, Parent or Purchaser, is greater than 40% of the Shares outstanding, for
an aggregate period of not more than fifteen (15) business days (for all such
extensions); (iii) for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or its staff applicable to the Offer; or (iv) if all conditions to the
obligations of Purchaser and the Company to accept for payment and pay for
Shares are satisfied or waived but the number of Shares tendered, together with
the Shares otherwise owned by BYOWC, Parent or Purchaser, is less than 90% of
the then outstanding number of Shares (and after giving effect to the reduction
of outstanding Shares resulting from the purchase of Shares by the Company
pursuant to the Company Offer), for an aggregate period of not more than twenty
(20) business days (for all such extensions) beyond the latest expiration date
that would
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be permitted under clauses (i), (ii) or (iii) of this sentence, and in the case
of any extension pursuant to this clause (iv) Purchaser and/or the Company, as
the case may be, shall accept for payment all Shares validly tendered pursuant
to the Offer as of the most recently expired expiration date in accordance with
the rules and regulations of the SEC, including Rule 14d-11 promulgated under
the Securities Exchange Act.
(e) The Offer shall be made by means of an offer to purchase
(the "OFFER TO PURCHASE") having only the conditions set forth in ANNEX I and
ANNEX II hereto. BYOWC, Parent, the Company and Purchaser shall cooperate in
good faith in the timely preparation of the Offer to Purchase and the other
Offer Documents (as defined below).
(f) As soon as practicable on the date the Offer is commenced,
(x) Purchaser shall file with the SEC a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, the "SCHEDULE 14D-1") and
(y) the Company Shall file an Issuer Tender Offer Statement on Schedule 13E-4
(the "SCHEDULE 13E-4") and a Solicitation/Recommendation Statement on Schedule
14D-9 (the "SCHEDULE 14D-9") with respect to the Offer, each of which will
comply in all material respects with the provisions of, and satisfy in all
material respects the requirements of, such Schedule 14D-1, Schedule 13E-4 and
Schedule 14D-9, respectively, and all applicable federal securities laws and, in
the case of the Schedule 14D-1 and Schedule 13E-4, will contain as an exhibit or
incorporate by reference the Offer to Purchase and forms of the related letter
of transmittal and summary advertisement (which documents, together with any
supplements or amendments thereto, and any other SEC schedule or form which is
filed in connection with the Offer and related transactions, are referred to
collectively herein as the "OFFER DOCUMENTS"). Each of Parent, Purchaser and the
Company agrees promptly to correct any information provided by it for use in the
Schedule 14D-1, the Schedule 13E-4, the Schedule 14D-9 or the Offer Documents if
and to the extent that such information shall have become false or misleading in
any material respect and to supplement the information provided by it
specifically for use in the Schedule 14D-1, the Schedule 13E-4, the Schedule
14D-9 or the other Offer Documents to include any information that shall become
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Parent, Purchaser and the Company,
as applicable, shall take all steps necessary to cause the (x) Schedule 14D-1,
the Schedule 13E-4 and the Schedule 14D-9, as so corrected or supplemented, to
be filed with the SEC and (y) the Offer Documents and the Schedule 14D-9, as so
corrected or supplemented, to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws.
(g) The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-1 before it is filed with
the SEC, and Purchaser shall consider any such comments in good faith. Parent,
Purchaser and their counsel shall be given a reasonable opportunity to review
and comment on the Schedule 13E-4 and Schedule 14D-9 before it is filed with the
SEC, and the Company shall consider any such comments in good faith.
(h) The Per Share Amount shall be appropriately adjusted to
reflect fully the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into Shares),
distribution, exercise or exchange of the Rights (as defined in Section 4.02(d))
or such Rights becoming exercisable, reorganization,
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recapitalization, split up, combination or exchange of shares or other like
event with respect to the Shares occurring after the date hereof and prior to
the consummation of the Offer or the Merger, as the case may be.
SECTION 1.03 COMPANY ACTION. (a) The Company represents and
warrants that the Board of Directors of the Company, at a meeting duly called
and held on December 20, 1999, at which all the Directors were present in person
or by telephone, duly approved and adopted this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, resolved to recommend
that stockholders of the Company accept the Offer, tender their Shares pursuant
to the Offer and adopt this Agreement, and determined that this Agreement and
the transactions contemplated hereby, including the Offer and the Merger, are
fair to and in the best interests of the stockholders of the Company. The
Company hereby consents to the inclusion in the Offer Documents of such
recommendation of the Board of Directors of the Company. The Company represents
that its Board of Directors has received the written opinion (the "FAIRNESS
OPINION") of Xxxxxxxxxxx Xxxxxxx & Co., Inc. (the "FINANCIAL ADVISOR") that the
proposed consideration to be received by the holders of Shares pursuant to the
Offer and the Merger is fair to such holders from a financial point of view. The
Company has been authorized by the Financial Advisor to permit, subject to the
prior review and consent by the Financial Advisor (such consent not to be
unreasonably withheld), the inclusion of the Fairness Opinion (or a reference
thereto) in the Offer Documents, the Schedule 14D-9 and the Proxy Statement (as
hereinafter defined).
(b) In connection with the Offer, the Company shall promptly
upon execution of this Agreement furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and security
position listings of Shares held in stock depositories, each as of a recent
date, and shall promptly furnish Purchaser with such additional information
reasonably available to the Company, including updated lists of stockholders,
mailing labels and security position listings, and such other information and
assistance as Purchaser or its agents may reasonably request for the purpose of
communicating the Offer to the record and beneficial holders of Shares. Subject
to the requirements of applicable law and except as necessary to disseminate the
Offer Documents and otherwise for the purpose of effecting the transactions
contemplated hereby, BYOWC, Parent and Purchaser shall hold in confidence the
materials furnished pursuant to this SECTION 1.03(b), use such information only
in connection with the Offer, the Merger and the other transactions contemplated
by this Agreement and, if this Agreement is terminated, as promptly as
practicable return to the Company such materials and all copies thereof in the
possession of BYOWC, Parent and Purchaser.
SECTION 1.04 DIRECTORS. Promptly upon the purchase by
Purchaser of Shares pursuant to the Offer (and provided that the Minimum
Condition has been satisfied), Parent shall be entitled to designate such number
of directors, rounded up to the next whole number, on the Board of Directors of
the Company as will give Parent, subject to compliance with Section 14(f) of the
Securities Exchange Act, representation on the Board of Directors of the Company
equal to at least that number of directors which equals the product of the total
number of directors on the Board of Directors of the Company (giving effect to
the directors appointed or elected pursuant to this sentence and including
current directors serving as officers of the Company) multiplied by the
percentage that the aggregate number of Shares beneficially owned by Purchaser
or any other affiliate of Parent (including for purposes of this SECTION 1.04
such Shares
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as are accepted for payment pursuant to the Purchaser Offer, but excluding
Shares held by the Company) bears to the number of Shares outstanding (after
reduction for Shares accepted for payment pursuant to the Company Offer). At
such time, if requested by Parent, the Company will also cause each committee of
the Board of Directors of the Company to include persons designated by Parent
constituting the same percentage of each such committee as Parent's designees
are of the Board of Directors of the Company. The Company shall, upon request by
Parent, promptly increase the size of the Board of Directors of the Company or
exercise reasonable best efforts to secure the resignations of such number of
directors as is necessary to enable Parent's designees to be elected to the
Board of Directors of the Company in accordance with the terms of this SECTION
1.04 and to cause Parent's designees so to be elected; PROVIDED, HOWEVER, that,
in the event that Parent's designees are appointed or elected to the Board of
Directors of the Company, until the Effective Time (as hereinafter defined) the
Board of Directors of the Company shall have at least two directors who are
directors on the date hereof, each of whom is neither an officer of the Company
nor a designee, stockholder, affiliate or associate (within the meaning of the
federal securities laws) of BYOWC (such directors, the "CONTINUING DIRECTORS")
or such persons having such qualifications who are designated as "Independent
Directors" by a majority of Continuing Directors in office at the time of such
designation (such persons, together with the Continuing Directors, the
"INDEPENDENT DIRECTORS"). Subject to applicable law, the Company shall promptly
take all action necessary pursuant to Section 14(f) of the Securities Exchange
Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations
under this SECTION 1.04 and shall include in the Schedule 14D-9 mailed to
stockholders promptly after the commencement of the Offer (or in an amendment
thereof or an information statement pursuant to Rule 14f-1 if Parent has not
theretofore designated directors) such information with respect to the Company
and its officers and directors as is required under Section 14(f) and Rule 14f-1
in order to fulfill its obligations under this SECTION 1.04. 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 such
Section 14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to the
contrary, subsequent to the designation of the directors by Parent referred to
in the first sentence of this Section 1.04 and prior to the Effective Time, the
unanimous vote 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 Parent's, Purchaser's or BYOWC's obligations or other acts
required hereunder, (iv) take any other action by the Company in connection with
this Agreement required to be taken by the Board of Directors of the Company or
(v) amend the Company's Certificate of Incorporation or the Company's Bylaws,
each as in effect on the date of this Agreement.
SECTION 1.05 THE MERGER. Upon the terms and subject to the
conditions of this Agreement, the Merger shall be consummated in accordance with
the DGCL. At the Effective Time (as defined in SECTION 1.06 hereof), upon the
terms and subject to the conditions of this Agreement, the Company shall be
merged with and into Purchaser in accordance with the DGCL and the separate
existence of the Company shall thereupon cease, and Purchaser, as the surviving
corporation in the Merger (the "SURVIVING CORPORATION"), shall continue its
corporate existence under the laws of the State of Delaware as a direct
subsidiary of Parent. The parties shall prepare and execute a certificate of
merger (the "CERTIFICATE OF MERGER") that complies in all respects with the
requirements of the DGCL and with the provisions of this Agreement.
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SECTION 1.06 EFFECTIVE TIME. The Merger shall become effective
at the time of the filing of the Certificate of Merger with the Secretary of
State of Delaware in accordance with the applicable provisions of the DGCL or at
such later time as may be specified in the Certificate of Merger. As soon as
practicable (and in any event within three business days) after all the
conditions set forth in ARTICLE VI of this Agreement have been satisfied or
waived by the party or parties entitled to the benefit of the same, the parties
hereto shall cause the Merger to become effective. Parent and the Company shall
mutually determine the exact time of such filing and the place where the closing
of the Merger (the "CLOSING") shall occur. The time when the Merger shall become
effective is herein referred to as the "EFFECTIVE TIME," and the date on which
the Effective Time occurs is herein referred to as the "CLOSING DATE."
SECTION 1.07 CONVERSION OF SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holder of any of the securities specified below:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be cancelled pursuant to SECTION 1.07(b)
and other than any Dissenting Shares (as hereinafter defined)) shall be
converted into the right to receive the Per Share Amount in cash payable to the
holder thereof, without interest, upon surrender of the certificate representing
such Share in accordance with SECTION 1.09 hereof. From and after the Effective
Time, the holders of certificates evidencing ownership of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares except as otherwise provided for herein or by applicable
law.
(b) Each Share owned by the Company or any of its
subsidiaries, BYOWC, Parent, Purchaser or any direct or indirect wholly owned
subsidiary of BYOWC immediately prior to the Effective Time shall be canceled,
and no payment or other consideration shall be made with respect thereto.
(c) The shares of Purchaser common stock issued and
outstanding immediately prior to the Merger shall be converted into and
constitute a number of validly issued, fully paid and nonassessable shares of
common stock of the Surviving Corporation equal to the number of Shares owned by
BYOWC, Parent, Purchaser or any direct or indirect wholly owned subsidiary of
BYOWC immediately prior to the Effective Time.
In addition, the Surviving Corporation shall at the Effective Time issue to
Parent a Warrant to purchase common stock on the terms set forth in Exhibit 1.
SECTION 1.08 DISSENTING SHARES. (a) Notwithstanding any
provision of this Agreement to the contrary, any Shares issued and outstanding
immediately prior to the Effective Time and held by a holder who has demanded
and perfected his demand for appraisal of his Shares in accordance with the DGCL
and as of the Effective Time has neither effectively withdrawn nor lost his
right to such appraisal ("DISSENTING SHARES") shall not be converted into or
represent a right to receive cash pursuant to SECTION 1.07 hereof, but the
holder thereof shall be entitled only to such rights as are granted by the DGCL.
(b) Notwithstanding the provisions of SECTION 1.08(a) hereof,
if any holder of Shares who demands appraisal of his Shares under the DGCL shall
effectively withdraw or lose
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(through failure to perfect or otherwise) his right to appraisal, then as of the
Effective Time or the occurrence of such event, whichever occurs later, such
holder's Shares shall automatically be converted into and represent only the
right to receive cash as provided in SECTION 1.07(a) hereof, without interest
thereon, upon surrender of the certificate or certificates representing such
Shares.
(c) The Company shall give Parent (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands and any other instruments served pursuant to the
DGCL received by the Company after the date hereof and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. The Company shall not voluntarily make any payment with respect
to any demands for appraisal and shall not, except with the prior written
consent of Parent, settle or offer to settle any such demands.
SECTION 1.09 SURRENDER OF SHARES. (a) Prior to the Effective
Time, Parent shall appoint EquiServe or such other commercial bank or trust
company designated by Parent and reasonably acceptable to the Company to act as
exchange agent hereunder (the "EXCHANGE AGENT") for the payment of the Per Share
Amount upon surrender of certificates representing the Shares. All the fees and
expenses of the Exchange Agent shall be borne by the Surviving Corporation;
PROVIDED, HOWEVER, that, if the Merger shall not be consummated, such fees and
expenses shall be borne by Parent.
(b) On or before the Effective Time, Parent shall cause the
Surviving Corporation to provide the Exchange Agent with cash in amounts
necessary to pay for all the Shares pursuant to SECTION 1.07(a) hereof
(including, if necessary, by providing or causing to be provided cash for this
purpose to the Surviving Corporation).
(c) On the Closing Date, the Surviving Corporation shall
instruct the Exchange Agent to mail promptly to each holder of record of a
certificate representing any Shares canceled upon the Merger pursuant to
SECTIONS 1.07(a) hereof (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 delivery of the certificates to the Exchange Agent and
shall be in such form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
certificates. Each holder of a certificate or certificates representing any
Shares canceled upon the Merger pursuant to SECTIONS 1.07(a) hereof may
thereafter surrender such certificate or certificates to the Exchange Agent, as
agent for such holder, to effect the surrender of such certificate or
certificates on such holder's behalf for a period ending one year after the
Effective Time. Upon the surrender of certificates representing the Shares, the
Surviving Corporation shall cause the Exchange Agent to pay the holder of such
certificates in exchange therefor cash in an amount equal to the Per Share
Amount multiplied by the number of Shares represented by such certificate. Until
so surrendered, each such certificate (other than certificates representing
Dissenting Shares) shall represent solely the right to receive the aggregate Per
Share Amount relating thereto.
(d) If payment of cash in respect of canceled Shares is to be
made to a person other than the person in whose name a surrendered certificate
is registered, it shall be a condition to such payment that the certificate so
surrendered shall be properly endorsed or shall otherwise be in proper form for
transfer by delivery and that the person requesting such payment shall have paid
any transfer and other taxes required by reason of such payment in a name other
than that of
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the registered holder of the certificate or instrument surrendered or shall have
established to the satisfaction of Parent or the Exchange Agent that such tax
either has been paid or is not payable.
(e) At the Effective Time, the stock transfer books of the
Company shall be closed, and no transfer of Shares shall be made thereafter,
other than transfers of Shares that have occurred prior to the Effective Time.
In the event that, after the Effective Time, certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for cash as provided
in SECTIONS 1.07(a).
(f) The Per Share Amount paid in the Merger shall be net to
the holder of Shares in cash, and without interest thereon, subject to reduction
only for any applicable withholding taxes and, but only if the Per Share Amount
is to be paid other than to the registered holder, any applicable stock transfer
taxes payable by such holder.
(g) Promptly following the date which is one year after the
Effective Time, the Exchange Agent shall deliver to the Surviving Corporation
all cash, certificates and other documents in its possession relating to the
transactions contemplated hereby, and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a certificate representing Shares (other
than certificates representing Dissenting Shares and certificates representing
Shares held directly or indirectly by the Surviving Corporation, Parent or
BYOWC) may surrender such certificate to the Surviving Corporation and (subject
to any applicable abandoned property, escheat or similar law) receive in
consideration therefor the aggregate Per Share Amount relating thereto, without
any interest thereon.
(h) None of the Company, Parent, Purchaser, BYOWC, the
Surviving Corporation or the Exchange Agent shall be liable to any holder of
Shares for any cash delivered to a public official pursuant to any abandoned
property, escheat or similar law, rule, regulation, statute, order, judgment or
decree.
SECTION 1.10 OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN. (a) The
Company shall provide a period of 30 days ending on the Effective Time in which
each option ("COMPANY PLAN OPTIONS") outstanding under the Company option plans
listed on Section 2.11 of the Company Disclosure Schedule (as hereinafter
defined) ("COMPANY STOCK OPTION PLANS"), whether or not then vested or
exercisable, may be exercised, provided that such exercise with respect to an
otherwise unvested option shall be contingent upon the subsequent occurrence of
the Effective Time.
(b) Each Company Plan Option and each other option to purchase
Shares under any stock option plan or agreement of the Company outstanding
immediately prior to the Effective Time (a "COMPANY OPTION"), whether or not
then vested or exercisable, shall be cancelled and the holder thereof shall
receive from the Surviving Corporation as soon as practicable following
consummation of the Merger an amount in cash equal to the positive difference,
if any, between the Per Share Amount and the exercise price of the Company
Option multiplied by the number of Shares for which the Company Option was
exercisable immediately prior to the Effective Time, subject to reduction only
for any applicable withholding taxes. In no event will any Company Options be
exercisable after the Effective Time, except to receive cash as provided in the
first sentence of this Section 1.10(b).
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SECTION 1.11 CERTIFICATE OF INCORPORATION AND BYLAWS. Subject
to SECTION 5.05 hereof, unless otherwise determined by Parent prior to the
Effective Time, at and after the Effective Time (a) the Certificate of
Incorporation of Purchaser, as in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the Surviving Corporation
until thereafter amended as provided by the DGCL; and (b) the Bylaws of
Purchaser shall be the Bylaws of the Surviving Corporation in effect at the
Effective Time (subject to any subsequent amendments).
SECTION 1.12 DIRECTORS AND OFFICERS. At and after the
Effective Time, the directors of Purchaser immediately prior to the Effective
Time shall be the initial directors of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
successors are duly elected or appointed and qualified.
SECTION 1.13 OTHER EFFECTS OF MERGER. The Merger shall have
all further effects as specified in the applicable provisions of the DGCL.
SECTION 1.14 PROXY STATEMENT. (a) Following the consummation
of the Offer and if required by the Securities Exchange Act because an action by
the Company's stockholders is necessary in order to consummate the Merger, the
Company shall prepare and file with the SEC and, when cleared by the SEC, shall
mail to stockholders, a proxy statement in connection with a meeting of the
Company's stockholders to vote upon the adoption of this Agreement and the
Merger and the transactions contemplated hereby, or an information statement, as
appropriate, satisfying all requirements of the Securities Exchange Act (such
proxy or information statement in the form mailed by the Company to its
stockholders, together with any and all amendments or supplements thereto, is
herein referred to as the "PROXY STATEMENT").
(b) Parent will furnish the Company with such information
concerning BYOWC, Parent and its subsidiaries as is necessary in order to cause
the Proxy Statement, insofar as it relates to Parent and its subsidiaries, to
comply with applicable Law. Parent agrees promptly to advise the Company if, at
any time prior to the meeting of stockholders of the Company referenced herein,
any Parent Information (as defined below) in the Proxy Statement is or becomes
incorrect or incomplete in any material respect and to provide the Company with
the information needed to correct such inaccuracy or omission. Parent will
furnish the Company with such supplemental information as may be necessary in
order to cause the Proxy Statement, insofar as it relates to BYOWC and its
subsidiaries, to comply with applicable law after the mailing thereof to the
stockholders of the Company.
(c) The Company and Parent agree to cooperate in making any
preliminary filings of the Proxy Statement with the SEC, as promptly as
practicable, pursuant to Rule 14a-6 or Rule 14c-5, as applicable, under the
Securities Exchange Act.
(d) The Company shall provide Parent for its review a copy of
the Proxy Statement prior to each filing thereof, with reasonable time and
opportunity for such review. Parent authorizes the Company to utilize in the
Proxy Statement the information concerning Parent and its subsidiaries provided
to the Company in connection with, or contained in, the Proxy Statement.
-10-
SECTION 1.15 ADDITIONAL ACTIONS. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Purchaser or the Company or otherwise to carry
out this Agreement, the officers and directors of the Company and Purchaser
shall be authorized to execute and deliver, in the name and on behalf of
Purchaser or the Company, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of Purchaser or the
Company, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
SECTION 1.16 MERGER WITHOUT MEETING OF STOCKHOLDERS.
Notwithstanding the foregoing provisions of this ARTICLE I, in the event that
Purchaser, or any other direct or indirect subsidiary of Parent, shall own or
acquire at least 90 percent of the outstanding Shares, the parties hereto agree
to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
meeting of stockholders of the Company, in accordance with Section 253 of the
DGCL.
SECTION 1.17 LOST, STOLEN OR DESTROYED CERTIFICATES. In the
event any certificates representing Shares shall have been lost, stolen or
destroyed, the Exchange Agent shall make such payment in exchange for such lost,
stolen or destroyed certificates upon the making of an affidavit of that fact by
the holder thereof; PROVIDED, HOWEVER, that the Surviving Corporation may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against Parent, the Surviving Corporation or the Exchange Agent with respect to
the certificates alleged to have been lost, stolen or destroyed.
SECTION 1.18 MATERIAL ADVERSE EFFECT. (a) When used in
connection with the Company or any of its subsidiaries, or Parent, BYOWC or any
of their respective subsidiaries, as the case may be, the term "MATERIAL ADVERSE
EFFECT" means any change, effect or circumstance that is materially adverse to
the business, assets (including intangible assets), financial condition or
results of operations of the Company and its subsidiaries, or Parent, BYOWC or
any of their respective subsidiaries, as the case may be, in each case taken as
a whole; PROVIDED, HOWEVER, that effects of changes that are applicable to or
arise on account of (A) any changes in economic, regulatory, or political
conditions generally, (B) the United States securities markets, (C) this
Agreement or the transactions contemplated by this Agreement, (D) the computer
reseller industry generally, or (E) the effect of the public announcement of the
transactions contemplated hereby, including, without limitation, any effect on
current or prospective customers or employees of the Company, shall be excluded
from the definition of "Material Adverse Effect" and from any determination as
to whether a Material Adverse Effect has occurred or may occur.
(b) The failure of a representation or warranty to be true and
correct, either individually or together with the failure of other
representations or warranties to be true and correct, or the failure to perform
an obligation, agreement or covenant shall be deemed to have a Material Adverse
Effect if (x) the business, assets (including intangible assets), financial
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condition, or results of operations of the Company and its subsidiaries, or
Parent, BYOWC or any of their respective subsidiaries, as the case may be, in
each case taken as a whole, are or are reasonably likely to be materially worse
than if such representation or warranty had been true and correct or such
obligation, agreement or covenant had been performed, excluding, however, the
effects of the changes specified in the proviso set forth in Section 1.18(a),
(y) in the case of the Company, such representation or warranty materially
misstates the capitalization of the Company and/or its subsidiaries or (z) the
failure of such representation or warranty to be true and correct or the failure
to perform such obligation, agreement of covenant materially and adversely
affects the ability of the Company or Parent, as the case may be, timely to
consummate the transactions contemplated by this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent that,
except as disclosed in forms, reports and other documents filed by the Company
with the SEC since December 31, 1998 through the date of this Agreement (the
"COMPANY SEC DOCUMENTS") or set forth in the corresponding section of the
disclosure schedule delivered by the Company to Parent prior to the execution of
this Agreement (the "COMPANY DISCLOSURE SCHEDULE"):
SECTION 2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
Each of the Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority necessary to
own, lease and operate the properties it purports to own, operate or lease and
to carry on its business as it is now being conducted, except where the failure
to be so organized, existing and in good standing or to have such power or
authority is not reasonably likely to have a Material Adverse Effect. Each of
the Company and its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except where the
failure to be so duly qualified or licensed and in good standing is not
reasonably likely to have a Material Adverse Effect. The Company's only
"significant" subsidiary, as defined in Regulation S-X, is Micro Warehouse Ltd.,
a U.K. company (the "COMPANY SIGNIFICANT SUBSIDIARIES"). Section 2.01 of the
Company Disclosure Schedule describes the jurisdiction of incorporation of each
subsidiary and the percentage of each such subsidiary's outstanding capital
stock owned by the Company or another subsidiary of the Company. Except for the
capital stock and other ownership interests in its Subsidiaries, the Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity (other than its wholly-owned subsidiaries), with
respect to which interest the Company has invested (and currently owns) or is
required to invest $100,000 or more, excluding securities in any publicly-traded
company held for investment by the Company and comprising less than five percent
of the outstanding stock of such company.
SECTION 2.02 CERTIFICATE OF INCORPORATION AND BYLAWS. The
Company has heretofore made available to Parent a complete and correct copy of
its Certificate of
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Incorporation and Bylaws as amended to date (the "COMPANY CHARTER DOCUMENTS"),
and will make available to Parent at Parent's request, as promptly as
practicable, the Certificate of Incorporation and Bylaws (or equivalent
organizational documents) of each Company Significant Subsidiary (the
"SUBSIDIARY DOCUMENTS"). Such Company Charter Documents and Subsidiary Documents
are in full force and effect. Neither the Company nor any of the Company
Significant Subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or Bylaws or equivalent organizational documents,
except for violations of the Subsidiary Documents which do not and are not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries is in violation of any
of the provisions of its Certificate of Incorporation or Bylaws or equivalent
organizational documents, except for violations of such documents which,
individually or in the aggregate, do not and are not reasonably likely to have a
Material Adverse Effect.
SECTION 2.03 CAPITALIZATION. The authorized capital stock of
the Company consists of 100,000,000 shares of Company Common Stock, 100,000
shares of Preferred Stock, $.01 par value ("COMPANY PREFERRED STOCK"), and
45,000 shares of Series A Junior Participating Preferred Stock, $.01 par value
("COMPANY SERIES A PREFERRED STOCK"). As of November 30, 1999, (i) 36,059,088
shares of Company Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable (excluding shares which are issued
but not outstanding all of which are not entitled to vote), (ii) there were no
shares of Company Common Stock which were held by subsidiaries of the Company,
(iii) 6,000,000 shares of Company Common Stock were reserved for grants pursuant
to the Company Stock Option Plans, and 4,028,320 shares of Company Common Stock
were subject to existing grants under the Company Stock Option Plans, and (iv)
no shares of Company Preferred Stock or Company Series A Preferred Stock were
issued and outstanding. No change in such capitalization has occurred since
November 30, 1999, except for changes resulting from the exercise of Stock
Options. Except for existing option grants referred to in clause (iii) above,
options whose issuance is permitted after the date hereof pursuant to Section
4.01, Rights under the Rights Agreement and the Warrant contemplated by Section
1.07, there are no options, warrants or other rights, agreements, arrangements
or commitments of any character binding on the Company or any of its
subsidiaries relating to the issued or unissued capital stock of the Company or
any of its subsidiaries or obligating the Company or any of its subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any of its subsidiaries. All shares of Company Common Stock subject
to issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully-paid and nonassessable. There are no obligations,
contingent or otherwise, of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of any subsidiary. There are no obligations, contingent or
otherwise, of the Company or any of its subsidiaries to provide funds to or make
any investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock (other than directors' qualifying shares) of
each of the Company's Significant Subsidiaries are duly authorized, validly
issued, fully-paid and nonassessable, and all such shares (other than directors'
qualifying shares and a de minimis number of shares owned by employees of such
subsidiaries) are owned by the Company or another subsidiary free and clear of
all security interests, liens, claims, pledges, agreements,
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limitations in the Company's voting rights, charges or other encumbrances of any
nature whatsoever.
SECTION 2.04 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company
has all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the adoption of this Agreement by the Company's
stockholders in accordance with the DGCL and the Company's Charter Documents and
the filing of the appropriate documents with respect to the Merger in accordance
with the DGCL). As of the date of this Agreement, the Board of Directors of the
Company has determined that it is advisable and in the best interest of the
Company's stockholders for the Company to enter into this Agreement and to
consummate the Offer and the Merger upon the terms and subject to the conditions
of this Agreement and has adopted resolutions so that Section 203 of the DGCL is
not applicable to the Offer, the Merger or the other transactions contemplated
by this Agreement. This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by BYOWC, Parent and Purchaser, constitutes a legal, valid and
binding obligation of the Company.
SECTION 2.05 CONTRACTS; NO CONFLICT; REQUIRED FILINGS AND
CONSENTS. (a) Section 2.05(a) of the Company Disclosure Schedule includes, as of
the date of this Agreement, a list of (i) other than intercompany agreements,
all loan agreements, indentures, mortgages, pledges, conditional sale or title
retention agreements, security agreements, equipment obligations, guaranties,
standby letters of credit, equipment leases or lease purchase agreements, each
in an amount equal to or exceeding $275,000 to which the Company or any of its
subsidiaries is a party or by which any of them is bound; (ii) all contracts,
agreements, commitments or other understandings or arrangements to which the
Company or any of its subsidiaries is a party or by which any of them or any of
their respective properties or assets are bound or affected, but excluding
contracts, agreements, commitments or other understandings or arrangements
entered into in the ordinary course of business or involving, in the case of any
such contract, agreement, commitment, or other understanding or arrangement,
individual payments or receipts by the Company or any of its subsidiaries of
less than $100,000 over the term of such contract, commitment, agreement, or
other understanding or arrangement; and (iii) all agreements which are required
to be filed as "material contracts" with the SEC pursuant to the requirements of
the Securities Exchange Act but have not been so filed with the SEC.
(b) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company will not,
(i) conflict with or violate the Certificate of Incorporation or Bylaws of the
Company, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its subsidiaries or by
which its or any of their respective properties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would become a default), or impair the Company's or any of
its subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment,
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acceleration or cancellation of, or result in the creation of a lien or
encumbrance on (including a right to purchase) any of the properties or assets
of the Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except, in the case of clauses (ii)
or (iii), for any such conflicts, violations, breaches, defaults or other
occurrences that are not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect.
(c) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or filing with or
notification to (each, a "CONSENT"), any governmental or regulatory authority,
domestic or foreign (each, a "GOVERNMENTAL AUTHORITY"), except (i) for
applicable requirements, if any, of the Securities Exchange Act, state
securities laws ("BLUE SKY LAWS"), the pre-merger notification requirements of
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR ACT"), filings and consents under any
applicable foreign laws intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade ("FOREIGN
MONOPOLY LAWS"), filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement ("ENVIRONMENTAL, HEALTH AND SAFETY
LAWS"), and the filing and recordation of appropriate merger or other documents
as required by the DGCL, (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or materially delay consummation of the Merger, or otherwise
prevent or materially delay the Company from performing its material obligations
under this Agreement, or is not otherwise reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect, or (iii) as to which any
necessary consents, approvals, authorizations, permits, filings or notifications
have heretofore been obtained or filed, as the case may be, by the Company.
SECTION 2.06 COMPLIANCE; PERMITS. (a) Neither the Company nor
any of its subsidiaries is in conflict with, or in default or violation of, (i)
any law, rule, regulation, order, judgment or decree applicable to the Company
or any of its subsidiaries or by which its or any of their respective properties
is bound or affected or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected, except in the case of clauses (i) and (ii) for any such
conflicts, defaults or violations which are not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect.
(b) The Company and its subsidiaries hold all permits,
licenses, easements, variances, exemptions, consents, certificates, orders and
approvals from governmental authorities which are material to the operation of
the business of the Company and its subsidiaries taken as a whole as it is now
being conducted (collectively, the "COMPANY PERMITS"), except where the failure
to hold such Company Permits is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect. The Company and its subsidiaries
are in compliance with the terms of the Company Permits, except as described in
the Company SEC Reports or where the
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failure to so comply is not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect.
SECTION 2.07 SEC FILINGS; FINANCIAL STATEMENTS. (a) The
Company has filed all forms, reports and documents required to be filed by it
with the SEC since December 31, 1996. All such forms, reports and documents (i)
were prepared in all material respects in accordance with the requirements of
the Securities Act or the Securities Exchange Act, as the case may be, and (ii)
did not at the time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of the Company's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the forms, reports and
documents referred to in Section 2.07(a) (or if amended or superceded by a
filing prior to the date of this Agreement to restate or reclassify amounts
shown thereon, then as restated or reclassified) was prepared in accordance with
United States generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or in the Company SEC Reports), and each fairly presents in
all material respects the consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
SECTION 2.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since
September 30, 1999, the Company has conducted its business in the ordinary
course and there has not occurred: (i) any changes, effects or circumstances
constituting or which is reasonably likely to constitute, individually or in the
aggregate, a Material Adverse Effect; (ii) any amendments or changes in the
Certificate of Incorporation or Bylaws of the Company; (iii) any damage to,
destruction or loss of any asset of the Company (whether or not covered by
insurance) that is reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect; (iv) any material change by the Company in its
accounting methods, principles or practices (other than changes required by GAAP
after the date of this Agreement); or (v) other than in the ordinary course of
business, any sale of a material amount of assets of the Company.
SECTION 2.09 NO UNDISCLOSED LIABILITIES. Neither the Company
nor any of its subsidiaries has any liabilities (absolute, accrued, contingent
or otherwise), except liabilities (a) in the aggregate adequately provided for
in the Company's unaudited balance sheet (including any related notes thereto)
as of September 30, 1999 included in the Company's Quarterly Report of Form 10-Q
for the quarter ended September 30, 1999 (the "1999 BALANCE SHEET"), (b)
incurred in the ordinary course of business and not required under GAAP to be
reflected on the 1999 Balance Sheet, (c) incurred since September 30, 1999 in
the ordinary course of business, (d) incurred in connection with this Agreement,
the Offer or the Merger or the other transactions contemplated hereby, or (e)
which is not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect.
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SECTION 2.10 ABSENCE OF LITIGATION. Except for those arising
out of transactions contemplated by this Agreement, there are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
the Company, threatened against the Company or any of its subsidiaries, or any
properties or rights of the Company or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect.
SECTION 2.11 EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS.
(a) Section 2.11(a) of the Company Disclosure Schedule lists, all employee
pension benefit plans (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all employee welfare benefit
plans (as defined in Section 3(1) of ERISA), and all other bonus, stock option,
stock purchase, incentive, deferred compensation, supplemental retirement,
severance and other similar fringe or employee benefit plans, programs or
arrangements (including those which contain change of control provisions or
pending change of control provisions), and any employment, executive
compensation or severance agreements (including those which contain change of
control provisions or pending change of control provisions), written or
otherwise, as amended, modified or supplemented, for the benefit of, or relating
to, any former or current employee, officer, director or consultant (or any of
their beneficiaries) of the Company or any other entity (whether or not
incorporated) which is a member of a controlled group including the Company or
which is under common control with the Company within the meaning of Sections
414(b), (c), (m) or (o) of the Code or Section 4001(a) (14) or (b) of ERISA (a
"COMPANY ERISA Affiliate"), or any subsidiary of the Company, excluding any
plans that have not been maintained or contributed to in the six year period
ending on the date hereof, as well as each plan with respect to which the
Company or a Company ERISA Affiliate could incur liability under Title IV of
ERISA or Section 412 of the Code (together for the purposes of this Section
2.11, the "COMPANY EMPLOYEE PLANS"). The Company has made available to Parent,
prior to the date of this Agreement, copies of (i) each such written Company
Employee Plan (or a written description of any Company Employee Plan which is
not written) and all related trust agreements, insurance and other contracts
(including policies), summary plan descriptions, summaries of material
modifications and communications distributed to plan participants, (ii) the
three most recent annual reports on Form 5500 series, with accompanying
schedules and attachments, filed with respect to each Company Employee Plan
required to make such a filing, (iii) the latest reports which have been filed
with the Department of Labor with respect to each Company Employee Plan required
to make such filing and (iv) the most recent favorable determination letters
issued for each Company Employee Plan and related trust which is intended to be
qualified under Section 401(a) of the Code (and, if an application for such
determination is pending, a copy of the application for such determination).
(b) (i) None of the Company Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person, and
none of the Company Employee Plans is a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA; (ii) to the knowledge of the Company, no
party in interest or disqualified person (as defined in Section 3(14) of ERISA
and Section 4975 of the Code) has at any time engaged in a transaction with
respect to any Company Employee Plan which could subject the Company or any
Company ERISA Affiliate, directly or indirectly, to a material tax, penalty or
other material liability for prohibited transactions under ERISA or Section 4975
of the Code; (iii) to the knowledge of the
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Company, no fiduciary of any Company Employee Plan has breached any of the
responsibilities or obligations imposed upon fiduciaries under Title I of ERISA,
which breach is reasonably likely to result in any material liability to the
Company or any Company ERISA Affiliate; (iv) all Company Employee Plans have
been established and maintained substantially in accordance with their terms and
have operated in compliance in all material respects with the requirements of
applicable law (including but not limited to the applicable notification and
other requirements of COBRA, the Health Insurance Portability and Accountability
Act of 1996, the Newborns' and Mothers' Health Protection Act of 1996, the
Mental Health Parity Act of 1996, and the Women's Health and Cancer Rights Act
of 1998), and may (to the knowledge of the Company without a duty of inquiry) by
their terms be amended and/or terminated at any time to the greatest extent
permitted by applicable law, and the Company and each of its subsidiaries have
performed all material obligations required to be performed by them under, are
not in any material respect in default under or violation of, and have no
knowledge of any default or violation by any other party to, any of the Company
Employee Plans; (v) each Company Employee Plan which is intended to be qualified
under Section 401(a) of the Code is the subject of a favorable determination
letter from the IRS, and, to the Company's knowledge, nothing has occurred which
is reasonably likely to impair such determination; (vi) other than routine
claims for benefits made in the ordinary course of the operation of the Company
Employee Plans, there are no pending, nor to the Company's knowledge any
threatened, claims, investigations or causes of action with respect to any
Company Employee Plan, whether made by a participant or beneficiary of such a
plan, a governmental agency or otherwise, against the Company, any Company
director, officer or employee, any Company Employee Plan or any fiduciary of a
Company Employee Plan; and (vii) there are no communications to any employee,
former employee or any other person who may be entitled to benefits under any
Company Employee Plan that are materially inconsistent with any provision of any
Company Employee Plan.
(c) Section 2.11(c) of the Company Disclosure Schedule sets
forth a true and complete list ,as of the date of this Agreement, of each
current or former employee, officer or director of the Company or any of its
subsidiaries who holds (i) any option to purchase Company Common Stock as of the
date hereof, together with the number of shares of Company Common Stock subject
to such option, the option price of such option (to the extent determined as of
the date hereof), and the expiration date of such option; (ii) any shares of
Company Common Stock that are restricted; and (iii) any other right, directly or
indirectly, to receive Company Common Stock, together with the number of shares
of Company Common Stock subject to such right.
(d) To the extent not already included and so labeled in
Section 2.11(a) of the Company Disclosure Schedule, Section 2.11(d) of the
Company Disclosure Schedule sets forth a true and complete list, as of the date
of this Agreement, of (i) all employment agreements with officers of the Company
or any of its subsidiaries; (ii) all agreements with consultants who are
individuals that obligate the Company or any of its subsidiaries to make annual
cash payments in an amount exceeding $100,000; (iii) all agreements with respect
to the services of independent contractors or leased employees whether or not
they participate in any of the Company Employee Plans that obligate the Company
or any of its subsidiaries to make annual cash payments exceeding $100,000; (iv)
all officers of the Company or any of its subsidiaries who have executed a
non-competition agreement with the Company or any of its subsidiaries; and (v)
all plans, programs, agreements and other arrangements of the Company which
contain change of control provisions.
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(e) None of the Company Employee Plans is subject to Section
302 of ERISA, Section 412 of the Code or Title IV of ERISA.
(f) (i) The Company has never maintained an employee stock
ownership plan (within the meaning of Section 4975(e)(7) of the Code) or any
other Company Employee Plan that invests in Company stock; (ii) since December
8, 1999, the Company has not proposed nor agreed to any increase in benefits
under any Company Employee Plan (or the creation of new benefits) or change in
employee coverage which would materially increase the expense of maintaining any
Company Employee Plan; (iii) the consummation of the transactions contemplated
by this Agreement will not result in an increase in the amount of compensation
or benefits or accelerate the vesting or timing of payment of any benefits or
compensation payable in respect of any employee; and (iv) no person will be
entitled to any severance benefits under the terms of any Company Employee Plan
solely by reason of the consummation of the transactions contemplated by this
Agreement.
(g) The Company has no stock purchase plan or similar plan
pursuant to which employees of the Company or its subsidiaries are offered the
right or option to purchase securities of the Company other than the Company's
1992 and 1994 Stock Option Plans.
SECTION 2.12 LABOR MATTERS.
(a) There are no controversies, including any strikes,
slowdowns, work stoppages, lockouts, pending or, to the knowledge of the
Company, threatened, between the Company or any of its subsidiaries and any of
their respective employees, which controversies have had, or are reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect.
(b) Neither the Company nor any of its subsidiaries is a party
to any collective bargaining agreement or other labor union contract applicable
to persons employed by the Company or its subsidiaries, nor does the Company or
any of its subsidiaries know of any activities or proceedings of any labor union
to organize any significant number of such employees.
(c) The Company is in compliance with all applicable laws
(including any legal obligation to engage in affirmative action), agreements and
contracts relating to employment practices, terms and conditions of employment,
and the employment of former, current and prospective employees, independent
contractors and "leased employees" (within the meaning of Section 414(n) of the
Code) of the Company including all such laws, agreements and contracts relating
to wages, hours, collective bargaining, employment discrimination, immigration,
disability, civil rights, fair labor standards, occupational safety and health,
workers' compensation, pay equity, wrongful discharge and violation of the
potential rights of such former, current, and prospective employees, independent
contractors and leased employees, and has timely prepared and filed all
appropriate forms (including Immigration and Naturalization Service Form I-9)
required by any relevant governmental authority, except where the failure to be
in compliance is not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect.
SECTION 2.13 DISCLOSURE DOCUMENTS. The Schedule 13E-4 and the
Schedule 14D-9 will comply in all material respects with the Securities Exchange
Act, except that no
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representation or warranty is being made by the Company with respect to the
Parent Information (as defined below) included in the Schedule 13E-4 or the
Schedule 14D-9. Neither the Schedule 13E-4 nor the Schedule 14D-9 nor any of the
information relating to the Company or its affiliates provided by or on behalf
of the Company specifically for inclusion in the Schedule 14D-1 or the Offer
Documents will, at the respective times the Schedule 13E-4, the Schedule 14D-9,
the Schedule 14D-1 and the Offer Documents are filed with the SEC and are first
published, sent or given to stockholders of the Company, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. The Proxy
Statement will comply in all material respects with the applicable requirements
of the Securities Exchange Act, except that no representation or warranty is
being made by the Company with respect to the Parent Information included in the
Proxy Statement. The Proxy Statement will not, at the time the Proxy Statement
is filed with the SEC or first sent to stockholders or at the time of the
Company's 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 were made, not misleading except that no representation or warranty is
being made by the Company with respect to the Parent Information included in the
Proxy Statement.
SECTION 2.14 RESTRICTIONS ON BUSINESS ACTIVITIES. Except for
this Agreement, to the Company's knowledge, there is no agreement, judgment,
injunction, order or decree binding upon the Company or any of its subsidiaries
which has or is reasonably likely to have the effect of prohibiting or impairing
the conduct of business by the Company or any of its subsidiaries as currently
conducted by the Company or such subsidiary, except for any prohibition or
impairment as is not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect.
SECTION 2.15 TITLE TO PROPERTY. The Company and each of its
subsidiaries have good title to all of their real properties and other assets,
free and clear of all liens, charges and encumbrances, except liens for taxes
not yet due and payable and such liens or other imperfections of title, if any,
as do not materially interfere with the present use of the property affected
thereby or which are not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect, and except for liens which secure indebtedness
reflected in the 1999 Balance Sheet; and, to the knowledge of the Company, all
leases pursuant to which the Company or any of its subsidiaries lease from
others any real or personal property, are valid and effective in accordance with
their respective terms, and there is not, to the knowledge of the Company, under
any of such leases, any existing material default or event of default (or event
which with notice or lapse of time, or both, would constitute a material
default), except where the lack of such validity and effectiveness or the
existence of such default or event of default is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.16 TAXES. Except as is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect:
(a) The Company and each of its subsidiaries has timely and
accurately filed, or caused to be timely and accurately filed, all material Tax
Returns (as hereinafter defined) required to be filed by it, and has paid,
collected or
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withheld, or caused to be paid, collected or withheld, all material amounts of
Taxes (as hereinafter defined) required to be paid, collected or withheld, other
than such Taxes for which adequate reserves in the 1999 Balance Sheet have been
established or which are being contested in good faith. There are no material
claims or assessments pending against the Company or any of its subsidiaries for
any alleged deficiency in any Tax, there are no pending audits or investigations
or, to the knowledge of the Company's Vice President/Controller or any other
officer senior thereto, threatened of or relating to any liability in respect of
any Taxes, and the Company has not been notified in writing of any proposed Tax
claims or assessments against the Company or any of its subsidiaries (other than
in each case, claims and assessments for which adequate reserves in the 1999
Balance Sheet have been established or which are being contested in good faith
or claims or assessments that are immaterial in amount). Neither the Company nor
any of its subsidiaries has executed any waivers or extensions of any applicable
statute of limitations to assess any material amount of Taxes. The federal
income tax returns of the Company and its subsidiaries have been audited by the
IRS for the taxable year through 1995. The statute of limitations period for
assessment of federal income taxes has expired for all taxable years through the
taxable year ending 1995. There are no outstanding requests by the Company or
any of its subsidiaries for any extension of time within which to file any
material Tax Return or within which to pay any material amounts of Taxes shown
to be due on any Tax Return. To the best knowledge of the Company, there are no
liens for material amounts of Taxes on the assets of the Company or any of its
subsidiaries except for statutory liens for current Taxes not yet due and
payable. Other than with respect to the Company and its subsidiaries, neither
the Company nor any of its subsidiaries is liable for Taxes of any other Person,
or is currently under any contractual obligation to indemnify any person with
respect to Taxes (except for customary agreements to indemnify lenders or
security holders in respect of taxes other than income taxes), or is a party to
any tax sharing agreement or any other agreement providing for payments by the
Company or any of its subsidiaries with respect to Taxes. Neither the Company
nor any of its subsidiaries will be required to include any adjustment in
taxable income for any period ending after the Closing under Section 481 of the
Code (or under any similar provision of the Tax laws of any jurisdiction) as a
result of a change in the method of accounting for a period ending on or before
the Closing or pursuant to an agreement with a Tax authority with regard to the
Tax liability of the Company or any of its subsidiaries for any period ending on
or before the Closing. There are no outstanding powers of attorney enabling any
party to represent the Company or any of its subsidiaries with respect to Tax
matters. Neither the Company nor any of its subsidiaries is a party to any joint
venture, partnership or other arrangement or contract which is or is reasonably
likely to be treated as a partnership for federal income tax purposes. None of
the Company's property is "tax exempt use property" within the meaning of
Section 168(h) of the Code. There are no private letter rulings in respect of
any Tax pending between the Company or its subsidiaries and any taxing
authority. The Company is not a party to any agreement, contract, arrangement or
plan that would result (taking into account the transactions contemplated by
this Agreement), separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code.
(b) For purposes of this Agreement, the term "TAX" shall mean
any United States federal, state, local, non-United States or provincial income,
gross receipts, property, sales, use, license, excise, franchise, employment,
payroll, alternative or add-on minimum, ad valorem, transfer or excise tax, or
any other tax, custom, duty, governmental fee or other like assessment or charge
imposed by any Governmental Authority, together with any interest or
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penalty imposed thereon. The term "TAX RETURN" shall mean a report, return or
other information (including any attached schedules or any amendments to such
report, return or other information) required to be supplied to or filed with a
Governmental Authority with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
SECTION 2.17 ENVIRONMENTAL MATTERS. (a) Except as is not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect, the operations and properties of the Company and its subsidiaries are in
compliance with applicable Environmental Laws (as hereinafter defined), which
compliance includes the possession by the Company and its subsidiaries of all
permits and governmental authorizations required under applicable Environmental
Laws, and compliance with the terms and conditions thereof.
(b) Except as is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect, there are no Environmental Claims
(as hereinafter defined), including claims based on "arranger liability,"
pending or, to the knowledge of the Company, threatened in writing against the
Company or any of its subsidiaries or against any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries has
retained or assumed.
(c) There are no past or present actions, circumstances,
conditions, events or incidents, including the release, emission, discharge,
presence or disposal of any Materials of Environmental Concern (as hereinafter
defined), that are reasonably likely to form the basis of any Environmental
Claim against the Company or any of its subsidiaries or against any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries have retained or assumed, except for such Environmental Claims that
are not reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect.
(d) Except as is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect or as set forth in Section 2.17(d)
of the Company Disclosure Schedule or the Company SEC Reports, (i) the Company
has not been notified in writing that any locations where the Company or any of
its subsidiaries has stored, disposed or arranged for the disposal of Materials
of Environmental Concern which have been listed on the National Priority List,
or any analogous state site list, and the Company and its subsidiaries have not
been notified that any of them is a potentially responsible party at any such
location; (ii) there are no underground storage tanks located on property owned
or leased by the Company or any of its subsidiaries; (iii) there is no friable
asbestos containing material contained in or forming part of any building,
building component, structure or office space owned, leased or operated by the
Company or any of its subsidiaries; and (iv) there are no polychlorinated
biphenyls (PCBs) or PCB-containing items contained in or forming part of any
building, building component, structure or office space owned, leased or
operated by the Company or any of its subsidiaries; PROVIDED, HOWEVER, that
other than in the case of a Company Facility, the representations in clause
(ii), (iii), and (iv) are made to the knowledge of the Company.
(e) For purposes of this Agreement:
(i) "ENVIRONMENTAL CLAIM" means any written claim, action,
cause of action, investigation or written notice by any person or entity
alleging potential liability (including
-22-
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries,
or penalties) arising out of, based on or resulting from the presence, or
release into the environment, of any Material of Environmental Concern at any
location, owned, leased or operated by the Company or any of its subsidiaries to
the extent occurring at the time of such ownership, lease or operation or at any
other time to the extent liability therefor has been retained or assumed by the
Company or any of its subsidiaries.
(ii) "ENVIRONMENTAL LAWS" means all United States federal,
state, local and non-United States laws, regulations, codes and ordinances,
relating to pollution or protection of human health and the environment
(including ambient air, surface water, ground water, land surface or sub-surface
strata), including but not limited to CERCLA, RCRA, TSCA, OSHA, the Clean Air
Act, the Clean Water Act, each as amended or supplemented, and any applicable
transfer statutes or laws.
(iii) "MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances and
hazardous wastes, medical waste, toxic substances, petroleum and petroleum
products, asbestos-containing materials, polychlorinated biphenyls, and any
other chemicals, pollutants or substances regulated under any Environmental Law.
(iv) "COMPANY FACILITY" means each of the Company Warehouse,
Xxxx. 00, 0000 Xxxxx Xxxxx 00, Xxxxxxxxxx, Xxxx and the Company Corporate
Headquarters at 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx.
SECTION 2.18 BROKERS. No broker, finder or investment banker
(other than the Financial Advisor, the fees and expenses of whom will be paid by
the Company) is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct copy of all agreements between the
Company and the Financial Advisor pursuant to which such firm would be entitled
to any payment relating to the transactions contemplated hereunder.
SECTION 2.19 INTELLECTUAL PROPERTY. (a) As used herein, the
term "INTELLECTUAL PROPERTY ASSETS" shall mean all worldwide intellectual
property rights, including, without limitation, patents, trademarks, service
marks and copyrights, and registrations and applications therefor, trade names,
common law marks, know-how, trade secrets, computer software programs and
proprietary information. As used herein, "COMPANY INTELLECTUAL PROPERTY ASSETS"
shall mean the Intellectual Property Assets used or owned by the Company or any
of its subsidiaries that are material to the business of the Company and its
subsidiaries as currently conducted.
(b) The Company and/or each of its subsidiaries owns, or is
licensed or otherwise possesses legally enforceable rights to use all Company
Intellectual Property Assets without conflict with the rights of others.
(c) Except as is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect, no claims (i) are currently
pending or, to the knowledge of the Company, are threatened in writing by any
person with respect to the Company Intellectual
-23-
Property Assets, or (ii) are currently pending or, to the knowledge of the
Company, threatened by any person with respect to the Intellectual Property
Assets of a third party (the "THIRD PARTY INTELLECTUAL PROPERTY ASSETS") to the
extent arising out of any use, reproduction or distribution of such Third Party
Intellectual Property Assets by or through the Company or any of its
subsidiaries.
(d) Except as is not reasonably likely to have a Material
Adverse Effect, neither the Company nor any of its subsidiaries knows of any
valid grounds for any bona fide claim to the effect that the licensing or use by
the Company or any of its subsidiaries of any product now licensed or used or
proposed for license or use by the Company or any of its subsidiaries infringes
on any Third Party Intellectual Property Assets, PROVIDED, HOWEVER, that nothing
in this Section 2.19(d) shall be deemed to apply to products purchased or
licensed by the Company for resale in the ordinary course of the Company's
business.
(e) The Company and/or each of its subsidiaries has made all
necessary filings and recordations to protect and maintain its interest in the
patents, patent applications, trademark and service xxxx registrations,
trademark and service xxxx applications, copyright registrations and copyright
applications and licenses included in the Company Intellectual Property Assets,
except where the failure to so protect or maintain is not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect.
(f) (i) Each patent, patent application, trademark or service
xxxx registration, and trademark or service xxxx application and copyright
registration or copyright application of the Company and/or each of its
subsidiaries included in the Company Intellectual Property Assets is valid and
subsisting and (ii) each material license of Company Intellectual Property
Assets is valid, subsisting and enforceable.
(g) To the knowledge of the Company, there is no material
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property Assets by any third party, including any employee, former
employee, independent contractor or consultant of the Company or any of its
subsidiaries which is reasonably likely, individually or in the aggregate, to
result in a Material Adverse Effect.
(h) The disclosure under the heading "Year 2000" contained in
the Company's Quarterly Report on Form 10-Q for the period ended September 30,
1999 is accurate and in compliance with applicable law in all material respects.
SECTION 2.20 INTERESTED PARTY TRANSACTIONS. Except for events
as to which the amounts involved do not, in the aggregate, exceed $100,000,
since the Company's proxy statement dated April 30, 1999, no event has occurred
that would be required to be reported as a Certain Relationship or Related
Transaction pursuant to Item 404 of Regulation S-K promulgated by the SEC.
SECTION 2.21 INSURANCE. All material fire and casualty,
general liability, business interruption, product liability and sprinkler and
water damage insurance policies maintained by the Company or any of its
subsidiaries are with reputable insurance carriers, provide coverage appropriate
in character and amount for the businesses of the Company and its
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subsidiaries and their respective properties and assets, except as is not
reasonably likely, individually or in the aggregate, to have a Material Adverse
Effect.
SECTION 2.22 PRODUCT LIABILITY. Since January 1, 1998, the
Company has not received written notice of any claim, pending or threatened,
against the Company or any of its subsidiaries for injury to person or property
of employees or any third parties suffered as a result of the sale of any
product or performance of any service by the Company or any of its subsidiaries,
including claims arising out of the defective or unsafe nature of its products
or services, which is reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect.
SECTION 2.23 OPINION OF FINANCIAL ADVISOR. The Board of
Directors of the Company has been advised by the Financial Advisor to the effect
that in its opinion, as of the date of this Agreement, the Per Share Amount is
fair to the holders of Shares from a financial point of view.
SECTION 2.24 RIGHTS AGREEMENT. The Board of the Directors of
the Company has authorized and approved, and the Company has executed, an
amendment to the Rights Agreement (as defined in Section 4.02(d)) to the effect
that (i) none of Parent, Purchaser or their affiliates, either individually or
as a group, shall become an "Acquiring Person" (as defined in the Rights
Agreement) by virtue of the approval, execution or delivery of this Agreement,
the consummation of the transactions contemplated hereby or any announcement of
the same, and (ii) no Distribution Date or Share Acquisition Date (as each such
term is defined in the Rights Agreement) (each a "RIGHTS EVENT") shall occur by
virtue of the approval, execution or delivery of this Agreement, the
consummation of the transactions contemplated hereby or any announcement of the
same. The Company will use its reasonable best efforts to cause the Rights Agent
(as defined in the Rights Agreement) to execute such amendment as promptly as
practicable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as would not prevent or delay consummation of the
Merger or otherwise materially and adversely affect the ability of Parent, BYOWC
and Purchaser to perform their respective obligations under this Agreement or as
set forth in the disclosure schedule delivered by the Parent to the Company
prior to the execution of this Agreement (the "PARENT DISCLOSURE SCHEDULE"),
Parent and BYOWC, jointly and severally, hereby represent and warrant to the
Company as follows:
SECTION 3.01 ORGANIZATION AND GOOD STANDING. BYOWC is a
limited liability company duly organized, validly existing and in good standing
under the laws of Delaware and has all requisite limited liability company power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of Parent and Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted. Other than
Purchaser, Parent has no subsidiaries.
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SECTION 3.02 AUTHORIZATION; BINDING AGREEMENT. BYOWC, Parent
and Purchaser have all requisite limited liability company or corporate power
and authority, as the case may be, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation by Parent, Purchaser and BYOWC of the
transactions contemplated hereby (including, but not limited to, the Offer and
the Merger), have been duly and validly authorized by the members of BYOWC and
by the Boards of Directors of Parent and Purchaser, as applicable, and no other
limited liability company or corporate proceedings on the part of Parent,
Purchaser or BYOWC are necessary to authorize the execution and delivery of this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Parent, Purchaser and BYOWC
and, assuming due authorization, execution, and delivery by the Company,
constitute the legal, valid and binding obligations of Parent, Purchaser and
BYOWC.
SECTION 3.03 GOVERNMENTAL APPROVALS. No Consent from or with
any Governmental Authority on the part of Parent, Purchaser or BYOWC is required
in connection with the execution or delivery by Parent, Purchaser and BYOWC of
this Agreement, or the consummation by Parent, Purchaser and BYOWC of the
transactions contemplated hereby, other than filings with the SEC, any filings
under the HSR Act, compliance with applicable Blue-Sky Laws and any applicable
Foreign Monopoly Laws, such filings and consents as may be required under any
Environmental, Health and Safety Laws, and the filing and recordation of
appropriate merger or other documents as required by the DGCL.
SECTION 3.04 NO VIOLATIONS. The execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and
compliance by Parent, Purchaser and BYOWC with any of the provisions hereof will
not (i) conflict with or result in any breach of any provision of the
Certificate of Formation and Operating Agreement of BYOWC or the Certificate of
Incorporation and Bylaws of Parent and Purchaser, (ii) require any Consent under
or result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of, any material note, bond, mortgage, indenture, contract, lease, license,
agreement or instrument to which Parent, Purchaser or BYOWC is a party or by
which Parent, Purchaser or BYOWC, or any of their assets or property is subject,
(iii) result in the creation or imposition of any material lien or encumbrance
of any kind upon any of the assets of Parent, Purchaser or BYOWC or (iv) subject
to obtaining the Consents from Governmental Authorities referred to in SECTION
3.03 hereof, violate any Law to which Parent, Purchaser or BYOWC or their
respective assets or properties are subject, except in any such case for any
such conflicts, violations, breaches, defaults or other occurrences that would
not prevent or delay consummation of the Offer or the Merger, or otherwise
materially and adversely affect the ability of Parent, Purchaser and BYOWC to
perform their respective obligations under this Agreement.
SECTION 3.05 DISCLOSURE DOCUMENTS. None of the information
supplied by Parent, Purchaser or BYOWC or their respective officers, directors,
managers, members, representatives, agents or employees (the "PARENT
INFORMATION") for inclusion in the Proxy Statement will, at the time the Proxy
Statement is filed with the SEC or first mailed to the Company's stockholders,
at the time of the Company's stockholders' meeting, contain any untrue statement
of a material fact, or will omit to state any material fact necessary in order
to
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make the statements therein, in light of the circumstances in which they were
made not misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for such stockholders'
meeting which has become false or misleading. Neither the Schedule 14D-1 or the
Offer Documents or any amendments thereof or supplements thereto nor any of the
Parent Information provided specifically for inclusion in the Schedule 13E-4 or
the Schedule 14D-9 will, at the respective times the Schedule 14D-1, the Offer
Documents, the Schedule 13E-4 or the Schedule 14D-9 are filed with the SEC or
first published, sent or given to the Company's stockholders, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Notwithstanding the foregoing, neither Parent
nor BYOWC makes any representation or warranty with respect to any information
that has been supplied by the Company or its accountants, counsel or other
authorized representatives for use in any of the foregoing documents. The
Schedule 14D-1 and the Offer Documents will comply as to form in all material
respects with the provisions of the Securities Exchange Act.
SECTION 3.06 FINDERS AND INVESTMENT BANKERS. Except for Credit
Suisse First Boston Corporation ("CSFB"), whose fees and expenses will be paid
by Parent, none of BYOWC, Parent, Purchaser, and their respective officers or
directors has employed any broker, finder or financial advisor or otherwise
incurred any liability for any brokerage fees, commissions or financial
advisors' or finders' fees in connection with the transactions contemplated
hereby.
SECTION 3.07 FINANCING ARRANGEMENTS. (a) Parent has, on or
prior to the date of this Agreement, entered into one or more subscription
agreements pursuant to which the subscribers thereunder have, subject to the
conditions set forth in this Agreement and no other conditions, agreed to make
an equity investment in Parent of an aggregate of $80 million in cash or Shares
valued at $19.00 per share for use in connection with the Offer and Merger (the
"EQUITY INVESTMENT").
(b) Parent has, on or prior to the date hereof, entered into a
commitment letter with an investment fund managed by Xxxxxxx Xxxxxx & Co.
LLC ("XXXXXXX XXXXXX") attached hereto as Exhibit 2, pursuant to which Xxxxxxx
Xxxxxx has agreed, subject to the terms and conditions contained in such letter
and no other conditions, to make an equity investment in Parent (the "EQUITY
FINANCING") of an aggregate of $130 million in cash for use in connection with
the Offer and the Merger.
(c) Parent has, on or prior to the date hereof, entered into a
commitment letter with CSFB, CIBC Inc. ("CIBC") and CIBC World Markets Corp.
("CIBC WORLD") attached hereto as Exhibit 3, pursuant to which CSFB, CIBC and
CIBC World have committed, subject to the conditions contained in such letter
and no other conditions, to lend an aggregate of up to $320 million to Purchaser
in cash to the Purchaser for purposes of financing the Purchaser Offer (the
"DEBT FINANCING" and together with the Equity Financing, the "FINANCING") and,
effective upon the initial acceptance for payment of Shares pursuant to the
Offer, to make available to the Company and Purchaser a revolving credit
facility in the amount of up to $70 million (the "NEW COMPANY CREDIT FACILITY").
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(d) The Equity Investment and the Financing are sufficient,
together with the Company Contribution Amount, to pay the aggregate
consideration to the holder of Shares and Company Options as contemplated by
this Agreement and to make all other necessary payments of fees and expenses
required to be paid by Parent and Purchaser in connection with the transactions
contemplated by this Agreement.
SECTION 3.08 NO PRIOR ACTIVITIES. Except for obligations or
liabilities incurred in connection with its incorporation or organization or the
negotiation and consummation of this Agreement and the transactions contemplated
hereby (including any financing in connection therewith), Purchaser has not
incurred any obligations or liabilities and has not engaged in any business or
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person or entity.
SECTION 3.09 DGCL SECTION 203. Other than by reason of this
Agreement or the transactions contemplated hereby, Parent is not an "interested
stockholder" of the Company, as that term is defined in Section 203 of the DGCL.
SECTION 3.10 BENEFICIAL OWNERSHIP OF SHARES. Except as
previously disclosed in writing to the Company, none of Parent, BYOWC or
Purchaser "beneficially owns" (as defined in Rule 13d-3 under the Securities
Exchange Act) any of the outstanding shares of Company Common Stock or any
securities convertible into or exchangeable for Company Common Stock.
SECTION 3.11 SURVIVING CORPORATION AFTER THE MERGER. At and
immediately after the Effective Time, and after giving effect to the Offer and
the Merger, any indebtedness incurred in connection with the Offer and the
Merger and any other transactions contemplated in connection therewith (and any
changes in the Surviving Corporation's assets and liabilities as a result
thereof), the Surviving Corporation will not (i) be insolvent (either because
its financial condition is such that the sum of its debts is greater than the
fair value of its assets or because the present fair saleable value of its
assets will be less than the amount required to pay its probable liabilities on
its debts as they mature), (ii) have unreasonably small capital with which to
engage in its business, or (iii) have incurred or plan to incur debts beyond its
ability to pay as they mature.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. The Company covenants and agrees that, during the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, unless Parent shall otherwise agree in writing,
and except as set forth in Section 4.01 of the Company Disclosure Schedule, the
Company shall conduct its business and shall cause the businesses of its
subsidiaries to be conducted only in, and the Company and its subsidiaries shall
not take any action except in, the ordinary course of business and in a manner
consistent with past practice; and the Company shall use reasonable commercial
efforts to preserve substantially intact the business organization of the
Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its subsidiaries and to
preserve the present relationships of the Company and its subsidiaries with
customers, suppliers and other persons with which the Company or any of its
subsidiaries has significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement, neither the Company nor
any of its subsidiaries shall, during the period from the date of this Agreement
and continuing until the earlier of the termination of this Agreement or the
Effective Time, and except as set forth in Section 4.01 of the Company
Disclosure Schedule, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Parent, which in the case of
clauses (c), (d)(iv), (e), (f), (h) or (i) will not be unreasonably withheld or
delayed:
(a) amend or otherwise change the Company's Certificate of
Incorporation or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom interest) in the
Company, any of its subsidiaries or affiliates (except for the issuance of
shares of Company Common Stock issuable pursuant to Company Options under the
Company Stock Option Plans, which options are outstanding on the date hereof);
(c) sell, pledge, dispose of or encumber any assets of the
Company or any of its subsidiaries (except for (i) sales of assets in the
ordinary course of business and in a manner consistent with past practice, (ii)
dispositions of obsolete or worthless assets, and (iii) sales of immaterial
assets not in excess of $250,000 in the aggregate);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock, except that a wholly-owned subsidiary of
the Company may declare and pay a dividend to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, (iii) except as required by the terms of any
security as in effect on the date hereof or expressly permitted hereunder, amend
the terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise
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acquire, or permit any subsidiary to amend the terms or change the period of
exercisability of, purchase, repurchase, redeem or otherwise acquire, any of its
securities or any securities of its subsidiaries, including, without limitation,
shares of Company Common Stock, or any option, warrant or right, directly or
indirectly, to acquire any such securities, or propose to do any of the
foregoing, or (iv) settle, pay or discharge any claim, suit or other action
brought or threatened against the Company with respect to or arising out of a
stockholder equity interest in the Company;
(e) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof other than those listed on Section 4.01(e) of the Company
Disclosure Schedule; (ii) incur any indebtedness for borrowed money, except for
(x) borrowings and reborrowings under the Company's existing credit facilities
not in excess of $5 million and (y) other borrowings not in excess of $500,000
or issue any debt securities or assume, guarantee (other than guarantees of the
Company's subsidiaries entered into in the ordinary course of business) or
endorse or otherwise as an accommodation become responsible for, the obligations
of any person, or make any loans or advances, except in the ordinary course of
business consistent with past practice; or (iii) authorize any capital
expenditures or purchases of fixed assets which are, in the aggregate, in excess
of $8,000,000 from the date hereof until March 31, 2000; or (iv) enter into or
materially amend any contract, agreement, commitment or arrangement to effect
any of the matters prohibited by this Section 4.01(e);
(f) except as set forth in Section 4.01(f) of the Company
Disclosure Schedule, increase the compensation or severance payable or to become
payable to its directors, officers or employees, except for increases in salary
or wages of employees of the Company or its subsidiaries (who are not directors
or executive officers of the Company) in accordance with past practices, or
grant any severance or termination pay (except to make payments required to be
made under obligations existing on the date hereof in accordance with the terms
of such obligations) to, or enter into any employment or severance agreement,
with any new employee of the Company or any of its subsidiaries, except for an
agreement entered into in the ordinary course of business and providing for
annual base and bonus compensation not to exceed $150,000, or establish, adopt,
enter into or amend any collective bargaining agreement, Company Employee Plan
(within the meaning of Section 2.11 of this Agreement), trust, fund, policy or
arrangement for the benefit of any current or former directors, officers or
employees or any of their beneficiaries, except, in each case, as may be
required by law or as would not result in a material increase in the cost of
maintaining such collective bargaining agreement, Company Employee Plan, trust,
fund, policy or arrangement;
(g) take any action to change accounting policies or
procedures (including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable), except as required by a change in GAAP or SEC position occurring
after the date hereof;
(h) make any tax election or settle or compromise any United
States federal, state, local or non-United States tax liability;
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(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
in excess of $500,000 in the aggregate, other than the payment, discharge or
satisfaction in the ordinary course of business and consistent with past
practice of liabilities reflected or reserved against in the financial
statements contained in the Company SEC Reports or incurred in the ordinary
course of business and consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.01(a) through (i) above, or any action which
would make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect (subject to the first sentence of Article II)
or prevent the Company from performing or cause the Company not to perform its
covenants hereunder.
SECTION 4.02 NO SOLICITATION. (a) The Company shall not,
directly or indirectly, through any officer, director, employee, representative
or agent of the Company or any of its subsidiaries, solicit or encourage the
initiation of (including by way of furnishing information) any inquiries or
proposals regarding any merger, sale of assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transactions
involving the Company or any subsidiaries of the Company that if consummated
would constitute an Alternative Transaction (as defined in Section 7.01) (any of
the foregoing inquiries or proposals being referred to herein as an "ACQUISITION
PROPOSAL"). Nothing contained in this Agreement shall prevent the Board of
Directors of the Company from (i) furnishing information to a third person which
has made a BONA FIDE Acquisition Proposal that is a Superior Proposal (as
defined below) not solicited in violation of this Agreement, provided that such
person has executed an agreement with confidentiality provisions substantially
similar to those then in effect between the Company and BYOWC, or (ii) subject
to compliance with the other terms of this Section 4.02, including Sections
4.02(c), considering and negotiating a bona fide Acquisition Proposal that is a
Superior Proposal not solicited in violation of this Agreement; PROVIDED,
HOWEVER, that, as to each of clauses (i) and (ii), (x) such actions occur at a
time prior to the consummation (or, if the Offer is consummated and extended,
the initial consummation) of the Offer and (y) the Board of Directors of the
Company determines (after due consultation with independent counsel, which may
be Xxxxx, Day, Xxxxxx & Xxxxx) that it is or is reasonably likely to be required
to do so in order to discharge properly its fiduciary duties; PROVIDED, FURTHER,
that if a third person has made an Acquisition Proposal and the Company cannot
determine based upon the information provided by the third person whether the
Acquisition Proposal is a Superior Proposal, it may so indicate to the third
person. For purposes of this Agreement, a "SUPERIOR PROPOSAL" means any proposal
made by a third person to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, all of the equity securities of the
Company entitled to vote generally in the election of directors or all or
substantially all the assets of the Company, on terms which the Board of
Directors of the Company reasonably believes (i) (after consultation with a
financial advisor of nationally recognized reputation) to be more favorable from
a financial point of view to its stockholders than the Offer and the Merger and
the transactions contemplated by this Agreement taking into account at the time
of determination any changes to the financial terms of this Agreement which as
of that time had been proposed by Parent and (ii) to be more favorable to the
Company than the Offer and the Merger and the transactions contemplated by this
Agreement after taking into account all pertinent factors
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deemed by the Board of Directors of the Company required under the laws of the
State of Delaware.
(b) The Company shall notify Parent after receipt of any
Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company or
any of its subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any subsidiary by any
person or entity that informs the Board of Directors of the Company or such
subsidiary that it is considering making, or has made, an Acquisition Proposal.
Such notice to Parent shall be made orally and in writing, and shall indicate
the identity of the person making the Acquisition Proposal or intending to make
an Acquisition Proposal or requesting non-public information or access to the
books and records of the Company, the terms of any such Acquisition Proposal or
modification or amendment to an Acquisition Proposal, and whether the Company is
providing or intends to provide the person making the Acquisition Proposal with
access to information concerning the Company as provided in Section 4.02(a). The
Company shall also promptly notify Parent, orally and in writing, if it enters
into negotiations concerning any Acquisition Proposal.
(c) Except to the extent the Board of Directors of the Company
determines in (after due consultation with independent counsel, which may be
Xxxxx, Day, Xxxxxx & Xxxxx) that it is or is reasonably likely to be required to
do so in order to discharge properly its fiduciary duties, neither the Company
nor the Board of Directors of the Company shall withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Parent or Purchaser, the approval
by such Board of Directors of this Agreement, the Offer or the Merger; PROVIDED,
HOWEVER, that in no event may the Board of Directors withdraw or modify its
recommendation as aforesaid earlier than the second full business day following
Parent's receipt of written notice of the intention of the Board of Directors of
the Company to do so.
(d) The Company and the Board of Directors of the Company
shall not (i) redeem the rights (the "RIGHTS") issued under the Rights
Agreement, dated as of June 17, 1996, between the Company and State Street Bank
and Trust Company NA, as Rights Agent (the "RIGHTS AGREEMENT"), or waive or
amend any provision of the Rights Agreement, in any such case to permit or
facilitate the consummation of any Acquisition Proposal or Alternative
Transaction, or (ii) enter into any agreement with respect to, or otherwise
approve or recommend to stockholders, or publicly propose to approve or
recommend, any Acquisition Proposal or Alternative Transaction, unless this
Agreement has been terminated in accordance with its terms. It is understood and
agreed that a deferral of the distribution of Rights following the commencement
of a tender offer or exchange offer shall not be prohibited hereunder.
(e) Nothing contained in this Section 4.02 shall prohibit the
Company from taking and disclosing to its stockholders a position required by
Rule 14e-2(a) promulgated under the Securities Exchange Act or from making any
disclosure to its stockholders required by applicable law, rule or regulation.
(f) The Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any persons (other than
Parent) conducted heretofore with respect to any of the foregoing. The Company
agrees not to release any third party from the confidentiality and standstill
provisions of any agreement to which the Company is a party.
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(g) The Company shall ensure that the officers and directors
of the Company and the Company Significant Subsidiaries and any investment
banker or other advisor or representative retained by the Company are aware of
the restrictions described in this Section 4.02. The Company shall be
responsible for any failure of the Company's officers, directors, investment
bankers or other advisors or representatives to comply with such restrictions.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 APPROVAL OF THE MERGER. As promptly as
practicable after the date on which the Purchaser and, if required, the Company,
complete the purchase of shares in the Offer (the "OFFER COMPLETION DATE") and
to the extent required by applicable law, the Company shall prepare and file
with the SEC preliminary proxy materials or a preliminary information statement
which shall constitute the Proxy Statement. As promptly as practicable after
comments are received from the SEC thereon and after the furnishing by Parent of
all Parent Information required to be contained therein, the Company shall file
with the SEC the definitive Proxy Statement relating to the adoption of this
Agreement and approval of the transactions contemplated hereby by the
stockholders of the Company pursuant to this Agreement. The Proxy Statement
shall contain the recommendation of the Board of Directors of the Company in
favor of approval of this Agreement and the Merger. Thereafter, the Company
shall take all steps necessary so that this Agreement and the Merger will be
presented for the approval of stockholders, either at a stockholders meeting
duly called for such purpose or by the written consent of stockholders in lieu
of a meeting in accordance with the DGCL. BYOWC, Parent and Purchaser will use
their reasonable best efforts to cause such meeting or consent (or the short
form merger described in the next sentence) to occur within six months after the
Offer Completion Date. The Company shall not be required to take any of the
action specified in this Section if Parent or Purchaser may consummate the
Merger without the vote or approval of stockholders in accordance with the short
form merger provisions of Section 253 of the DGCL.
SECTION 5.02 VOTING OF SHARES BY PURCHASER. At any meeting of
the Company's stockholders held for the purpose of voting upon this Agreement
and the Merger, Parent, Purchaser, BYOWC and any of their respective
subsidiaries shall vote all of the Shares then owned by them in favor thereof.
SECTION 5.03 ACCESS TO INFORMATION; CONFIDENTIALITY. (a) The
Company shall (and shall cause its subsidiaries to):
(i) afford to the officers, employees, accountants, counsel,
financing sources and other representatives of Parent, reasonable
access during normal business hours to its properties, books,
contracts, commitments and records;
(ii) furnish to Parent all information concerning its
business, properties and personnel as Parent may reasonably request or
has reasonably requested; and
(iii) make available during normal business hours to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent the
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appropriate individuals (including management personnel, attorneys,
accountants and other professionals) for discussion of the Company's
business, properties, prospects and personnel as Parent may reasonably
request.
(b) Parent shall keep all information disclosed to it pursuant
to this Section 5.03 confidential in accordance with the terms of the
confidentiality letter, dated November 22, 1999 (the "CONFIDENTIALITY LETTER"),
between BYOWC and the Company.
SECTION 5.04 CONSENTS; APPROVALS. The Company, BYOWC and
Parent shall each use its commercially reasonable efforts (which efforts, to the
extent reasonably practicable, shall be made prior to the consummation of the
Offer) to obtain all consents, waivers, approvals, authorizations or orders
(including, without limitation, all United States and foreign governmental and
regulatory rulings and approvals), and the Company and Parent shall make (or, if
applicable, BYOWC will make) all filings (including, without limitation, all
filings with United States and foreign governmental or regulatory agencies)
required in connection with the authorization, execution and delivery of this
Agreement by the Company and Parent and the consummation by them of the
transactions contemplated hereby. The Company, BYOWC, Purchaser and Parent shall
furnish all information required to be included in the Proxy Statement or for
any application or other filing to be made pursuant to the rules and regulations
of any United States or foreign governmental body in connection with the
transactions contemplated by this Agreement. If a filing under the HSR Act is
required with respect to the Merger, each party hereto shall make an appropriate
filing of a notification and report form pursuant to the HSR Act with respect to
the transactions contemplated hereby within ten business days after the date
hereof, shall promptly supply any additional information and documentary
material that may be requested pursuant to the HSR Act, and shall use
commercially reasonable efforts to obtain early termination of the waiting
period under the HSR Act. In addition, each party hereto shall promptly make any
other filing that may be required under any antitrust law or by any antitrust
authority.
SECTION 5.05 INDEMNIFICATION AND INSURANCE. (a) The
Certificate of Incorporation and Bylaws of the Surviving Corporation shall
contain the provisions with respect to indemnification set forth in the Amended
and Restated Certificate of Incorporation and the Bylaws of the Company, which
provisions shall not be amended, modified or otherwise repealed for a period of
six years from the Effective Time in any manner that would adversely affect the
rights thereunder as of the Effective Time of individuals who at the Effective
Time were directors, officers, employees or agents of the Company, unless such
modification is required after the Effective Time by law.
(b) The Surviving Corporation shall, to the fullest extent
permitted under applicable law or under the Surviving Corporation's Certificate
of Incorporation or Bylaws, indemnify and hold harmless, each present and former
director, officer or employee of the Company or any of its subsidiaries
(collectively, the "INDEMNIFIED PARTIES") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the transactions contemplated
by this Agreement or (y) otherwise with respect to any acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided
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in the Company's Amended and Restated Certificate of Incorporation or Bylaws or
any applicable contract or agreement as in effect on the date hereof, in each
case for a period of six years after the date hereof. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time) and subject to the specific terms of any
indemnification contract, (i) any counsel retained by the Indemnified Parties
for any period after the Effective Time shall be reasonably satisfactory to the
Surviving Corporation (and, for these purposes, Xxxxx, Day, Xxxxxx & Xxxxx shall
be deemed reasonably satisfactory to the Surviving Corporation), (ii) after the
Effective Time, the Surviving Corporation shall pay the reasonable fees and
expenses of such counsel, promptly after statements therefor are received and
(iii) the Surviving Corporation will cooperate in the defense of any such
matter; PROVIDED, HOWEVER, that the Surviving Corporation shall not be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld or delayed); and PROVIDED, FURTHER, that, in the event
that any claim or claims for indemnification are asserted or made within such
six-year period, all rights to indemnification in respect of any such claim or
claims shall continue until the disposition of any and all such claims. The
Indemnified Parties as a group may retain only one law firm to represent them in
each applicable jurisdiction with respect to any single action unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties,
in which case each Indemnified Person with respect to whom such a conflict
exists (or group of such Indemnified Persons who among them have no such
conflict) may retain one separate law firm in each applicable jurisdiction.
(c) The Surviving Corporation shall honor and fulfill in all
respects the obligations of the Company pursuant to indemnification agreements
and employment agreements (the employee parties under such agreements being
referred to as the "OFFICER EMPLOYEES") with the Company's directors and
officers existing at or before the Effective Time.
(d) In addition, Parent will provide, or cause the Surviving
Corporation to provide, for a period of not less than six years after the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring at or prior
to the Effective Time (the "D&O INSURANCE") that is no less favorable than the
existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; PROVIDED, HOWEVER, that Parent and the
Surviving Corporation shall not be required to pay an annual premium for the D&O
Insurance in excess of 300% of the annual premium currently paid by the Company
for such insurance, but in such case shall purchase as much such coverage as
possible for such amount.
(e) From and after the Effective Time, Parent shall
unconditionally guarantee the timely payment of all funds owing by, and the
timely performance of all other obligations of, the Surviving Corporation under
this Section 5.05.
(f) This Section shall survive the consummation of the Merger
at the Effective Time, is intended to benefit the Company, the Surviving
Corporation, the Indemnified Parties, and the Officer Employees, shall be
binding on all successors and assigns of the Surviving Corporation and shall be
enforceable by the Indemnified Parties. Without limiting the generality or
effect of the foregoing, in the event that the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges with any other person
and is not the
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continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person, then, and in each such case, Parent shall cause proper provision
to be made so that the continuing or surviving corporation or purchase of such
properties and assets assumes the obligations set forth in this Section 5.05.
SECTION 5.06 NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to BYOWC and Parent, and BYOWC and Parent shall give
prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which is reasonably likely to cause any
representation or warranty of such party contained in this Agreement to be
materially untrue or inaccurate, (ii) any failure of the Company or Parent, as
the case may be, materially to comply with or satisfy, or the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which is
reasonably likely to cause the failure by such party materially to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; (iii) the Company obtaining knowledge of a material breach by
Parent, or Parent obtaining knowledge of a material breach by the Company, of
their respective representations, warranties, or covenants hereunder of which
the breaching party has not already given notice pursuant to clauses (i) or
(ii); or (iv) the occurrence of any other event which would be reasonably likely
(A) to have a Material Adverse Effect or (B) to cause any condition set forth in
ANNEX I or ANNEX II hereto to be unsatisfied in any material respect at any time
prior to the consummation of the Offer; PROVIDED, HOWEVER, that the delivery of
any notice pursuant to this Section shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice; and PROVIDED
FURTHER that failure to give such notice shall not be treated as a breach of
covenant for the purposes of Sections 7.01(h) or affect the rights and remedies
of the party obligated to give any notice pursuant to the foregoing clause (iii)
unless the failure to give such notice results in material prejudice to the
other party.
SECTION 5.07 FURTHER ACTION. Upon the terms and subject to the
conditions hereof, each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and otherwise to satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement. The Company agrees to cooperate reasonably with BYOWC, Purchaser and
Parent in connection with the negotiation and documentation of the Debt
Financing.
SECTION 5.08 PUBLIC ANNOUNCEMENTS. Parent and the Company
shall consult with each other before issuing any press release or making any
written public statement with respect to the Offer or Merger or this Agreement
and shall not issue any such press release or make any such public statement
without the prior consent of the other party, which shall not be unreasonably
withheld; PROVIDED, HOWEVER, that either party may, without the prior consent of
the other, issue such press release or make such public statement as may upon
the advice of counsel be required by law or the rules and regulations of The
Nasdaq Stock Market, in advance of obtaining such prior consent, if it has used
all reasonable efforts to consult with the other party.
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SECTION 5.09 CONVEYANCE TAXES. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Time.
SECTION 5.10 OPTION PLANS AND BENEFITS, ETC. Prior to the
Effective Time, the parties to this Agreement shall take all such actions as
shall be necessary to effectuate the provisions of Section 1.10.
SECTION 5.11 EMPLOYEE MATTERS. (a) Parent shall cause the
Surviving Corporation to (i) satisfy all obligations of the Company under each
existing severance agreement or employment agreement between the Company and any
of its officers or employees, and (ii) for a period of one year beginning on the
Effective Time, provide each individual who, as of the Effective Time, is an
employee of the Company or any subsidiary of the Company (a "Company Employee"),
so long as he or she remains employed by the Surviving Corporation or a
subsidiary thereof during such one-year period, with (x) health and welfare
benefits that are comparable in the aggregate to such benefits as are provided
to Company Employees immediately prior to the Effective Time; (y) severance
benefits pursuant to the Company's Severance Pay Plan in effect immediately
prior to the Effective Time; and (z) 401(k) plan benefits and deferred
compensation benefits as in effect under the Company's 401(k) plan and deferred
compensation plan in effect immediately prior to the Effective Time.
Notwithstanding the foregoing, Parent, the Surviving Corporation, or any
subsidiary thereof may (A) terminate, amend or modify any health and welfare
employee benefit plan, program or arrangement in any respect, (B) terminate the
employment of any employee of, or the service of any independent contractor,
leased employee or other service provider to, the Surviving Corporation or any
subsidiary thereof, and (C) modify the terms and conditions of the employment of
any such employee or the service of any such independent contractor, leased
employee or other service provider.
(b) It is expressly agreed that the provisions of Section
5.11(a) are not intended to be for the benefit of or otherwise enforceable by
any third party, including, without limitation, any Company Employee or any
collective bargaining unit or employee organization.
(c) The Company shall use its reasonable best efforts to
obtain from each holder of a Company Option his or her consent to the provisions
of Section 1.10 prior to the initial expiration date of the Offer; PROVIDED,
HOWEVER, that, in any event, the Company shall obtain such consent from the
holders of 80% of such Company Options within 15 business days from the date
hereof.
SECTION 5.12 COMPLIANCE WITH STATE PROPERTY TRANSFER STATUTES.
The Company agrees that it shall use its reasonable commercial efforts to comply
promptly with all requirements of applicable state property transfer laws as may
be required by the relevant state agency and shall take all action necessary to
cause the transactions contemplated hereby to be effected in compliance with
applicable state property transfer laws. The Company, after consultation with
Parent, shall determine which actions, if any, must be taken prior to or after
the Effective Time to comply with applicable state property transfer laws. The
Company agrees to
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provide Parent with any documents required to be submitted to the relevant state
agency prior to submission, and the Company shall not take any action to comply
with applicable state property transfer laws without Parent's prior consent,
which consent shall not be unreasonably withheld, conditioned or delayed. BYOWC
and Parent shall provide to the Company any assistance reasonably requested by
the Company with respect to such compliance.
SECTION 5.13 FINANCING COVENANTS. (a) Parent covenants and
agrees that it will not, without the prior consent of the Company (which consent
shall not be unreasonably withheld), enter into any material amendment to, or
modification or waiver of, any of the terms of the Equity Investment, the Equity
Financing or the Debt Financing if such amendment, modification or waiver would
(i) reduce the aggregate amount of funds committed under the Equity Investment,
the Equity Financing or the Debt Financing, as the case may be, (ii) add
significant additional conditions to the consummation of the Equity Investment,
the Equity Financing or the Debt Financing or (iii) have a significant adverse
affect on or significantly delay the consummation of the Offer and/or the
Merger. BYOWC and Parent shall enforce, to the fullest extent permitted under
applicable law, the obligations of the respective investment and financing
sources to provide the Equity Investment, the Equity Financing and the Debt
Financing and shall use its reasonable best efforts to consummate the Equity
Investment, Equity Financing and Debt Financing. BYOWC and Parent shall cause
the capitalization and debt of Parent and its subsidiaries (other than the
Company) after giving effect to the transactions contemplated hereby, to be
satisfactory to the lenders under the Debt Financing. If any of the lenders or
investors under the Debt Financing or Equity Financing is provided a solvency
opinion, the Company shall be provided, as an addressee, with substantially the
same opinion.
Parent's obligations under this Section 5.13(a) shall not be
construed in any way as restricting the ability of Parent to modify or otherwise
alter the terms, conditions or relative amounts of any debt or equity financing
(including arranging for substitute providers of such debt or equity financing)
as long as such modification or alteration does not (i) reduce the aggregate
amount of funds under the commitments for the Equity Investment, the Equity
Financing and the Debt Financing entered into on or prior to the date hereof,
(ii) add significant additional conditions to the funding of any of the Equity
Investment, the Equity Financing or the Debt Financing, or (iii) have a
significant adverse affect on or significantly delay the consummation of the
Offer and/or the Merger.
(b) The Company covenants and agrees that:
(i) unless and until the Offer (including for this purpose any
extensions pursuant to Section 1.02(d)) is consummated or this
Agreement is terminated, the Company shall maintain on hand cash, cash
equivalents and/or marketable securities (the "COMPANY OFFER CASH") in
an amount equal to the sum of (x) $200,000,000 and (y) the Option
Exercise Amount;
(ii) the Company shall, simultaneously with Purchaser's first
purchase of the Shares tendered in the Offer, fully and unconditionally
guarantee (the "GUARANTEE") the Debt Financing and shall,
simultaneously with Purchaser's first purchase of Shares tendered in
the Offer, secure such Guarantee by a first priority lien on and
security interest in (together with the lien and security interest
securing the New Company Credit Facility) substantially all of the
assets of the Company (including, to the extent not used
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to purchase Shares in the Company Offer, the Company Offer Cash) on
terms reasonably required by the provider of the Debt Financing, as
approved by the Board of Directors of the Company (as constituted both
before and after Parent has designated Directors pursuant to Section
1.04) provided that the New Company Credit Facility shall at the time
have been substituted for the Company's existing bank credit facility;
and
(iii) simultaneously with Purchaser's first purchase of Shares
tendered in the Offer, the Company shall enter into the New Company
Credit Facility, and shall, simultaneously with Purchaser's first
purchase of Shares tendered in the Offer, secure its obligations under
the New Company Credit Facility by a first priority lien on and
security interest in (together with the lien and security interest
securing the Guarantee) substantially all of the assets of the Company
(including, to the extent not used to purchase Shares in the Company
Offer, the Company Offer Cash), on the terms set forth in Exhibit 3 and
such other customary terms for credit facilities of this nature as
shall reasonably be required by the provider for the New Company Credit
Facility, as approved by the Board of Directors of the Company (as
constituted both before and after Parent has designated Directors
pursuant to Section 1.04).
(c) The obligations contained in this Section 5.13 are not
intended, nor shall they be construed, to benefit or confer any rights upon any
third person.
ARTICLE VI
CONDITIONS TO THE MERGER
The respective obligations of each party to effect the Merger
shall be subject to the fulfillment or waiver at or prior to the Effective Time
of the following conditions:
SECTION 6.01 OFFER. The Offer Completion Date shall have
occurred; PROVIDED that this condition shall be deemed to have been satisfied
with respect to the obligation of Parent and Purchaser to effect the Merger if
Purchaser fails to accept for payment or pay for Shares pursuant to the Offer in
violation of the terms of the Offer or of this Agreement.
SECTION 6.02 STOCKHOLDER APPROVAL. This Agreement shall have
been adopted at or prior to the Effective Time by the requisite vote of the
stockholders of the Company in accordance with the DGCL.
SECTION 6.03 NO INJUNCTION OR ACTION. No order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction shall have
been enacted, entered, promulgated or enforced by any court or other
Governmental Authority which prohibits or prevents the consummation of the
Merger which has not been vacated, dismissed or withdrawn prior to the Effective
Time. The Company and Parent shall use all reasonable best efforts to have any
of the foregoing vacated, dismissed or withdrawn by the Effective Time.
SECTION 6.04 GOVERNMENTAL APPROVALS. All Consents of any
Governmental Authority required for the consummation of the Merger and the
transactions contemplated by this Agreement shall have been obtained, except for
those Consents the failure to obtain which will not have a material adverse
effect on the business, assets, condition (financial or other),
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liabilities or results of operations of the Surviving Corporation and its
subsidiaries taken as a whole.
ARTICLE VII
TERMINATION
SECTION 7.01 TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
(a) subject to Section 1.04, by mutual written consent duly
authorized by the Boards of Directors of Parent and the Company; or
(b) by either Parent or the Company if the initial
consummation of the Offer shall not have occurred on or prior to March 31, 2000;
PROVIDED, HOWEVER, that the right to terminate this Agreement under this Section
7.01(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Offer to be consummated on or prior to such date; or
(c) by either Parent or the Company if, as the result of the
failure of the Minimum Condition or any of the other conditions set forth in
Annex I hereto, the Offer shall have terminated or expired in accordance with
its terms without Purchaser having purchased any Shares pursuant to the Offer,
PROVIDED that if the failure to satisfy any conditions set forth in Annex I
shall be a basis for termination of this Agreement under any other clause of
this Section 7.01, a termination pursuant to this clause (c) shall be deemed a
termination under such other clause; or
(d) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other nonappealable final action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; or
(e) by Parent, if, whether or not permitted to do so by this
Agreement, the Board of Directors of the Company or the Company shall (x) (i)
withdraw, modify or change its approval or recommendation of the Offer, this
Agreement or the Merger in a manner adverse to Parent, (ii) approve or recommend
to the stockholders of the Company an Acquisition Proposal or Alternative
Transaction; or (iii) approve or recommend that the stockholders of the Company
tender their shares in any tender or exchange offer that is an Alternative
Transaction or (y) take any public position or make any disclosures to the
Company's stockholders, whether or not permitted pursuant to Section 4.02(e),
which has the effect of any of the foregoing; or
(f) by Parent or the Company, if any representation or
warranty of the Company or Parent, respectively, set forth in this Agreement
shall be untrue when made (without for this purpose giving effect to
qualifications of materiality contained in such representations and warranties),
if such failure to be true and correct, individually or in
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the aggregate, is reasonably likely to have a Material Adverse Effect (a
"TERMINATING MISREPRESENTATION"); PROVIDED that, if such Terminating
Misrepresentation is curable prior to the Initial Expiration Date (or any
extension thereof) by the Company or Parent, as the case may be, through the
exercise of its reasonable best efforts and for so long as the Company or
Parent, as the case may be, continues to exercise such reasonable best efforts,
neither Parent nor the Company, respectively, may terminate this Agreement under
this Section 7.01(f); or
(g) by Parent or the Company, if any representation or
warranty of the Company or Parent, respectively, set forth in this Agreement,
shall have become untrue (without for this purpose giving effect to
qualifications of materiality contained in such representations and warranties)
if such failure to be true and correct, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect (in either case, a
"TERMINATING CHANGE"), in either case other than by reason of a Terminating
Breach (as hereinafter defined); PROVIDED that, if any such Terminating Change
is curable prior to the Initial Expiration Date (or any extension thereof) by
the Company or Parent, as the case may be, through the exercise of its
reasonable best efforts, and for so long as the Company or Parent, as the case
may be, continues to exercise such reasonable best efforts, neither Parent nor
the Company, respectively, may terminate this Agreement under this Section
7.01(g); or
(h) by Parent or the Company, upon a material breach of any
covenant or agreement on the part of the Company or Parent, respectively, set
forth in this Agreement (a "TERMINATING BREACH"); PROVIDED THAT, except for any
breach of the Company's obligations under Section 4.02, if such Terminating
Breach is curable prior to the Initial Expiration Date (or any extension
thereof) by the Company or Parent, as the case may be, through the exercise of
its reasonable best efforts and for so long as the Company or Parent, as the
case may be, continues to exercise such reasonable best efforts, neither Parent
nor the Company, respectively, may terminate this Agreement under this Section
7.01(h); PROVIDED THAT, it is expressly agreed that for the purposes of this
Section 7.01(h) (x) the Company's failure to obtain the consents required by the
proviso of Section 5.11(c) shall be deemed to be material; and (y) a failure by
Parent, Purchaser or BYOWC to comply with Section 5.13 shall be deemed to be
material; or
(i) by the Company, in order to accept a Superior Proposal;
provided that (A) the Offer shall not theretofore have been consummated (or, if
the Offer is consummated and extended, initially consummated); (B) the Board of
Directors of the Company determines (after due consultation with independent
counsel, which may be Xxxxx, Day, Xxxxxx & Xxxxx) that it is or is reasonably
likely to be required to accept such proposal in order to discharge properly its
fiduciary duties; (C) the Company has given Parent two full business days'
advance notice of the Company's intention to accept such Superior Proposal; (D)
the Company shall in fact thereafter accept such proposal; (E) the Company shall
have paid the Fee and expenses pursuant to Section 7.04(b); and (F) the Company
shall have complied in all respects with the provisions of Section 4.02.
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Notwithstanding the foregoing, the right to terminate this
Agreement pursuant to clauses (e), (f), (g) and (h) above shall not be available
to Parent if Purchaser or any other affiliate of Parent shall have acquired
Shares pursuant to the Offer;
As used herein, "ALTERNATIVE TRANSACTION" means any of (i) a
transaction pursuant to which any person (or group of persons) other than Parent
or its affiliates (a "THIRD PARTY") acquires or would acquire more than 30% of
the outstanding shares of any class of equity securities of the Company, whether
from the Company or pursuant to a tender offer or exchange offer or otherwise,
(ii) a merger or other business combination involving the Company pursuant to
which any Third Party acquires more than 30% of the outstanding equity
securities of the Company or the entity surviving such merger or business
combination, (iii) any transaction pursuant to which any Third Party acquires or
would acquire control of assets (including for this purpose the outstanding
equity securities of subsidiaries of the Company and securities of the entity
surviving any merger or business combination including any of the Company's
subsidiaries) of the Company, or any of its subsidiaries having a fair market
value (as determined by the Board of Directors of the Company in good faith)
equal to more than 30% of the fair market value of all the assets of the Company
and its subsidiaries, taken as a whole, immediately prior to such transaction,
or (iv) any other consolidation, business combination, recapitalization or
similar transaction involving the Company or any of the Company Significant
Subsidiaries that are "significant" under Regulation S-X at a level of 30% or
more, other than the transactions contemplated by this Agreement; PROVIDED,
HOWEVER, that the term Alternative Transaction shall not include any acquisition
of securities by a broker dealer in connection with a BONA FIDE public offering
of such securities.
SECTION 7.02 [INTENTIONALLY OMITTED]
SECTION 7.03 EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 7.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto or any of its affiliates, directors, officers or stockholders except for
any obligation of Company, BYOWC or Parent set forth in Section 7.04 hereof.
Notwithstanding the foregoing, nothing herein shall relieve the Company, BYOWC
or Parent from liability for any willful breach hereof (it being understood that
(x) the provisions of Section 7.04 do not constitute a sole or exclusive remedy
for such willful breach and (y) the mere existence of a Material Adverse Effect,
by itself, shall not constitute such a willful breach), and nothing shall
relieve BYOWC or the Company or any of their affiliates of their obligations
under the Confidentiality Agreement.
SECTION 7.04 FEES AND EXPENSES. (a) Except as set forth in
this Section 7.04, all fees 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 Merger is consummated; PROVIDED,
HOWEVER, that Parent and the Company shall share equally all SEC filing fees and
printing expenses incurred in connection with the printing and filing of the
Proxy Statement (including any preliminary materials related thereto) and any
amendments or supplements thereto.
(b) The Company shall pay Parent a fee of $14,500,000 (the
"FEE") and shall also pay Parent $3,000,000 to reimburse Parent for documented
expenses relating to the
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transactions contemplated by this Agreement (which expenses shall include all
fees and expenses payable to any financing sources) upon the first to occur of
any of the following events:
(i) the termination of this Agreement by Parent or the Company
pursuant to Section 7.01(b) or Section 7.01(c), PROVIDED THAT an
Alternative Transaction shall be publicly announced by the Company or
any third party within nine months following the date of such
termination and such transaction shall at any time thereafter be
consummated on substantially the terms theretofore announced; PROVIDED,
HOWEVER, that for the purpose of this clause (i), all references to
"30%" in the definition of Alternative Transaction shall be deemed to
refer to "40%;"
(ii) the termination of this Agreement by Parent pursuant to
Section 7.01(e); or
(iii) the termination of this Agreement by the Company
pursuant to Section 7.01(i).
(c) Upon a termination of this Agreement by Parent pursuant to
Section 7.01(f) or 7.01(h), the Company shall pay to Parent Parent's actual,
documented and reasonable out-of-pocket expenses relating to the transaction
contemplated by this Agreement (including, but not limited to, fees and expenses
of counsel and accountants), but in no event more than $3,000,000, and shall
also pay to Parent Parent's actual and documented out-of-pocket expenses in the
nature of fees, costs and expenses paid to financing sources.
(d) Parent shall pay the Company's actual, documented and
reasonable out-of-pocket expenses relating to the transactions contemplated by
this Agreement (including, but not limited to, fees and expenses of counsel and
accountants and out-of-pocket expenses of financial advisors), such payment of
Company Expenses not to exceed $3,000,000, upon the termination of this
Agreement by the Company pursuant to Section 7.01(f) or 7.01(h).
(e) The Fee and expenses payable pursuant to Section 7.03(b),
or the expenses payable pursuant to Section 7.03(c), and the expenses payable
pursuant to Section 7.03(d), shall be paid within one business day after a
demand for payment following the first to occur of any of the events described
in Section 7.03(b), Section 7.03(c) or Section 7.03(d), as applicable; PROVIDED
THAT, in no event shall the Company be required to pay the Fee or any expenses
to Parent, nor shall Parent be required to pay any expenses to the Company if,
immediately prior to the termination of this Agreement, the entity entitled to
receive such fee and/or expenses was in material breach of its obligations under
this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. (a) Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any
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such party or any of their officers or directors, whether prior to or after the
execution of this Agreement. The representations, warranties and agreements in
this Agreement shall terminate at the Effective Time or upon the termination of
this Agreement pursuant to Section 7.01, as the case may be, except that the
agreements set forth in Article I and Sections 5.05 and any other agreement in
this Agreement which contemplates performance after the Effective Time shall
survive the Effective Time indefinitely and those set forth in Section 7.03
shall survive termination indefinitely. The Confidentiality Letter shall survive
termination of this Agreement.
(b) Any disclosure made with reference to one or more Sections
of the Company Disclosure Schedule shall be deemed disclosed with respect to
each other section therein as to which such disclosure is relevant provided that
such relevance is reasonably apparent. Disclosure of any matter in the Company
Disclosure Schedule shall not be deemed an admission that such matter is
material. No statement contained in any certificate or schedule required to be
furnished by any party pursuant to this Agreement, including the Company
Disclosure Schedule, shall contain any untrue statement of a material fact or
omit to state any material facts necessary under the circumstances, in order to
make the other statements contained therein not misleading.
SECTION 8.02 CERTAIN LIMITATIONS. (a) The representations and
warranties made in this Agreement by the Company shall be deemed for all
purposes to be qualified by the disclosures made in the Company Disclosure
Schedule, regardless of whether in the case of any particular representation or
warranty such representation or warranty refers to the specific section of the
Company Disclosure Schedule in which disclosure is made or to any other portion
thereof, so long as the relevance of a disclosure to the matter in question in
another portion of the Company Disclosure Schedule is reasonably apparent.
(b) The parties hereto expressly acknowledge that regardless
of the facts or circumstances, (i) no financial advisor, attorney, director,
officer, employee, member, manager, stockholder or other representative of any
party (a "REPRESENTATIVE") had, has or will have any duty to any other party in
connection with this Agreement or the transaction contemplated hereby and (ii)
no party will have any right of recovery against a Representative of any other
party by reason of this Agreement or the transactions contemplated hereby on any
theory, whether for alleged breach of contract, negligent misrepresentation,
actual or constructive fraud, federal or state securities or other laws or
otherwise; PROVIDED, HOWEVER, that nothing in this Section shall relieve any
party of liability for the acts or omissions of its Representatives to the
extent such liability attaches under this Agreement or applicable principles of
law.
(c) The parties hereto hereby waive any and all claims or
causes of action that might be asserted in connection with the transactions
contemplated by this Agreement, including under common law (including common law
fraud, constructive fraud, negligent misrepresentation or similar theories) or
federal or state securities law including Rule 10b-5 under the Securities
Exchange Act, trade regulation, environmental or other laws, except for claims
or causes of action brought under and subject to the terms of this Agreement.
(d) Each of the parties is a sophisticated legal entity that
was advised by experienced counsel and, to the extent it deemed necessary, other
advisors in connection with this Agreement, the events giving rise hereto and
the transactions contemplated hereby, including
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the Merger (collectively, the "Transaction"). Accordingly, each of the parties
hereby acknowledges and agrees (on behalf of itself and its affiliates) that:
(i) No party has relied or will rely upon any written or oral
information previously furnished to or discovered by it or its
representatives (including without limitation data room information or
oral or written information previously furnished by or on behalf of the
Company in connection with the Transaction, including without
limitation information furnished by the Company, any affiliate of any
of the Company or any of their respective Representatives, other than
this Agreement (including the Schedules hereto);
(ii) There are no representations or warranties by or on
behalf of any party hereto, the Company, any of their respective
affiliates or any Company Representative in respect of the Transaction
other than those expressly set forth in this Agreement (including the
Schedules hereto); and
(iii) The parties' respective rights, obligations and remedies
with respect to the Transaction will be solely pursuant to this
Agreement.
SECTION 8.03 NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made if and when delivered personally or by overnight courier
to the parties at the following addresses or sent by electronic transmission,
with confirmation received, to the telecopy numbers specified below (or at such
other address or telecopy number for a party as shall be specified by like
notice):
(a) If to Parent:
BYOWC Partners LLC
0000 Xxxxxxxx Xxxx.
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
With a copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
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(b) If to the Company:
Micro Warehouse, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
With a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
Confirm: (000) 000-0000
SECTION 8.04 CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) "affiliates" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(b) "business day" means any day other than a day on which
banks in New York are required or authorized to be closed, except that for the
purpose of determining any period of time prescribed by the rules and
regulations of the SEC, "business day" shall mean any day other than a day on
which the SEC is officially closed;
(c) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "knowledge of the Company" means the actual knowledge of
the executive officer of the Company and those persons employed by the Company
who have primary responsibility for the matter in question after reasonable
review of the applicable files in such person's possession, without a duty to
conduct any special investigation outside of the ordinary course of business;
(e) "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization,
other entity or group (as defined in Section 13(d)(3) of the Securities Exchange
Act); and
(f) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent, BYOWC or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company, the
Surviving Corporation, Parent, BYOWC or
-46-
such other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, more than 50% of the stock
or other equity interests the holders of which are generally entitled to vote
for the election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 8.05 AMENDMENT. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; PROVIDED, HOWEVER, that,
after approval of the Merger and this Agreement by the stockholders of the
Company, no amendment may be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.06 WAIVER. At any time prior to the Effective Time,
any party hereto may with respect to any other party hereto (a) extend the time
for the performance of any of the obligations or other acts, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 8.07 HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 8.08 SEVERABILITY. (a) If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon a determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
(b) The Company and Parent agree that the Fee and expense
provisions in Section 7.04 are fair and reasonable in the circumstances. If a
court of competent jurisdiction shall nonetheless, by a final, non-appealable
judgment, determine that the amount of either the Fee or the expenses exceeds
the maximum amount permitted by law, then the amount of such Fee or expenses
shall be reduced to the maximum amount permitted by law in the circumstances, as
determined by such court of competent jurisdiction.
SECTION 8.09 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and supersedes all prior agreements and undertakings (other
than the Confidentiality Letter, except to the extent specifically superseded
hereby), both written and oral, among the parties, or any of them, with respect
to the subject matters hereof and thereof, except as otherwise expressly
provided herein or therein.
SECTION 8.10 ASSIGNMENT; MODIFICATION OF STRUCTURE. (a) This
Agreement shall not be assigned by operation of law or otherwise; except that
all or any of the
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rights of Parent and/or Purchaser hereunder may be assigned to
any subsidiary of BYOWC; provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
(b) At the election of Parent, BYOWC, Parent, Purchaser and
the Company shall take all steps necessary such that the merger of Purchaser and
the Company shall be structured as a merger of Purchaser with and into the
Company, with the Company being the Surviving Corporation, in accordance with
the provisions of the DGCL. Except as may be necessary to reflect this change in
transaction structure, the terms of this Agreement and the obligations of the
parties pursuant hereto shall remain unchanged.
SECTION 8.11 PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, including, without limitation, by way of subrogation,
other than Section 5.05 (which is intended to be for the benefit of the
Indemnified Parties and Officer Employees and may be enforced by such
Indemnified Parties and Officer Employees).
SECTION 8.12 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of any party hereto in the exercise
of any right hereunder shall impair such right or be construed to be a waiver
of, or acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 8.13 ENFORCEMENT; GOVERNING LAW; JURISDICTION. (a)
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of Delaware applicable to contracts executed and
fully performed within the State of Delaware, regardless of laws that might
otherwise govern under applicable principles of conflict of laws thereof.
(b) The parties agree that irreparable damage would occur and
that the parties would not have any adequate remedy at law in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity.
(c) Each of the parties hereto (I) (a) consents to submit
itself to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement and (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, and (II) (a) agrees that
any action under this Agreement may also be brought in any Federal or state
court located in the City of New York, Borough of Manhattan and (b) agrees that
it will not by motion or other action contest the
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bringing of any such action in the above mentioned courts rather than in any
other venue or forum.
SECTION 8.14 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement. A
facsimile copy of a signature page shall be deemed and original signature page.
SECTION 8.15 WAIVER OF JURY TRIAL. BYOWC, PARENT AND PURCHASER
AND THE COMPANY HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.16 OBLIGATIONS OF BYOWC. BYOWC shall be jointly and
severally responsible with Parent and/or Purchaser for each and every obligation
of Parent or Purchaser under this Agreement to be performed at or prior to the
Effective Time.
SECTION 8.17 INTERPRETATION. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents to this Agreement is for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant thereto unless otherwise defined therein.
The definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns.
-49-
IN WITNESS WHEREOF, BYOWC, Parent, Purchaser and the Company
have caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
BYOWC PARTNERS LLC
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Member
BRIDGEPORT HOLDINGS INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
BRIDGEPORT ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
MICRO WAREHOUSE, INC.
By: /s/ Xxxxx X. Xxx
---------------------------------
Name: Xxxxx X. Xxx
Title: Executive Vice President
-50-
ANNEX I
CONDITIONS TO THE OFFER. Notwithstanding any other provision
of the Purchaser Offer, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) promulgated under the Securities Exchange Act (relating to the
obligation of Purchaser to pay for or return tendered Shares promptly after
termination or withdrawal of the Purchaser Offer), pay for, and (subject to any
such rules or regulations) may delay the acceptance for payment of any tendered
Shares and (except as provided in this Agreement) amend or terminate the
Purchaser Offer if (i) there shall not be validly tendered and not withdrawn
prior to the expiration of the Offer a number of Shares such that, upon
consummation of the Offer and contribution to the Purchaser of the Shares owned
by BYOWC, Purchaser would own at least 51% of the total number of issued and
outstanding Shares on a fully diluted basis, (the "MINIMUM CONDITION") or (ii)
any applicable waiting period under the HSR Act shall not have expired or been
terminated prior to the expiration of the Offer or (iii) at any time after the
date of this Agreement and before the initial time of acceptance of Shares for
payment pursuant to the Offer, any of the following conditions exists,
(a) there shall be in effect an injunction or other order,
decree, judgment or ruling by a Governmental Authority of competent jurisdiction
or a law, rule or regulation shall have been promulgated, or enacted by a
Governmental Authority of competent jurisdiction which in any such case (i)
restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger, or (ii) prohibits or restricts the ownership or
operation by Parent (or any of its affiliates or subsidiaries) of any portion of
the Company's business or assets, which is material to the business of the
Company taken as a whole or which would substantially deprive Parent and/or its
affiliates or subsidiaries of the benefit of ownership of the Company's business
or assets, or compels Parent (or any of its affiliates or subsidiaries) to
dispose of or hold separate any portion of the Company's business or assets, or
its or BYOWC's business or assets, or which would substantially deprive Parent
and/or its affiliates or subsidiaries of the benefit of ownership of the
Company's business or assets, or (iii) imposes material limitations on the
ability of Purchaser effectively to acquire or to hold or to exercise full
rights of ownership of the Shares, including, without limitation, the right to
vote Shares purchased by Purchaser pursuant to the Offer or acquired by Parent
in the Merger on all matters properly presented to the stockholders of the
Company, or (iv) imposes any material limitations on the ability of Parent
and/or its affiliates or subsidiaries effectively to control in any material
respect the business and operations of the Company (other than, prior to the
Effective Time, by reason of there being minority stockholder in the Company);
or
(b) there shall have been instituted, pending or threatened
(in writing or by public announcement) an action by a Governmental Authority
seeking (i) to restrain or prohibit the making or consummation of the Offer or
the consummation of the Merger or (ii) to impose any other restriction,
prohibition or limitation referred to in the foregoing paragraph (a); or
(c) this Agreement shall have been terminated by the Company
or Parent in accordance with its terms; or
(d) Parent and the Company shall have agreed in writing that
Purchaser shall amend the Offer to terminate the Offer or postpone the payment
for Shares pursuant thereto; or
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(e) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in the Shares on NASDAQ or (ii) a
declaration of a banking moratorium or any general suspension of payments in
respect of banks in the United States; or
(f) all proceeds of the Financing necessary to consummate the
Offer shall not have been received by Purchaser or the New Company Credit
Facility shall not be in effect; PROVIDED that this condition shall not apply if
(x) the failure of Purchaser to receive the proceeds of the Financing or the
failure of the New Company Credit Facility to be in effect shall have been
occasioned by the action or inaction by BYOWC or Parent, which action or
inaction also constitutes a breach of any material covenant, representation or
warranty of BYOWC or Parent under this Agreement or (y) the failure of Purchaser
to receive the proceeds of the Equity Financing shall have been occassioned by
the inability to document such financing in a manner reasonably satisfactory to
Xxxxxxx Xxxxxx; or
(g) any of the representations and warranties made by the
Company in this Agreement shall not have been true and correct when made, or
shall thereafter have ceased to be true and correct as if made as of such later
date (other than representations and warranties made as of a specified date) (in
each case without for this purpose giving effect to qualifications of
materiality contained in such representation and warranty), or the Company shall
not have performed each obligation and agreement and complied with each covenant
to be performed and complied with by it under this Agreement, if such failure to
be true and correct or such failure to perform, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect, PROVIDED,
HOWEVER, that such breach or failure to perform is incapable of being cured or
has not been cured the Initial Expiration Date (as it may be extended); or
(h) the Company's Board of Directors shall have modified or
amended its recommendation of the Offer in any manner adverse to Parent or shall
have withdrawn its recommendation of the Offer, or shall have recommended
acceptance of any Acquisition Proposal or shall have resolved to do any of the
foregoing; or
(i) (i) any corporation, entity or "group" (as defined in
Section 13(d)(3) of the Securities Exchange Act) ("PERSON/GROUP"), other than
Parent and Purchaser and any person/group identified in the Company's Proxy
Statement dated June 3, 1999), shall have acquired beneficial ownership of more
than 15% of the outstanding Shares, or shall have been granted any options or
rights, conditional or otherwise, to acquire a total of more than 15% of the
outstanding Shares and which, in each case, does not tender the Shares
beneficially owned by it in the Offer; (ii) any new group shall have been formed
which beneficially owns more than 15% of the outstanding Shares and which does
not tender the Shares beneficially owned by it in the Offer; or (iii) any
person/group (other than Parent or one or more of its affiliates) shall have
entered into an agreement in principle or definitive agreement with the Company
with respect to a tender or exchange offer for any Shares or a merger,
consolidation or other business combination with or involving the Company; or
(j) any change, development, effect or circumstance shall have
occurred or be threatened that is reasonably likely to have a Material Adverse
Effect with respect to the Company; or
(k) the Rights shall have become exercisable; or
-52-
(l) the Company shall commence a case under any chapter of
Title XI of the United States Code or any similar law or regulation; or a
petition under any chapter of Title XI of the United States Code or any similar
law or regulation is filed against the Company which is not dismissed within 2
business days; or
(m) the Company Offer shall not be consummated at the same
time as the Purchaser Offer (other than by reason of the fact that the number of
Shares tendered in the Offer were not sufficient to require the purchase of
Shares by the Company in the Offer pursuant to Section 1.02).
The foregoing conditions are for the sole benefit of Parent
and Purchaser and may be asserted by Parent and Purchaser regardless of the
circumstances giving rise to any such condition, and may be waived by Parent and
Purchaser, in whole or in part, at any time and from time to time, in the sole
discretion of Parent and Purchaser. The failure by Parent and Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
right, the waiver of such right with respect to any particular facts or
circumstances shall not be deemed a waiver with respect to any other facts or
circumstances, and each right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
Should the Purchaser Offer be terminated pursuant to the
foregoing provisions, all tendered Shares not theretofore accepted for payment
pursuant thereto shall forthwith be returned to the tendering stockholders.
-53-
ANNEX II
CONDITIONS TO THE OFFER. Notwithstanding any other provision
of the Company Offer, the Company shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) promulgated under the Securities Exchange Act (relating to the
obligation of the Company to pay for or return tendered Shares promptly after
termination or withdrawal of the Company Offer), pay for, and (subject to any
such rules or regulations) `may delay the acceptance for payment of any tendered
Shares and (except as provided in this Agreement) amend or terminate the Company
Offer for if (i) there shall not be validly tendered and not withdrawn prior to
the expiration of the Offer a number of Shares such that, upon consummation of
the Offer and contribution to the Purchaser of the BYOWC Shares, Purchaser would
own at least 51% of the total number of issued and outstanding Shares on a fully
diluted basis, (the "MINIMUM CONDITION") or (ii) any applicable waiting period
under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer or (iii) at any time after the date of this Agreement
and before the initial time of acceptance of Shares for payment pursuant to the
Offer, any of the following conditions exists,
(a) there shall be in effect an injunction or other order,
decree, judgment or ruling by a Governmental Authority of competent jurisdiction
or a law, rule or regulation shall have been promulgated, or enacted by a
Governmental Authority of competent jurisdiction which in any such case
restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger; or
(b) there shall have been instituted, pending or threatened
(in writing or by public announcement) an action by a Governmental Authority
seeking to restrain or prohibit the making or consummation of the Offer or the
consummation of the Merger; or
(c) this Agreement shall have been terminated by the Company
or Parent in accordance with its terms, including by the Company pursuant to
Section 7.01(i); or
(d) Parent and the Company shall have agreed that Purchaser
shall amend the Offer to terminate the Offer or postpone the payment for Shares
pursuant thereto; or
(e) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in the Shares on NASDAQ or (ii) a
declaration of a banking moratorium or any general suspension of payments in
respect of banks in the United States; or
(f) any of the representations and warranties made by Parent
in the Merger Agreement shall not have been true and correct when made, or shall
thereafter have ceased to be true and correct as if made as of such later date
(other than representations and warranties made as of a specified date) (in each
case without for this purpose giving effect to qualifications of materiality
contained in such representation and warranty), or Parent shall not have
performed each obligation and agreement and complied with each covenant to be
performed and complied with by it under this Agreement, if such failure to be
true and correct or such failure to perform, individually or in the aggregate,
is reasonably likely to have a Material Adverse Effect, PROVIDED, however, that
such breach or failure to perform is incapable of being cured or has not been
cured the Initial Expiration Date (as it may be extended); or
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(g) the New Company Credit Facility shall not be in effect,
PROVIDED that this condition shall not apply if the failure of the New Company
Credit Facility to be in effect shall have been occasioned by the action or
inaction of the Company, which action or inaction also constitutes a breach of
any material covenant, representation or warranty of the Company under this
Agreement; or
(h) the Purchaser Offer shall not be consummated at the same
time as the Company Offer.
The foregoing conditions are for the sole benefit of the
Company and may be asserted by the Company regardless of the circumstances
giving rise to any such condition, and may be waived by the Company, in whole or
in part, at any time and from time to time, in the sole discretion of the
Company. The failure by the Company at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any right, the waiver of such right with
respect to any particular facts or circumstances shall not be deemed a waiver
with respect to any other facts or circumstances, and each right shall be deemed
an ongoing right which may be asserted at any time and from time to time.
Should the Company Offer be terminated pursuant to the
foregoing provisions, all tendered Shares not theretofore accepted for payment
pursuant thereto shall forthwith be returned to the tendering stockholders.
-55-
EXHIBIT 1
TO THE AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BYOWC PARTNERS LLC,
BRIDGEPORT HOLDINGS INC.
BRIDGEPORT ACQUISITION CORPORATION
AND MICRO WAREHOUSE, INC.
SUMMARY OF TERMS OF WARRANT*
ISSUER: Surviving Corporation
SECURITY: Warrant to purchase common stock.
NUMBER OF SHARES: The sum of (i) the number of Shares
purchased by the Company in the Offer; (ii)
the number of shares exchanged for cash
consideration in the Merger; and (iii) the
number of Dissenting Shares.
EXERCISE PRICE: $19 per share in cash.
DATE OF ISSUANCE: The Closing Date of the Merger.
TERM: 10 years from the date of issuance.
ANTI-DILUTION: Subject to customary anti-dilution provisions.
Assumes an initial number of shares of common
stock of the Surviving Corporation equal to
the number of Shares held by BYOWC, Parent,
Purchaser or any direct or indirect wholly
owned subsidiary of BYOWC immediately prior to
the Effective Time.
--------
* Defined terms have the meanings assigned to them in the Merger Agreement.
-56-
EXHIBIT 2
December 20, 1999
BYOWC Partners LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
RE: PROJECT BRIDGEPORT
Gentlemen:
The purpose of this letter is to set forth the undersigned's commitment
to provide preferred and common equity financing for the acquisition, by a new
company ("Acquisition") to be formed by the undersigned and you and your
associates, of all of the common stock of Bridgeport, Inc. in a combined tender
offer, self tender and merger pursuant to an acquisition agreement (the
"Acquisition Agreement") in form and substance satisfactory to the undersigned
and you.
Attached hereto are Summary Term Sheets for (i) a Securities Purchase
Agreement pursuant to which the undersigned would purchase preferred stock (the
"Preferred Shares") of Acquisition's parent ("Holdings") and 50 percent of the
common stock (the "Common Shares") of Holdings (with the other 50 percent of the
Common Shares to be purchased by you and your associates), (ii) warrants to
purchase Common Shares representing 20 percent of the initial primary Common
Shares, which would be acquired by you and your associates, and (iii) a
Securityholders Agreement providing for certain matters relating to, among other
things, the composition of Holding's board of directors and its governance and
certain rights and obligations, including registration rights, relating to exit
transactions.
We are pleased to commit, subject to the conditions set forth herein
and in the attachments hereto, to purchase, at the Closing under the Acquisition
Agreement, (i) the Preferred Shares, for an aggregate of $50 million, and (ii)
50 percent of the Common Shares, for an aggregate of $80 million. This
commitment is subject to the following conditions:
1. The negotiation, execution and delivery of the documentation
referenced herein in form and substance reasonably
satisfactory to us (it being understood that we have reviewed
the Acquisition Agreement and are satisfied with it, provided
that it is not be amended without our consent).
2. The availability of debt financing, including a term loan and
a revolver, in amounts and on terms and conditions consistent
with the form of Commitment Letter attached hereto.
3. The satisfaction of the conditions described in the
attachments hereto.
FS Equity Partners IV, L.P. is excited about the opportunity to invest
in Bridgeport. We are available to discuss this commitment letter at your
earliest convenience. Please contact Xxxxxxx Xxxxxxx at (000) 000-0000 or Xxx
Xxxxx at (000) 000-0000 with any questions regarding this letter.
Sincerely yours,
FS Equity Partners IV, L.P.
By: FS Capital Partners LLC,
its general partner
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
AGREED AND ACCEPTED:
BYOWC Partners LLC
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Member
PROJECT BRIDGEPORT
SUMMARY OF TERMS
FOR
SECURITIES PURCHASE AGREEMENT
ISSUER: Bridgeport Holdings Inc.
PURCHASER: FS Equity Partners IV, L.P. and its designees (collectively,
"FS Fund") (any reference herein to a right of FS Fund may
be exercised by a majority in interest of the persons
comprising FS Fund).
SECURITIES
PURCHASED: o 50% of the Common Shares issued and outstanding at
closing, as per the attached Schedule 1.
o $50 million liquidation preference of Preferred Shares.
The Preferred Shares will have the terms set forth on
Schedule 2 attached hereto.
REPRESENTATIONS
AND WARRANTIES: Customary representations and warranties as to corporate
housekeeping matters.
CONDITIONS: o The negotiation, execution and delivery of the various
transaction agreements in form and substance satisfactory
to FS Fund (it being understood that FS Fund has reviewed
and is satisfied with the form of Acquisition Agreement,
provided that it is not amended without the consent of FS
Fund).
o The satisfaction (and not, unless FS Fund consents in
writing, the waiver) of each condition to the obligations
of Purchaser to purchase shares in the offer as set forth
in the Acquisition Agreement, including the absence of a
material adverse change.
o The continuing favorable recommendation of the Board of
Directors of Bridgeport of the transactions contemplated
by the Acquisition Agreement.
o The absence of any legal prohibition on FS Fund
purchasing the Common Shares and Preferred Shares and
executing, delivering and performing under the
transaction documentation.
o The availability of debt financing, including a term loan
and a revolver, as contemplated by the debt financing
commitment letter.
o BYOWC and its designees shall have purchased the Common
Shares to be purchased by them as per Schedule 1.
SCHEDULE 1
PROJECT BRIDGEPORT
CAPITAL STRUCTURE
The contemplated acquisition of Bridgeport, Inc. (the "Company") will
be accomplished through tender offers for the outstanding shares of the Company
made by Bridgeport Acquisition, Inc. ("Acquisition") and the Company. The
purchase of shares by Acquisition pursuant to the tender offers will be funded
by the equity contributions referred to below and bank financing. Upon
consummation of the tender offers, Acquisition will own at least 51% of the
shares of the Company on a fully diluted basis. Following the tender offers,
Acquisition will be merged with the Company, and Acquisition will be the
surviving corporation.
Acquisition will be wholly owned by Bridgeport Holdings Inc.
("Holdings"). Following the merger, the surviving corporation will be wholly
owned by Holdings. The following describes the capital structure of Holdings,
which will be in effect upon consummation of the tender offers except as noted:
1. XXXXXXX XXXXXX. Xxxxxxx Xxxxxx and its designees will contribute
$80,000,000 to Holdings and will receive 50% of the common equity of Holdings.
In addition, Xxxxxxx Xxxxxx and its designees will contribute
$50,000,000 for the purchase of Preferred Shares of Holdings. Upon consummation
of the merger, such securities may be exchanged for Preferred Shares of the
Company having substantially identical terms.
2. BYOWC. BYOWC, and other investors identified by it, will contribute
$80,000,000 in cash or common stock of the Company and will receive 50% of the
common equity of Holdings.
3. WARRANTS. BYOWC will receive warrants to acquire Common Shares of
Holdings exercisable for a number of shares equal to 20% of the common equity
referred to in (1) and (2) above.
4. MANAGEMENT OPTIONS. Following consummation of the merger, management
may receive options to acquire Common Shares of Holdings equal to up to 10% of
the common equity referred to in (1) and (2) above.
Sch. 1-1
SCHEDULE 2 - SUMMARY OF TERMS FOR PREFERRED SHARES
ISSUER: Initially Bridgeport Holdings Inc., but may be exchanged for
preferred shares of the Bridgeport (the "Company") on
substantially identical terms following consummation of the
merger contemplated by the Acquisition Agreement (the
"Merger").
PURCHASER: FS Fund.
SECURITY: 14% Preferred Stock with option to capitalize dividend (if
the Preferred Shares are held by any person other than FS
Fund, the option to capitalize dividend shall expire after
five years; PROVIDED, HOWEVER, that payment of cash
dividends is permitted or allowed for under the terms of the
Company's bank financing).
AMOUNT: $50.0 million ($1,000 per share).
DIVIDENDS: At a rate payable or capitalized semi-annually to yield
14.00% per year.
MATURITY: 8 years.
OPTIONAL
REDEMPTION: None.
MANDATORY
REDEMPTION: In the event of a change of control, Issuer must offer to
purchase for cash all outstanding Preferred Shares at a
price of 101% plus accrued dividends. Redeemable in full at
maturity.
LIQUIDATION
PREFERENCE: Holders of Preferred Shares will have a senior liquidation
preference equal to $1,000 per share, plus accrued
dividends.
SYNDICATION RIGHT: FS Fund may sell down any amount of the Preferred Shares at
any time. Any equity necessary to syndicate the Preferred
Shares will be provided by FS Fund. Issuer and FS Fund will
cooperate and coordinate with respect to such syndication
process.
PROTECTIVE
PROVISIONS: Issuer will not issue preferred stock that is senior to or
pari passu with the Preferred Shares, and no subsidiary of
Issuer will issue any preferred stock,
Sch. 2-1
in each case without the consent of the holders of a
majority of the Preferred Shares.
BOARD RIGHT: If Issuer fails to redeem the Preferred Shares at maturity,
the holders of a majority in interest of the Preferred
Shares will have the right to appoint one director to
Issuer's board of directors.
Sch. 2-2
PROJECT BRIDGEPORT
SUMMARY OF TERMS
FOR
WARRANTS
ISSUER: Bridgeport Holdings Inc.
PURCHASER: BYOWC.
SECURITY: Warrants to purchase Common Shares.
AMOUNT: Warrants to purchase Common Shares representing 20% of the
Common Shares issued at closing, as provided on Schedule I,
for an aggregate initial exercise price of $32,000,000.
EXERCISE PRICE: The date of issuance of the Warrants and each anniversary of
such date is hereinafter referred to as an "Anniversary
Date". The aggregate exercise price of all of the Warrants
from and after the date of issuance of the Warrants through
the date six months following such date shall be
$32,000,000. On the day following such date, and every six
months thereafter, the exercise price shall be increased by
15% of the exercise price on the most recent Anniversary
Date.
EXERCISE DATE: The Warrants will be exercisable at any time after the third
anniversary of the transactions contemplated by the
Acquisition Agreement or in the event of a change of control
of Issuer. Once exercisable, the Warrants can be exercised
for cash or, following an initial public offering or other
liquidation event, by tendering shares or Warrants. The
right to exercise the Warrants will expire upon the eighth
anniversary of the transactions contemplated by the
Acquisition Agreement.
REGISTRATION
RIGHTS: The Issuer will afford customary resale demand and piggyback
registration rights to the holders of the Warrants and the
Common Shares underlying the Warrants beginning six months
after the Issuer's initial public offering of the Common
Shares. In addition, to the extent permitted under the rules
and
1
practices of the Securities and Exchange Commission, the
Issuer will register the issuance of the Common Shares
issuable upon exercise of the Warrants to a purchaser in a
registered resale thereof.
OTHER PROVISIONS: Such other provisions as are reasonable and customary,
including anti-dilution protection for stock splits and
stock distribution and the treatment of the Warrants in a
business combination transaction in which the Issuer is not
the surviving public company.
2
PROJECT BRIDGEPORT
SUMMARY OF TERMS
FOR
SECURITYHOLDERS AGREEMENT
[To be executed by holders of]
Common Shares and Warrants]
BOARD
REPRESENTATION: The securityholders will agree to vote their securities to
cause the election of three nominees of FS Equity Partners
IV, L.P. ("FS Equity Partners") and four nominees of BYOWC
to the board of directors of Issuer.
GOVERNANCE: Issuer will not take any of the following actions without
the affirmative vote of five directors: (i) consummate or
submit to securityholders a merger, sale or change of
control transaction, (ii) purchase or sell material assets,
(iii) enter into any material financing transaction or sell
any securities to the public, (iv) consummate any
transaction with an affiliate of any securityholder, (v)
enter into any line of business other than lines of business
Issuer or its competitors currently conduct, (vi) hire or
terminate Issuer's chief executive officer, (vii) dissolve,
liquidate or wind-up Issuer, (viii) declare voluntary
bankruptcy or (ix) amend Issuer's certificate of
incorporation or bylaws.
INFORMATION RIGHTS: Issuer will furnish the securityholders with (i) quarterly
financial statements no later than 45 days following the end
of each fiscal quarter and (ii) audited annual financial
statements no later than 90 days following the end of each
fiscal year.
RIGHT OF FIRST
OFFER: Securityholders will have the right to purchase their
pro-rata share (based on the number of Common Shares held by
such person) of any Common Shares or warrants proposed to be
transferred by other securityholders to third parties (other
than transfers to permitted transferees, transfers pursuant
to an underwritten public offering or transfers in the
public securities market following the Issuer's initial
public offering).
1
TAG-ALONG RIGHTS: Securityholders will have the right to tag-along on a
pro-rata basis (based on the number of Common Shares held by
such person) in transfers by other securityholders of Common
Shares aggregating in excess of one percent of the then
outstanding Common Shares (other than transfers to permitted
transferees, transfers pursuant to an underwritten public
offering or transfers in the public securities market
following the Issuer's initial public offering.)
SYNDICATION RIGHTS: Notwithstanding anything to the contrary herein, transfers
of Preferred Shares held immediately after the closing by FS
Fund will not be subject to the rights of first offer or
tag-along rights described above. FS Fund will also be
entitled to transfer such Preferred Shares, together with
such number of Common Shares as FS Fund shall determine, as
an investment unit and the transfer of Common Shares as part
of such investment unit also will not be subject to the
rights of first offer or tag-along rights described above.
The purchasers of such investment unit will, in FS Fund's
discretion, execute either the Securityholders Agreement or
alternative documentation providing that the purchaser will
be subject to all of the obligations (other than obligations
to give tag-along rights) and may succeed to certain of the
rights of FS Fund contained in the Securityholders
Agreement. FS Equity Partners may, in its discretion, assign
to any such purchaser its rights to nominate not more than
one director of Issuer.
PREEMPTIVE RIGHTS: Securityholders will have the right to purchase on a
pro-rata basis (based on the number of Common Shares held by
such person) any equity securities (or securities
convertible into or exchangeable for equity securities)
issued by Issuer. Preemptive rights will not apply to (i)
issuances to employees, officer and directors approved by
the board of directors of Issuer, (ii) issuances as
consideration in mergers and acquisitions, (iii) any
issuance in or following the Issuer's initial public
offering of Common Shares and (iv) other customary
exceptions.
2
REGISTRATION
RIGHTS: (1) PREFERRED DEMAND RIGHTS:
If at any time after 12 months from the date of the Merger
the holders of at least 25% of the outstanding Preferred
Shares requests that Issuer file a registration statement
for the sale of at least 20% of the Preferred Shares then
outstanding, Issuer will use its best efforts to cause such
Preferred Shares to be registered. Issuer shall not be
obligated to effect more than two demand registration on
behalf of the holders of Preferred Shares.
(2) COMMON DEMAND RIGHTS:
If, at any time after the date six months after the
effective date of Issuer's initial registration statement on
Form S-1 with the U.S. Securities and Exchange Commission, a
securityholder holding at least 15% of the initially
outstanding Common Shares requests that Issuer file a
registration statement for the sale of Common Shares having
an aggregate market value of at least $20,000,000, Issuer
will use its best efforts to cause such Common Shares to be
registered. Issuer shall not be obligated to effect more
than three demand registrations on behalf of FS Fund and
three demand registrations on behalf of BYOWC and its
principals.
(3) PIGGY-BACK RIGHTS:
The securityholders will be entitled to "piggy-back"
registration rights on any registration statement of Issuer
on Issuer's behalf or on the behalf of other
securityholders, subject to certain rights, however, of
Issuer or its underwriters to reduce the number of
securities proposed to be registered in view of market
conditions.
(4) EXPENSES:
Issuer will pay for the fees and expenses associated with
all demand registrations and all "piggy-back" registrations,
exclusive of underwriting discounts and commissions.
(5) TRANSFER OF RIGHTS:
The registration rights may be freely transferred in
connection with transfers of the Preferred Shares or
3
Common Shares, provided Issuer is given written notice
thereof.
(6) OTHER PROVISIONS:
Such other provisions as are reasonable and customary,
including the terms for Issuer's best efforts to register
the Preferred Shares or Common Shares, the time registration
is required to remain effective, Issuer's ability to delay
filing a demand registration for a period of 60 days, the
information to be provided by the selling securityholders,
the documents to be delivered to the selling
securityholders, the terms of any underwritten offering and
the selection of an underwriter, and indemnification
provisions.
RIGHTS AND
OBLIGATIONS
OF BYOWC: If, following the Merger, BYOWC is dissolved and its Common
Shares distributed to its members, each of the members will
be subject to the obligations of BYOWC under the
Securityholders Agreement, and the rights of BYOWC under the
Securityholders Agreement will be collectively exercisable
by the members as determined by the members in their
discretion.
4
EXHIBIT 3
CREDIT SUISSE FIRST BOSTON
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
CIBC INC.
CIBC WORLD MARKETS CORP.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
December 20, 1999
BYOWC Partners LLC
0000 Xxxxxxxx Xxxx.
Xxxxxxx Xxxxx, XX 00000
Attention of Xxxxxx X. Xxxxx
Managing Member
FS Equity Partners IV, L.P.
c/o Xxxxxxx Xxxxxx & Co. LLC
00000 Xxxxx Xxxxxx Xxxx. -- Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention of Xxxxxxx X. Xxxxxxx
PROJECT BRIDGEPORT
$390,000,000 SENIOR SECURED CREDIT FACILITIES
COMMITMENT LETTER
Ladies and Gentlemen:
You have advised Credit Suisse First Boston ("CSFB"), CIBC Inc. ("CIBC"
and, together with CSFB, the "Initial Lenders") and CIBC World Markets Corp.
("CIBCWM" and, together with CSFB, the "Agents") that you intend to acquire all
the capital stock of a public company previously identified to us and referred
to herein as "Bridgeport" or the "Company" and to consummate the other
Transactions (such term and each other capitalized term used but not defined
herein having the meaning assigned to it in the Summary of Principal Terms and
Conditions attached hereto as Exhibit A (the "Term Sheet")). You have further
advised us that, in connection therewith, (a) Merger Sub will obtain senior
secured credit facilities (the "Term Facilities") described in the Term Sheet,
in an aggregate principal amount of up to $320,000,000, and (b) the Company and
Merger Sub will obtain a senior secured credit facility (the "Revolving
Facility" and, together with the Term Facilities, the "Facilities") described in
the Term Sheet, in an aggregate principal amount of up to $70,000,000.
In connection with the foregoing, you have requested that (a) CSFB
agree to structure, arrange and syndicate the Facilities, commit to provide 60%
of the Facilities and agree to serve as administrative agent, book manager and
lead arranger therefor, (b) CIBC commit to provide 40% of the Facilities and (c)
CIBCWM agree to serve as syndication agent for the Facilities.
2
CSFB is pleased to advise you (a) that it is willing to act as
exclusive administrative agent, book manager and lead arranger for the
Facilities and (b) of its commitment to provide up to 60% of the Facilities, in
each case upon the terms and subject to the conditions set forth or referred to
in this commitment letter (the "Commitment Letter") and in the Term Sheet.
CIBCWM is pleased to advise you that it is willing to act as exclusive
syndication agent for the Facilities, and CIBC is pleased to advise you of its
commitment to provide up to 40% of the Facilities, in each case upon the terms
and subject to the conditions set forth or referred to in this Commitment Letter
and in the Term Sheet. The commitments of CSFB and CIBC hereunder are several
and not joint and shall be allocated ratably among the Facilities.
It is agreed that (a) CSFB will act as the sole and exclusive
administrative agent (and shall have the right to appoint a collateral agent
(which may be CSFB or one of its affiliates)), book manager and lead arranger
for the Facilities, and (b) CIBCWM will act as the sole and exclusive
syndication agent for the Facilities.
We intend to syndicate the Facilities to a group of financial
institutions (together with the Initial Lenders, the "Lenders") identified by us
in consultation with and reasonably acceptable to you. We intend to commence
syndication efforts promptly upon the execution of this Commitment Letter, and
you agree actively to assist us in completing a syndication satisfactory to us.
Such assistance shall include (a) your using commercially reasonable efforts to
ensure that the syndication efforts benefit materially from your existing
lending relationships, (b) direct contact between senior management,
representatives and advisors of you and the Company, on the one hand, and the
proposed Lenders, on the other hand (including, without limitation, the active
participation of Xxxxxx X. York, in the capacity of an equity investor in BYOWC
and the prospective chairman of the board of directors and prospective acting
chief executive officer of the Company), (c) assistance by you and the Company
in obtaining credit ratings for the Facilities and in the preparation of a
Confidential Information Memorandum for the Facilities and other marketing
materials to be used in connection with the syndication and (d) the hosting,
with the Initial Lenders, of one or more meetings of prospective Lenders (it
being understood that the general Lenders' meeting will occur no later than
January 7, 2000).
The Agents will manage, in consultation with you, all aspects of the
syndication, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate (such institutions to be
reasonably satisfactory to you), the allocation of the commitments among the
Lenders and the amount and distribution of fees among the Lenders. To assist us
in our syndication efforts, you agree promptly to prepare and provide to us all
information with respect to Holdings, the Company and their respective
subsidiaries, the Transactions and the other transactions contemplated hereby,
including all financial information and projections (the "Projections"), as we
may reasonably request and which you can reasonably obtain, considering that you
will have contractual rights to obtain information from and the cooperation of
the Company but that you will not control the Company until the consummation of
the Tender Offer. You hereby represent and covenant that (a) all information
other than the Projections (the "Information") that has been or will be made
available to the Initial Lenders by you or any of your representatives is or
will be, when furnished, correct in all material respects
3
and does not or will not, when furnished, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein not materially misleading in light of the
circumstances under which such statements are made and (b) the Projections that
have been or will be made available to us by you or any of your representatives
have been or will be prepared in good faith based upon assumptions that are
reasonable at the time made and at the time the related Projections are made
available to us. You agree that if, at any time from and including the date
hereof until the closing of the Facilities, any of the representations in the
preceding sentence would be incorrect if the Information and Projections were
being furnished, and such representations were being made, at such time, then
you will promptly supplement the Information and the Projections so that such
representations will be correct under those circumstances, except that if the
representations are incorrect with respect to Information and Projections
furnished or prepared by the Company, you will supplement such Information and
Projections promptly after you become aware that such representations are
incorrect. In arranging and syndicating the Facilities, we will be entitled to
use and rely primarily on the Information and the Projections without
responsibility for independent verification thereof.
As consideration for the Initial Lenders' commitments hereunder and
agreements to perform the services described herein, you agree to pay (or to
cause the Borrowers to pay) to CSFB, when due, the nonrefundable fees set forth
in the Term Sheet and in the Fee Letter and the Administrative Agent Fee Letter,
each dated the date hereof and delivered herewith with respect to the Facilities
(the "Fee Letters").
The Initial Lenders' commitments hereunder and our agreements to
perform the services described herein are subject to (a) our not having
discovered or otherwise become aware of any information not previously disclosed
to us that we reasonably believe to be inconsistent in a material and adverse
manner with the information provided to us prior to the date hereof, with
respect to the business, assets, operations, condition (financial or otherwise),
or prospects of the Company and its subsidiaries, (b) there not having occurred
since September 30, 1999, any change, effect or circumstance that is or could
reasonably be expected to be materially adverse to the business, assets,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, (c) there not having occurred after the date
hereof a material disruption of or material adverse change in financial, banking
or capital market conditions that, in our reasonable judgment, could reasonably
be expected to materially and adversely affect the syndication of the
Facilities, (d) our satisfaction that, prior to and during the syndication of
the Facilities, there shall be no competing issues of debt securities or
commercial bank or other credit facilities of Holdings, the Company or their
respective subsidiaries being offered, placed or arranged, (e) the negotiation,
execution and delivery of definitive documentation with respect to the
Facilities reasonably satisfactory to us and our counsel, (f) the initial
advance of funds under the Facilities not being made prior to January 28, 2000,
and (g) the other conditions set forth in the Term Sheet.
You agree, jointly and severally, (a) to indemnify and hold harmless
each Initial Lender and Agent and their respective officers, directors,
employees, affiliates, agents and controlling persons from and against any and
all losses, claims, damages, liabilities and expenses, joint or several, to
which any such persons may become subject arising out of or in connection with
this Commitment Letter, the Fee Letters, the Term Sheet, the Transactions, the
Facilities or any related transaction or any claim, litigation,
4
investigation or proceeding relating to any of the foregoing, regardless of
whether any of such indemnified parties is a party thereto, and to reimburse
each of such indemnified parties upon demand for any reasonable legal or other
expenses incurred in connection with investigating or defending any of the
foregoing, PROVIDED that the foregoing indemnity will not, as to any indemnified
party, apply to losses, claims, damages, liabilities or related expenses to the
extent they are found in a final judgment of a court to have resulted from the
willful misconduct or gross negligence of such indemnified party and (b) (i) if
the Closing Date occurs or (ii) to the extent you otherwise are entitled to
reimbursement of expenses pursuant to the Merger Agreement (but, in the case of
this clause (ii), subject to pro rata reduction to the extent the aggregate
amount of your reimbursable expenses and our reimbursable expenses exceeds the
cap on reimbursement set forth in the Merger Agreement), to reimburse each
Initial Lender and Agent from time to time, upon presentation of a reasonably
satisfactory summary statement, for all reasonable out-of-pocket expenses
(including but not limited to expenses of the Initial Lenders' due diligence
investigation, consultants' fees, syndication expenses, travel expenses and
reasonable fees, disbursements and other charges of counsel), in each case
incurred in connection with the Facilities and the preparation of this
Commitment Letter, the Term Sheet, the Fee Letters, the definitive documentation
for the Facilities and any security arrangements in connection therewith.
Notwithstanding any other provision of this Commitment Letter, no indemnified
person shall be liable for any indirect or consequential damages in connection
with its activities related to the Facilities.
You acknowledge that the Initial Lenders and their respective
affiliates may be providing debt financing, equity capital or other services
(including financial advisory services) to other companies in respect of which
you may have conflicting interests regarding the transactions described herein
and otherwise. We will not use confidential information obtained from you by
virtue of the transactions contemplated by this Commitment Letter or our other
relationships with you in connection with the performance by us of services for
other companies, and we will not furnish any such information to other
companies. You also acknowledge that we have no obligation to use in connection
with the transactions contemplated by this Commitment Letter, or to furnish to
you, confidential information obtained by us from other companies. Without
limiting the foregoing, we acknowledge that non-public information concerning
the Company that you have obtained from the Company is subject to a
confidentiality agreement between you and the Company, a copy of which has been
delivered to us, and we agree to treat such information in accordance with said
confidentiality agreement.
This Commitment Letter and the Initial Lenders' commitments hereunder shall not
be assignable by you without the prior written consent of the Initial Lenders
(and any attempted assignment without such consent shall be null and void), are
intended to be solely for the benefit of the parties hereto (and the indemnified
persons), are not intended to confer any benefits upon, or create any rights in
favor of, any person other than the parties hereto (and the indemnified persons)
and are not intended to create a fiduciary relationship between the parties
hereto. Each Initial Lender may assign its commitment hereunder to any of its
affiliates or any Lender reasonably acceptable to you. Any such assignment to an
affiliate will not relieve the assignor from any of its obligations hereunder
unless and until such affiliate shall have funded the portion of the commitment
so assigned. Any assignment to a Lender shall be by novation and shall release
the assignor from the portion of its commitment hereunder so assigned. This
Commitment Letter may not be amended or any provision hereof waived or modified
except by an
5
instrument in writing signed by each of the parties hereto. This Commitment
Letter may be executed in any number of counterparts, each of which shall be an
original and all of which, when taken together, shall constitute one agreement.
Delivery of an executed counterpart of a signature page of this Commitment
Letter by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof. This Commitment Letter and the Fee Letters are the
only agreements that have been entered into between us with respect to the
Facilities and set forth the entire understanding of the parties with respect
thereto. This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of New York.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF
ANY PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE PERFORMANCE
OF SERVICES HEREUNDER.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letters nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, members, employees, attorneys,
accountants and advisors on a confidential and need-to-know basis or (b) as
required by applicable law or compulsory legal process (in which case you agree
to inform us promptly thereof); PROVIDED that, after your acceptance of this
Commitment Letter and the Fee Letters in the manner provided below, you may
disclose this Commitment Letter, the Term Sheet and the contents hereof and
thereof (but not the Fee Letters or the contents thereof) (i) to the Company and
Holdings and their respective attorneys, accountants and advisors, in each case
in connection with the Acquisition and on a confidential and need-to-know basis
and (ii) in any public filing relating to the Acquisition.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letters shall remain in full force
and effect regardless of whether definitive financing documentation shall be
executed and delivered and notwith standing the termination of this Commitment
Letter or the Initial Lenders' commitments hereunder; PROVIDED that your
obligations under this Commitment Letter, other than those relating to
confidentiality and to your assistance in connection with the syndication of the
Facilities, shall automatically terminate and be superseded by the definitive
documentation relating to the Facilities upon the initial funding thereunder,
and you shall be released from all liability in connection therewith at such
time.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof and of the Term Sheet and the Fee Letters by
returning to us executed counterparts hereof and of the Fee Letters not later
than 11:59 p.m., New York City time, on December 20, 1999. The Initial Lenders'
commitments hereunder and our agreements contained herein will expire at such
time in the event that we have not received such executed counterparts in
accordance with the immediately preceding sentence. In the event that the
initial borrowing in respect of the Facilities does not occur on or before
February 29, 2000, then this Commitment Letter and the Initial Lenders'
commitments and undertakings hereunder shall automatically terminate unless we
shall, in our discretion, agree to an extension. Before such date, we may
terminate our commitments under this Commitment Letter if any event occurs or
information has
6
become available that, in our reasonable judgment, results or is likely to
result in the failure to satisfy any condition precedent to borrowing set forth
herein or in the Term Sheet, provided that such failure could not reasonably be
expected to be cured prior to the expiration of the commitment.
7
We are pleased to have been given the opportunity to assist you in
connection with the financing for the Transactions.
Very truly yours,
CREDIT SUISSE FIRST BOSTON,
by /s/ Xxxxxxx X. Carry
--------------------------------
Name: Xxxxxxx X. Carry
Title: Director
by /s/ Xxxxxxxxxxx X. Xxxxxxxxxx
--------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxxxx
Title: Director
CIBC INC.,
by /s/ Xxxxxxx Xxxxx
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
CIBC WORLD MARKETS CORP.,
by /s/ Xxxxxxx Xxxxx
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
Accepted and agreed to as of
the date first above written:
BYOWC PARTNERS LLC,
by /s/ Xxxxxx X. Xxxxx
-----------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Member
8
by FS EQUITY PARTNERS IV, L.P.
by FS Capital Partners LLC, its General
Partner
by /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
CONFIDENTIAL
December 20, 1999 EXHIBIT A
PROJECT BRIDGEPORT
$390,000,000 SENIOR SECURED CREDIT FACILITIES
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS
BORROWERS: (A) With respect to the Term Facilities (as
defined below), Merger Sub (as defined
below).
(B) With respect to the Revolving Facility (as
defined below), (i) a Delaware corporation
referred to herein as "Bridgeport" or the
"Company" and (ii) Merger Sub.
(C) Upon consummation of the Merger (as defined
below), the Company shall assume all
obligations of Merger Sub with respect to
the Facilities.
(D) References herein to the "Borrower" or the
"Borrowers" shall refer to Merger Sub,
Bridgeport or the surviving corporation of
the Merger, as the context may require.
TRANSACTIONS:
A Delaware corporation ("Holdings") to be
formed by BYOWC Partners LLC ("BYOWC") and
FS Equity Partners IV, L.P. (the
"Sponsors"), intends to acquire (the
"Acquisition"), through a wholly owned
acquisition subsidiary of Holdings to be
incorporated under the laws of the State of
Delaware ("Merger Sub"), all the capital
stock (the "Shares") of Bridgeport pursuant
to an agreement and plan of merger (the
"Merger Agreement") to be entered into among
Holdings, Merger Sub, BYOWC and the Company.
The Merger Agreement will provide that
Merger Sub and the Company will make a
tender offer (the "Tender Offer") to acquire
up to 100% of the outstanding Shares. As
promptly as practicable following the
acceptance of Shares pursuant to the Tender
Offer (a) the Company will merge (the
"Merger") with and into Merger Sub, with
Merger Sub being the surviving corporation
in the Merger and a wholly owned subsidiary
of Holdings and (b) subject to stockholders'
appraisal rights, each outstanding Share not
acquired in the Tender Offer (the
"Untendered Shares") will be converted into
the right to receive an amount in cash equal
to the price paid in connection with the
Tender Offer.
In connection with the foregoing, (a) the
Sponsors, together with certain other equity
investors, will contribute an aggregate
amount of not less than
2
$210 million in cash and Shares to Holdings
as common and/or preferred equity, (b)
Holdings will contribute the amount so
received to Merger Sub as common equity in
exchange for the issuance to Holdings of all
the common stock of Merger Sub (the equity
contributions described in clauses (a) and
(b) being referred to herein collectively as
the "Sponsor Equity Contribution"), (c) the
Company will repay all amounts outstanding
under, and terminate, its existing credit
facility (the "Existing Credit Facility"),
(d) the Borrowers will obtain the senior
secured credit facilities described below
under the caption "Facilities" and (e) fees
and expenses incurred in connection with the
foregoing (the "Transaction Costs") will be
paid. The transactions described in this
paragraph and the preceding paragraph,
together with the Acquisition, are
collectively referred to herein as the
"Transactions".
SOURCES AND USES: The sources and uses of the funds necessary
to consummate the Transactions are set forth
on Annex II hereto.
ADMINISTRATIVE AGENT: Credit Suisse First Boston ("CSFB") will act
as sole and exclusive administrative agent
and collateral agent (collectively, the
"Administrative Agent") for a syndicate of
financial institutions (together with CSFB,
the "Lenders"), and will perform the duties
customarily associated with such roles.
BOOK MANAGER AND LEAD
ARRANGER: CSFB.
SYNDICATION AGENT: CIBC World Markets Corp. ("CIBC" and,
together with CSFB, the "Agents").
FACILITIES: (A) Two Senior Secured Term Loan Facilities in
an aggregate principal amount of up to
$320,000,000 (the "Term Facilities"), such
aggregate principal amount to be allocated
between (i) a Tranche A Facility in an
aggregate principal amount of $155,000,000
(the "Tranche A Facility") and (ii) a
Tranche B Term Loan Facility in an aggregate
principal amount of $165,000,000 (the
"Tranche B Facility").
(B) A Senior Secured Revolving Credit Facility
in an aggregate principal amount of up to
$70,000,000 (the "Revolving Facility" and,
together with the
3
Term Facilities, the "Facilities"), of which
up to an amount to be agreed upon will be
available in the form of letters of credit.
In connection with the Revolving Facility,
CSFB will make available to the Borrower a
swingline facility under which the Borrower
may make short-term borrowings of up to an
amount to be agreed upon. Except for
purposes of calculating the Commitment Fee
described below, any such swingline
borrowings will reduce availability under
the Revolving Facility on a
dollar-for-dollar basis. Each Lender under
the Revolving Facility shall, promptly upon
request by CSFB, fund to CSFB its pro rata
share of any swingline borrowings.
PURPOSE: (A) The proceeds of the Term Facilities will be
used by Merger Sub, (i) on the date of the
initial borrowing under the Facilities (the
"Closing Date"), together with the proceeds
of the Sponsor Equity Contribution, solely
to pay the cash consideration payable in
respect of Shares purchased by Merger Sub in
the Tender Offer, (ii) following the Closing
Date, to purchase Shares tendered and
accepted during any extension of the Tender
Offer pursuant to the Merger Agreement,
(iii) on the date the Merger is consummated,
to pay the cash merger consideration to be
paid to the holders of the Untendered
Shares, if any, in connection with the
Merger, including any amounts to be paid in
connection with the exercise by such holders
of their appraisal rights, and (iv) to pay
related Transaction Costs.
(B) The proceeds of loans under the Revolving
Facility will be used by the Company solely
for general corporate purposes (other than
for the purchase of Shares), including the
refinancing of amounts outstanding under the
Existing Credit Facility on the Closing
Date. In addition, at any time on or prior
to the date the Merger is consummated, up to
$20,000,000 of loans under the Revolving
Facility may be used by Merger Sub solely to
pay interest and commitment fees on the
loans and unused commitments, respectively,
under the Term Facilities.
(C) Letters of credit will be used by the
Borrower solely for general corporate
purposes.
4
AVAILABILITY: (A) The full amount of the Tranche B Facility
must be drawn in a single drawing on the
Closing Date. Loans under the Tranche A
Facility will be available during the period
beginning on and including the Closing Date
and ending on and including the earlier of
(i) the 180th day after the Closing Date and
(ii) the date the Merger is consummated (the
"Tranche A Cutoff Date"). Any unused
commitments in respect of the Tranche A
Facility shall automatically terminate on
the Tranche A Cutoff Date. Amounts borrowed
under the Term Facilities that are repaid or
prepaid may not be reborrowed.
(B) Loans under the Revolving Facility will be
available on and after the Closing Date and
at any time prior to the final maturity of
the Revolving Facility, in minimum principal
amounts to be agreed upon. Amounts repaid
under the Revolving Facility may be
reborrowed.
INTEREST RATES AND FEES: As set forth on Annex I hereto.
DEFAULT RATE: The applicable interest rate plus 2% per
annum.
LETTERS OF CREDIT: Letters of credit under the Revolving
Facility will be issued by CSFB or one of
its affiliates (the "Issuing Bank"). Each
letter of credit shall expire not later than
the earlier of (a) 12 months after its date
of issuance and (b) the fifth business day
prior to the final maturity of the Revolving
Facility.
Drawings under any letter of credit shall be
reimbursed by the Borrower on the same
business day. To the extent that the
Borrower does not reimburse the Issuing Bank
on the same business day, the Lenders under
the Revolving Facility shall be irrevocably
obligated to reimburse the Issuing Bank pro
rata based upon their respective Revolving
Facility commitments.
The issuance of all letters of credit shall
be subject to the customary procedures of
the Issuing Bank.
FINAL MATURITY
AND AMORTIZATION: (A) TRANCHE A FACILITY
The Tranche A Facility will mature on the
180th day after the Closing Date (the
"Initial Maturity Date"), unless the Merger
shall have been consummated on or prior to
such date, in which
5
case the Tranche A Facility will mature on
the date that is five years after the
Closing Date, and will amortize in quarterly
installments under a schedule to be agreed
upon.
(B) TRANCHE B FACILITY
The Tranche B Facility will mature on the
Initial Maturity Date, unless the Merger
shall have been consummated on or prior to
such date, in which case the Tranche B
Facility will mature on the date that is
seven years after the Closing Date, and will
amortize in equal quarterly installments in
an annual amount equal to 1% during the
first six years of the Tranche B Facility
and 94% during the seventh year of the
Tranche B Facility.
(C) REVOLVING FACILITY
The Revolving Facility will mature on the
date that is five years after the Closing
Date.
GUARANTEES: All obligations of each Borrower under the
Facilities and under any interest rate
protection or other hedging arrangements
entered into with a Lender (or any affiliate
thereof) will be unconditionally guaranteed
(the "Guarantees") by Holdings, by the other
Borrower and by each existing and
subsequently acquired or organized domestic
and, to the extent no adverse tax
consequences to a Borrower would result
therefrom, foreign subsidiary of Holdings.
Notwithstanding the foregoing, the Company
and its subsidiaries shall not be required
to issue their Guarantees until the Closing
Date.
SECURITY: The Facilities, the Guarantees and any
interest rate protection or other hedging
arrangements entered into with a Lender (or
any affiliate thereof) will be secured by
substantially all the assets of Holdings,
each Borrower and each existing and
subsequently acquired or organized domestic
(and, to the extent no adverse tax
consequences to a Borrower would result
therefrom, foreign) subsidiary of Holdings
(collectively, the "Collateral"), including
but not limited to: (a) a first-priority
pledge of the capital stock of Merger Sub,
(b) a first-priority pledge of all other
capital stock (including the Shares) held by
Holdings, Merger Sub or the Company or any
domestic (or, subject to the foregoing
limitation,
6
foreign) subsidiary of Holdings (which
pledge, in the case of any foreign
subsidiary, shall be limited to 65% of the
voting stock of such foreign subsidiary to
the extent the pledge of any greater
percentage would result in adverse tax
consequences to Holdings) and (c) perfected
first- priority (subject to customary
exceptions) security interests in, and
mortgages on, substantially all tangible and
intangible assets of Holdings, each Borrower
and each existing or subsequently acquired
or organized domestic (or, subject to the
foregoing limitation, foreign) subsidiary of
Holdings (including but not limited to
accounts receivable, inventory, general
intangibles, investment property,
intellectual property, real property, cash
and proceeds of the foregoing).
All the above-described pledges, security
interests and mortgages shall be created on
terms, and pursuant to documentation,
satisfactory to the Lenders, and none of the
Collateral shall be subject to any other
pledges, security interests or mortgages
(subject to customary exceptions).
MANDATORY PREPAYMENTS: Loans under the Term Facilities shall be
prepaid with (a) a percentage to be agreed
upon of Excess Cash Flow (to be defined),
(b) 100% of the net cash proceeds of all
non-ordinary course asset sales or other
dispositions of property by Holdings and its
subsidiaries (including insurance and
condemnation proceeds), (c) 100% of the net
cash proceeds of issuances of debt
obligations of Holdings and its subsidiaries
and (d) 50% of the net cash proceeds of
issuances of equity securities of Holdings
and its subsidiaries, in each case subject
to exceptions to be agreed upon. In
addition, on the date the Merger is
consummated, Loans under the Term Facilities
shall be prepaid with the amount on deposit
in the Cash Collateral Account (as defined
below).
The above-described mandatory prepayments
shall be allocated between the Term
Facilities pro rata. Within each Term
Facility, mandatory prepayments shall be
applied pro rata to the remaining
amortization payments under each Term
Facility.
VOLUNTARY PREPAYMENTS
AND REDUCTIONS IN
COMMITMENTS: Voluntary reductions of the unutilized
portion of the Facilities commitments and
prepayments of borrowings will be permitted
at any time, in minimum principal amounts to
be agreed upon,
7
without premium or penalty, subject to
reimbursement of the Lenders' redeployment
costs in the case of a prepayment of
Adjusted LIBOR borrowings other than on the
last day of the relevant interest period.
All voluntary prepayments of the Term
Facilities will be allocated between the
Term Facilities in the discretion of the
Borrower. Within each Term Facility,
voluntary prepayments will be applied first,
to the scheduled installments of principal
due within 12 months of such prepayment and
then, pro rata to the remaining amortization
payments under such Facility.
REPRESENTATIONS AND
WARRANTIES: Usual for facilities and transactions of
this type and others to be reasonably
specified by the Agents, including, without
limitation, accuracy of financial statements
and other information; no material adverse
change; absence of litigation; no violation
of agreements or instruments; compliance
with laws (including ERISA, margin
regulations and environmental laws); payment
of taxes; ownership of properties;
inapplicability of the Investment Company
Act and the Public Utility Holding Company
Act; solvency; effectiveness of governmental
approvals; labor matters; environ mental
matters; Year 2000 matters; and validity,
priority and perfection of security
interests in the Collateral.
CONDITIONS PRECEDENT TO
INITIAL BORROWING: Usual for facilities and transactions of
this type, those specified below and others
to be reasonably specified by the Agents,
including, without limitation, delivery of
satisfactory legal opinions and financial
information; first-priority perfected
security interests in the Collateral (free
and clear of all liens, subject to customary
exceptions); execution of the Guarantees,
which shall be in full force and effect;
accuracy of representations and warranties;
absence of defaults, prepayment events or
creation of liens under debt instruments or
other agreements as a result of the
Transactions; evidence of authority;
compliance with applicable laws and
regulations (including but not limited to
ERISA, margin regulations and environmental
laws); absence of material adverse change;
and payment of fees and expenses.
The Board of Directors of the Company shall
have approved the Merger Agreement and shall
have recommended to the shareholders of the
Company
8
that such shareholders accept the Tender
Offer, and such approval and recommendation
shall not have been withdrawn. Neither the
Merger Agreement nor the Tender Offer shall
have been amended or modified in any
material respect without the consent of the
Initial Lenders (as defined below). All
conditions to the purchase of Shares in the
Tender Offer shall have been satisfied
without giving effect to any waiver or
amendment thereof not approved by the
Initial Lenders, and Merger Sub shall have
acquired pursuant to the Tender Offer a
number of Shares that, on a fully diluted
basis and when aggregated with all other
Shares owned by Merger Sub, shall be
sufficient to enable Merger Sub, without the
vote of any other stockholder of the
Company, to effect stockholder approval of
the Merger under applicable law and under
the certificate of incorporation and by-laws
of the Company.
Not more than $5,000,000 shall have been
outstanding under the Existing Credit
Facility on the Closing Date; the Existing
Credit Facility shall have been paid in
full, any security therefor released and any
commitments to lend thereunder permanently
terminated, and the Administrative Agent
shall have received reasonably satisfactory
evidence thereof.
The Sponsor Equity Contribution shall have
been made on the terms previously disclosed
to the Initial Lenders.
The Company shall have deposited into a cash
collateral account (the "Cash Collateral
Account") with the Administrative Agent, as
security for its obligations under its
Guarantee, an amount in cash equal to
$193,300,000, less the amount used by the
Company to acquire Shares in the Tender
Offer upon the initial consummation thereof.
After giving effect to the Transactions and
the other transactions contemplated hereby,
Holdings and its subsidiaries shall have
outstanding no indebtedness or preferred
stock other than (a) the loans and other
extensions of credit under the Facilities,
(b) the preferred equity of Holdings issued
as part of the Sponsor Equity Contribution
and (c) other limited indebtedness to be
agreed upon.
9
The Lenders shall have received an opinion,
in form and substance and from an
independent investment banking or appraisal
firm satisfactory to the Agents, as to the
solvency of the Company and its subsidiaries
on a consolidated basis after giving effect
to the Transactions and the other
transactions contemplated hereby.
No member of management who is also a
stockholder of the Company during the Tender
Offer shall receive any direct or indirect
consideration for accepting the Tender Offer
(including, without limitation, securities
or options to acquire securities in Holdings
or the Company following the consummation of
the Tender Offer) other than (a) payment of
the cash consideration paid to all accepting
stockholders in the Tender Offer and (b)
pursuant to contractual arrangements that
were in place on or prior to October 18,
1999.
All requisite governmental authorities and
third parties shall have approved or
consented to the Transactions and the other
transactions contemplated hereby to the
extent required and to the extent the
failure to obtain the same could reasonably
be expected to result in a material adverse
effect on Holdings, the Company, the
Transactions or the other transactions
contemplated hereby, all applicable appeal
periods shall have expired, and there shall
be no litigation, governmental or judicial
action, actual or threatened, that could
reasonably be expected to (a) restrain or
prevent the Transactions or the other
transactions contemplated hereby or (b)
materially impair (i) the ability of
Holdings or Merger Sub, as the case may be,
to operate the Company following the
consummation of the Tender Offer or (ii) the
financing arrangements contemplated hereby,
in each case specifically excluding,
however, any private litigation based upon
state law fiduciary duty claims based upon
the transactions contemplated by the Merger
Agreement where the only remedy that could
reasonably be expected to be awarded is
monetary damages.
As used herein, the term "Initial Lenders"
means CSFB, CIBC Inc. and each other person
that shall have become a party to the
definitive credit documentation for the
Facilities as a "Lender" thereunder.
10
AFFIRMATIVE COVENANTS: Usual for facilities and transactions of
this types and others to be reasonably
specified by the Agents and reasonably
acceptable to Holdings and Merger Sub (to be
applicable to Holdings, Merger Sub and its
subsidiaries), including, without
limitation, maintenance of corporate
existence and rights; performance of
obligations; delivery of financial
statements and other financial information;
delivery of notices of default, litigation
and material adverse change; maintenance of
properties in good working order;
maintenance of satisfactory insurance;
compliance with laws; inspection of books
and properties; further assurances; and
payment of taxes.
NEGATIVE COVENANTS: Usual for facilities and transactions of
this type and others to be reasonably
specified by the Agents and reasonably
acceptable to Holdings and Merger Sub (to be
applicable to Holdings, Merger Sub and its
subsidiaries), including, without
limitation, prohibition of dividends on, and
redemptions and repurchases of, capital
stock; limitations on prepayments,
redemptions and repurchases of debt (other
than loans under the Facilities);
limitations on liens and sale-leaseback
transactions; limitations on loans and
investments; limitations on debt and hedging
arrangements; limitations on mergers,
acquisitions and asset sales; limitations on
transactions with affiliates; limitations on
changes in business conducted by Holdings
and its subsidiaries; limitations on
amendments of debt and other material
agreements; and limitations on capital
expenditures.
Notwithstanding, the foregoing, the Company
will be permitted to withdraw cash from the
Cash Collateral Account for the purpose of
(a) paying for Shares tendered and accepted
during the Tender Offer and (b) paying the
cash consideration in the Merger in respect
of Untendered Shares.
SELECTED FINANCIAL
COVENANTS: Usual for facilities and transactions of
this type (with financial definitions and
levels to be agreed upon), including,
without limitation, (a) maximum ratios of
(i) Total Debt to EBITDA and (ii) Senior
Debt to EBITDA, (b) minimum interest
coverage ratios and (c) minimum fixed charge
coverage ratios.
EVENTS OF DEFAULT: Usual for facilities and transactions of
this type and
11
others to be reasonably specified by the
Agents and reasonably acceptable to Holdings
and Merger Sub, including, without
limitation, nonpayment of principal or
interest, violation of covenants,
incorrectness of representations and
warranties in any material respect, cross
default and cross acceleration, bankruptcy,
material judgments, ERISA, actual or
asserted invalidity of guarantees or
security documents and Change in Control (to
be defined).
VOTING: Amendments and waivers of the definitive
credit documentation will require the
approval of Lenders holding more than 50% of
the aggregate amount of the loans and
commitments under the Facilities, except
that the consent of each Lender adversely
affected thereby shall be required with
respect to, among other things, (a)
increases in the commitment of such Lender,
(b) reductions of principal, interest or
fees, (c) extensions of final maturity or
scheduled amortization and (d) releases of
guarantors or all or any substantial part of
the Collateral (other than in connection
with any sale of Collateral permitted by the
definitive credit documentation).
COST AND YIELD PROTECTION: Usual for facilities and transactions of
this type.
ASSIGNMENTS AND
PARTICIPATIONS: The Lenders will be permitted to assign
loans and commitments to other Lenders (or
their affiliates) without restriction, or to
other financial institutions with the
consent of the Borrower and the
Administrative Agent, in each case not to be
unreasonably withheld. Each assignment
(except to other Lenders or their
affiliates) will be in a minimum amount of
$5,000,000. The Administrative Agent will
receive a processing and recordation fee of
$3,500, payable by the assignor and/or the
assignee, with each assignment. Assignments
will be by novation and will not be required
to be pro rata among the Facilities.
The Lenders will be permitted to participate
loans and commitments without restriction to
other financial institutions. Voting rights
of participants shall be limited to matters
in respect of (a) increases in commitments,
(b) reductions of principal, interest or
fees, (c) extensions of final maturity or
scheduled amortization and (d) releases of
guarantors or all or any substantial part of
the
12
Collateral (other than in connection with
any sale or collateral permitted by the
definitive credit documentation).
EXPENSES AND
INDEMNIFICATION: All reasonable out-of-pocket expenses
(including, without limitation, expenses
incurred in connection with due diligence)
of CSFB and CIBC associated with the
syndication of the Facilities and with the
preparation, execution and delivery,
administration, waiver or modification and
enforcement of the definitive credit
documentation contemplated hereby (including
the reasonable fees, disbursements and other
charges of counsel) are to be paid by the
Borrowers. In addition, all reasonable
out-of-pocket expenses of the Lenders for
enforcement costs and documentary taxes
associated with the Facilities are to be
paid by the Borrowers.
The Borrowers will indemnify CSFB, CIBC and
the other Lenders and hold them harmless
from and against all costs, expenses
(including reasonable fees, disbursements
and other charges of counsel) and
liabilities of CSFB, CIBC and the other
Lenders arising out of or relating to any
claim or any litigation or other proceeding
(regardless of whether CSFB, CIBC or any
other Lender is a party thereto) that
relates to the Transactions, including the
financing contemplated hereby, the Tender
Offer, the Merger or any transactions
connected therewith, PROVIDED that none of
CSFB, CIBC or any other Lender will be
indemnified for any cost, expense or
liability to the extent determined in the
final judgment of a court of competent
jurisdiction to have resulted from its gross
negligence or willful misconduct.
GOVERNING LAW AND FORUM: New York.
COUNSEL TO CSFB AND CIBC: Cravath, Swaine & Xxxxx.
ANNEX I
INTEREST RATES: The interest rates under the Facilities will
be as follows:
REVOLVING FACILITY AND TRANCHE A FACILITY
At the Borrower's option, Adjusted LIBOR
plus 3.25% or ABR plus 2.25%.
TRANCHE B FACILITY
At the Borrower's option, Adjusted LIBOR
plus 3.75% or ABR plus 2.75%.
ALL FACILITIES
The Borrower may elect interest periods of
1, 2, 3 or 6 months for Adjusted LIBOR
borrowings.
Calculation of interest shall be on the
basis of the actual days elapsed in a year
of 360 days (or 365 or 366 days, as the case
may be, in the case of ABR loans based on
the Prime Rate) and interest shall be
payable at the end of each interest period
and, in any event, at least every 3 months.
ABR is the Alternate Base Rate, which is the
higher of CSFB's Prime Rate and the Federal
Funds Effective Rate plus 1/2 of 1%.
Adjusted LIBOR will at all times include
statutory reserves.
LETTER OF CREDIT FEE: A per annum fee equal to the spread over
Adjusted LIBOR under the Revolving Facility
will accrue on the aggregate face amount of
outstanding letters of credit under the
Revolving Facility, payable in arrears at
the end of each quarter and upon the
termination of the Revolving Facility, in
each case for the actual number of days
elapsed over a 360- day year. Such fees
shall be distributed to the Lenders
participating in the Revolving Facility pro
rata in accordance with the amount of each
such Lender's Revolving Facility commitment.
In addition, the Borrower shall pay to the
Issuing Bank, for its own account, (a) a
fronting fee equal to a percentage per annum
to be agreed upon of the aggregate face
amount of outstanding letters of credit,
payable in arrears at the end of each
quarter and upon the termination of the
Revolving Facility, calculated based upon
the actual number of days
2
elapsed over a 360-day year, and (b)
customary issuance and administration fees.
COMMITMENT FEES: A commitment fee equal to (a) 1.00% per
annum on the undrawn portion of the
commitments in respect of the Tranche A
Facility and (b) 0.50% per annum on the
undrawn portion of the commitments in
respect of the other Facilities, will
accrue, commencing upon the execution and
delivery of the Credit Agreement, and be
payable quarterly in arrears thereafter and
upon the termination of the commitments,
calculated based on the number of days
elapsed in a 360-day year.
CHANGES IN INTEREST RATES: The definitive credit documentation for the
Facilities will contain provisions under
which, from and after the date of delivery
of the Borrower's financial statements for
the period ended March 31, 2000, and so long
as no default shall have occurred and be
continuing, the interest rate spreads under
the Facilities will be reduced in increments
to be agreed upon based upon performance
goals to be agreed upon.
ANNEX II
Sources and Uses of Funds
(in millions of dollars)
(all figures are approximate)
USES OF FUNDS SOURCES OF FUNDS
------------- ----------------
Purchase Shares $697.3 Revolving Facility1/ $ 0.0
Transaction Costs2/ 26.0 Tranche A Facility 155.0
------ Tranche B Facility 165.0
Cash on Hand3/ 193.3
Sponsor Cash Equity
Contribution 210.0
------
TOTAL USES $723.3 TOTAL SOURCES $723.3
====== ======
--------------------
1/ Represents amount to be drawn under the $70 million Revolving
Facility on the Closing Date.
2/ Excludes transaction costs and change-in-control payments to be paid
by the Company.
3/ Or additional Sponsor Equity, to the extent cash on hand is less
than $193.3 million.
